Federal Circuit rules willfulness a prerequisite for disgorgement of trademark infringer’s profits

trademark-gavel-2 Romag Fasteners, Inc. v. Fossil, Inc., No. 2014-1856, 2014-1857, 2016 U.S. App. LEXIS 5871 (Fed. Cir. Mar. 31, 2016) (Before Dyk, Wallach, Hughes, J.) (Opinion for the court, Dyk, J.)(Finding of willfulness is a prerequisite to disgorgement of trademark infringer’s profits.). Click Here for a copy of the opinion.

Plaintiff, Romag Fastners, Inc. (“Romag”), owner of a patent for magnetic snap fasters and a registered trademark, ROMAG, filed suit against Fossil alleging patent and trademark infringement.  The jury found Fossil liable under both theories and awarded damages.  The district court reduced Romag’s damages award, holding as a matter of law that Romag could not recover Fossil’s profits for trademark infringement because the jury found that the infringement was not willful.

The Federal Circuit affirmed.  Undertaking an extensive analysis of the legislative history of Lanham Act damages, the Court attempted to explain a 1999 amendment inserting language regarding willfulness.  The current version of § 1117(a) reads:

[w]hen a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, 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, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. 15 U.S.C. § 1117(a) (2014) (new language added by 1999 amendment underscored).

Because the “willful violation” language appears to modify violations of § 1125(c) regarding dilution, Romag argued that the amendment negated any preexisting willfulness requirement for causes of action other than dilution.  Relying heavily on Second Circuit precedent, which governed the district court decision, the Court disagreed, finding that the willfulness rule for awarding profits for infringement was reaffirmed by the Second Circuit.  Further, the Court found that the statute’s language regarding infringement had remained unchanged, such that existing precedent was still applicable.  Because Romag failed to prove the infringement was willful, it was not entitled to Fossil’s profits.

Also contributing to this summary were Lindsay Henner, Parker Hancock, and Puja Dave.

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