Supreme Court: Willfulness Trademark Infringement Not Required to Obtain Profit Disgorgement

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In Romag Fasteners, Inc. v. Fossil Group, Inc., the Supreme Court held that a district court may award the plaintiff with the defendant’s profits even without a showing of willfulness for trademark infringement. However, the Court did not hold that a plaintiff is entitled to recover a defendant’s profits, but a defendant’s mental state is an important factor in determining whether to award profits. According to the Court:

At the end of it all, the most we can say with certainty is this. Mens rea figured as an important consideration in awarding profits in pre-Lanham Act cases. This reflects the ordinary, transsubstantive principle that a defendant’s mental state is relevant to assigning an appropriate remedy. . . . Given these traditional principles, we do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate. But acknowledging that much is a far cry from insisting on the inflexible precondition to recovery.

Justice Gorsuch wrote the majority opinion, joined by seven other justices. Justice Alito joined the majority, but also wrote a concurring opinion that was joined by Justices Breyer and Kagan. Justice Sotomayor also concurred.

Justice Alito’s concurrence was only one paragraph and emphasized that willfulness is a highly important consideration, but not required:

The decision below held that willfulness is such a prerequisite. That is incorrect. The relevant authorities, particularly pre-Lanham Act case law, show that willfulness is a highly important consideration in awarding profits under §1117(a), but not an absolute precondition.

Justice Sotomayor explained that the majority opinion suggested that courts of equity were just as likely to grant profits for willful infringement as innocent infringement. Justice Sotomayor disagreed with the majority and indicated that profits were rarely awarded for innocent infringement and therefore should not be awarded for innocent trademark infringement.

Takeaways:

While the Court held that willfulness is not an “inflexible precondition” to disgorgement of profits, willfulness is still “a highly important consideration.” Thus, courts hearing trademark infringement litigation will continue to focus on willfulness, and other factors evidencing the infringer’s mental state, when determining whether to award the infringer’s profits. With the Court making disgorgement of profits a more flexible inquiry, trademark owners will be more likely to pursue disgorgement of profits now.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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