Court denies trademark holder’s damages award

October 21, 2016
Patterson Thuente IP

The jury giveth — and the court taketh away. In Romag Fasteners, Inc. v. Fossil, Inc., a trademark holder learned this lesson the hard way when the two courts rejected a jury award of almost $7 million against an infringer because the infringement wasn’t “willful.”

TMstampTrial court pulls purse strings

Romag Fasteners owns the registered trademark ROMAG for magnetic snap fasteners. It sells the fasteners to Fossil, which designs, markets and distributes fashion accessories such as handbags and wallets. After seeing a significant decrease in fasteners purchased by Fossil’s authorized manufacturers, Romag discovered that certain Fossil products contained counterfeit fasteners. The company sued Fossil for, among other things, trademark infringement.

A jury made an advisory award to Romag of about $6.8 million of Fossil’s profits. But the trial court held that because the infringement wasn’t willful, Romag couldn’t recover an award of Fossil’s profits. Romag appealed the ruling.

Holder left with empty pockets

Romag argued that a trademark owner isn’t required to prove the infringer acted willfully to recover the defendant’s profits. The U.S. Supreme Court has never addressed the issue, and the federal courts of appeal have split over the question.

The appeal was heard by the Federal Circuit (the court that handles all patent-related appeals) because the case included a patent claim. But Second Circuit law governed the trademark issue. And the U.S. Court of Appeals for the Second Circuit has ruled that a plaintiff must prove that an infringer acted with willful deception before the infringer’s profits are recoverable by the trademark holder.

Romag contended that 1999 amendments to the Lanham Act, the federal trademark law, made clear that Congress didn’t intend for willfulness to be a prerequisite to damages for this type of infringement. But the Federal Circuit pointed out that the Second Circuit restated its rule requiring willful deceptiveness as a prerequisite for awarding profits in a 2014 case. The Federal Circuit therefore concluded that Romag wasn’t entitled to recover Fossil’s profits.

Not necessarily in the bag

Although the Federal Circuit found that the willfulness requirement still applies in the Second Circuit, it’s important to remember that other appellate courts have taken a different stance. Until the Supreme Court resolves the split, you should take these differences into account when preparing trademark cases for litigation.

Romag Fasteners, Inc. v. Fossil, Inc., Nos. 2014-1856, 2014-1857, March 31, 2016 (Fed. Cir.)