A Trademark Infringement Plaintiff Need not Prove Willfullness to Obtain a Profit Remedy
July 6, 2020
Trademark law protects brand names, business names, logos, and other words or symbols used to protect a product or service from unauthorized use by others. The Lanham Act, found in Title 15, Chapter 22 of the U.S. Code, regulates the issuance of trademarks by the federal government and the enforcement of trademark rights in federal court. In a claim for infringement of a trademark, the Lanham Act allows a trademark owner to recover profits resulting from the infringement as damages. The U.S. Supreme Court ruled earlier this year on a question about the standard of proof for recovering profit damages. At issue was whether the plaintiff needed to prove that the defendant’s infringement was willful. The Court’s decision in Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. ___ (2020), held that willfulness is not a required element in a trademark infringement claim.
Trademark Infringement and Trademark Dilution
Trademark infringement, described in § 1125(a) of the Lanham Act, is one of many acts prohibited by that statute. The Lanham Act, for example, also prohibits false advertising. Section 1125(c) describes an act known as trademark dilution. The dispute in Romag Fasteners arose in part because of uncertainty about the remedies available for each type of claim.
A plaintiff alleging trademark infringement must demonstrate that they own a valid mark, and that the defendant used the mark in a way that is likely to cause confusion. A famous example of similar-sounding names that led to a trademark dispute involved the initials used by the World Wildlife Fund, a charitable organization, and World Wrestling Entertainment, formerly known as the World Wrestling Federation. The wrestling organization changed its name as part of the resolution of a trademark dispute over the initials “WWF.” In a more recent example, the 3M Corporation prevailed over a Chinese company that marketed a product as “3N.”
Trademark dilution involves the unauthorized use of a “famous mark that is distinctive” in a way that either “impairs [its] distinctiveness” or harms its reputation. A 2003 Supreme Court decision, Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), arose from a dispute between the company that owns the Victoria’s Secret trademark and a store in Kentucky that opened under the name “Victor’s Secret.” Both the district and appellate courts held that this constituted trademark dilution.
Damages for Trademark Infringement and Trademark Dilution
Section 1117(a) of the Lanham Act addresses profit damages for infringement and other violations. The language of the statute seems to indicate clearly that a plaintiff can recover a defendant’s profits resulting from trademark infringement without regard to the defendant’s mental state, but they must prove that a defendant acted willfully to recover profits from trademark dilution. Any award under this section, the Lanham Act states, is “subject to the principles of equity.”
Several U.S. Circuit Courts of Appeals have held that willfulness is a required element for an award of profits in a trademark infringement claim. The Second Circuit Court of Appeals, which ruled on Romag Fasteners before it went to the Supreme Court, has reached this conclusion multiple times.
Facts of the Case
The defendant in Romag Fasteners produces clothing accessories. It signed a deal with the plaintiff to use the plaintiff’s magnetic fasteners in a line of handbags. The plaintiff had registered trademarks and patents related to the fasteners. It filed suit upon learning that a Chinese company subcontracted by the defendant to produce the handbags was using knock-off fasteners instead of the plaintiff’s product.
A jury in the U.S. District Court for the District of Connecticut found that the defendant had infringed on the plaintiff’s rights under both trademark and patent law. It declined to award disgorgement of the defendant’s profits under the Lanham Act, though, since it found that the plaintiff had not proved that the defendant had willfully infringed on the plaintiff’s trademark rights.
On appeal to the Second Circuit, the plaintiff argued that the plain language of the Lanham Act does not require proof of willfulness to recover the defendant’s profits. The Second Circuit followed its prior decisions and affirmed the trial court’s ruling.
The Supreme Court’s Ruling
The U.S. Supreme Court vacated the Second Circuit’s ruling in a 9-0 decision issued on April 23, 2020. Justice Gorsuch wrote the Court’s opinion, and he was joined by seven other justices. The Court’s decision highlighted the “principles of equity” mentioned in § 1117(a). The defendant argued that this term implicitly requires a finding of willfulness, but the Court disagreed. It held that Congress would not have applied a willfulness requirement specifically to trademark dilution claims if it intended the requirement to apply to trademark infringement as well. Of course, the Court acknowledged that a “trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.”
Justice Sotomayor concurred in the judgment but did not join the Court’s opinion. She expressed concern in her concurrence that, without a willfulness requirement, “principles of equity” might be the only thing preventing courts from ordering disgorgement of profits for “innocent or good-faith trademark infringement.”