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September 20, 2019

ABA asks U.S. Supreme Court to adopt a flexible rule for payouts of profits in trademark cases

CHICAGO, Sept. 20, 2019 — The American Bar Association filed an amicus brief yesterday with the
U.S. Supreme Court, urging the justices to resolve a long-standing split among federal circuit courts over when to award profits in trademark infringement cases.

The case focuses on an important element in trademark law: Whether a provision of the Lanham Act, the governing statute, gives lower courts discretion to consider all relevant factors when deciding how to award damages in trademark infringement cases or whether courts, as a requirement, must establish that the infringement was willful before awarding profits.

The issue arose after a manufacturer of magnetic clips for purses and wallets sued a fashion accessory company in federal court in Connecticut for patent and trademark infringement for selling handbags with counterfeit clips in a major department store. A jury awarded the manufacturer more than $140,000 for patent and trademark infringements, and another $6.7 million of the accessory company’s profits. But a judge threw out the profits award based on the jury’s finding that the accessory company’s infringement was not willful. The manufacturer appealed.

In 2017, the ABA House of Delegates adopted policy favoring interpretation of the Lanham Act in a way in which “proof of willfulness is not required…for a prevailing plaintiff to recover a defendant’s profits,” but should be one of several factors that may be considered in fashioning a remedy in infringement cases.

“Every circuit agrees that the infringer’s intent is at least relevant in deciding whether to award profits,” the ABA brief said. “The difference is, courts in some parts of the country have discretion to weigh that intent alongside the other equities, while other courts do not.” The ABA believes that discretion should be preserved for all courts.

The amicus brief in Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. can be found here.  The ABA was represented on the amicus brief by the law firm of Pirkey Barber PLLC. The Supreme Court has accepted the case for its new term but has yet to schedule oral arguments.

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