Trademark Owners Rejoice: Profit Recovery Possible Without Showing Willfulness

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This week, the United States Supreme Court may have made it considerably easier for a trademark owner to recover lost profits from a trademark infringer. Specifically, the Court answered the question, posed in Romag Fasteners, Inc. v. Fossil Grp., Inc., of whether the Lanham Act requires a “categorical” rule that only a willful infringer must disgorge its “ill-gotten profits.” In a unanimous 9-0 decision, the Justices determined that the Lanham Act includes no such requirement, and a trademark owner need not show that a trademark infringer willfully infringed on the plaintiff’s trademark in order to recover profits from the infringer.

In a short seven-page decision written by Justice Gorsuch, the Court analyzed whether a showing of willful trademark infringement is a precondition to recovering profits under section 1117(a), the provision governing remedies for trademark violations, for violations of section 1125(a) of the Lanham Act, the provision governing false or misleading use of trademarks. In its opinion, the Court relied on the text of the Lanham Act. Specifically, the Court pointed out that while the Lanham Act specifically requires willfulness to recover profits in trademark dilution cases, “the statutory language has never required a showing of willfulness to win a defendant’s profits” in claims of false or misleading use of trademarks. All the more telling, the Court said, is that the “Lanham Act speaks often and expressly about mental states,” including multiple adjustments in remedies for willful violations, but the remedies provision at issue, section 1117(a), includes no reference to willfulness or a mental state of any kind for recovering remedies from violations of section 1125(a). Noteworthy as well, the Court rejected Fossil’s argument that the purported willfulness requirement was required by “principles of equity,” historical trademark law, and public policy. Ultimately, the Court acknowledged that its “limited role is to read and apply the law those policymakers have ordained,” and in doing so held that the text of the Lanham Act, and as a result Federal Trademark law, does not require willfulness to recover profits for the false or misleading use of trademarks.

On the other hand, although willfulness is not expressly required for such claims,  the Court made clear that an alleged infringer’s state of mind is still important in assessing violations and potential trademark remedies. For instance, in his opening paragraph, Justice Gorsuch expressed: “Without question, a defendant’s state of mind may have a bearing on what relief a plaintiff should receive. An innocent trademark violator often stands in very different shoes than an intentional one.” Likewise, his opinion notes that “a defendant’s mental state is relevant to assigning an appropriate remedy” and “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.” Similarly, in his concurrence, Justice Alito, joined by Justice Breyer and Justice Kagan, acknowledged the distinction that willfulness remains important, but not a prerequisite, in awarding profits. Thus, trademark owners should be aware that, although willfulness is not required to obtain profits, it is still appears to be an immensely important factor courts may consider.

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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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