A recent Supreme Court case just made trademarks much more valuable – and substantially increased the penalties for trademark infringement, even if the infringing party didn’t intend to rip off the trademark.
Let’s say you discover that someone has infringed on your trademark. You bring the case to court and you prove that there was an infringement. You’ve spent a lot of time and money pursuing this case, and now you want to recover the profits that the infringer realized from their actions. What do you have to prove in order to be awarded those profits?
More specifically: do you have to show that the infringement was “willful” – meaning voluntary, purposeful, and committed with an intent to infringe? Maybe you can’t prove before the court that the other party specifically intended to infringe on your trademark. It could be that they were just sloppy and didn’t do their due diligence, or you simply can’t find the “smoking gun” that shows their bad intent.
This might seem like a nuance or quirk of trademark law, but it’s often the factor that determines whether you are able to bring a claim to court to enforce your legal rights. If you can’t receive sufficient compensation at the end of a long legal process, it might not make sense to bring the case to court in the first place – which means there’s nothing to stop someone from ripping off your trademark.
Until last week, federal courts in different parts of the U.S. had different standards regarding whether a finding of willfulness was required in order for an infringer to be ordered to pay back their ill-gotten profits.
The Supreme Court Case: Romag v. Fossil
On April 23, 2020, the U.S. Supreme Court issued a substantial trademark ruling in Romag Fasteners, Inc. v. Fossil Group, Inc.
Romag and Fossil had a contract whereby Fossil would use Romag-branded fasteners in Fossill’s handbags. Romag found some Fossil handbags containing counterfeit Romag fasteners. Romag sued Fossil and was able to prove infringement. The jury even found that Fossil had acted with “callous disregard” of Romag’s trademark rights and recommended an award of $6.7 million in profits to deter future trademark infringement. But Romag wasn’t able to prove that Fossil’s actions were willful, and the court, relying on local precedent, determined that Romag wasn’t entitled to the award of profits.
Romag appealed, and the case went up to the Supreme Court, who ruled that the Lanham Act (the federal law that governs trademarks) does not require a plaintiff to prove that an infringement was willful in order to receive an award of profits from the defendant.
What Does This Mean for Trademark Owners?
Following Romag v. Fossil, trademark owners have a further incentive to bring claims against infringers. The bar for disgorgement of profits has been lowered, so the chances of receiving a substantial profit award have gone up substantially.
What Does This Mean for Every Business, Large or Small?
See above – if you infringe on someone’s trademark, even if you didn’t mean to do so, you may be on the hook for a large award of damages. This ruling makes it much more important to do your due diligence before you use a trademark that may be owned by someone else – even if you aren’t intending to infringe on anyone’s legal rights.