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SCOTUS to Decide Whether the Lanham Act Requires Proof of Willfulness for Disgorgement of Profits

On Friday, June 28, 2019, the Supreme Court granted certiorari in Romag Fasteners, Inc. v. Fossil, Inc. to decide whether a showing of willfulness is necessary to obtain a defendant’s profits under the Lanham Act.

In Romag, the plaintiff, a manufacturer of magnetic snap fasteners, sued Fossil and various retailers for, among other things, infringement of an unregistered trademark in violation of section 1125(a) of the Lanham Act based on their sale of merchandise that featured snaps bearing the Romag mark. A jury found Fossil liable for infringing Romag’s trademark and determined that Fossil should disgorge close to $90,000 in profits to prevent its unjust enrichment. However, the district court held that Romag was not entitled to disgorge Fossil’s profits because it failed to prove Fossil’s trademark infringement was willful. The Federal Circuit affirmed the district court’s decision not to permit disgorgement.

As both the district court and the Federal Circuit acknowledged, there is a stark circuit split as to whether proof of willfulness is required to recover a defendant’s profits for a violation of section 1125(a). The split centers over how to interpret section 1117(a) of the Lanham Act, which reads 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 … subject to the principles of equity to recover defendant’s profits. (Emphasis added)

The circuit conflict revolves around whether the above italicized language reflects Congress’s intent that a showing of willfulness is required only for disgorgement awards in trademark dilution cases brought under section 1125(c), or instead that willfulness is also required in cases brought under section 1125(a) for infringement of an unregistered trademark, false designation of origin, or false advertising. The Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits do not require plaintiffs to show willfulness for disgorgement in section 1125(a) cases, while the remaining circuits do.

Of particular relevance to this blog, the Supreme Court’s ultimate decision in Romag should apply to false advertising cases as well as trademarks, as Lanham Act section 1125(a) covers both. The availability of a disgorgement remedy is particularly vital in many false advertising cases, because it is often difficult for the plaintiff to prove that its own profits were diminished by the defendant’s false advertising, as opposed to other factors in what often is a noisy marketplace. Thus, a requirement that Lanham Act false advertising plaintiffs must prove willfulness to obtain disgorgement may be the difference between a significant damages award and no recovery at all. Accordingly, this is an important case for false advertising litigants, and one we will be monitoring closely.

Watch this space for further developments in Romag. We will report back once the Supreme Court issues its decision.

© 2019 Proskauer Rose LLP.

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About this Author

Lawrence I Weinstein, False Advertising and Trademark Copywright Law, Proskauer
Partner

Larry Weinstein is a Partner in Proskauer's Litigation Department. He is co-head of the firm’s Intellectual Property Litigation Group, and also co-head of the firm’s False Advertising & Trademark Practice. Larry is both a distinguished trial lawyer and counselor, whose practice covers a broad spectrum of intellectual property law, including Lanham Act false advertising and trademark cases, consumer class action cases, NAD and FTC proceedings, and trade secret and copyright litigations, as well as sports, art and other complex commercial cases.

212-969-3240
Alexander Kaplan, Proskauer law firm, Litigation Attorney, New york office,
Partner

Alexander Kaplan is a partner in the Litigation Department. Alex is a commercial litigator and trial lawyer with broad expertise in intellectual property litigation and counseling. He has substantial experience in the fields of copyright, trademark, advertising and trade secrets law, representing clients in a wide array of fields and industries.

Copyright/Entertainment

In copyright and related entertainment matters, Alex has represented various major record labels, music publishing companies and recording artists, as well as other media and entertainment companies. He also counsels clients with respect to the Digital Millennium Copyright Act (DMCA), digital rights management and content encryption issues

Trademark and False Advertising

In trademark and false advertising matters, Alex represents and advises a range of consumer product, fashion, food and beverage, pharmaceutical and medical device companies before the federal courts, TTAB and NAD. He has represented both plaintiffs and defendants in numerous Lanham Act matters in courts across the country, including in multiple preliminary injunction hearings and jury trials. Beyond litigation, Alex frequently counsels clients concerning advertising and marketing claim substantiation and review. He is an editor of and contributor to Proskauer’s advertising law blog, Watch This Space: Proskauer on Advertising Law, and is a frequent speaker at advertising law conferences and courses.

212-969-3671
Jeffrey H Warshafsky, Proskauer Law firm, Litigation Attorney
Associate

Jeffrey H. Warshafsky is an Associate in the Litigation Department, resident in the New York office. He is a commercial litigator with a particular emphasis on false advertising, trademark, and counterfeiting disputes. Jeff also advises clients on trademark portfolio management, anti-counterfeiting strategies, cybersquatting prevention, and other Internet-related trademark infringement matters.

212-969-3241
Monique Curry law clerk Proskauer
Law Clerk

Monique Curry received her J.D. cum laude from Howard University School of Law, where she served as a senior notes and comments editor for the Howard Law Journal.  While at Howard, Monique also served as a student attorney in the Civil and Human Rights Clinic and was a Dean’s Fellow for the Legal Writing Department. 

Monique received her B.S. from Towson University in Sport Management.

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