The Supreme Court overturned a Second Circuit decision to find that a finding of willful infringement is not a prerequisite for an award of profits in a trademark action in Romag Fasteners, Inc. v. Fossil, Inc., Docket No. 18–1233 (April 23, 2020). The decision has major implications for trademark holders because the perceived need to prove willfulness would often make it difficult for a trademark holder to obtain significant damages in a trademark infringement action.
The Romag Fasteners decision concerned an interpretation of a particular statute, which states:
[w]hen a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . . , the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.
15 U. S. C. §1117(a).
The accused infringer argued that the phrase “subject to the principles of equity” indicated that willfulness is a perquisite to an award of profits.
Unfortunately, for the accused infringer, the actual language of the statute seemed to contradict its theory. Additionally, the trademark owner was able to point to other statutes that had express requirements for willfulness and/or intentional conduct, which implied that the decision to omit any express requirement for willfulness in 15 U. S. C. §1117(a) was intention.
The Supreme Court also reviewed case law to see whether there was an inherent requirement for willfulness in equity and in the awarding of profits in trademark law. The Court concluded that there was no inherent requirement or historical support for the accused infringer’s position.
Finally, the Supreme Court considered the policy implications of awarding profits without willfulness in trademark cases. Each side presented conflicting policy arguments to support their positions. Specifically, the accused infringer argued that awarding profits without a willfulness finding would encourage “baseless trademark lawsuits.” The trademark holder argued that such awards would “promote greater respect for trademarks in the ‘modern global economy.’”
Ultimately, the Court was not persuaded by either side’s policy arguments and based its decision on the language of the statute and the historical record.