From The Field

April 23, 2020

Resolving a circuit split, on April 23, 2020, in Romag Fasteners, Inc. v. Fossil, Inc. a unanimous U.S. Supreme Court held that a trademark plaintiff need not prove that the defendant acted willfully to obtain a profits award, overruling what was settled law in the Second Circuit.

Justice Gorsuch delivered the opinion, which interpreted the Lanham Act’s provision for remedies, namely Lanham Act § 35(a) (15 U.S.C. §1117(a)).  Reasoning that because the statute expressly requires a showing of willfulness as a precondition to a profits award under §1125(c) (for trademark dilution), but lacks such an express requirement for violations of §1125(a) (trademark infringement), the Court held that Congress could not have intended for willfulness to be an absolute requirement for a profits award for such claims. The Court bolstered its reasoning by considering the Lanham Act’s overall structure, which “exhibits considerable care with mens rea standards.”

Defendant Fossil argued that Section 35(a)’s reference to “principles of equity” requires a finding of willfulness for a profits award because courts of equity historically applied such a requirement.  The Court rejected that argument, finding the caselaw at best equivocal on the point, stating that “it’s far from clear whether trademark law historically required a showing of willfulness before allowing a profits remedy.” 

From a practical standpoint, a trademark defendant’s mental state will continue to be highly relevant in the remedy phase, but the decision leaves unclear how the district courts are to decide when and whether profits are an appropriate remedy in light of the defendant’s mental state.  What can be said for certain is that this decision will alter the dynamics of settlement by opening the door to a profit award even absent a showing of willfulness.

Full opinion

Author: David Steiner