©2021. Published in Landslide, Vol. 13, No. 3, January/February 2021, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
The U.S. Supreme Court issued numerous landmark decisions in 2020, among those—for trademark scholars and practitioners—Romag Fasteners, Inc. v. Fossil, Inc.1 The Court, with Justice Gorsuch delivering the majority opinion, held that a plaintiff in a trademark infringement suit is not required to show that a defendant willfully infringed the plaintiff’s trademark as a precondition to a profits award. But Justice Gorsuch’s opinion and Justice Alito’s and Justice Sotomayor’s concurrences were clear that mental state is still a highly important consideration in determining whether to award profits. To that end, even with the Romag decision clarifying that willfulness is not a precondition for a profits award in a trademark infringement suit, the lower courts are likely to still require plaintiffs to prove that defendants had high levels of culpability before awarding profits for trademark infringement. Practitioners should expect that juries will ﬁnd that defendants who knew of infringement or were reckless concerning the possibility of such conduct deserve to lose their profits.
Romag solidiﬁes the threat posed to companies that rely on third-party manufacturers. By allowing a profits award when infringement is perpetrated with a mental state less than willfulness, this decision incentivizes companies using Chinese and other foreign manufacturers to innovate in order to mitigate these risks, either by strengthening supply chain oversight or (more likely) by writing contracts to control the risk as much as possible. Considering the importance of Chinese manufacturing to global trade, the Chinese legal system and its evolving trademark enforcement system will likely cause companies to get creative.
Continue Reading Meeting of the Minds: The Price of Recklessness: Disgorgement of Proﬁts in a Post-Romag World