U.S. Supreme Court Rules Trademark Infringer's Profits at Risk in All Cases

On April 23, 2020, the U.S. Supreme Court unanimously ruled that a trademark owner need not submit evidence of the infringer's intention or state of mind as a precondition to recover profits earned from an infringer's unauthorized use of the trademark. Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020).

Before this decision, some lower courts, including the 2nd Circuit and the 9th Circuit, required a trademark owner to prove that an infringer used a trademark with knowledge that the trademark was owned by another to recover monetary damages. See, e.g., Adray v. Adry-Mart, Inc., 76 F.3d 984 (9t h Cir. 1995), as amended on denial of reh'g (Feb. 15, 1996); George Basch Co . v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992). Other courts, such as the 3rd Circuit and the 5th Circuit, have not required proof of such knowledge. See, e.g., Banjo Buddie, Inc. v. Renosky, 399 F.3d 168 (3d Cir. 2005); Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338 (5th Cir. 2002). The Court's ruling makes the law consistent throughout the United States.

What This Means

Trademark owners have the exclusive right to use their trademark for certain goods and services. To enforce that right, owners can sue those who make unauthorized use of their mark. The remedies available to the trademark owner include a court order to stop misuse of their mark and, in some cases, monetary damages. Until now, courts have been inconsistent in awarding certain monetary damages in trademark infringement cases–in particular, the infringer's profits earned from unauthorized use of the trademark.

The Court's ruling makes clear that an infringer's willfulness is not a categorical prerequisite to recovery of the infringer's profits. Thus, infringers who do not know that someone else owns a trademark or that their use violates another's trademark rights may still be liable to turn over the profits they earn from use of the trademark.

The Court recognized that use of a trademark with specific knowledge of the trademark owner's rights is a "highly important factor" in determining whether to award monetary damages (including the infringer's profits) and the amount of such an award. However, the Court eliminated any requirement that the infringement be willful for the profit remedy to be available.

Key Takeaways

Trademark use: This ruling underscores the need to perform diligent trademark clearance searches before adopting a new trademark for use with your goods and services or before expanding use of an existing trademark to new goods or services.

Trademark enforcement: Trademark owners can now seek the infringer's profits, in addition to their own losses, in all trademark infringement cases.

Chike Eze is an associate in Davis Wright Tremaine's Seattle office. Cindy L. Caditz, Matthew E. Moersfelder, and Jeff Nelson are partners in Davis Wright Tremaine's Seattle office. Alexandra Nicholson is a partner in Davis Wright Tremaine's New York office.