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Supreme Court to Determine Whether Fossil Must Turn Over Profits for Trademark Infringement

Fossil, Inc., the luxury goods retailer, could owe a manufacturer, Romag Fasteners, Inc., its profits for infringing on Romag’s trademark. The issue of whether Fossil owes Romag approximately $6.7 million dollars in profits gained by using the infringing trademark depends on whether the remedy of disgorgement of profits by a party infringing on a trademark requires willfulness by the infringing party.

The issue arises from Fossil using a magnetic snap fastener on some of its bags, purchasing some of the fasteners directly from Romag. However, Fossil also purchased some fasteners that looked nearly identical to those of Romag from another source, likely knowing that the fasteners were counterfeit and infringed on the trademark of Romag. Despite this knowledge, Fossil proceeded to use them anyways in “callous disregard” to the rights of Romag. In a moment of luck for Romag, an employee discovered the counterfeit products when visiting a Macy’s, finding the Fossil bags with the counterfeit fastener. Romag successfully argued that Fossil infringed on their trademark rights, but an open question regarding the remedy remains. The United States Supreme Court will determine whether the remedy includes the profits of Fossil, and such decision will be based on whether Fossil must willfully infringe on Romag’s trademark rights or if “callous disregard” is sufficient to entitle Romag to the profits of Fossil.

This case highlights the broader importance of protecting the brand and intellectual property of a company. Traditionally, this means taking active steps to ensure that the trademarks, copyrights, trade secrets, and patents are protected under applicable law, but it should also mean proactively verifying that the initiatives of the company don’t infringe on the rights of another. Failure to take consider trademark rights, as Fossil is learning the hard way, could result in disgorgement of profits.