In an April 23rd decision written by Justice Neil Gorsuch the Supreme Court decided that trademark infringement did not have to be willful for a Plaintiff to be entitled to Defendant’s profits.
In that case Appellee Fossil sold a variety of leather goods and watches. See www.fossil.com. Those goods used fasteners manufactured by Appellant Romag Fasteners, Inc. Romag discovered that Chinese factories making Fossil products were using counterfeit versions of its fasteners and subsequently sued Fossil and several retailers of its products for trademark infringement under Section 43(a) of the Trademark Act.
That Section provides in part that “Any person who, on or in connection with any goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin or false or misleading representation of fact, which is likely to cause confusion as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods by another person, shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.”
Romag alleged under that Section that Fossil, by using counterfeit versions of its fasteners, infringed its trademark and falsely represented that its fasteners originated with Romag. While a jury held that Fossil had acted “in callous disregard” of Romag’s rights it rejected Romag’s’ accusation that Fossil had acted willfully, therefore entitling it to Fossil’s profits under Sections 35 and 43(a) of the Trademark Act.
In interpreting these relevant provisions of the Trademark Act Gorsuch found that its statutory language did not require a showing of willfulness to win a defendant’s profits where a violation of Section 43(a) has been proven to exist.
The prior Trademark Act of 1905, the predecessor to the current Trademark Act, did not mention a requirement of willfulness. Further, the case law under that Act is inconsistent in requiring that a defendant be guilty of willful fraud for profits to be obtained by the complaining party.
Gorsuch wrote that, “a defendant’s mental state is relevant to assigning an appropriate remedy. That principle arises not only in equity, but across many legal contexts…It’s a principle reflected in the [current Trademark Act’s] text, too, which permits greater statutory damages for certain willful violations than for other violations.”
Here, Fossil went around the supplier with which it had a contract to provide component parts for its goods and substituted for those parts cheaper counterfeited copies “in callous disregard” of its supplier’s rights.
Clearly those acts were willful and with knowledge of Fossil’s violation of Romag’s rights. With those facts in mind, the Supreme Court held that Romag should not be constrained by a narrow interpretation of the Trademark Act to be denied an appropriate redress of its rights.