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Date:
04/23/2020
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Supreme Court Strikes Down "Willfulness" Requirement for an Award of Ill-Gotten Profits in Trademark

On April 23, 2020, the United States Supreme Court ruled that a party whose trademark has been infringed is not required to prove a “willful” violation to obtain an award of defendant’s ill-gotten profits. This potentially exposes the trademark infringer’s profits in every infringement case.

The Supreme Court’s decision in Romag Fasteners, Inc. v. Fossil Group, Inc., was unanimous. Romag sued Fossil for trademark infringement after discovering that Fossil’s Chinese vendors were using counterfeited Romag fasteners to make Fossil handbags. The jury found that Fossil acted “in callous disregard” of Romag’s intellectual property rights by not more closely policing the vendors and awarded Romag damages. Yet the trial court denied Romag’s request for an award of Fossil’s profits because Romag had not proved the infringement was “willful.”

The Supreme Court reversed the trial court’s ruling, explaining that the plain language of the Lanham Act (which protects trademarks) does not impose a “willfulness” requirement for a trademark infringement case. 15 U.S.C. § 1125(a). The court contrasted the infringement section with the specific “willfulness” prerequisite in the act for a trademark dilution. 15 U.S.C. § 1125(c).

The ruling overturned the findings of a number of Courts of Appeal, including the Ninth Circuit (encompassing all federal courts in Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), which had previously required a trademark infringement plaintiff to prove both “a likelihood of confusion combined with willful infringement.” Gracie v. Gracie, 217 F.3d 1060, 1068 (9th Cir. 2000) (emphasis in original).

The Supreme Court’s ruling sets a nationwide precedent that appears to make an award of ill-gotten profits much more easily obtained and potentially awardable in every trademark infringement case. Companies should be more careful than ever to assure that they do not infringe on another’s trademark. At the same time, those with potential infringement claims should certainly reevaluate litigation in light of this new precedent.