Supreme Court Ruling Strengthens Profit Recovery in Trademark Suits

A recent ruling by the Supreme Court has strengthened plaintiff’s trademark claims by holding that a plaintiff is not required to show that the defendant “willfully” infringed its trademark in order to recover the defendant’s ill-gotten profits under the Lanham Act. The Court’s interpretation of the Lanham Act will also apply to plaintiff’s filing a false advertising lawsuit.

In Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020), Romag and Fossil signed an agreement allowing Fossil to use Romag’s fasteners in Fossil’s products. Romag later discovered that the production factories Fossil hired in China were using counterfeit Romag fasteners while Fossil did little to stop them. Romag alleged that Fossil infringed on Romag’s trademark rights and falsely represented that Fossil’s fasteners came from Romag. The jury agreed and found that Fossil had acted “in callous disregard” of Romag’s rights. However, the jury also found that Fossil did not act willfully. Relying on prior rulings requiring a plaintiff seeking profits to prove that the defendant’s infringement was willful, the district court ruled that Romag could not recover Fossil’s profits.

Writing for an eight-justice majority, Justice Gorsuch explained that the language in Lanham Act, specifically within 15 U.S.C. § 1117(a), does not require a finding of willfulness in order to disgorge a defendant of ill-gotten profits. While the Lanham Act expressly makes willfulness a prerequisite to recovering profits for trademark dilution under 15 U.S.C. § 1125(c), the statute does not contain any such requirement for violations of 15 U.S.C. § 1125(a) — the provision addressing trademark infringement. The Court noted that the Lanham Act “speaks often and expressly about mental states.” The Court acknowledged that the defendant’s mental state is a “highly important consideration in determining whether an award of profits is appropriate,” but ruled that this did not necessitate an inflexible requirement of willfulness.

False advertising claims under the Lanham Act also fall under 15 U.S.C. § 1125(a). Consequently, the Supreme Court’s interpretation of this section — and its lack of a willfulness prerequisite for recovery of lost profits — will apply to Lanham Act false advertising plaintiffs as well. Even if a defendant did not willfully engage in false advertising, a plaintiff may still recover the defendant’s profits.

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