Since April 2020, several courts have had the opportunity to apply the holding of Romag. For example, in RVC Floor, the Eastern District of New York rejected an argument that willfulness was still required where disgorgement of profits was sought solely for “deterrence.” See RVC Floor Decor, Ltd. v. Floor & Decor Outlets of Am., Inc., No. 218CV6449DRHARL, 2021 WL 1163117, at *16 (E.D.N.Y. Mar. 18, 2021). This would suggest that, regardless of the purpose of seeking an infringer’s profits, Romag governs.
And in Monster Energy Co. v. Integrated Supply Network, LLC, No. EDCV17548CBMRAOX, 2021 WL 1521981, at *2 (C.D. Cal. Apr. 12, 2021), the Central District of California upheld a jury’s finding of willfulness under Romag’s new standard, which emphasized that “a trademark defendant’s mental state is a highly important consideration in determining whether an award of profits is appropriate.” There, the jury found that the plaintiff proved by clear and convincing evidence that the defendant acted with malice, fraud, or oppression by infringing the plaintiff’s federally registered trademarks that include the word “Monster” and its trade dress. The plaintiff offered evidence at trial that the defendant’s executive stated, in response to the announcement of the plaintiff’s sponsorship of NASCAR, that it “could be good for [defendant’s] Monster brand” and that it “certainly creates awareness!” There was also evidence offered at trial demonstrating that the defendant continued to sell the infringing products after it received the plaintiff’s cease-and-desist letters and after the plaintiff filed the instant lawsuit.
Last, the Fourth Circuit Court of Appeals has also provided a highly useful analysis of the impact of Romag in Variety Stores, Inc. v. Walmart Inc., No. 19-1601, 2021 WL 1171746, at *9 (4th Cir. Mar. 29, 2021). There, the court accepted Walmart’s argument “that infringement must be more than ‘merely volitional’ to be willful.” Instead, the correct inquiry is “whether there has been a willful infringement on the trademark rights of the plaintiff, or whether the defendant has acted in bad faith.” But the court also made clear that willfulness could involve “reckless disregard or willful blindness.” Based on these legal standards, which Romag does not appear to have altered, the Fourth Circuit agreed that a reasonable jury could have made a finding of willfulness based on willful blindness or bad faith.
Nevertheless, the Fourth Circuit vacated the jury’s finding of willfulness, because the trial court did not instruct the jury on the definition of “willfulness” to apply in its determination. Thus, under a “plain error” standard of review, the court found that a layperson could easily have concluded erroneously that willfulness merely required that Walmart’s actions were volitional. The court thus concluded that the jury acted in ignorance of fundamentally controlling legal principles.
Together, these cases demonstrate that Romag’s emphasis on the mental state of a defendant will continue to play a key role in awarding profits. It does not appear, however, that Romag will be interpreted as lowering or raising the legal bar for determining “willfulness.” Practitioners should nevertheless continue to monitor the case law applying Romag within their jurisdiction moving forward.
