In 2010, Romag Fasteners, a company that produces and sells magnetic snaps, fasteners and closures, brought suit in the United States District Court for the District of Connecticut against Fossil Inc., as well as Macy’s, alleging patent and trademark infringement. According to the lawsuit, Fossil had been a licensee of Romag’s patent-protected magnetic closures but had switched to an unapproved supplier, which Romag alleges sold counterfeit Romag magnetic snaps. Thus, certain Fossil handbags sold in the United States were found to contain said counterfeit snaps. In this manner, not only did Fossil run afoul of Romag’s patents for the metal components, Fossil was also accused of violating Romag’s trademarks because the knock-off parts bore the “ROMAG” mark. Moreover, due to the existence of the agreement between the two parties in connection with which Fossil agreed to use Romag closures for its profits, Romag contends that Fossil knowingly adopted and used the Romag mark without its consent.
Trademark infringement involves the unauthorized use of a trademark on or in connection with goods and/or services in a manner that is likely to cause consumers to be confused, deceived, or mistaken as to the source of the goods and/or services. When trademark infringement is found to be willful, the infringer is required to forfeit any profits realized from sale under the infringing mark.
After a jury trial, Fossil was found liable for both patent and trademark infringement. The jury rendered advisory awards, including a reasonable royalty award of $51,000 for patent infringement and an award of $6.7 million of Fossil’s profits for willful trademark infringement. Thereafter, the District Court reduced the patent damages award and simultaneously decided that Romag could not recover Fossil’s profits for trademark infringement because the jury had not found the infringement to be willful. Rather, the jury had determined that Fossil had acted with “callous disregard” for Romag’s trademark rights. Upon appeal, the United States Court of Appeals for the Federal Circuit affirmed the award.
In the Federal Circuit appeal, Romag argued that Fossil cannot invoke a laches defense to patent infringement and that the District Court erred in disallowing it from recovering Fossil’s profits without proving that the infringer acted willfully. Laches is a defense when the plaintiff has unreasonably delayed in making a claim and the defending party is prejudiced as a result. Regarding this argument, the Federal Circuit determined that laches remains a defense to legal relief in patent infringement cases because Congress codified the same. As to Romag’s contention that it is entitled to Fossil’s profits regardless of whether it proved that Fossil acted willfully, the Federal Circuit followed Second Circuit precedent in finding that because Romag did not prove that Fossil acted willfully, Romag is not entitled to recover Fossil’s profits. The decision regarding Fossil’s profits was then appealed to the United States Supreme Court.
Through this case, the Supreme Court will decide whether, under Section 35 of the Lanham Act, 15 U.S.C. § 1117(a), willful infringement is a prerequisite for an award of an infringer’s profits for a violation of Section 43(a), 15 U.S.C. § 1125(a). Currently, across the twelve circuit courts, there exists a split of precedents. In particular, six circuits, including the first, second, eight, ninth, tenth, and District of Columbia, strictly require willful infringement in order to recover an award of infringer’s profits. On the other hand, the remaining six circuits, including the third, fourth, fifth, sixth, seventh, and eleventh, have interpreted amendments to the statute to permit an award of the infringer’s profits absent a finding of willful infringement, reasoning that Congress’ failure to include the word “willfulness” in the relevant section of the statute indicated a desire to supersede the judicially created doctrine which requires willfulness. Instead, these circuits consider intent to be merely one of several factors to be considered in balancing the equities. To resolve this circuit court split regarding willfulness, the Supreme Court granted Romag’s petition for writ of certiorari in June 2019. Oral arguments are set to begin January 14, 2020.