Decisions in Brief

The Supreme Court held that the OCGA annotations are not protectable by copyright based on the animating principle that no one can own the law and that all should know and have free access to the law. Thus, the annotations are not subject to copyright.

Factual Issues Reverse Authorship Repudiation Summary Judgment

Everly v. Everly, 958 F.3d 442, 2020 U.S.P.Q.2d 10477 (6th Cir. 2020). The Everly Brothers were a famous music duo that had many hit songs, including “Cathy’s Clown.” Don Everly sued Phil Everly’s successors in interest (collectively, Phil), seeking a declaratory judgment that Don was the sole author of the song. Don and Phil signed an agreement in 1980 where Phil transferred all of his rights in the song, including his claim as a co-composer, to Don. In 2011, Don used his termination rights to regain copyright ownership in the work. Don moved for summary judgment that he was the sole author of “Cathy’s Clown” and that any counterclaims filed by Phil were banned by the statute of limitations. The district court granted Don’s summary judgment and found that Phil was on notice by 2011 that Phil’s authorship had been expressly repudiated. Phil appealed.

The Sixth Circuit Court of Appeals reversed. The court began by looking at whether a repudiation of authorship occurred between Don and Phil. The Sixth Circuit identified three types of repudiation of authorship: direct repudiation from one author to another author, publication of a work without credit, and nonreceipt of royalties. The Sixth Circuit determined that the 1980 agreement between Don and Phil did not establish as a matter of law that Don had repudiated Phil’s authorship. The 1980 agreement could be viewed as a repudiation, but it could also be viewed as a copyright ownership transfer. Therefore, an issue of material fact existed, and summary judgment was inappropriate.

Patents

Anticipation/On-Sale Bar

BASF Corp. v. SNF Holding Co., 955 F.3d 958, 2020 U.S.P.Q.2d 10304 (Fed. Cir. 2020). The Federal Circuit Court of Appeals reversed the district court’s grant of summary judgment of invalidity under § 102(a) prior knowledge and use, and under the § 102(b) public use and on-sale bars. Regarding the public use bar, the Federal Circuit held that while members of the public were given access to the Sanwet process via plant tours, public articles, and videos, there was a genuine issue as to whether the elements of the Sanwet process were either known or obvious to one skilled in the art, or whether they were still concealed from the public. Additionally, the court rejected the view that the public use bar applied to a third party’s secret commercial use, instead reiterating that such an application was inconsistent with the policies underlying the public use bar. The Federal Circuit reversed the district court’s view that a license agreement or acquisition related to the Sanwet process triggered the on-sale bar. The Federal Circuit noted that while the license agreement may have enabled the third party to perform the Sanwet process, the essential features of the claimed and licensed process were never embodied in a product sold or offered for sale.

Assignor Estoppel

Hologic, Inc. v. Minerva Surgical, Inc., 957 F.3d 1256, 2020 U.S.P.Q.2d 10393 (Fed. Cir. 2020). The Federal Circuit affirmed in part, vacated in part, and remanded the district court’s findings on assignor estoppel. One patent was found to be invalid during an inter partes review (IPR) instituted by the defendant (a company founded by the assignor of the patent). The Federal Circuit held that assignor estoppel does not preclude an assignor from instituting an IPR and then benefiting in district court if the IPR results in the patent being invalidated. However, the Federal Circuit did find that assignor estoppel precluded a company in privity with the assignor of the patent from asserting an invalidity defense to that patent.

Attorney Fees

Dragon Intellectual Property, LLC v. DISH Network LLC, 956 F.3d 1358, 2020 U.S.P.Q.2d 10386 (Fed. Cir. 2020). The Federal Circuit vacated and remanded the district court’s order denying the appellants’ motion for attorney fees. The patents were found to be unpatentable in a concurrent IPR. The Federal Circuit stated that a party could be a prevailing party even if the case is decided on procedural grounds and based on determinations at the U.S. Patent and Trademark Office (USPTO).

Hitkansut LLC v. United States, 958 F.3d 1162, 2020 U.S.P.Q.2d 10454 (Fed. Cir. 2020). The Federal Circuit affirmed the U.S. Court of Federal Claims’ awarding of attorney fees. The Federal Circuit found that the Court of Federal Claims relied on an overly broad interpretation of the position of the United States. However, the United States’ position was not justified even under a narrower interpretation.

O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, 955 F.3d 990, 2020 U.S.P.Q.2d 10330 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s determination that a competitor would not be considered a prevailing party entitled to attorney fees when the plaintiff voluntarily dismissed the action after losing a battle at the USPTO on the validity of the patent. The district court stayed the case. After several years of litigating at the USPTO, the patent was found invalid and the patent owner subsequently voluntarily dismissed the case. The Federal Circuit agreed that there was no final court decision in the case, and thus there was no prevailing party for purposes of awarding attorney fees.

Claim Interpretation/Invalidity

Technical Consumer Products, Inc. v. Lighting Science Group Corp., 955 F.3d 16, 2020 U.S.P.Q.2d 10303 (Fed. Cir. 2020). The Federal Circuit vacated and remanded a Patent Trial and Appeal Board (PTAB) determination that several claims were not anticipated or obvious because the PTAB improperly interpreted the term “heat sink” and misapplied Federal Circuit case law.

Free Speech/Prior Restraint

Myco Industries, Inc. v. BlephEx, LLC, 955 F.3d 1, 2020 U.S.P.Q.2d 10290 (Fed. Cir. 2020). The Federal Circuit reversed and vacated the district’s court grant of a preliminary injunction enjoining BlephEx and its officers, agents, and those in active concert with BlephEx from alleging patent infringement and threatening litigation against Myco’s potential customers. In reversing, the Federal Circuit explained that the district court made no finding that BlephEx acted in bad faith—an essential requirement before a patentee can be enjoined from communicating its patent rights. This was compounded by the fact that the district court expressly declined to find that any of BlephEx’s statements were either false or misleading. Thus, the district court erred in granting the preliminary injunction without a showing of bad faith.

Indefiniteness

Nevro Corp. v. Boston Scientific Corp., 955 F.3d 35, 2020 U.S.P.Q.2d 10315 (Fed. Cir. 2020). The Federal Circuit vacated and remanded a claim construction and summary judgment order finding claims indefinite and not infringed. The Federal Circuit found that the district court did not apply the correct standard for indefiniteness.

Judicial Review

Thryv, Inc. v. Click-to-Call Technologies, LP, 140 S. Ct. 1367, 2020 U.S.P.Q.2d 10373 (2020). The Supreme Court vacated and remanded the Federal Circuit’s decision with instructions to dismiss the appeal for lack of appellate jurisdiction. Under 35 U.S.C. § 315(b), an IPR is precluded if the request comes more than a year after suit against the requesting party for patent infringement. Section 314(d) provides that the agency’s determination whether to institute an IPR under this section is final and unappealable. The PTAB instituted review despite the petitioner entities arguing that the petition was untimely. The Federal Circuit treated the PTAB’s application of § 315(b) as judicially reviewable and concluded that the petition was untimely. The Supreme Court held that § 314(d) precludes judicial review of the agency’s application of § 315(b)’s time prescription.

Notice under the APA

Nike, Inc. v. Adidas AG, 955 F.3d 45, 2020 U.S.P.Q.2d 10314 (Fed. Cir. 2020). The Federal Circuit remanded to the PTAB due to the PTAB’s failure to comply with the Administrative Procedure Act (APA). In the underlying IPR, Nike submitted several substitute claims. The PTAB concluded that one such claim was invalid as obvious; however, the PTAB reached that conclusion based on a prior art reference that, while of record, Adidas had not relied on for the particular claim limitation at issue. Nike argued that it had no notice that the PTAB would rely on the prior art for this purpose and thus that the PTAB violated the APA. The Federal Circuit agreed, finding that: (1) the PTAB may sua sponte identify a patentability issue for proposed substitute claims based on any prior art of record (addressing an issue left unresolved by the court’s decision in Aqua Products); and (2) if the PTAB does so, it must provide notice and an opportunity for the parties to respond before issuing a final written decision.

Obviousness

Grit Energy Solutions, LLC v. Oren Technologies, LLC, 957 F.3d 1309, 2020 U.S.P.Q.2d 10448 (Fed. Cir. 2020). The Federal Circuit vacated and remanded the finding that the alleged infringer did not meet its burden of proving that the claims were obvious. The Federal Circuit found that the inclusion of a reference number in a claim did not limit the claim to the configuration using that reference number.

Valeant Pharmaceuticals International, Inc. v. Mylan Pharmaceuticals Inc., 955 F.3d 25, 2020 U.S.P.Q.2d 10306 (Fed. Cir. 2020). The Federal Circuit reversed and remanded the district court’s grant of summary judgment of invalidity of a claim. The patent is directed to stable methylnaltrexone pharmaceutical preparations. The patent inventors discovered that when the pH of a methylnaltrexone solution is adjusted, the percentage of total degradants drops significantly. The pH range recited in the claims clearly overlaps with the pH range in the record art, but none of the references discloses the claimed drug. The Federal Circuit rejected the district court’s view that overlapping ranges only establish a prima facie case of obviousness when the only difference between the prior art is the range or value of a particular variable. Instead, the Federal Circuit explained that the strong structural and functional similarity between the molecules in the record art and the claimed compound could lead a person of skill in the art to expect similar stability of the molecules at similar pH ranges in solution, and it was an error to reject this inference as a matter of law at the summary judgment stage.

Patentable Subject Matter

Bozeman Financial LLC v. Federal Reserve Bank of Atlanta, 955 F.3d 971, 2020 U.S.P.Q.2d 10332 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s conclusion that the banks were “persons” under the America Invents Act (AIA) and that the subject matter of the patents was ineligible under § 101. The Federal Circuit found that the banks therefore were capable of petitioning for post-issuance review under the AIA. The Federal Circuit found that the patent claims were directed to ineligible subject matter because using a digital-image scanner to create a digital electronic record of a check did not meet the machine-or-transformation test.

CardioNet, LLC v. InfoBionic, Inc., 955 F.3d 1358, 2020 U.S.P.Q.2d 10367 (Fed. Cir. 2020). The Federal Circuit reversed the district court’s determination that the asserted claims were ineligible under § 101 and remanded. The Federal Circuit concluded that the asserted claims were directed to a patent-eligible improvement to cardiac monitoring technology and were not directed to an abstract idea.

Ericsson Inc. v. TCL Communication Technology Holdings Ltd., 955 F.3d 1317, 2020 U.S.P.Q.2d 10340 (Fed. Cir. 2020). The Federal Circuit reversed the district court’s denial of summary judgment that the patent claims were ineligible under § 101. The Federal Circuit found that the claims were directed to the abstract idea of controlling access to, or limiting permission to, resources. Despite the technical jargon, the claims required nothing more than the abstract idea. The claims did no more than require a generic computer to perform generic computer functions.

In re Rudy, 956 F.3d 1379, 2020 U.S.P.Q.2d 10415 (Fed. Cir. 2020). The Federal Circuit affirmed the PTAB’s rejection of claims as unpatentable under § 101. The Federal Circuit found that the claims were directed to the abstract idea of selecting a fishing hook based on observed water conditions. The Federal Circuit next decided that the claimed elements did not transform the nature of the claim into a patentable application of the abstract idea. The three elements of the claim were all abstract and mental processes.

Uniloc USA, Inc. v. LG Electronics USA, Inc., 957 F.3d 1303, 2020 U.S.P.Q.2d 10450 (Fed. Cir. 2020). The Federal Circuit reversed and remanded the district court’s decision determining that the claims were directed to ineligible subject matter. Regarding the first step for determining patent eligibility, the Federal Circuit found that the claims were directed to patent-eligible subject matter by making improvements to computer functionality.

Patent Term Extension

Biogen International GmbH v. Banner Life Sciences LLC, 956 F.3d 1351, 2020 U.S.P.Q.2d 10385 (Fed. Cir. 2020). The Federal Circuit affirmed the district court’s judgment that Banner did not infringe the extended portion of the patent, which was extended under the patent term restoration provisions of the Hatch-Waxman Act. Because the scope of a patent term under 35 U.S.C. § 156 only includes the active ingredient of an approved product, or an ester or salt of that active ingredient, and the product did not fall within one of those categories, the Federal Circuit affirmed the district court’s judgment.

Standing

Argentum Pharmaceuticals LLC v. Novartis Pharmaceuticals Corp., 956 F.3d 1374, 2020 U.S.P.Q.2d 10406 (Fed. Cir. 2020). The Federal Circuit dismissed the plaintiff’s appeal as lacking standing because the plaintiff failed to establish an injury.

Takings Claims

Golden v. United States, 955 F.3d 981, 2020 U.S.P.Q.2d 10331 (Fed. Cir. 2020). The Federal Circuit affirmed the U.S. Court of Federal Claims for lack of jurisdiction. The Court of Federal Claims does not have jurisdiction to hear takings claims based on alleged patent infringement by the government. The Federal Circuit further reiterated that subjecting patents to IPR proceedings is not an unconstitutional taking under the Fifth Amendment.

Validity

Spigen Korea Co. v. Ultraproof, Inc., 955 F.3d 1379, 2020 U.S.P.Q.2d 10366 (Fed. Cir. 2020). The Federal Circuit reversed the district court’s grant of summary judgment of invalidity of the patents and remanded. The Federal Circuit concluded that a genuine issue of material fact existed as to whether the primary reference patent was basically the same as the asserted patents.

Trade Secrets

Advanced Fluid Systems, Inc. v. Huber, 958 F.3d 168, 2020 U.S.P.Q.2d 10452 (3d Cir. 2020). The plaintiff (AFS) entered into a three-year contract with the Virginia Commonwealth Space Flight Authority (VCSFA) to build, install, and maintain a hydraulic system for the NASA rocket launch facility. The contract designated confidential information as the exclusive property of the VCSFA, so the defendant argued that AFS did not have standing to litigate the trade secret misappropriation claims because AFS did not own the trade secrets. The district court rejected this argument and held that a per se ownership requirement for misappropriation claims is flawed since it takes account neither of the substantial interest that lawful secret possessors have in the value of that secrecy, nor of the statutory language that creates trade secret protection, while saying nothing of ownership as an element of a misappropriation claim.

Caudill Seed & Warehouse Co. v. Jarrow Formulas, Inc., No. 3:13-cv-00082, 2020 WL 3065626, 2020 U.S. Dist. LEXIS 94821 (W.D. Ky. June 9, 2020). Caudill Seed is a 65-year-old family-owned business that produces and supplies agricultural products. Caudill Seed’s former research and development (R&D) director, Kean Ashurst, resigned from Caudill Seed in 2011 after working there for almost 11 years. Ashurst started an R&D department at Jarrow Formulas. Jarrow Formulas never had an R&D department before Ashurst’s arrival. One of Caudill Seed’s successful products was a broccoli extract powder. Jarrow Formulas was a customer for broccoli extract until Ashurst arrived. Jarrow Formulas cut out the middleman and became a broccoli extract manufacturer in 2011. Caudill Seed sued Ashurst and Jarrow Formulas for violating the Kentucky Uniform Trade Secrets Act. The jury returned a verdict for Caudill Seed. The district court sustained the finding of the jury upon a JMOL motion rejecting Jarrow Formulas’ attack on the secrecy of the specific trade secret and noting that the protectable value of the trade secret is the proprietary and successful process and know-how synthesized from years of R&D that assisted or accelerated developing the competing product.

Cisco Systems, Inc. v. Chung, No. 19-cv-07562, 2020 U.S. Dist. LEXIS 92497 (N.D. Cal. May 26, 2020). Cisco’s complaint alleged that former employees engaged in a scheme to misappropriate trade secrets to benefit their new employer, Plantronics. Under the doctrine of respondeat superior, an employer is vicariously liable for the torts of its employees committed within the scope of their employment. The district court found that the plaintiff adequately alleged that Thomas Puorro acted within the scope of his employment at Plantronics when he misappropriated the confidential information purportedly taken by the others involved in the scheme to misappropriate trade secrets. Given that Plantronics and Cisco are in the same industry, the district court reasonably concluded that Puorro acquired the confidential information to benefit Plantronics. The plaintiff adequately alleged that Plantronics misappropriated the information purportedly taken by the other defendants under a theory of vicarious liability.

Moss Holding Co. v. Fuller, No. 20-cv-01043, 2020 WL 1081730, 2020 U.S. Dist. LEXIS 39068 (N.D. Ill. Mar. 6, 2020). Moss sued two former employees and a competitor (Image Options) for trade secret misappropriation. Moss then moved for a preliminary injunction. At issue were the Moss client spreadsheets with detailed compilations relating to its customers, including actual and forecast revenues with additional detailed comments by customers. The defendants argued that they returned the Moss client spreadsheets and were therefore not using the information. However, the evidence revealed that the individual defendants were using personal Gmail accounts to send proprietary information while still employed at Moss. The district court observed that a defendant’s bare assurances that he will not misappropriate his former employer’s trade secrets may be discounted when there is evidence of deceit. A former employee may not use specific, confidential information gained from a former employer to win clients from the former employer. The preliminary injunction was granted.

NEXT Payment Solutions, Inc. v. CLEAResult Consulting, Inc., No. 1:17-cv-08829, 2020 U.S. Dist. LEXIS 94764, 2020 U.S.P.Q.2d 10600 (N.D. Ill. May 31, 2020). The plaintiff sued a former client for trade secret misappropriation. The defendant pressed the plaintiff to identify its alleged trade secrets with sufficient specificity. On a motion for summary judgment, the district court noted that NEXT had attempted several times to identify its alleged trade secrets, including answers to interrogatories, a response to a motion to compel, and two motions for summary judgment. NEXT finally submitted a 13-page document entitled “Identification of Trade Secrets.” On the defendant’s second motion for summary judgment, the district court noted that instead of narrowing its alleged trade secrets, the plaintiff simply dropped additional information about its trade secrets in the already existing quagmire of trade secrets and publicly available information. The district court observed that NEXT came to the summary judgment stage with an “amorphous bog” of alleged trade secrets, leaving the audience wondering what exactly were the supposed trade secrets. Trying to pin down the trade secrets had the distinct feel of “nailing jello to a wall.” NEXT had not engaged in a serious effort to pin down its alleged trade secrets, although it had plenty of opportunities to do so. Thus, the defendant’s motion for summary judgment was granted.

Trademarks

Disclaimer

In re UST Global (Singapore) Pte. Ltd., Serial No. 87657822, 2020 U.S.P.Q.2d 10435 (T.T.A.B. Apr. 29, 2020). UST Global filed a trademark application for registration of INFINITY LABS in connection with business incubator services in classes 35, 36, 40, 41, and 42. The examining attorney required a disclaimer of LABS for all of the applied-for services. UST Global disclaimed LABS for the class 35 services and for a portion of the class 42 services. After receiving a final refusal, UST Global appealed the disclaimer requirement for the services in classes 36, 40, and 41, and a portion of the services in class 42.

The examining attorney made of record dictionary definitions of “incubation,” “labs,” and “laboratory,” as well as 23 use-based third-party registrations for trademarks that include a disclaimer of LABS, as support for the assertion that LABS was merely descriptive of the services. UST Global argued that LABS did not immediately describe any of the services without speculation or conjecture and that the recited services made no reference to a specific place for study, such as a laboratory.

The Trademark Trial and Appeal Board (TTAB) agreed with the examining attorney that LABS was descriptive of the applied-for services in class 36 (“Think tank services in the nature of consultation services in the field of digital finance”); class 40 (“Think tank services in the nature of consultation services in the field of additive manufacturing”); class 41 (“Education services, namely, providing on-line classes, seminars, meet-ups, and workshops in the fields of retail, software design, technology research and development, and customer service” and “Education services, namely, one-on-one mentoring in the field of retail technology”); and class 42 (several of the services including consultation and think tank services, as well as collaborative computer programming). Accordingly, the disclaimer requirement was affirmed for these services.

The TTAB did not agree that the examining attorney had shown that LABS was descriptive of the class 36 services relating to “Incubation services, namely, providing financing to freelancers, start-ups, existing businesses and non-profits.” In particular, the TTAB found that nothing in the record supported the examining attorney’s finding that the provision of financing was related to “a place equipped for experimental study . . . or for testing and analysis” or a “place, situation, [or] set of conditions . . . conducive to experimentation, investigation, [or] observation.”

Likelihood of Confusion

Stratus Networks, Inc. v. UBTA-UBET Communications Inc., 955 F.3d 994, 2020 U.S.P.Q.2d 10341 (Fed. Cir. 2020). Stratus appealed a decision from the TTAB denying registration of its STRATUS plus design mark based on a likelihood of confusion with the prior-registered STRATA plus design mark. Both Stratus and the owner of the cited STRATA mark were telecommunications providers. The Federal Circuit affirmed, finding that the TTAB’s determination was supported by substantial evidence.

Weighing the DuPont factors, the TTAB found that the similarity of the marks, the similarity of the services, and the similarity of trade channels weighed in favor of a likelihood of confusion. The TTAB found that the modest evidence of customer sophistication and weakness of the STRATA mark were insufficient to overcome the similarities between the marks, services, and trade channels. The Federal Circuit agreed and affirmed the TTAB’s decision to refuse registration.

Preclusion

Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc., 140 S. Ct. 1589, 2020 U.S.P.Q.2d 10519 (2020). The petitioners (Lucky Brand) and the respondent (Marcel) had been involved in nearly 20 years of litigation regarding both parties’ use of the word “Lucky” in conjunction with jeans and other apparel. Marcel owned a trademark registration for the mark GET LUCKY, and Lucky Brand owned a trademark registration for LUCKY BRAND and other marks including the word LUCKY. The first round of litigation resulted in a settlement in which Lucky Brand agreed to stop using the phrase GET LUCKY and Marcel agreed to release any claims against Lucky Brand’s use of its own trademarks. In the second round (the 2005 action), Lucky Brand sued Marcel for violating its trademarks, and Marcel counterclaimed that Lucky Brand allegedly continued to use GET LUCKY but did not claim that Lucky Brand’s use of its own marks infringed the GET LUCKY mark. The court in the 2005 action permanently enjoined Lucky Brand from copying or imitating Marcel’s GET LUCKY mark, and a jury found against Lucky Brand on Marcel’s remaining counterclaims. In a third 2011 action, Marcel sued Lucky Brand for continuing to infringe the GET LUCKY mark but did not reprise its 2005 allegation about Lucky Brand’s use of the GET LUCKY phrase. After protracted litigation, Lucky Brand finally moved to dismiss, arguing that Marcel had released its claims in the settlement agreement. Marcel countered that Lucky Brand could not invoke the release defense because it could have pursued it in the 2005 action but did not.

The district court granted Lucky Brand’s motion to dismiss. The Second Circuit Court of Appeals vacated and remanded, concluding that “defense preclusion” prohibited Lucky Brand from raising an unlitigated defense it should have raised earlier.

The Supreme Court noted that “defense preclusion” had never been explicitly recognized as a stand-alone category of res judicata. Rather, any preclusion of defense must, at a minimum, satisfy the strictures of claim preclusion or issue preclusion. Here, the Court held that because Marcel’s 2011 action alleged different conduct involving different marks from the 2005 action, the two suits did not share a common nucleus of operative facts. Specifically, the 2005 action was based on Lucky Brand’s alleged use of GET LUCKY, whereas the 2011 action alleged infringement of other marks including the word LUCKY, not any use of GET LUCKY itself. As such, Marcel could not preclude Lucky Brand from raising new defenses.

Trademark Inherent Distinctiveness

In re Forney Industries, Inc., 955 F.3d 940, 2020 U.S.P.Q.2d 10310 (Fed. Cir. 2020). The Federal Circuit vacated and remanded the TTAB’s affirmance of a trademark examiner’s refusal to register Forney’s proposed mark, which was a color mark comprised of a specific arrangement of black, yellow, orange, and red shades. The examiner and the TTAB found that the proposed mark was of a type that could never be inherently distinctive and thus was not subject to registration. In vacating and remanding the TTAB’s affirmance, the Federal Circuit concluded that the TTAB erred in holding that such a multicolor mark could never be inherently distinctive. And the TTAB further erred in finding that such color marks, even when used on product packaging, cannot be inherently distinctive unless the mark includes a well-defined peripheral shape or border. Instead, the Federal Circuit found that “color marks can be inherently distinctive when used on product packaging, depending upon the character of the color design,” because “a distinct color-based product packaging mark can indicate the source of the goods to a consumer.”

Willfulness/Award of Profits

Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492, 2020 U.S.P.Q.2d 10401 (2020). Romag entered into an agreement with Fossil to use Romag’s fasteners in Fossil’s leather goods. Romag later sued Fossil for trademark infringement after Romag discovered that Fossil was using counterfeit Romag fasteners. At issue was the district court’s rejection of Romag’s request for an award of profits where the jury had not found that Fossil had acted willfully. The district court relied on Second Circuit precedent that required willful trademark infringement before an award of profits could be made. Other circuits did not agree with the Second Circuit’s willfulness requirement, and the Supreme Court took the case to resolve the dispute.

The Supreme Court found that the Lanham Act exhibited considerable care when requiring willful conduct. In particular, § 1125(c) of the Lanham Act (trademark dilution) requires willfulness as a precondition to a profits award. However, Romag claimed trademark infringement under § 1125(a) for false or misleading use of trademarks. Under that section, the statutory language did not require a showing of willfulness. Fossil argued that a finding of willfulness was required under a principle of equity that was long recognized in trademark disputes under the Lanham Act. However, the Supreme Court recognized that while a trademark defendant’s mental state has been important when considering an award of profits, particularly under pre-Lanham Act cases, a finding of willfulness was not an inflexible precondition for recovery of a defendant’s profits. Thus, the judgment was vacated and remanded for further proceedings.