Beware of whom you hook up with: Romag Fasteners v. Fossil

In Romag Fasteners, Inc. v. Fossil Group, Inc. et al., 590 U. S. __ (2020) [hereinafter ‘Romag’ and ‘Fossil’], the United States Supreme Court [hereinafter ‘the Court’] held that trademark owners in infringement lawsuits may receive lost profits without establishing willful conduct by the infringer. The decision also held that the Lanham Act does not require willfulness for such an award, and that the alternative interpretation conflicts with explicit mental state requirements for other remedies under the Act.[1]

This story begins after Fossil licensed Romag’s snap fasteners to place in leather products at Fossil’s associated manufacturer in China. Although Fossil invested in protection against counterfeiting for other vendors, it failed to do so for Romag’s fasteners. As a result, the Chinese facility produced leather goods with counterfeit fasteners displaying Romag’s mark.   After Romag sued Fossil, the jury concluded that Fossil and associated retailers infringed Romag’s trademark. However, the jury also concluded that Fossil did not do so willfully, and therefore Romag would not receive Fossil’s profits from counterfeit products. Upon a second appeal by Romag, the United States Court of Appeals for the Federal Circuit affirmed the district court’s decision to decline an award of profits.

Before the Court, Fossil contended that (i) the Lanham Act at 35 U.S.C. section 1117(a) (i) requires  willfulness for profits based upon the phrase “according to the principles of equity,” and (ii) thereby this section ushers in pre-Lanham Act decisions which required willful behavior. However, Romag contended that section 1117(a) by its own terms does not require willfulness for an award of profits due to  infringement.[2]  In contrast and as an example, the Act explicitly requires willfulness where someone dilutes a famous trademark under section 1125(c).[3] As another example, section 1114(a) — causes of action for infringement of registered marks —- does not expressly include a mental state requirement. Furthermore, “principles of equity” in section 1117(a) does not incorporate pre-Lanham Act decisions, because these decisions did not demonstrate a willfulness requirement for a profits remedy in a uniform or well established manner.

The Court vacated and remanded the Federal Circuit’s decision. In so doing it held that although the Lanham Act requires willfulness for remedies under other statutory provisions, section 1117(a)[4] does not expressly require willfulness for a profits award. The Court based this conclusion upon the Act’s plain language as well as the requirements of specific mental states for liability and remedies in other provisions of the Act. The Court also disagreed with Fossil that the phrase “subject to the principles of equity” indirectly ushers a willfulness requirement into 1117(a). Instead, if Congress had included a willfulness requirement under section 1117(a), it would have done so directly and consistently with other explicit state mental state requirements in the Act. The Court also observed that, in any event, pre-Lanham Act decisions solely support the generic conclusion that mental state is relevant for award of an appropriate remedy.

© 2020 Adrienne B. Naumann, Esq., all rights reserved. Ms. Naumann does not sponsor or endorse the advertisements at adriennebnaumann.wordpress.com.

[1] The Lanham Act is the federal trademark statute in the United States.

[2] 15 U.S.C. section 1117(a) reads in relevant part:

.  .  . when. . . a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c). .  . shall have been established. . . the plaintiff shall be entitled.  .  . and subject to the principles of equity, to recover (1) defendant’s profits.  .  .  .”

[3] Trademark dilution is use by another party that (i) lessens the association consumer have with a well-known mark or (ii) otherwise tarnishes this mark. 35 U. S. C. section 1125(c).

[4] 15 U.S.C. section 1117(a) also refers explicitly to section 1125(a) which reads in relevant part: (1) Any person who uses in commerce any word, term.  .   . (A) likely to cause confusion .  .  .  (B).  .   . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”

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