Monday, 04 May 2020 19:53

Supreme Court Rules that Willful Infringement Is Not A Prerequisite for an Award of Profits in Trademark Infringement Cases

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*** APRIL 2020 UPDATE ***

In an unanimous opinion dispelling a split approach among Circuits, the Supreme Court ruled that a trademark infringement plaintiff is not required to demonstrate that the defendant’s trademark infringement activity was willful in order to obtain an award of the defendant’s profits. The question revolved around the language of Section 43(a), 15 U.S.C. § 1125(a), which states:

 When . . . a violation under section 1125(a) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.

 The Circuits have been split as to how to apply the “principles of equity,” and what role a “willful violation” should play. In order to reward profits, the Second, Eighth, Ninth, Tenth, D.C., and Federal Circuit required a finding that the Defendant acted willfully in the infringing activity, whereas the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits found that the infringer’s intent was merely one of the many factors in the weighing of the equities. The First Circuit took an alternative approach by requiring willfulness only when the parties are not competitors.

 Justice Gorsuch, who authored the Supreme Court’s deciding opinion, noted that an innocent infringer and an intentional one “stand in very different shoes.” While the Justices “do not doubt that a trademark defendant’s mental state is a highly consideration in determining whether an award of profits is appropriate,” this acknowledgement that willfulness of a defendant plays an important role in the determination is a “far cry” from the “inflexible precondition” that willfulness be proven to award profits. As such, an establishment of willful infringement is not required to obtain an award of an infringer’s profits.

 

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