Brand owners now have greater incentive for pursuing infringers of their trademarks under a recent Supreme Court decision. Last week, the high court resolved a dispute between the circuits, ruling that trademark owners may recover the profits earned from the sale of infringing goods even if the infringer did not act willfully.
Writing for a unanimous Court in Romag Fasteners, Inc. v. Fossil, Inc., Justice Gorsuch conducted a statutory analysis. The Lanham Act expressly requires willful infringement to obtain certain forms of damages, but not to obtain an infringer’s profits. Congress could have imposed that requirement, but chose not to do so – so neither should the courts. This decision thus clears the way for an award of infringer’s profits even in cases of “innocent infringement.”
High Risk, High Reward
Following Romag Fasteners, accused infringers will likely see an uptick in lawsuits seeking disgorgement of profits. The expanded availability of infringer’s profits bolsters the financial case for pursuing trademark infringers. Previously, plaintiffs seeking damages in some circuits had to prove that they lost sales to an infringer – a tricky task in a crowded marketplace. Most successful infringers have earned something for their efforts, though, all of which is now at risk. Even if profits are not awarded in every case, the chance that they will be is a significant benefit to plaintiffs. Brand owners should search and clear trademarks carefully.
The decision is also likely to increase deterrence for so-called “short-term” infringers. Some infringers are not deterred by the risk that their future sales will be banned – they simply roll the dice, make money while they can, and move on to greener pastures when challenged. Romag Fasteners modifies the calculus for them. Real money is now at stake.
The Supreme Court’s latest intellectual property decision continues the trend towards dismantling limitations to damages rooted in precedent but not statute. Careful monitoring of trademark use in the market – for both trademark owners and potential infringers – is now more important than ever.
For further information on the topic or for general IP assistance, contact Coblentz Intellectual Property attorneys Karen Frank at kfrank@coblentzlaw.com, Thomas Harvey at tharvey@coblentzlaw.com, or Christopher Wiener at cwiener@coblentzlaw.com.
