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 is not required to 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.1
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.2 Other courts, such as the 3rd Circuit and the 5th Circuit, have not required proof of such knowledge.3 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 the misuse of their mark and, in some cases, money 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 a trademark is owned by another, 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.4
The Court recognized that use of a trademark with specific knowledge of the rights of the trademark owner is a "highly important factor" in determining whether to award money damages (including the infringer's profits) and, if so, the amount of such an award. However, the Court eliminated any requirement that the infringement be willful for the profit remedy to be available.
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.
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1 See Romag Fasteners, Inc. v. Fossil, Inc., 590 U.S. ____ (2020), available at https://www.supremecourt.gov/opinions/19pdf/18-1233_5he6.pdf.
2 See, e.g., Adray v. Adry-Mart, Inc., 76 F.3d 984 (9th Cir. 1995) as amended on denial of reh'g, (Feb. 15, 1996); George Basch Co., Inc. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992).
3 See, e.g., Banjo Buddie, Inc. v. Renosky, 399 F.3d 168 (3d Cir. 2005); Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d 338 (5th Cir. 2002).
4 The Court recognized certain "innocent infringers" are not liable for damages such as printers or publishers of newspapers, magazines or electronic publications.