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Romag Fasteners V. Fossil: Unfastening the Circuit
Split on Profit Awards for Trademark Infringement
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Feder,
Michael N. Krieger,
John L. Green,
Caleb

May
2020

Industry Alerts

Romag Fasteners, Inc. v. Fossil Grp., Inc., No.
18-1233 (April 23, 2020)

In a landmark decision issued by the Supreme Court of the United States of
America in the matter of Romag Fasteners, Inc. v. Fossil Grp., Inc.,
No. 18-1233 (April 23, 2020), the Supreme Court unanimously held that under
the Lanham Act, proof of willful trademark infringement is not a precondition to
a mark holder’s recovery of the infringer’s profits, resolving a significant
split between several circuit courts. Prior to the Supreme Court’s decision, six
circuits required a willfulness finding to award profits for a trademark
infringement claim—the First, Second, Eighth, Ninth, Tenth, and D.C.
Circuits—whereas the other six circuits—the Third, Fourth, Fifth, Sixth,
Seventh, and Eleventh Circuits—did not require a showing of
willfulness.

BACKGROUND & PROCEDURAL HISTORY

Romag Fasteners, Inc. (“Romag”) brought a trademark infringement claim
under the Lanham Act, 15 U.S.C. 1125(a) against Fossil, Inc. (“Fossil”) and
retailers of Fossil products. Before the lawsuit, Fossil and Romag entered into
an agreement that permitted Fossil to use Romag’s magnetic fasteners on its
handbags and other products. Romag later realized that the Chinese factories
Fossil hired to make its products were using counterfeit Romag fasteners, and
Fossil failed to safeguard against this practice. At the district court level,
the jury agreed with Romag finding that Fossil infringed on Romag’s trademark
and falsely represented its products as being from Romag. However, the jury
found that Fossil only acted with “callous disregard”[1]
for Romag’s trademark rights and concluded that Fossil did not willfully
infringe. As a result, relying on the willfulness requirement adopted within the
circuit for an award of profits, the district court refused to award Romag the
profits Fossil earned. The Federal Circuit affirmed the district court’s
decision on appeal, and Roman appealed the decision to the Supreme
Court.

THE SUPREME COURT’S DECISION

The Supreme Court, in its determination of the proper standard for an
award of profits for trademark infringement, analyzed the plain language of the
Lanham Act. Upon a close reading of the statute, the Supreme Court held that it
is inaccurate to require willfulness as a prerequisite in order to award profits
for a violation of 15 U.S.C. 1125(a). Reluctant to “read into the statute words
that aren’t there,”[2]
the Court found that the Lanham Act’s text was clear and provided that
willfulness is only a prerequisite for an award of profits under a trademark
dilution claim under 15 U.S.C. 1125(c).[3]
However, willfulness is not a requirement for awarding profits where a
registered or unregistered trademark was infringed.[4]
The Supreme Court noted that the statute’s structure provides additional support
against a willfulness requirement highlighting Congress’s deliberate placement
of mental states (i.e., mens rea) throughout the Lanham Act.[5]
Although the Supreme Court held there is no willfulness requirement for
trademark infringement claims under the Lanham Act[6],
the Court noted  there is no doubt “that a trademark defendant’s mental
state is a highly important consideration in determining whether an award of
profits is appropriate.”[7]

KEY TAKEAWAYS FROM THE SUPREME COURT DECISION

Successful trademark infringement claimants seeking damages for a
violation of Lanham Act, 15 U.S.C. § 1125(a), may recover profits without
having to demonstrate the infringement was willful.

Clients should consider obtaining a clearance opinion from a
qualified trademark attorney prior to using a mark since the user’s mental
state remains a “highly important consideration in determining whether an
award of profits is appropriate.”[8]
A clearance opinion could help demonstrate a client’s innocent or good faith
use of a trademark.

The Supreme Court’s decision does not alter the willfulness
requirement to obtain an award of profits in trademark dilution cases brought
under the Lanham Act, 15 U.S.C. § 1125(c).

Susan Benedict’s attorneys have considerable experience in assisting
companies and individuals in litigating legal matters and protecting their
intellectual property. The firm remains committed to helping our clients
navigate this unprecedented time and remains fully available to provide any
assistance that may be required.  Trademark owners are encouraged to
consult with one of Susan Benedict’s attorneys experienced in trademark
matters.

[1]
Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 784 (Fed. Cir.
2016).
[2] Romag
Fasteners, Inc. v. Fossil Grp., Inc., No.
18-1233, slip op. at 3 (April 23, 2020).
[3] Id.
[4] Id.
[5] Id. at 4.
[6] The Supreme Court also rejected Fossil’s
“principles of equity” argument finding that such an interpretation would
require the Supreme Court to assume Congress intended to apply the willfulness
requirement inconsistently throughout the statute. Id. Additionally, the Supreme Court determined the
asserted policy concerns were relevant when before Congress and policymakers but
not before the Court. Id. at
7.
[7] Id. at 7.
[8] Id.

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Contacts

Michael
Feder

Member
Las Vegas

T:702-550-4440

E:[email-masked]

Caleb
Green

Associate
Las Vegas

T:702-550-4417

E:[email-masked]

John
Krieger

Member
Las Vegas

T:702-550-4439

E:[email-masked]

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