Romag Fasteners v. Fossil: Willfulness Is a Factor, Not a Gate, for Disgorgement

Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233, 590 U.S. 212, decided April 23, 2020, is the modern starting point for any analysis of disgorgement in trademark law. In a compact, unanimous opinion by Justice Gorsuch, the Supreme Court held that a plaintiff suing for trademark infringement under Section 43(a) of the Lanham Act need not prove that the defendant acted willfully before it may recover the defendant’s profits. The decision resolved a long-standing and lopsided circuit split, and it recalibrated the leverage in trademark disputes by removing a categorical barrier that several circuits had treated as dispositive.

At a glance

• Case: Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233, 590 U.S. 212 (2020)
• Decided: April 23, 2020; opinion by Justice Gorsuch for a unanimous Court, with a concurrence by Justice Alito (joined by Justices Breyer and Kagan) and an opinion by Justice Sotomayor concurring in the judgment
• Court below: U.S. Court of Appeals for the Federal Circuit, reviewing a judgment from the U.S. District Court for the District of Connecticut
• Holding: Under 15 U.S.C. § 1117(a), a finding of willfulness is not an absolute precondition to an award of an infringer’s profits for a violation of § 1125(a); willfulness remains a “highly important” equitable consideration
• Disposition: Judgment vacated and case remanded

The fastener, the counterfeit, and the verdict

Romag Fasteners makes magnetic snap fasteners for leather goods. Fossil, the accessories company, agreed to use Romag’s fasteners — and Romag’s trademark — in handbags manufactured by Fossil’s contractors in China. Romag later discovered that those factories were using counterfeit fasteners bearing the Romag mark, and that Fossil had done little to police the practice. A jury in the District of Connecticut found Fossil liable for trademark infringement and concluded that Fossil had acted with “callous disregard” of Romag’s rights. Critically, however, the jury rejected the contention that Fossil’s infringement was willful.

That distinction proved decisive below. Applying Second Circuit precedent, the district court refused to award Romag the roughly $6.8 million in Fossil profits the jury had calculated, reasoning that willfulness was a prerequisite to disgorgement under the Lanham Act. The Federal Circuit, applying regional circuit law, affirmed. The Supreme Court granted certiorari to settle whether that prerequisite exists.

The text does the work

Justice Gorsuch’s opinion is a study in statutory structure. Section 35(a), 15 U.S.C. § 1117(a), makes an infringer’s profits available “subject to the principles of equity” for violations of § 1125(a) (the general infringement and false-association provision), § 1125(d) (cyberpiracy), or “a willful violation under section 1125(c)” (dilution). The decisive observation was that Congress expressly conditioned a profits award on willfulness for dilution claims — and conspicuously did not impose that same condition for § 1125(a) infringement claims. Where Congress has drawn the willfulness line explicitly in one clause of the very same sentence, courts should not read the same limitation into a neighboring clause where it is absent.

The Court rejected Fossil’s argument that the phrase “principles of equity” silently incorporated a mandatory willfulness rule. Fossil contended that the historical equity practice treated willfulness as an inflexible threshold. The Court was unpersuaded: “principles of equity” is a transsubstantive phrase referring to fundamental, flexible doctrines, not a coded reference to a single mandatory mental-state requirement. And the historical record, the Court found, was equivocal — the older cases did not establish the bright-line rule Fossil needed.

Willfulness survives as a weighty factor

The unanimity of the result should not obscure the nuance in the concurrences, which together explain how disgorgement actually works after Romag. Justice Alito, joined by Justices Breyer and Kagan, wrote separately to make explicit what the majority implied: willfulness is “a highly important consideration in awarding profits,” even if it is not an “absolute precondition.” Justice Sotomayor, concurring in the judgment, went further in emphasizing the mens rea continuum. She cautioned that courts following established equity practice did not award profits against truly innocent infringers, and she worried that the majority’s framing could be read to treat an “innocent” infringer the same as a “willful” one. In her view, a defendant’s mental state should continue to carry decisive weight even if it is no longer a formal gate.

The practical upshot is that Romag moved willfulness from the threshold to the scale. After Romag, a plaintiff who proves infringement but cannot prove willfulness is no longer categorically barred from disgorgement — but a defendant whose conduct was genuinely innocent retains a powerful equitable argument that profits should not be awarded at all. The decision did not abolish the relevance of intent; it relocated it.

Open questions

Romag answered one question crisply and left several open. The Court did not define the quantum of culpability that will, in practice, justify a profits award short of willfulness — terms like “callous disregard,” recklessness, and willful blindness now occupy contested middle ground that the lower courts are still mapping. Nor did the Court specify how the “principles of equity” should be operationalized: which equitable factors bear on the disgorgement decision, how they should be weighted, and whether a jury or the court decides them. Finally, the opinion did not address the deduction-and-apportionment mechanics of § 1117(a) — how an infringer proves the costs and the non-infringing contributions that reduce the profit base — leaving the actual dollar computation to the familiar burden-shifting framework.

Implications

• The willfulness gate is gone for § 1125(a) claims. A plaintiff who proves infringement may pursue the defendant’s profits without first proving willfulness, though it remains a precondition for dilution claims under § 1125(c).
• Intent still drives outcomes. Willfulness has shifted from a yes/no threshold to a heavily weighted equitable factor; innocent infringers retain a strong argument against disgorgement, and willful ones face an uphill climb.
• Demand letters carry more weight. Because profits are now available without proof of willfulness, the expected value of a trademark infringement claim rises, strengthening a brand owner’s pre-suit leverage.
• Compliance and supply-chain diligence matter. Romag itself arose from inattention to a contractor’s counterfeiting; documented policing and prompt corrective action are now part of a defendant’s equitable defense to disgorgement.
• Plead and prove the equities. Litigants on both sides should marshal evidence on the full range of equitable considerations — intent, deterrence, unjust enrichment, and the relationship between the profits and the infringement — rather than litigating willfulness alone.

Frequently asked questions

Did Romag eliminate willfulness from trademark remedies entirely? No. It held that willfulness is not an absolute precondition to a profits award for infringement under § 1125(a). Willfulness remains a highly important equitable factor, and it is still a statutory precondition for a profits award in dilution cases under § 1125(c).

Does this mean innocent infringers must now pay profits? Not necessarily. The “principles of equity” governing § 1117(a) continue to allow courts to deny disgorgement where the defendant’s conduct was innocent. Romag removed a categorical bar; it did not mandate profits in every case.

Why did the Court focus on dilution claims? Because § 1117(a) expressly conditions a profits award on willfulness for dilution under § 1125(c). That explicit condition, sitting in the same sentence, demonstrated that Congress knew how to require willfulness when it wanted to — and chose not to for § 1125(a) infringement.

Authorities and sources

• Romag Fasteners, Inc. v. Fossil, Inc., No. 18-1233, 590 U.S. 212 (Apr. 23, 2020), slip opinion: Supreme Court of the United States.
• Case docket and proceedings: SCOTUSblog.
• Opinion text and syllabus: Legal Information Institute, Cornell Law School.
• Practitioner analysis: Crowell & Moring LLP and Akin Gump.