On April 23, 2020, the Supreme Court unanimously held in Romag Fasteners, Inc. v. Fossil Group, Inc., that a plaintiff does not need to demonstrate a defendant’s trademark infringement was willful in order to recover lost profit damages. Resolving a long-standing split in courts across the United States on this issue, the Romag decision provides an easier path for trademark owners to recover lost profit damages in trademark infringement actions, and counsels more caution from alleged infringers when defending against accusations of trademark infringement.
In Romag, Fossil had an agreement to use Romag fasteners in a number of its leather goods. Romag subsequently learned, however, that Fossil’s overseas manufacturers were using counterfeit Romag fasteners, with Fossil doing little to address the problem despite requests to do so. The district and appellate court both concluded that lost profit damages were not recoverable without a finding that Fossil’s infringement was willful. The Supreme Court disagreed, reasoning that the Lanham Act, which sets remedies for federal trademark violations, requires a showing of willfulness for a trademark dilution claim, but no such requirement exists for direct trademark infringement claims.
Armed with Romag, trademark holders are provided a clearer and potentially easier path forward to recover lost profit damages for trademark infringement claims. While a defendant’s state of mind may be considered in determining whether lost profits are appropriate, requiring a showing of willfulness can no longer be a required precondition for recovery. Together with the Supreme Court’s landmark 2014 decision in Octane Fitness, LLC v. Icon Health & Fitness, which has had the effect of expanding trademark owners’ ability to recover their attorneys’ fees, there has never been a better time for trademark owners to aggressively defend the valuable goodwill in their brands.