SCOTUS to clarify rules on awarding TM profits; defence ‘preclusion’
The US Supreme Court has agreed to rule on two trademark cases, including a dispute over whether plaintiffs must establish wilful infringement in order to be awarded profits.
On Friday, June 28, the court granted certiorari in Romag Fasteners v Fossil and Lucky Brand Dungarees v Marcel Fashion Group.
In Romag, a manufacturer of magnetic fittings including snaps and closures, petitioned for certiorari after the US Court of Appeals for the Federal Circuit ruled that defendant Fossil, a fashion brand, had infringed Romag’s trademark rights but did not award profits.
According to Romag, the Federal Circuit applied the law of the US Court of Appeals for the Second Circuit, which holds that a finding of wilful infringement is a prerequisite for an award of damages in trademark cases.
In its petition for certiorari, Romag outlined a split between the appeals courts on the issue. As its suit was filed in the US District Court for the District of Connecticut, it was subject to the ruling of the Second Circuit, it said.
In the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits, however, plaintiffs are not required to establish wilful infringement to be eligible for an award of profits, the petition said.
“Because a plaintiff’s actual damages are often difficult to measure, an award of an infringer’s profits is often the only meaningful monetary relief that trademark owners can secure for infringement,” Romag argued.
Fossil replied that an award of profits was an “extraordinary and often draconian measure”, which is subject to the principles of equity.
Whether such a remedy legally requires a finding of wilful infringement was also not overly significant, Fossil argued.
“...even where wilfulness is ‘important’ but not a prerequisite, the overwhelming majority of decisions upholding defendant’s profits awards involve intentional, wilful misconduct,” the fashion brand argued.
Defence Preclusion
In a separate case, the Supreme Court also agreed to rule on whether courts can litigate on defences that were not raised in previous trademark disputes involving the same parties.
Lucky Brand Dungarees petitioned for certiorari in the case, challenging a Second Circuit decision.
The issue arose, Lucky Brand said, when Marcel Fashion Group raised new claims that had not been litigated on in previous disputes.
According to Lucky Brand’s petition, the Second Circuit “held that ‘defence preclusion’ barred petitioners from raising any defence to these new claims that could have also been adjudicated in the earlier cases between the parties, whether or not it actually was”.
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