Supreme Court Rules on Willfulness and the Lanham Act
The Supreme Court decision in Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (U.S., 2020) has been a decade in the making, arising out of a trademark infringement dispute between a popular international fashion accessory manufacturer (Fossil) and a Connecticut based family-owned business (Romag Fasteners). Fossil and Romag entered into an agreement in which Fossil would use Romag fasteners in their leather goods. However, nearly eight years later, Romag discovered that some of Fossil’s factories located in China were utilizing counterfeit Romag fasteners that bore the Romag trademark. At issue in the case was whether a showing that Fossil had willfully infringed Romag’s trademark was a prerequisite for Romag to recover defendant’s ill-gotten profits under the Lanham Act §1125(a). After federal courts split over whether the willful mens rea required by §1125(c) was also present in §1125(a), the Supreme Court accepted the case in order to provide clarification.
In its decision, the Court found that a plaintiff bringing a trademark infringement suit is not required to show that the infringement was willful under §1125(a) of the Lanham Act. The Court held that the presence of required mental states in other provisions of the Lanham Act did not justify the reading of a willful mens rea into §1125(a), where a prerequisite mental state was absent. This decision came despite persistent argument from Fossil that interpreting the statute without a required mental state would lead to ‘baseless’ trademark litigation. In delivering the opinion of the Court, Justice Gorsuch left the inclusion of a specific mental state up to policymakers. Justice Gorsuch’s opinion explains that the mental state of the defendant is not irrelevant, but simply not an inflexible precondition for trademark owners to recover a defendant’s ill-gotten profits.
At first glance, this decision clears up the confusion surrounding the burden of proof and trademark infringement, likely creating a clearer avenue of recovery for many trademark owners. Looking deeper, however, this decision may also incentivize trademark owners to pursue litigation further in hope of receiving a damage payout rather than settling earlier in the case. With intellectual property infringement filings on the rise, this will likely cause a further increase. Predictably, trademark owners are more likely to pursue litigation if they have a greater chance of receiving a payout at the end of the case. While the decision in Romag may not guarantee that a trademark owner will receive the infringer’s ill-gotten profits, it definitely improves the odds that they will be successful. Whether Fossil’s prediction of an increase in ‘baseless’ trademark suits will come to fruition will likely be determined in the coming years.
A copy of the Court’s decision can be found here.
Grayson J. Derrick
Chair, Technology and Intellectual Property Section
Halle A. Hayhurst