The U.S Supreme Court Clarifies That Willfulness is Not a Predicate Finding for Lost Profits in Trademark Infringement Claim
The federal circuits have expressed different views on whether a claimant alleging trademark infringement and seeking lost profits must first make a showing that that the alleged infringer acted willfully. The U.S. Supreme Court has now brought certainty to that question in Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S (2020) and the answer is “NO.” Romag involved a manufacturing agreement whereby Fossil agreed to use Romag’s fasteners in the production of its leather goods. However, at some point, the China manufacturer began using counterfeit Romag fasteners. Romag filed for trademark infringement against Fossil and sought an award of profits under 15 U.S.C. 1125(a).
The District Court declined the award given precedent in the Second Circuit that willfulness is a requirement for an award of lost profits. Justice Gorsuch reviewed 15 U.S.C. § 1117(a), the relevant section of the federal Lanham Act, and noted that it only specified an intent element for trademark dilution in 1125(c), whereas 1125(a), under which Romag brought its claim, was devoid of any such limitation or requirement. Accordingly, the Supreme Court found that willfulness was not a requirement for an award of lost profits. However, Justice Gorsuch did acknowledge that a “defendant’s mental state is a highly important consideration in determining whether an award or profits is appropriate.” It is not however a mandatory showing. That is consistent with the Sixth Circuit’s position as espoused in Laukus v. Rio Brands, Inc., 391 Fed. Appx 416 (2010).