Most of the time, winning a trademark lawsuit doesn’t get you any money. That’s because trademark infringement lawsuits are usually about preventing consumer confusion, and so the most common remedy for winning a trademark infringement lawsuit is a court order telling the defendant to stop infringing.
But sometimes a plaintiff can also get a damages award. Section 1117(a) of the Lanham Act permits awards of money, including an award of the defendant’s ill-gotten profits from infringement. The Lanham Act imposes no requirements that must be met before a court is permitted to award profits in most cases. But many courts have read one into the statute. Some courts have required proof of actual confusion before profits are disgorged; some have required proof of actual damages. And the biggest divide among courts is whether the infringement must be “willful” before profits become an available remedy.
Before 1999, most courts agreed a plaintiff had to prove a defendant’s infringement was “willful” before a court could order the defendant to disgorge its profits. Even though the word “willful” did not appear in section 1117(a), 9 of the 13 federal courts of appeal – including our Eighth Circuit – required it be proven. The other four circuit courts held willfulness was just one element to be weighed in considering an award of profits.
In 1999, Congress amended section 1117(a). The amendment added the word “willful” to one clause: “When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . .”
Some courts and many commentators have read the amendment to say that a plaintiff seeking an award of profits is only required to prove willfulness for claims of trademark dilution – the subject of section 1125(c). They reason that Congress specified a willfulness requirement for section 1125(c), but not 1125(a) or (d). The Third and Fourth Circuits read the amendment that way and dropped willfulness as a required element under sections 1125(a) and (d). The Fifth Circuit considered the amendment confirmation that willfulness was not required.
The Eighth Circuit is the only circuit that has not addressed the impact of the amendment. As of today, six circuits still consider willfulness a requirement to award profits, six circuits only treat it as one factor, and the Eighth Circuit has not addressed it.
Circuit splits like this are often resolved the Supreme Court. That Court has never issued an opinion on the issue before or after the 1999 amendments. So what might it do?
A recent Supreme Court decision may shed some light on its inclination. In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), the Supreme Court was asked to interpret the language allowing attorneys fees to be awarded in “exceptional” patent cases. Although Octane Fitness was a patent case, much of the language in the patent statutes is very similar to the Lanham Act and so courts routinely interpret the statutes synonymously.
In Octane Fitness, the Court rooted its decision in the language of the statute: “Our analysis begins and ends with the text of § 285: ‘The court in exceptional cases may award reasonable attorney fees to the prevailing party.’ This text is patently clear. It imposes one and only one constraint on district courts’ discretion to award attorney’s fees in patent litigation: The power is reserved for ‘exceptional’ cases.” Id. at 553.
When the Supreme Court eventually rules on the issue of what it takes to award profits, it is likely to take the same approach: start and end with the language of the statute. It permits an award of profits subject to one caveat: “subject to the principles of equity.” It is likely that the Supreme Court will hold that willfulness should be considered, but that there is no statutory basis for making it a prerequisite.