The Price of Recklessness: Disgorgement of Profits in a Post-Romag World

AuthorJosh Escovedo, Zack Thompson
Published in Landslide® magazine, Volume 13, Number 3, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2020 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Meeting of the Minds
The Price of Recklessness: Disgorgement
of Prots in a Post-Romag World
By Josh Escovedo and Zack Thompson
by writing contracts to control the risk
as much as possible. Considering the
importance of Chinese manufactur-
ing to global trade, the Chinese legal
system and its evolving trademark
enforcement system will likely cause
companies to get creative.
Summary of the Supreme Court’s
In Romag, the Court examined whether
a plaintiff in a trademark infringement
action is required to show that a defen-
dant willfully infringed the plaintiff’s
trademark to obtain a prots award.
The issue arose from a dispute between
Romag, a manufacturer of magnetic
snap fasteners for leather goods, and
Fossil, a designer and distributor of
a wide range of fashion accessories.2
Long ago, those parties entered into
an agreement permitting Fossil to use
Romag’s fasteners on Fossil’s handbags
and other products. All was well until
Romag discovered that the Chinese
factories where Fossil’s products were
being manufactured were using coun-
terfeit Romag fasteners, and that Fossil
had not instituted protocols to prevent
such conduct. When settlement discus-
sions proved fruitless, Romag sued.
After trial, the jury found that Fos-
sil had acted “in callous disregard” of
Romag’s intellectual property rights.3
However, because the district court also
found that Fossil had not acted will-
fully, the district court refused Romag’s
The U.S. Supreme Court issued
numerous landmark decisions in
2020, among those—for trademark
scholars and practitioners—Romag Fas-
teners, Inc. v. Fossil, Inc.1 The Court, with
Justice Gorsuch delivering the majority
opinion, held that a plaintiff in a trade-
mark infringement suit is not required to
show that a defendant willfully infringed
the plaintiff’s trademark as a precondition
to a prots award. But Justice Gorsuch’s
opinion and Justice Alito’s and Justice
Sotomayor’s concurrences were clear that
mental state is still a highly important con-
sideration in determining whether to award
prots. To that end, even with the Romag
decision clarifying that willfulness is not a
precondition for a prots award in a trade-
mark infringement suit, the lower courts
are likely to still require plaintiffs to prove
that defendants had high levels of culpabil-
ity before awarding prots for trademark
infringement. Practitioners should expect
that juries will nd that defendants who
knew of infringement or were reckless
concerning the possibility of such conduct
deserve to lose their prots.
Romag solidies the threat posed to
companies that rely on third-party man-
ufacturers. By allowing a prots award
when infringement is perpetrated with
a mental state less than willfulness, this
decision incentivizes companies using
Chinese and other foreign manufac-
turers to innovate in order to mitigate
these risks, either by strengthening sup-
ply chain oversight or (more likely)
Josh Escovedo is a shareholder at Weintraub Tobin. He specializes in intellectual property and real property litigation. He can be reached
at Zack Thompson is an associate at Weintraub Tobin in Sacramento, California. He specializes in labor and
employment litigation and has litigated trade secret and trademark cases. He can be reached at
request for a prots award. The district
court indicated that it was bound by
Second Circuit precedent that requires
proof of willfulness as a prerequisite to
a prots award. The matter was even-
tually appealed to the Federal Circuit,
which afrmed the district court’s rul-
ing. But not all of the circuit courts were
in agreement with the Second Circuit
precedent, the precedent followed by the
district court and afrmed by the Federal
Circuit, so the Supreme Court granted
certiorari to resolve the circuit split.
At the Supreme Court, Romag
argued that requiring willfulness for
a prots award “outs the plain text
of section 35(a) and undermines the
broader policies of the Lanham Act,
and is a “serious misinterpretation of
federal law” that should not be allowed
to stand.4 Fossil argued that the Federal
Circuit’s decision below was correct, on
the grounds that common law, and prin-
ciples of equity, required willfulness for
a prots award.5
The Supreme Court rst looked to
the section of the Lanham Act govern-
ing remedies for trademark violations,
15 U.S.C. § 1117(a), which says:
When a violation of any right of the
registrant of a mark registered in the
Patent and Trademark Ofce, a vio-
lation 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
Making a Connection between Young IP Attorneys
and Those Who Want to Share Their Experience
“Meeting of the Minds” is a recurring feature of Landslide® magazine. It includes articles authored by young lawyers
in conjunction with experienced attorneys, who participate as mentors in the planning and writing process. Landslide is
proud to provide the opportunity for young lawyers and law students to learn from attorneys in IP practice areas and to get
published in our prominent legal magazine. The end product is a collaboration for which both authors share attribution.

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