THE UNITED STATES SUPREME COURT’S INTERPRETATION OF §1117(a) AND §1125(a) OF THE LANHAM ACT

A REVIEW OF ROMAG FASTENERS INC V FOSSIL INC 590 U.S. ____ 2020 DELIVERED ON 23RD APRIL 2020 by Gideon Okebu

Facts:

Romag, the Plaintiff, is in the business of selling magnetic snap fasteners for use in leather goods. While Fossil, the Defendant, sells a wide variety of fashion products. The Plaintiff and Defendant entered an agreement for Fossil to use Romag’s fasteners in handbags and other products.  After some years, the Plaintiff discovered that factories hired by Fossil in china were using counterfeit Romag fasteners and Fossil was complacent in guarding against the practice of these factories. Romag sued Fossil for infringing on their trademark and falsely representing their fasteners as those of Romag. The Jury agreed with Romag and found Fossil acted in “callous disregard”.

Background to Appeal

The Federal district court refused the relief for profit, relying on a second circuit rule, that required a Plaintiff seeking a profit award to prove that the defendants violation was wilful.

The Court of Appeal also upheld the district Court’s refusal to award profits from the infringement.

The Supreme Court accepted the Appeal to resolve and address the requirement of willfulness.

Issue on Appeal

The issue before the Supreme Court was whether it was necessary for Romag to prove ‘willfulness’ on the part of the Defendant, in order to be entitled to an award of profits.

Overview

The relevant provision of the Lanham Act which the Supreme Court considered and interpreted was 15 U. S. C. §1117(a), which provides:

“When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . . , the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and 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.”

Ostensibly the Lanham Act made willfulness a condition for a cause of action under Section 1125(c). However, Romag alleged and proved a violation of §1125(a), which provided a cause of action for the false or misleading use of trademarks. The statutory language for actions brought pursuant to §1125(a) of the Act did not require a showing of willfulness to succeed in an award of profits. Yes, the law provided that a profits award was subject to limitations found in §§1111 and 1114. But those cross- referenced sections did not contain the rule of willfulness that Fossil sought before the Court. The Supreme Court in its opinion refused to read into the statute words that aren’t there, referring to the arguments of Fossil as “a temptation we are doubly careful to avoid when Congress has (as here) included the term in question elsewhere in the very same statutory provision.” The supreme Court went further to reference several other Sections of the Act where willfulness was made a condition precedent and mandatory and held that the absence of willfulness/mens rea in §1125(a) depicted a clear intent by parliament to exclude same.

It is also pertinent to state that Fossil also made a persuasive argument on the need for willfulness/mens rea under §1125(a) of the Act, by referring the Court to the statutory provision of §1117(a), which provided that a violation under §1125(a) can only trigger an award of the defendant’s profits “subject to the principles of equity”, arguing further, Fossil contended that the principles of equity had always required willfulness as a precondition for the award of profits, authorities in that regard were provided by Learned attorney to Fossil.

In the opinion of the United States Supreme Court, Fossil’s argument would require the Court to “assume that Congress intended to incorporate a willfulness requirement in §1125(a) obliquely, while it prescribed willfulness/mens rea conditions expressly elsewhere throughout the Lanham Act.” The Supreme Court was of the opinion that the statutory reference to the principles of equity, was of broad trans-substantive guidance and was too broad to be construed as constricting the Courts to a narrow rule about an award of profits, within trademark law.

The Supreme Court further reasoned that even if Fossil was correct in their assertion that the reference to ‘principles of equity’ in the statute would invariably mean that the Court should import narrow trademark rules, such as the requirement of willfulness, Fossil had also not shown that historically there was a unanimous application of the rule of willfulness as a precondition to an award of profit under trademark law. The Supreme Court referenced the authorities cited by Fossil which supported the argument that willfulness was mandatory before an award of profit was made, and also relied on other cases proffered by Romag, where courts of equity rejected the rule that willfulness was mandatory. Therefore, the Supreme Court was of the opinion that, historically there was substantial inconsistency in the application of the rule.

The Supreme Court went further to conclude that from the early authorities, it could be said with certainty that mens rea was an important consideration in awarding profits in pre-lanham Act cases, but it could not be conclusively decided that willfulness was always an inflexible precondition. In conclusion, the Supreme Court held that a Court’s limited role is to read and apply the law which policymakers have ordained. Consequent upon which the Supreme Court vacated the judgment of the court of appeals, overruled the second circuit rule as being inconsistent with the express provision of the Lanham Act and remanded the case for further proceedings consistent with the opinion of the Supreme court.

Annotation

The decision of the United States Supreme Court in this matter is coterminous with the ‘Literal rule’ of interpretation and the Latin maxim; Expressio Unius Est Exclusio Alterius (the expression of one thing is the exclusion of the other). The Judgment accords with sound reasoning.

I am in complete agreement with the reasoning of the Court, because to my mind, there is a distinction between ‘a factor to be considered’ in awarding a relief and ‘an inflexible condition precedent’ to the award of a relief. Whilst the former weighs on the mind of an arbiter in coming to a conclusion, the later is the sole determinant of a conclusion. I think the difference between both positions can also be illustrated by the use of the words “discretion” and ‘Mandatory”

I equally align myself with the reasoning of the erudite Court on the ground that most principles of equity are of broad application and largely well propounded, such that there is a general consensus that they are so long and universally recognized and admit of no disputation. Thus raising them to the level of being principles of equity.

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