June 9, 2020
Don’t read too much into it!
Don’t read too much into it!

The recent US judgement in ROMAG FASTENERS, INC. v. FOSSIL GROUP, INC., FKA FOSSIL, INC., ET AL. by the US Supreme Court highlights the importance of the rules of interpretation of statues. The court’s decision was not to clarify or amend section 1125(a) of the Lanham Act, as the wording is clear and unambiguous Therefore, it unanimously held that a plaintiff in a trade mark infringement suit is not required to show that a defendant “wilfully” infringed the plaintiff’s trade mark and that wilfulness or knowledge is not a precondition to an award of profits.

 

Facts

Romag Fasteners, Inc and Fossil, Inc had an agreement that Fossil would use Romag’s fasteners in their leather goods. However, it came to Romag’s attention that the factories in China that make Fossil’s goods were using counterfeit Romag fasteners and that Fossil did nothing to prevent it. This led to Romag suing Fossil and others for trade mark infringement in terms of section 1125(a) of the Lanham Act; which deals with false designation of origin, false or misleading description of fact, or false or misleading representation of fact that is likely to cause confusion. Romag alleged that the use of counterfeit fasteners falsely represented that the fasteners came from Romag. The jury had decided that Fossil had acted “in callous disregard” of Romag’s rights but not that Fossil had acted “wilfully”. Therefore, the District Court denied Romag’s request for an award of profits. The District Court decided in view of a Second Circuit precedent, which requires that a defendant must have acted wilfully for a plaintiff to receive an award of profits. However, there was no consensus between the courts on this rule and, therefore, the matter went before the Supreme Court to make a ruling on this point.

 

Court’s decision

The court had to interpret section 1117(a) which provides for the recovery of profits, damages and costs or attorney fees. In terms of the section, wilfulness is a requirement for an award of profits in the case of trade mark dilution under section 1125(c), however, the wording of the section does not specifically mention wilfulness as a requirement for an award of profits in the case of an infringement under section 1125(a). Fossil argued that the wording allowed for an award of profits in the case of an infringement of section 1125(a), “subject to the principles of equity” and that the requirement of wilfulness in such circumstances was universally recognised that today it is considered to be a principle of equity. The court did not accept this argument and stated that it was “far from clear” that this is the case historically. The court also stressed that a defendant’s mental state is considered to be a very important factor for courts to take into account when determining an appropriate remedy for the plaintiff, however, it certainly does not mean that wilfulness is an inflexible precondition for Romag to succeed with its request. Ultimately, the court held that its role was to read and apply the law whereas the role for dealing with competing interests is that of policymakers. As a result, courts should avoid reading words into statutes, particularly where they appear elsewhere in the same statute.

 

United Kingdom

Section 14(2) of the UK Trade Marks Act 1994 provides:

“In an action for infringement all such relief by way of damages, injunctions, accounts or otherwise is available to him as is available in respect of the infringement of any other property right”.

The wording of the statute is clear. A claimant in an infringement action may elect to request account of profits as a remedy instead of claiming damages. However, as account of profits is an equitable remedy, the court hearing the matter may decide to refuse a request for this remedy. As with all matters, it will depend on the circumstances of each case and the defendant’s intent will no doubt be an important factor to be taken into account. As stated in the High Court decision in Jack Wills Limited v House of Fraser (Stores) Limited [2016]

Jack Wills Limited v House of Fraser (Stores) Limited [2016] “the remedy of an account of profits is not penal in any sense. It is a mechanism by which an infringer is required to pay over to the proprietor of the infringed marks all profits properly attributable to the infringement”.

If you need advice in relation to trade mark disputes, please get in touch with Stobbs at info@iamstobbs.com

Tags
Fashion /  Trademarks /  Disputes

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