On April 23rd, 2020, the U.S. Supreme Court unanimously held that willfulness is not required for trademark owners to recover damages from infringers, settling a Circuit Court split on the matter. Six Circuit Courts previously required willfulness in order to award profits to non-competitors while six other Circuit Courts did not.
In Circuit Courts that did not require willfulness, competitors were able to calculate profits as an estimate of damages. The split is also apparent among various trademark and intellectual property groups, who filed additional briefs supporting both parties.
Romag first sued Fossil in 2010, claiming Fossil began using a counterfeiter rather than an approved supplier for Romag”™s patented fasteners. The District Court found Fossil liable for trademark and patent infringement. The jury awarded Romag $156,000 for infringement and $6.7 million from Fossil”™s profits. However, the judge reversed the profits award because the jury did not find willfulness. Romag appealed, and the Federal Circuit ruled in favor of Fossil in 2017. This decision was vacated by the Supreme Court.
Writing for the Court, Justice Gorsuch looked to §35 of the Lanham Act, which is the damages section of the Lanham Act. The section specifically lists willfulness as a requisite for trademark dilution, but not trademark infringement. However, the Court emphasized that willfulness is still a highly important consideration in awarding profits.
Because willfulness will still be considered in cases involving disgorgement of profits, this decision may not drastically affect future cases. Although removing a condition may make it easier to initiate litigation, proving damages or intent has always been difficult. In cases where a strong showing of willfulness was present, damages from profits were recovered. Without a finding of willfulness, there would have to be extenuating circumstances to justify awarding the plaintiff damages. Therefore, businesses that act in good faith are unlikely to see a surge in trademark lawsuits or be forced to give up their profits as a result of this ruling.
On the other hand, businesses who are trademark holders are given the opportunity to seek a disgorgement remedy that they were previously barred from. Per the Lanham Act at15 U.S.C. §1117(c)(1), statutory damages for the non-willful sale of counterfeits is limited to $200,000 per counterfeit mark per type of goods or services sold. This may not be enough to cover damages from the sale of counterfeits, so the opportunity to obtain a disgorgement remedy may address this issue.