U.S. Supreme Court Rules on Damages for Trademark Infringement
It may now be easier for plaintiffs to collect money damages in trademark infringement litigation. In Romag Fasteners, Inc. v. Fossil Group, Inc., the Supreme Court held that because the federal trademark statute does not expressly list willfulness as a requirement for money damages, courts cannot impose this as a condition to obtaining such damages.
There are important takeaways from the Court’s decision:
- Brand owners will now have another tool in their toolbox when others are misappropriating their brands. However, the Court did not go so far as to state that money damages will always be applicable, saying “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.”
- Businesses adopting a new trademark will now face the concern that they could be subject to money damages, rather than simply having to discontinue use of a trademark if they encounter an infringement challenge from a brand owner. Proper trademark searching and clearance can help minimize the risk of facing such a challenge.
Before this ruling, different jurisdictions around the country applied different standards with respect to the awarding of damages. The Supreme Court case arose out of the Second Circuit (which includes New York, Connecticut and Vermont), which had long applied the rule that willfulness was required to recover damages, and that only an injunction against use was warranted otherwise. Romag Fasteners had a deal with Fossil to provide Romag-branded fasteners for Fossil leather goods. When Romag learned that Fossil was using counterfeit Romag fasteners from China, Romag sued for trademark infringement under Section 43(a) of the Lanham Act, which provides a cause of action for false or misleading use of trademarks. The jury found that Fossil was liable under Section 43(a) and that Fossil had acted “in callous disregard” of Romag’s rights, but the judge declined to award money damages because the jury found that Fossil did not act willfully. This was in keeping with the Second Circuit precedent that damages would only be awarded in cases of willful infringement. Romag appealed.
The Supreme Court was unanimous in holding that willfulness is not a prerequisite to a damages award. Justice Gorsuch wrote the opinion, signed by seven other justices (Justice Sotomayor reached the same conclusion but under a different rationale.) Noting that other sections of the Lanham Act specified that damages would be awarded where infringement was willful, or otherwise specified that a defendant needed some level of intentional action to be subject to certain remedies, Justice Gorsuch wrote that “Reading words into a statute should be avoided, especially when they are included elsewhere in the same statute.”
ABOUT LAURA WINSTON
Laura J. Winston is a principal in the firm’s intellectual property group. Ms. Winston focuses her law practice primarily in the areas of trademarks, copyrights and the internet, representing a broad range of clients from individual business owners and small startup ventures to established Fortune 500 and publicly-traded companies both domestically and abroad. Ms. Winston practiced both at large firms and specialized intellectual property firms, before co-founding an intellectual property boutique firm. Her industry experience covers various industries as diverse as pharmaceuticals and medical devices, print and online publishing, computer-related goods and services, alternative energy, and travel and transportation.
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