No Willfulness Requirement for Lost Profits Award

If you are a business owner and have federally-registered your trademark (an important step that the Chambliss Intellectual Property section regularly advises our clients to take), then the value of your trademark(s) just received a big boost. The Supreme Court of the United States (the Court) recently settled a long-standing split between the appellate courts over whether a plaintiff must prove willfulness before an award of the infringer’s profits to the trademark owner would be available as a remedy for trademark infringement. In its recent decision in Romag v. Fossil, the Court dramatically increased the monetary relief available for trademark infringement in ruling that an award of the infringer’s profits to plaintiffs is available even if the infringement was not willful. Prior to the Court’s decision, many lower courts required proof of a defendant’s willfulness before it would authorize an award of profits, which made that particular remedy exceedingly rare. 

Following the trial in Romag v. Fossil, the jury awarded the trademark owner $6.7 million in profits to deter infringement, even though it found that only 1% of the infringer’s profits were attributable to the infringement. According to the jury, the defendant infringed “in callous disregard,” but it did not do so willfully. The appellate court reversed the award of profits because the jury did not find willful infringement. As noted above, the high Court disagreed with the appellate court. 

On a side note, the Court’s decision in the Romag v. Fossil trademark infringement case is consistent with its 2016 decision in a patent infringement case in which the Court similarly ruled that willfulness is not a prerequisite to awarding enhanced damages against an infringer. To see our discussion of the 2016 patent infringement decision, click here.

What Does This Mean for Trademark Owners and Potential Infringers?

So while this decision provides trademark owners with a potentially new revenue source from infringers, it is also critical to recognize that the cost of infringing a third party’s trademark rights just potentially became more expensive. It is more important now than ever to conduct a comprehensive clearance search before you begin using any proposed new marks in commerce.