Infringers Profits and Willfulness:  Supreme Court Set to Resolve Circuit Split Regarding Trademark Damages

October marks the opening of the new Supreme Court 2019-2020 term and there is one case in particular that trademark practitioners are anxiously awaiting for the Court to weigh in on to resolve a longstanding circuit split and definitively answer the question whether willful infringement is a prerequisite for an award of an infringer’s profits in an action for trademark infringement.

While the Ninth Circuit and five other circuits have long required a trademark plaintiff to prove willful infringement in order to recover infringer’s profits, six other circuits have answered this question in the negative and permit trademark holders to recover infringer’s profits without proving willfulness.  But with Romag Fasteners, Inc. v. Fossil, Inc., et al., No. 18-1233, set to be heard later this term, the Court appears poised to resolve the circuit split and decide whether willfulness is a prerequisite to obtain an award of infringer’s profits under the Lanham Act.

As noted in Romag Fasteners, Inc.’s petition for writ of certiorari, the question about the required proof for profit awards in trademark cases “has sharply divided the court of appeals six to six.”  In addition to the Ninth Circuit, the First, Second, Eighth, Tenth, and District of Columbia Circuits each require a trademark plaintiff to show willfulness in order to recover an award of infringer’s profits.  Meanwhile, the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits do not require a threshold showing of willfulness to recover infringer’s profits.  In those circuits, rather, intent is merely one of many factors that are considered in balancing the equities. 

The circuit split is due in part to the 1999 amendment to the Lanham Act in which Congress amended section 1117(a) to read as follows:  “When a violation…under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . and subject to the principles of equity, to recover…defendant’s profits.”  Because, on the one hand, any award of profits is “subject to the principles of equity,” but, on the other hand, willfulness is only expressly required for dilution claims under section 1125(c), the circuits have disagreed whether Congress intended to also require a showing of willfulness for profit awards in actions for false designation of origin and false advertising under section 1125(a).

The Supreme Court’s decision will have a profound impact on trademark infringement and false advertising cases, which are both covered by the Lanham Act.  The availability of infringer’s profits is a significant remedy for trademark holders and an important deterrent because of its relatively easier burden of proof for a trademark-holder plaintiff to recover damages.  Whereas it is often difficult to quantify and prove a plaintiff’s actual damages or lost profits, to prove infringer’s profits under the Lanham Act, the plaintiff-trademark holder need prove “defendant’s sales only [and the] defendant must prove all elements of cost or deduction claimed.”  15 U.S.C. § 1117(a).

While the case has not been set for oral argument yet, the Supreme Court is expected to hear arguments and decide the case later this term.  AALRR is monitoring this significant case and will publish a subsequent post after the Court’s decision. 

AALRR has a dedicated group of attorneys on its Intellectual Property Team with the experience and expertise to vigorously enforce your trademarks and defend you against claims of trademark infringement.  Attorneys on the Firm’s Intellectual Property Team can also assist you with registration of your trademarks with the United States Patent and Trademark Office.  Contact the authors for assistance with your trademark and other intellectual property needs.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

Categories: Business, Litigation

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