Posted on 5/11/2020 6:36:30 PM By Mark V.B. Partridge

Has the Supreme Court changed practice in the Seventh Circuit regarding an award of profits for trademark infringement? The question arises from a recent United States Supreme Court decision involving handbag fasteners.
 
On April 23, 2020, the Supreme Court issued its decision in Romag Fasteners Inc. v. Fossil, Inc.[i], resolving a split in the Circuits as to whether a finding of willful infringement is a precondition for recovering profits for trademark infringement and misrepresentation under Section 43(a) of the Lanham Act.
 
For many years, Romag provided fasteners to Fossil for use on handbags. Then Romag learned that Fossil was using counterfeit fasteners manufacturer by another company and sued, claiming Fossil infringed Romag's trademark and falsely represented that the fasteners came from Romag.[ii]  A jury agreed with Romag, finding that Fossil acted in callous disregard of Romag's rights.[iii] The jury, however, did not make a finding of willful infringement. As a result, the Court denied an award of profits following Second Circuit precedent requiring proof of willful infringement to recover profits.[iv]
 
Justice Gorsuch writing for a majority of the court reviewed the language of the statute, which does not explicitly require a finding of willfulness to award profits, although such an award is specifically subject to the "principles of equity."  The Court however concluded that the principles of equity do not require willfulness as a precondition to awarding profits:

"Given these traditional principles, we do not doubt that a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate. But acknowledging that much is a far cry from insisting on the inflexible precondition to recovery Fossil advances."[v] The case was remanded for further proceedings consistent with the Supreme Court's decision.
 
The Seventh Circuit's position is consistent with the Romag decision so no change in local practice is needed. The Federal Civil Jury Instructions for the Seventh Circuit, revised in 2017, for example, specifically cover an award of profits for trademark infringement.[vi] Pattern Instruction 13.6.4, states in relevant part:
 
  • "In addition to Plaintiff’s damages, Plaintiff may recover the profits Defendant gained from the trademark infringement. You may not, however, include in any award of profits any amount that you took into account in determining actual damages.
  • Profit is determined by deducting expenses from gross revenue. Gross revenue is all of the money Defendant received due to its use of the trademark.
  • Plaintiff is required only to prove Defendant’s gross revenue. Defendant is required to prove any expenses that it argues should be deducted in determining its profits.
  • Plaintiff is entitled to recover Defendant’s total profits from its use of the trademark, unless Defendant proves that a portion of the profit is due to factors other than use of the trademark."[vii]
There is no mention of willfulness as a precondition or consideration in awarding profits. The main effect of the Romag decision in Illinois and other Seventh Circuit states may be to relieve us of the distraction of distinguishing authority from other jurisdictions that required willfulness as a precondition for an award of profits before the Supreme court decided otherwise.
 
 
[i] Romag Fasteners Inc. v. Fossil, Inc., Docket No. 18-1233, 590 U.S. ____, (Apr. 23, 2020).
[ii] Id.
[iii] Id. at *2; see also Romag Fasteners Inc. v. Fossil, Inc., Case No. 3:10-cv-01827, at Dkt. No. 417 “Jury Verdict” (Dist. Conn. Apr. 3, 2014).
[iv] Id.
[v] Romag Fasteners Inc. v. Fossil, Inc., Docket No. 18-1233, 590 U.S. ____ at *7.
[vi] Federal Civil Jury Instructions of The Seventh Circuit, revised August 2017, available at http://www.ca7.uscourts.gov/pattern-jury-instructions/7th_cir_civil_instructions.pdf (last visited May 11, 2020).
[vii] Id. at *407.
Trademark