Trademark owners and retailers of trademarked products await the U.S. Supreme Court’s ruling in Romag Fasteners v. Fossil on whether, under Section 35 of the Lanham Act, 15 USC § 1117(a), willful infringement is required for an award of an infringer’s profits for a violation of Section 43(a), 15 USC § 1125(a). This decision will set the standard for awarding a key form of monetary relief sought in trademark infringement litigation.

The U.S. Courts of Appeals have long been divided on this issue. In the Third, Fourth, Fifth, Sixth, Seventh and Eleventh Circuits, a plaintiff is not required to prove the infringement was willful to recover profits. In contrast, the Second, Eighth, Ninth, Tenth and D.C. Circuits require a showing of willfulness to award profits. The First Circuit requires willfulness only when the litigants are not direct competitors.

Romag Fasteners v. Fossil started in the Second Circuit. Romag, a magnetic snap fastener maker, sued Fossil, the fashion design and manufacturing company, for patent and trademark infringement, claiming that Fossil sold handbags, containing counterfeit snaps, to retailers. The district court held that Romag was not entitled to profits because Fossil’s infringement was not willful. On appeal, the Federal Circuit affirmed the district court’s ruling, upheld Second Circuit precedent and concluded that a 1999 amendment to the Lanham Act did not resolve the “conflict among the courts of appeals as to whether willfulness was required for recovery of profits.” The U.S. Supreme Court later granted Romag’s petition for a writ of certiorari and heard oral arguments on January 14, 2020.

In its briefs and before the Court, Romag argued that the text of Section 35 only requires a “violation” of § 1125(a), not a “willful violation,” as required for § 1125(c) after the 1999 amendment. Romag stated that the Lanham Act’s statutory structure, which “contains eight provisions tying monetary relief to a heightened mental state,” makes clear that willfulness is not required to award profits. In its defense, Fossil argued that the phrase “principles of equity” in Section 35 dictates a common law willfulness requirement to award profits, rather than a multifactor analysis as Romag claimed. Regarding the 1999 amendment, Fossil argued that the legislative record shows Congress did not acknowledge or intend to address the willfulness requirement.

During oral arguments, the justices focused on the definition of willfulness. Justices Sotomayor and Ginsburg noted that caselaw does not support a uniform definition of willfulness. Given the uncertainty regarding the definition, Justice Kavanaugh asked why the Court should assume Congress wanted to exclude reckless infringement and what the policy objective would be for doing so. Justice Kagan noted that many cases treat willfulness as “a significant factor, but not a gateway requirement.” Justice Ginsburg also noted the plain language of Section 35 and Justice Gorsuch asked if “principles of equity might be an unusual way of saying willfulness[.]” Justice Alito asked if willfulness as a necessary condition has led to any unjust results. Justice Breyer highlighted a clause in Section 35 giving courts discretion to adjust an award if the amount of recovery based on profits is inadequate or excessive. Finally, Chief Justice Roberts considered the meaning of equity and whether it includes profits.

The Court’s questioning suggests a reluctance to foreclose the recovery of profits in situations where an infringer’s conduct is clearly wrongful. In the absence of clear guidance from Congress, the Court seems unwilling to risk imposing a willfulness requirement when it is not clear whether other culpable mental states, such as recklessness or callous disregard, would be excluded. Therefore, it seems unlikely that the Court will hold that Section 35 requires willful infringement for an award of profits. The decision is expected in late June or early July.

UPDATE: On April 23, 2020, the Court unanimously ruled in favor of Romag, holding that “[a] plaintiff in a trademark infringement suit is not required to show that a defendant willfully infringed the plaintiff’s trademark as a precondition to a profits award.” However, the Court also noted that willfulness remains an important factor to consider in trademark infringement cases, with Justice Gorsuch writing that they “do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.”