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Trademarks – Special Report II
Well, our Supreme Court has done it again. Again, you say. What have they done again, for heaven’s sake? Well, if you talk to virtually any IP lawyer in the country, you will hear a tale of woe, starting with the tear-down of patent protection in the country, as a result of a series of misguided Supreme Court opinions, followed by an expansion of copyright coverage over useful articles that was clearly never intended by the copyright statute, and most recently in Romag Fasteners, Inc. v. Fossil Group, Inc., __ U.S. __ (April 23, 2020), where the Court has decided that willfulness is no longer required for disgorgement of profits in a trademark infringement case.
Instead, despite having just recently found that increased damages in a patent infringement case requires a finding of willfulness, similar language in the trademark statute does not, but rather something that sounds a lot like willfulness, but will allow lawyers to spend untold thousands in attorney fees explaining to lower courts how particular conduct does or does not sound an awful lot like the rather ambiguous standard set forth in Fossil Group. Bottom line, you put second-rate thinkers on the Court, you get second-rate thinking. Or to quote Thomas F. Carter, Taft Stettinius & Hollister Professor of Law and Intellectual Property Fellow at the University of Minnesota School of Law, “[t]he whole thing, including the two concurrences, comes to just 12 pages, and is yet another misguided, purportedly textualist opinion that relies on Black's Law Dictionary while ignoring the relevant underlying policies. …. To say I’m disgusted would be an understatement.”
Heretofore, trademark infringement litigation has basically been injunction litigation, except for those rare occasions where the alleged infringer clearly knew that whatever he or she was doing was infringement, i.e., the conduct was willful. There is a long line of authorities setting forth what conduct is willful vs. what isn’t.
Now we have what can only be described as an amorphous “totality of the circumstances” test. The law in general, and IP law in particular, contains a number of “totality of the circumstances” tests. They increase litigation costs, often dramatically. They avoid strict rules, however, which often lead to injudicious results. One would think that “willfulness,” which can include analysis of a number of factors, would be enough totality, but apparently not.
Justice Sotomayor’s opinion, concurring in the judgment only, not the analysis, foretells the results of this opinion:
I agree that 15 U. S. C. §1117(a) does not impose a “willfulness” prerequisite for awarding profits in trademark infringement actions. Courts of equity, however, defined “willfulness” to encompass a range of culpable mental states—including the equivalent of recklessness, but excluding “good faith” or negligence.
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The majority suggests that courts of equity were just as likely to award profits for such “willful” infringement as they were for “innocent” infringement. . .. But that does not reflect the weight of authority, which indicates that profits were hardly, if ever, awarded for innocent infringement. . .. Nor would doing so seem to be consistent with longstanding equitable principles which, after all, seek to deprive only wrongdoers of their gains from misconduct. . .. Thus, a district court’s award of profits for innocent or good-faith trademark infringement would not be consonant with the “principles of equity” referenced in §1117(a) and reflected in the cases the majority cites. . ..
Amen to that. If you get sued for trademark infringement now, you can expect to see the plaintiff try to obtain disgorgement of your profits, which is the measure of damages in trademark infringement cases, irrespective of how innocent the infringement may have been.