Last month, the Supreme Court, in its decision Romag Fasteners, Inc. v. Fossil Grp., Inc., 140 S. Ct. 1492 (2020) clarified that a finding of willfulness is not a pre-requisite for consideration of a profits award under 15 U. S. C. §1117(a) of the Lanham Act.
Essentially, what this means is that it is no longer required for a plaintiff to prove than an infringer willfully infringed the plaintiff’s trademark(s) in order to ask for the infringer to have to disgorge their profits from the infringement. However, the court took care to make sure that a defendant’s state of mind remained an important factor in whether such an award is proper.
The case stemmed from a dispute over magnetic handbag fasteners. Romag, the manufacturer of such fasteners, had entered into an agreement with Fossil, the manufacturer of handbags, that allowed the latter to use the former’s fasteners in its bags. Romag eventually found that Fossil’s off-shore manufacturers used counterfeit Romag fasteners instead of authentic ones and that Fossil did little to stem this practice and therefore infringed on Romag’s trademarks related to the fasteners. The jury found that Fossil had acted in “callous disregard” of Romag’s rights, but did not find that Fossil had acted willfully.
Romag sought to have Fossil hand over profits from the trademark violation, but both the district court and the circuit court refused, since Fossil had not been found to have acted willfully, holding that such a finding was required for profit awards. The Supreme Court stepped in to resolve a dispute among the circuits.
Justice Gorsuch, writing for a unanimous court, found that there is no pre-requisite for a finding of willfulness in order to consider disgorging profits under Section 1117(a). The court contrasted various sections of the Lanham Act that require some aspect of “mens rea” against Section 1117(a), stating that to find a willfulness pre-condition in this case would require the court to find that “Congress intended to incorporate a willfulness requirement here obliquely while it prescribed mens rea conditions expressly elsewhere throughout the Lanham Act.”
The court’s finding that willfulness is not a required pre-condition for consideration of a profits award does not, however, mean that willfulness cannot be considered as part of deciding whether such an award is proper. The courts are free to consider the infringer’s state of mind when making a decision: “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.” The lack of a finding of willfulness just can’t serve as a bar to a consideration of such an award.