Amicus Curiae Brief — Romag Fasteners, Inc., Petitioner v. Fossil Group, Inc., fka Fossil, Inc., et al.

No. 18-1233

In the

Supreme Court of the United States

ROMAG FASTENERS, INC..

Petitioner,

v.

FOSSIL, INC., et al.,

Respondents.

On Writ of Certiorari to the United States

Court of A ppeals for the Federal Circuit

BRIEF FOR AMICUS CURIAE INTELLECTUAL

PROPERTY OWNERS ASSOCIATION IN

SUPPORT OF NEITHER PARTY

Henry Hadad

President

Kevin H. Rhodes

Chair, Amicus Brief Committee

Intellectual Property Owners

A ssociation

1501 M Street N.W., Suite 1150

Washington, D.C. 20005

(202) 507-4500

Paul H. Berghoff

Counsel of Record

Eric R. Moran

Nicole E. Grimm

McDonnell Boehnen

Hulbert & Berghoff LLP

300 South Wacker Drive

Chicago, IL 60606

(312) 913-0001

berghoff@mbhb.com

Counsel for Amicus Curiae

291268

A

(800) 274-3321 • (800) 359-6859

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . ii

INTEREST OF THE AMICUS CURIAE . . . . . . . . . . . 1

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

I.

A WILLFULNESS REQUIREMENT IS

CONSISTENT WITH THE STATUTORY

INTERPRETATION OF § 1117(A) . . . . . . . . . . . 3

II. A WILLFULNESS REQUIREMENT

IS CONSIST EN T W I T H “ T H E

PRINCIPLES OF EQUITY” . . . . . . . . . . . . . . . 8

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a

ii

TABLE OF CITED AUTHORITIES

Page

CASES

ALPO Petfoods, Inc. v. Ralston Purina Co.,

913 F.2d 958 (D.C. Cir. 1990) . . . . . . . . . . . . . . . . . . . . 4

Banjo Buddies, Inc. v. Renosky,

399 F.3d 168 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . 5

Bishop v. Equinox Int’l Corp.,

154 F.3d 1220 (10th Cir. 1998) . . . . . . . . . . . . . . . . . . . 4

Dir. of Revenue of Mo. v. CoBank ACB,

531 U.S. 316 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fishman Transducers, Inc. v. Paul,

684 F.3d 187 (1st Cir. 2012) . . . . . . . . . . . . . . . . . . . . . 8

Frisch’s Restaurants, Inc. v.

Elby’s Big Boy of Steubenville, Ohio,

849 F.2d 1012 (6th Cir. 1988) . . . . . . . . . . . . . . . . . . . . 4

George Basch Co. v. Blue Coral, Inc.,

968 F.2d 1532 (2d Cir. 1992) . . . . . . . . . . . . . . . . 4, 9, 10

Merck Eprova AG v. Gnosis S.p.A.,

760 F.3d 247 (2d Cir. 2014) . . . . . . . . . . . . . . . . . . . . . . 8

Nat’l Ass’n of Home Builders v. Defs. of Wildlife,

551 U.S. 644 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

iii

Cited Authorities

Page

Pebble Beach Co. v. Tour 18 I Ltd.,

155 F.3d 526 (5th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . 4

Romag Fasteners, Inc. v. Fossil, Inc.,

817 F.3d 782 (Fed. Cir. 2016), cert. granted,

judgment vacated, 137 S. Ct. 1373 (2017) . . . . passim

Saxlehner v. Siegel-Cooper Co.,

179 U.S. 42 (1900) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Stone Creek, Inc. v. Omnia Italian Design, Inc.,

875 F.3d 426 (9th Cir. 2017), cert. denied,

138 S. Ct. 1984 (2018) . . . . . . . . . . . . . . . . . . . . . . . . . . 7

W. Diversified Servs., Inc. v.

Hyundai Motor Am., Inc.,

427 F.3d 1269 (10th Cir. 2005) . . . . . . . . . . . . . . . . . 8, 9

Whitman v. Am. Trucking Ass’ns, Inc.,

531 U.S. 457 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

STATUTES

15 U.S.C. § 1117(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

15 U.S.C. § 1125(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 7, 8

15 U.S.C. § 1125(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

15 U.S.C. § 1125(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

iv

Cited Authorities

Page

Pub. L. No. 104-98, 109 Stat. 985 (1996) . . . . . . . . . . . . . 6

Restatement (Third) of Unfair Competition

§ 37 cmt. e (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

MISCELLANEOUS

H.R. Rep. No. 106-250 (1999) . . . . . . . . . . . . . . . . . . . . . . 6

1

INTEREST OF THE AMICUS CURIAE

Amicus cur iae Intellectual Property Ow ners

Association (IPO) is a trade association representing

companies and individuals in all industries and fields

of technology who own or are interested in intellectual

property rights.1 IPO’s membership includes more than

175 companies and more than 12,000 individuals who are

involved in the association either through their companies

or as inventors, authors, executives, law firms, or attorney

members. The corporate members of IPO own tens of

thousands of trademarks and rely on the federal trademark

system to protect these valuable assets. Founded in 1972,

IPO represents the interests of all owners of intellectual

property. IPO regularly represents the interests of its

members before government entities and has filed amicus

curiae briefs in this Court and other courts on significant

issues of intellectual property law. The IPO Board of

Directors approved the filing of this brief. 2

This case presents a question of substantial practical

impor tance to IPO’s members: namely, whether

under section 35(a) of the Lanham Act, 15 U.S.C.

§ 1117(a), willful infringement is a threshold determination

for an award of an infringer’s profits for a violation of

1. No counsel for a party authored this brief in whole or in

part, and no such counsel or party made a monetary contribution

intended to fund the preparation or submission of this brief.

No person other than the amicus curiae or its counsel made

a monetary contribution to its preparation. Both parties have

consented to the filing of this brief through blanket consent letters.

2. IPO procedures require approval of positions in briefs by

a two-thirds majority of directors present and voting.

2

15 U.S.C. § 1125(a). Because consistency among the

federal courts of appeals is important to all trademark

owners, especially for an issue that frequently arises

during trademark infringement actions, IPO respectfully

requests that this Court resolve the conflict and find that

willfulness is required. 3

SUMMARY OF THE ARGUMENT

This case presents an issue of first impression before

the Supreme Court. The federal courts of appeals

have long been split regarding whether willfulness

is a threshold requirement or just one factor to be

considered in awarding defendant’s profits for a violation

of § 1125(a). The plain language and legislative history of

§ 35(a) of the Lanham Act, codified at 15 U.S.C. § 1117(a),

makes clear that willfulness is a prerequisite to recover

profits for a violation of § 1125(a). This is true even in

light of the 1999 amendments to § 1117(a). Furthermore,

a willfulness requirement is necessary to balance the

equities in disgorgement of a defendant’s profits and to

prevent a potential windfall judgment to the plaintiff. For

these reasons, IPO respectfully requests that this Court

resolve the conflict among the federal courts of appeals

and find that willfulness is a prerequisite for recovering

a defendant’s profits for a violation of § 1125(a).

3. IPO takes no position on the other aspects of the Federal

Circuit’s decision.

3

ARGUMENT

I.

A WILLFU LN ES S REQUIREMEN T IS

C O N S I S T E N T W I T H T H E S TAT U T O RY

INTERPRETATION OF § 1117(A)

The remedies provision of 15 U.S.C. § 1117(a), when

properly interpreted, provides that a court can only award

defendant’s profits when there has been a showing of

willfulness. Section 1117(a), which was last amended in

1999, states in relevant part:

W hen a v iol at ion of a ny r i ght of t he

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 in any civil action arising

under this chapter, the plaintiff shall be

entitled, subject to the principles of equity, to

recover (1) defendant’s profits ….

Although the current version of the statute requires a

“willful violation” for recovery under the § 1125(c) dilution

provisions, prior to the amendments in 1999, § 1117(a) did

not explicitly recite a “willfulness” requirement. Rather,

§ 1117(a) did not address dilution and instead recited that a

plaintiff’s award shall simply be “subject to the principles

of equity.” As stated by the Federal Circuit below,

§ 1117(a):

[P]rovided that plaintiffs who had established “a

violation of any right of the registrant of a mark

registered in the Patent and Trademark Office,

or a violation under section § 1125(a) of this title

4

... shall be entitled ... subject to the principles of

equity, to recover (1) defendant’s profits, (2) any

damages sustained by the plaintiff, and (3) the

costs of the action.” 15 U.S.C. § 1117(a) (1996)

(emphasis added) (amended 1999).

Romag Fasteners, Inc. v. Fossil, Inc., 817 F.3d 782, 785

(Fed. Cir. 2016), cert. granted, judgment vacated, 137 S.

Ct. 1373 (2017).

In applying the pre-1999 statute, courts of appeals

in several, but not all, circuits required a showing of

willfulness as a prerequisite for an award of a defendant’s

profits in cases involving § 1125(a). See Bishop v. Equinox

Int’l Corp., 154 F.3d 1220, 1223 (10th Cir. 1998) (“[A]

n award of profits requires a showing that defendant’s

actions were willful or in bad faith.”); George Basch Co.

v. Blue Coral, Inc., 968 F.2d 1532, 1540 (2d Cir. 1992)

(“[U]nder § 35(a) of the Lanham Act, a plaintiff must

prove that an infringer acted with willful deception

before the infringer’s profits are recoverable by way of an

accounting.”); ALPO Petfoods, Inc. v. Ralston Purina Co.,

913 F.2d 958, 968 (D.C. Cir. 1990) (“[A]n award based on a

defendant’s profits requires proof that the defendant acted

willfully or in bad faith.”); Frisch’s Restaurants, Inc. v.

Elby’s Big Boy of Steubenville, Ohio, 849 F.2d 1012, 10151016 (6th Cir. 1988) (affirming the district court’s refusal

of accounting because the defendant’s actions were not

“willful, malicious, or fraudulent” and noting that “[f]or a

court to order an accounting under § 35(a), bad faith must

be shown”); but see Pebble Beach Co. v. Tour 18 I Ltd., 155

F.3d 526, 554 (5th Cir. 1998) (noting that “intent to confuse

or deceive” was a relevant factor in determining whether

to award profits, but that the court “has not required a

particular factor to be present”).

5

Following the 1999 amendment, some courts used the

inclusion of “willful” for dilution claims as evidence that

willfulness is not required for an accounting of profits in

infringement claims. For example, the Third Circuit has

stated:

The plain language of the amendment indicates

that Congress intended to condition monetary

awards for § 43(c) violations, but not § 43(a)

violations, on a showing of willfulness. We

presume Congress was aware that most

courts had consistently required a showing

of willfulness prior to disgorgement of an

infringer’s profits in Lanham Act cases,

despite the absence of the word “willful” in

the statutory text prior to 1999. … By adding

this word to the statute in 1999, but limiting

it to § 43(c) violations, Congress effectively

superseded the willfulness requirement as

applied to § 43(a).

Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 174–75 (3d

Cir. 2005) (citation omitted).

Although statutory construction principles may

sometimes require that the expression of one term implies

the exclusion of others, such a canon assumes that the

language was written and considered at the same time.

See, e.g., Romag, 817 F.3d at 790. Here, however, because

the dilution language was added decades after the original

language, this rule of statutory construction should not be

applied. See, e.g., id. at 785 (describing history).

6

In fact, the legislative history supports the conclusion

that Congress did not intend to abrogate any willfulness

requirement with its 1999 amendment. Instead, the

amendment was intended to “correct the mistaken

omissions” from the Lanham Act when the Dilution

Act was passed. Id. at 789. As explained by the House

Judiciary Committee Report:

Section three seeks to clarify that in passing the

[Federal Trademark] Dilution Act, Congress

did intend to allow for injunctive relief and/

or damages against a defendant found to have

wilfully intended to engage in commercial

activity that would cause dilution of a famous

mark.... The language of the Dilution Act

presented to the President for signing did not

include the necessary changes to sections 35(a)

and 36 of the Trademark (Lanham) Act of 1946

as referred to in the Dilution Act. Therefore,

in an attempt to clarify Congress’ intent and

to avoid any confusion by courts trying to

interpret the statute, section three makes the

appropriate changes to sections 35(a) and 36 to

allow for injunctive relief and damages.

H.R. Rep. No. 106-250, at 6 (1999) (emphasis added). In

other words, the Federal Trademark Dilution Act of 1995

required “willful intent” to invoke remedies for dilution

under § 1117(a), but mistakenly omitted from § 1117(a)

amendments expanding its scope to cover such willful

violations. See id.; Pub. L. No. 104-98, 109 Stat. 985 (1996).

The legislative history reflects no intent or discussion

concerning the meaning of “violation” as it relates to

7

infringement claims under §1125(a), even though a split

existed on the issue prior to the 1999 amendment, as

discussed above. As the Federal Circuit in Romag stated,

“[g]iven the alleged significance of the purported change,

one would have expected to see an acknowledgement or

discussion from Congress of the courts of appeals cases in

the relevant area if Congress had intended to resolve the

circuit conflict.” Id. at 790 (quoting Dir. of Revenue of Mo.

v. CoBank ACB, 531 U.S. 316, 323-24 (2001) (“[I]t would

be surprising, indeed, if Congress ... made a radical—

but entirely implicit—change ... [with a] ‘technical and

conforming amendment[ ].’”) (citation omitted); Whitman

v. Am. Trucking Ass’ns, Inc., 531 U.S. 457, 468 (2001)

(“Congress does not “hide elephants in mouseholes.”)).

Accordingly, the 1999 amendment should be considered

in the context of the entire statutory scheme. See Nat’l

Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644,

666 (2007) (“[A] reviewing court should not confine itself to

examining a particular statutory provision in isolation….

It is a fundamental canon of statutory construction that

the words of a statute must be read in their context and

with a view to their place in the overall statutory scheme.”)

(citations omitted). Below, the Federal Circuit properly

applied this cannon of statutory construction to conclude

that the 1999 amendment did not disturb the “Second

Circuit precedent requiring willfulness for the recovery

of profits in infringement cases.” Romag, 817 F.3d at 791.

The First, Second, Ninth, and Tenth Circuits have also

found that willfulness is a prerequisite for an award of

profits following the 1999 amendment. See Stone Creek,

Inc. v. Omnia Italian Design, Inc., 875 F.3d 426, 439

(9th Cir. 2017), cert. denied, 138 S. Ct. 1984 (2018) (“We

agree with the district court that the 1999 amendment

8

has not changed the state of the law on disgorgement and

that willfulness is still required.”); Merck Eprova AG v.

Gnosis S.p.A., 760 F.3d 247, 261 (2d Cir. 2014) (“[U]nder

any theory, a finding of defendant’s willful deceptiveness

is a prerequisite for awarding profits.”) (citation omitted);

Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 191

(1st Cir. 2012) (noting that the court “usually requires

willfulness” to allow for “a recovery of the defendant’s

profits,” except for cases involving direct competition);

W. Diversified Servs., Inc. v. Hyundai Motor Am., Inc.,

427 F.3d 1269, 1270 (10th Cir. 2005) (“We hold that the

willfulness required to support an award of profits

under the Lanham Act typically requires an intent to

appropriate the goodwill of another’s mark.”).

Thus, the 1999 amendment left the conflict among

the courts of appeals regarding whether willfulness is

required to recover a defendant’s profits unresolved. IPO

believes this Court should resolve the conflict in line with

courts that interpret § 1117(a) to require willfulness for

recovery of profits.

II. A W I L L F U L N E S S R E Q U I R E M E N T I S

CONSISTENT WITH “THE PRINCIPLES OF

EQUITY”

A willfulness requirement for awarding defendant’s

profits for a violation of § 1125(a) is consistent with the

equitable considerations for awarding profits. These

equitable considerations are grounded in common law,

which required willfulness for an accounting, and are

expressly required in § 1117(a). See, e.g., Saxlehner v.

Siegel-Cooper Co., 179 U.S. 42, 42–43 (1900) (applying

common law to hold that “an injunction should issue

9

against all . . . defendants, but that, as the [one defendant]

appears to have acted in good faith, and the sales of the

others were small, they should not be required to account

for gains and profits.”); § 1117(a) (stating that “the plaintiff

shall be entitled, subject to the principles of equity, to

recover (1) defendant’s profits….”) (emphasis added).

As the Federal Circuit explained in Romag by citing

Second Circuit case law, requiring a finding of willfulness

“is necessary to avoid the conceivably draconian impact that

a profits remedy might have in some cases. While damages

directly measure the plaintiff’s loss, defendant’s profits

measure the defendant’s gain. Thus, an accounting may

overcompensate for a plaintiff’s actual injury and create

a windfall judgment at the defendant’s expense.” Romag,

817 F.3d at 785–86 (quoting George Basch, 968 F.2d at 1540

(citing the Restatement (Third) of Unfair Competition

§ 37 cmt. e (1991))).

And as set forth by the Second Circuit in George

Basch, “to limit what may be an undue windfall to the

plaintiff, and prevent the potentially inequitable treatment

of an ‘innocent’ or ‘good faith’ infringer, most courts

require proof of intentional misconduct before allowing a

plaintiff to recover the defendant’s profits.” 968 F.2d at

1540 (citing Restatement § 37 cmt. e).

Furthermore, requiring willfulness is appropriate

“[g]iven the punitive nature of the remedy and the possible

windfall to the plaintiff,” otherwise such an award could

lead to “inequity,” particularly when a plaintiff seeks

profits when there are no actual damages. W. Diversified

Servs., 427 F.3d at 1272–73. Indeed, when defendant’s

profits are awarded for the purpose of deterrence, such

10

award is not “compensatory in nature,” rather it serves

“to protect the public at large” from fraudulent use of

another’s mark. George Basch, 968 F.2d at 1539 (“By

awarding the profits of a bad faith infringer to the rightful

owner of a mark, we promote the secondary effect of

deterring public fraud regarding the source and quality

of consumer goods and services.”).

Permitting the disgorgement of a defendant’s profits

only upon a showing of bad faith or willfulness also

discourages vexatious trademark litigation. By bringing a

trademark infringement suit threatening a defendant with

having to turn over all of its profits, a less than scrupulous

trademark owner could extract settlement payments well

in excess of any harm actually suffered. Requiring a

showing of willfulness or bad faith by accused infringers

will eliminate this unwarranted settlement leverage

without harming the legitimate value of trademark rights.

11

CONCLUSION

IPO respectfully requests that the Supreme Court

resolve the conflict among federal courts of appeals and

find that willfulness is a prerequisite for recovering a

defendant’s profits for a violation of § 1125(a).

Respectfully submitted,

Henry Hadad

President

Kevin H. Rhodes

Chair, Amicus Brief Committee

Intellectual Property Owners

A ssociation

1501 M Street N.W., Suite 1150

Washington, D.C. 20005

(202) 507-4500

Paul H. Berghoff

Counsel of Record

Eric R. Moran

Nicole E. Grimm

McDonnell Boehnen

Hulbert & Berghoff LLP

300 South Wacker Drive

Chicago, IL 60606

(312) 913-0001

berghoff@mbhb.com

Counsel for Amicus Curiae

APPENDIX

1a

Appendix OF THE BOARD

APPENDIX1 — MEMBERS

OF DIRECTORS INTELLECTUAL PROPERTY

OWNERS ASSOCIATION

Eric Aaronson

Pfizer Inc.

Karen Cochran

Shell Oil Company

Brett Alten

Hewlett Packard

Enterprise

Buckmaster de Wolf

General Electric Co.

Ron Antush

Nokia Inc.

Estelle Bakun

Exxon Mobil Corp.

Scott Barker

Micron Technology, Inc.

Thomas R. Beall

Corning Incorporated

Steve Caltrider

Eli Lilly and Co.

John J. Cheek

Tenneco Inc.

Cara Coburn

Roche Inc.

Robert DeBerardine

Johnson & Johnson

Anthony DiBartolomeo

SAP AG

Daniel Enebo

Cargill, Inc.

Louis Foreman

Enventys

Scott M. Frank

AT&T

Darryl P. Frickey

Dow Chemical Co.

Gary C. Ganzi

Evoqua Water

Technologies, LLC

1. IPO procedures require approval of positions in briefs by

a two-thirds majority of directors present and voting.

2a

Appendix

Tanuja Garde

Raytheon Co.

Michael C. Lee

Google Inc.

Krish Gupta

Dell Technologies

Kelsey L. Milman

Caterpillar Inc.

Henry Hadad

Bristol-Myers

Squibb Co.

Micky Minhas

Microsoft Corp.

Bill Harmon

Uber

John Harris

Ford Global

Technologies LLC

Heath Hoglund

Dolby Laboratories

Jeffrey Myers

Apple Inc.

Ted Naccarella

InterDigital Corp.

Ross Oehler

Johnson Matthey Inc.

Ken K. Patel

Procter & Gamble Co.

Thomas R. Kingsbury

Bridgestone Americas, KaRan Reed

Inc.

BP America, Inc.

Laurie Kowalsky

Koninklijke Philips

N.V.

Kevin H. Rhodes

3M Innovative

Properties Co.

William Krovatin

Merck & Co., Inc.

Paik Saber

Medtronic, Inc.

3a

Appendix

Matthew Sarboraria

Oracle USA Inc.

Manny Schecter

IBM Corp.

Jessica Sinnott

DuPont

Thomas Smith

GlaxoSmithKline

Todd N. Spalding

Alexion

Pharmaceuticals

John Stewart

Intellectual Ventures

Management Corp.

Daniel Staudt

Siemens Corp.

Brian Suffredini

United Technologies

Corp.

Gillian Thackray

Thermo Fisher

Scientific Inc.

Joerg Thomaier

Bayer Intellectual

Property GmbH

Mark Wadrzyk

Qualcomm Inc.

Stuart L. Watt

Amgen, Inc.

Ariana Woods

Capitol One