Romag Fasteners, Inc. v. Fossil, Inc. , 817 F.3d 782 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
ROMAG FASTENERS, INC.,
Plaintiff-Appellant
v.
FOSSIL, INC., FOSSIL STORES I, INC., MACY’S,
INC., MACY’S RETAIL HOLDINGS, INC., BELK,
INC., THE BON-TON STORES, INC., THE BON-TON
DEPARTMENT STORES, INC., DILLARD’S, INC.,
NORDSTROM, INC., ZAPPOS.COM, INC., ZAPPOS
RETAIL, INC.,
Defendants-Cross-Appellants
______________________
2014-1856, 2014-1857
______________________
Appeals from the United States District Court for the
District of Connecticut in Nos. 3:10-cv-01827-JBA, 3:11-
cv-00929-CFD, Judge Janet Bond Arterton.
______________________
Decided: March 31, 2016
______________________
JONATHAN FREIMAN, Wiggin and Dana LLP, New Ha-
ven, CT, argued for plaintiff-appellant. Also represented
by TONIA A. SAYOUR, NORMAN H. ZIVIN, Cooper & Dun-
ham, LLP, New York, NY.
JEFFREY E. DUPLER, Gibney Anthony & Flaherty,
LLP, New York, NY, argued for defendants-cross appel-
2 ROMAG FASTENERS, INC. v. FOSSIL, INC.
lants. Also represented by LAWRENCE BROCCHINI, Reavis
Parent Lehrer LLP, New York, NY; LAUREN ALBERT, Law
Offices of Lauren S. Albert, New York, NY; NICHOLAS
GEIGER, Cantor Colburn LLP, Hartford, CT.
______________________
Before DYK, WALLACH, and HUGHES, Circuit Judges.
DYK, Circuit Judge.
Romag Fasteners, Inc. (“Romag”) owns U.S. Patent
No. 5,777,126 (“the ’126 patent”) on magnetic snap fas-
teners, which Romag sells under its registered trademark,
ROMAG. Romag sued Fossil, Inc. and Fossil Stores I, Inc.
(together, “Fossil”), along with retailers of Fossil products,
alleging, inter alia, patent and trademark infringement. A
jury found Fossil liable for both patent and trademark
infringement and made advisory awards. The district
court reduced the patent damages because of Romag’s
laches and held as a matter of law that Romag could not
recover Fossil’s profits for trademark infringement be-
cause the jury had found that Fossil’s trademark in-
fringement was not willful. We affirm.
BACKGROUND
Romag sells magnetic snap fasteners (for wallets,
purses, handbags, and other products) under its regis-
tered trademark, ROMAG. The fasteners are also covered
by the claims of Romag’s ’126 patent. Fossil designs,
markets, and distributes fashion accessories, including
handbags and small leather goods, and contracts with
independent businesses to manufacture its products. In
2002, Fossil and Romag entered into an agreement to use
ROMAG magnetic snap fasteners in Fossil products.
Pursuant to the agreement, Fossil instructed its author-
ized manufacturers of handbags and other products to
purchase, where necessary, ROMAG fasteners from Wing
Yip Metal Manufactory Accessories Limited (“Wing Yip”),
ROMAG FASTENERS, INC. v. FOSSIL, INC. 3
a Romag licensee located in China that manufactures all
of Romag’s fasteners.
One of Fossil’s authorized manufacturers, Superior
Leather Limited (“Superior”), purchased tens of thou-
sands of ROMAG fasteners from Wing Yip between 2002
and 2008. However, between August 2008 and November
2010, Superior purchased only a few thousand fasteners.
In 2010, Howard Reiter, the founder and president of
Romag, discovered that certain Fossil handbags contained
counterfeit fasteners. Romag filed suit against Fossil on
November 22, 2010, alleging patent infringement, trade-
mark infringement, false designation of origin, common
law unfair competition, and violation of Connecticut’s
Unfair Trade Practices Act. Romag moved for a temporary
restraining order and preliminary injunction on Novem-
ber 23, 2010, three days before “Black Friday,” the high-
est-volume shopping day in the United States (when the
motion would have maximum impact on Fossil’s sales). 1
On April 4, 2014, after a seven-day trial, the jury re-
turned a verdict finding Fossil liable for patent and
trademark infringement. For patent infringement, the
jury awarded a reasonable royalty of $51,052.14. For
trademark infringement, the jury made an advisory
award of $90,759.36 of Fossil’s profits under an unjust
enrichment theory, and $6,704,046.00 of Fossil’s profits
under a deterrence theory. But, despite determining as
part of its deterrence-based award that Fossil had acted
with “callous disregard” for Romag’s trademark rights,
the jury found that Fossil’s patent and trademark in-
1 On November 30, 2010, the district court granted
Romag’s motion for a temporary restraining order (later
converted into a preliminary injunction), enjoining Fossil
from selling or offering for sale Fossil handbags bearing
counterfeit ROMAG fasteners.
4 ROMAG FASTENERS, INC. v. FOSSIL, INC.
fringement was not willful. After a two-day bench trial to
address equitable defenses and equitable adjustment of
the amount of profits awarded by the jury, the district
court held that Romag’s delay in bringing suit until just
before “Black Friday” constituted laches, and reduced the
jury’s reasonable royalty award for patent infringement
by 18% to exclude sales made during the period of delay. 2
The district court also held as a matter of law that, be-
cause Fossil’s trademark infringement was not willful,
Romag was not entitled to an award of Fossil’s profits.
Romag appealed, and Fossil filed a conditional cross-
appeal challenging the jury instructions as to the award
of profits. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1). We review the district court’s legal conclu-
sions de novo. Arkema Inc. v. Honeywell Int’l, Inc., 706
F.3d 1351, 1356 (Fed. Cir. 2013). We apply our own law
with respect to issues of substantive patent law and the
law of the regional circuit with respect to non-patent
issues. Baden Sports, Inc. v. Molten USA, Inc., 556 F.3d
1300, 1304 (Fed. Cir. 2009).
DISCUSSION
I
We first address Romag’s argument that Fossil cannot
invoke a laches defense to patent infringement. Romag
relies on the Supreme Court’s decision in Petrella v.
Metro-Goldwyn-Mayer, Inc., which held that the equitable
defense of laches cannot be invoked as a defense against a
claim for copyright infringement. 134 S. Ct. 1962, 1974
2 Notably, in deciding whether to impose sanctions
on Romag and its counsel, the district court found that
Romag engaged in a pattern of misleading filings and that
a declaration filed in support of a temporary restraining
order was “misleading in several respects.” J.A. 29–33.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 5
(2014). After briefing in this case, we held en banc that
laches remains a defense to legal relief in a patent in-
fringement case because “Congress codified a laches
defense in 35 U.S.C. § 282(b)(1).” SCA Hygiene Prods.
Aktiebolag v. First Quality Baby Prods., LLC, 807 F.3d
1311, 1321 (Fed. Cir. 2015) (en banc). As Romag conceded
at oral argument, SCA Hygiene controls here. The district
court did not err in holding that Fossil could bring a
laches defense to a patent infringement claim.
II
We next address Romag’s contention that the district
court erred in holding that a trademark owner must prove
that the infringer acted willfully to recover the infringing
defendant’s profits.
A
Before 1999, § 35(a) of the Lanham Act, codified at 15
U.S.C. § 1117(a), provided that plaintiffs who had estab-
lished “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 . . . 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).
The Supreme Court has never addressed whether
proof of willfulness is required to recover the infringer’s
profits either as a matter of traditional equitable princi-
ples or under the pre-1999 version of § 1117(a). The
closest the Court came was in a pre-Lanham Act decision,
Saxlehner v. Siegel-Cooper Co., 179 U.S. 42 (1900). There,
the Court held that, under the common law, “an injunc-
tion should issue against [three trademark infringers],
but that, as [one defendant] appears to have acted in good
faith, and the sales of the other[] [defendants] were small,
they should not be required to account for gains and
6 ROMAG FASTENERS, INC. v. FOSSIL, INC.
profits.” Id. at 42–43. In contrast, in Hamilton-Brown
Shoe Co. v. Wolf Brothers & Co., another pre–Lanham Act
decision, the Court affirmed an accounting of the infring-
er’s profits where the “defendant [did] not stand as an
innocent infringer” but, rather, “the findings of the court
of appeals, supported by abundant evidence, show[ed]
that the imitation of complainant’s mark was fraudulent,
[and the defendant] persiste[d] in the unlawful simulation
in the face of the very plain notice of [the trademark
owner’s] rights.” 240 U.S. 251, 261 (1916); see also
McLean v. Fleming, 96 U.S. 245, 257 (1877) (reversing an
award of an accounting of profits where “acquiescence of
long standing [was] proved . . . and inexcusable laches in
seeking redress” and explaining that an accounting is
“constantly refused . . . in case[s] of acquiescence or want
of fraudulent intent”).
The Restatement of Unfair Competition, beginning
with a tentative draft approved in 1991 and as eventually
adopted in 1993, took the position that “[o]ne . . . is liable
for the net profits earned on profitable transactions
resulting from [trademark infringement], but only if . . .
the actor engaged in the conduct with the intention of
causing confusion or deception.” Restatement (Third) of
Unfair Competition § 37(1) (1995); Restatement (Third) of
Unfair Competition § 37(1) (Tent. Draft. No. 3, 1991).
Before 1999, however, there was a division in the courts of
appeals as to whether willfulness was required under the
“principles of equity” standard adopted in the statute.
Several courts of appeals determined that a finding of
willfulness was required for an award of the defendant’s
profits. Among these was the Second Circuit, whose law
governs here. The Second Circuit took the view that
“under [15 U.S.C. § 1117(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.” George Basch Co. v. Blue Coral, Inc., 968
F.2d 1532, 1540 (2d Cir. 1992); see also Int’l Star Class
ROMAG FASTENERS, INC. v. FOSSIL, INC. 7
Yacht Racing Ass’n v. Tommy Hilfiger, U.S.A., Inc., 80
F.3d 749, 753 (2d Cir. 1996) (“In order to recover an
accounting of an infringer’s profits, a plaintiff must prove
that the infringer acted in bad faith.”). The Second Circuit
reasoned that “this requirement 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 defend-
ant’s gain. Thus, an accounting may overcompensate for a
plaintiff’s actual injury and create a windfall judgment at
the defendant’s expense.” Id. (citing the Restatement
(Third) of Unfair Competition § 37 cmt. e (Tent. Draft.
No. 3, 1991)). And, in the Second Circuit, while “a finding
of willful deceptiveness is necessary in order to warrant
an accounting for profits . . . it may not be sufficient”—
generally, there are other factors to be considered.
Among these are such familiar concerns as: (1) the
degree of certainty that the defendant benefited
from the unlawful conduct; (2) availability and
adequacy of other remedies; (3) the role of a par-
ticular defendant in effectuating the infringement;
(4) plaintiff’s laches; and (5) plaintiff’s unclean
hands. The district court’s discretion lies in as-
sessing the relative importance of these factors
and determining whether, on the whole, the equi-
ties weigh in favor of an accounting. As the Lan-
ham Act dictates, every award is “subject to
equitable principles” and should be determined
“according to the circumstances of the case.”
George Basch, 968 F.2d at 1540–41 (citations omitted).
Before the 1999 amendment, the District of Columbia
Circuit also held that “an award based on a defendant’s
profits requires proof that the defendant acted willfully or
in bad faith,” ALPO Petfoods, Inc. v. Ralston Purina Co.,
913 F.2d 958, 968 (D.C. Cir. 1990) (Thomas, J.), as did the
Third Circuit, SecuraComm Consulting Inc. v. Securacom
8 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Inc., 166 F.3d 182, 190 (3d Cir. 1999) (Alito, J.) (“[A]
plaintiff must prove that an infringer acted willfully
before the infringer’s profits are recoverable.”), overruled
by Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 175 (3d
Cir. 2005), and the Tenth Circuit, Bishop v. Equinox Int’l
Corp., 154 F.3d 1220, 1223 (10th Cir. 1998) (an award of
profits requires proof that “defendant’s actions were
willful or in bad faith”). 3
But the willfulness requirement was not uniformly
adopted. The Fifth Circuit held that “whether the defend-
ant had the intent to confuse or deceive” is simply a
“relevant factor[] to the court’s determination of whether
an award of profits is appropriate.” Pebble Beach Co. v.
Tour 18 I Ltd., 155 F.3d 526, 554 (5th Cir. 1998); see also
Roulo v. Russ Berrie & Co., 886 F.2d 931, 941 (7th Cir.
1989) (“Other than general equitable considerations,
there is no express requirement that . . . the infringer
wilfully infringe the trade dress to justify an award of
profits.”); Wynn Oil Co. v. Am. Way Serv. Corp., 943 F.2d
595, 607 (6th Cir. 1991) (holding that the plaintiff is not
required to prove actual confusion to recover profits, and
quoting the Seventh Circuit rule that “there is no express
requirement . . . that the infringer willfully infringe . . . to
justify an award of profits”) (internal quotation marks
omitted) (quoting Roulo, 886 F.2d at 941); Burger King
Corp. v. Mason, 855 F.2d 779, 781 (11th Cir. 1988) (“Nor
is an award of profits based on either unjust enrichment
3 See also Aktiebolaget Electrolux v. Armatron Int’l,
Inc., 999 F.2d 1, 6 (1st Cir. 1993) (“[D]amages have never
been allowed under the deterrence or unjust enrichment
theories absent some form of fraud.”) (internal quotation
marks omitted); Lindy Pen Co. v. Bic Pen Corp., 982 F.2d
1400, 1406 (9th Cir. 1993) (an accounting of profits was
not justified where a “trademark was weak and Bic’s
infringement was unintentional”).
ROMAG FASTENERS, INC. v. FOSSIL, INC. 9
or deterrence dependent upon a higher showing of culpa-
bility on the part of the defendant, who is purposely using
the trademark.”).
Romag argues that George Basch and other pre-1999
authority requiring willfulness are no longer applicable in
light of the 1999 statutory amendment to the Lanham
Act.
Understanding the 1999 amendment requires starting
in 1996. Before 1996, and at the time of the Second Cir-
cuit’s decision in George Basch, the monetary relief provi-
sions of the Lanham Act permitted recovery only for
violations of § 1125(a), i.e., trademark infringement and
false advertising. In 1996, Congress amended the Lanham
Act to create a cause of action for trademark dilution,
providing for injunctive relief and also monetary relief if
the dilution was “wilfully intended.” See Federal Trade-
mark Dilution Act of 1995, Pub. L. No. 104-98, § 3, 109
Stat. 985, 985–86 (1996) (codified at 15 U.S.C. § 1125(c)
(1997)). 4
4
Section 1125, as amended in 1996, provided,
(a) Civil action
(1) Any person who, on or in connection with any
goods or services . . . , uses in commerce any word,
term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or
misleading description of fact, or false or mislead-
ing representation of fact, which—
(A) is likely to cause confusion, . . . as to the
affiliation, connection, or association of such
person with another person . . . or,
(B) in commercial advertising or promotion,
misrepresents the nature . . . of his or her or
10 ROMAG FASTENERS, INC. v. FOSSIL, INC.
But the effort to award monetary relief for willful di-
lution was ineffective because the new dilution provision
made available “the remed[y] set forth in section[]
1117(a)” without amending § 1117(a) to provide for such
another person’s goods, services, or commer-
cial activities,
shall be liable in a civil action . . . .
(b) Importation
Any goods marked or labeled in contravention of
the provisions of this section shall not be imported
into the United States . . . .
(c) Remedies for dilution of famous marks
(1) The owner of a famous mark shall be entitled,
subject to the principles of equity . . . to an injunc-
tion against another person’s commercial use in
commerce of a mark or trade name, if such use
begins after the mark has become famous and
causes dilution of the distinctive quality of the
mark, and to obtain such other relief as is provid-
ed in this subsection. . . .
(2) In an action brought under this subsection, the
owner of the famous mark shall be entitled only to
injunctive relief unless the person against whom
the injunction is sought willfully intended to trade
on the owner’s reputation or to cause dilution of
the famous mark. If such willful intent is proven,
the owner of the famous mark shall also be enti-
tled to the remedies set forth in sections 1117(a)
and 1118 [(i.e., destruction of infringing articles)]
of this title, subject to the discretion of the court
and the principles of equity. . . .
15 U.S.C. § 1125 (1997) (1996 amendment underscored).
ROMAG FASTENERS, INC. v. FOSSIL, INC. 11
monetary remedies in the case of dilution. Id. In 1999,
Congress amended § 1117(a) to correct this error. See
Trademark Amendments Act of 1999, Pub. L. No. 106-43,
§ 3(b), 113 Stat. 218, 219. 5 The current version of
§ 1117(a) reads,
[w]hen 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 in
any civil action arising under this chapter, the
plaintiff shall be entitled, subject to the provisions
of sections 1111 and 1114 of this title, and subject
to the principles of equity, to recover (1) defend-
ant’s profits, (2) any damages sustained by the
plaintiff, and (3) the costs of the action.
15 U.S.C. § 1117(a) (2014) (new language added by 1999
amendment underscored).
5 The 1999 amendment substituted the phrase “a
willful violation under [section 1125(a)] of this title, or a
willful violation under [section 1125(c)] of this title,” for “a
violation under [section 1125(a)] of this title.” Trademark
Amendments Act of 1999, Pub. L. No. 106-43, § 3(b), 113
Stat. 218, 219. Later in 1999, Congress amended
§ 1117(a) to insert “, (c), or (d)” after “[section 1125(a)]” in
the first sentence. Anticybersquatting Consumer Protec-
tion Act, Pub. L. No. 106-113, § 3003, 113 Stat. 1501,
1501A-549 (1999). In 2002, Congress removed the redun-
dant reference by substituting “a violation under [section
1125(a)] or (d) of this title,” for “a violation under [section
1125(a)], (c), or (d) of this title.” Intellectual Property and
High Technology Technical Amendments Act of 2002,
Pub. L. No. 107-273, § 13207(a), 116 Stat. 1758, 1906.
12 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Romag contends that the 1999 change made clear that
“Congress chose to make willful infringement a prerequi-
site to recovery of monetary relief for trademark dilution,”
but when “Congress chose not to insert ‘willful’ before
‘violation under section 43(a) [1125(a)],’ [it] made plain
that it did not intend willful infringement to be a prereq-
uisite to recovery of monetary relief for the other types of
infringement covered by that section, including the sale of
counterfeits.” Appellant’s Br. at 37.
This argument has had varied success in the courts of
appeals. After the 1999 amendment, the Fifth Circuit
continued to hold that willfulness is not a prerequisite to
an award of infringer’s profits for violations of § 1125(a).
See Quick Techs., Inc. v. Sage Group PLC, 313 F.3d 338,
349 (5th Cir. 2002) (“In accordance with our previous
decisions, and in light of the plain language of § 1117(a),
however, we decline to adopt a bright-line rule in which a
showing of willful infringement is a prerequisite to an
accounting of profits.”). The Third Circuit reversed course,
holding that the 1999 amendment barred a willfulness
requirement, see Banjo Buddies, Inc. v. Renosky, 399 F.3d
168, 175 (3d Cir. 2005) (“By adding this word [‘willful’] to
the statute in 1999, but limiting it to [§ 1125(c)] viola-
tions, Congress effectively superseded the willfulness
requirement as applied to [§ 1125(a)].”), and the Fourth
Circuit held that a finding of willfulness is not required,
see Synergistic Int’l, LLC v. Korman, 470 F.3d 162, 175
(4th Cir. 2006) (“[A]lthough willfulness is a proper and
important factor in an assessment of whether to make a
damages award, it is not an essential predicate thereto.”);
see also Laukus v. Rio Brands, Inc., 391 F. App’x 416, 424
(6th Cir. 2010) (“Although showing willfulness is not
required, willfulness is one element that courts may
consider in weighing the equities.”).
Other courts of appeals considering the issue found a
willfulness requirement for an award of the infringer’s
profits. See Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A.,
ROMAG FASTENERS, INC. v. FOSSIL, INC. 13
Inc., 778 F.3d 1059, 1073–74 (9th Cir. 2015) (“Awarding
profits is proper only where the defendant is attempting
to gain the value of an established name of another.
Willful infringement carries a connotation of deliberate
intent to deceive.”) (quoting Lindy Pen, 982 F.2d at 1406),
cert. denied, 136 S. Ct. 410; M2 Software Inc. v. Viacom
Inc., 223 F. App’x 653, 656 (9th Cir. 2007) (characterizing
the argument that the 1999 amendment negated the
willfulness requirement as a “shaky assumption”); see also
Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 191 (1st
Cir. 2012) (“[O]ur cases usually[, with the exception of
direct competition cases,] require willfulness . . . to allow
either (1) more than single damages or (2) a recovery of
the defendant’s profits.”); 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.”); 5 J. Thomas McCarthy, McCarthy on Trade-
marks and Unfair Competition § 30.62 (2015) (“Th[e]
reading of Congressional intent [as removing the willful-
ness requirement] is inaccurate. In fact, the 1999
amendment of Lanham Act § 35(a) was not intended to
change the law by removing willfulness as a requirement
for an award of profits in a classic infringement case, but
rather was meant to correct a drafting error . . . . The
courts have leveraged this statutory change beyond its
intended scope . . . .”).
Critically important for us, however, is the rule fol-
lowed in the Second Circuit. Contrary to Romag’s argu-
ment, the willfulness rule was reaffirmed by the Second
Circuit. In Merck Eprova AG v. Gnosis S.p.A., a district
court found that Gnosis had misrepresented the purity of
certain nutritional supplement products and was liable
for violating section 43(a) of the Lanham Act, 15 U.S.C.
§ 1125(a). 760 F.3d 247, 252–53 (2d Cir. 2014). The dis-
trict court found that Gnosis had willfully deceived its
14 ROMAG FASTENERS, INC. v. FOSSIL, INC.
customers and awarded Gnosis’s profits to prevent its
unjust enrichment, to compensate Merck for the business
it lost as a result of Gnosis’s false advertising, and to
deter future unlawful conduct. Id. at 262. The Second
Circuit restated its rule that “a finding of defendant’s
willful deceptiveness is a prerequisite for awarding prof-
its,” id. at 261 (quoting George Basch, 968 F.2d at 1537),
and affirmed the district court’s award of profits, as
“willful, deliberate deception [had] been proved,” id. at
262.
While the Second Circuit has not directly addressed
the 1999 amendment, 6 we see nothing in the 1999
amendment that permits us to declare that the governing
Second Circuit precedent is no longer good law.
First, the limited purpose of the 1999 amendment was
simply to correct an error in the 1996 Dilution Act. The
legislative history of the Trademark Amendments Act of
1999 does not indicate that Congress contemplated its
addition of “or a willful violation under section § 1125(c),”
6 See Fendi Adele, S.R.L. v. Ashley Reed Trading,
Inc., 507 F. App’x 26, 31 (2d Cir. 2013) (noting that “some
of our sister circuits [held] that a 1999 amendment to the
Lanham Act changed the governing rule” regarding
willfulness, but “assuming arguendo that [the trademark
owner] [was] still required to prove willfulness” and
finding that the district court properly determined that
the defendant willfully infringed).
The Eighth Circuit has also recognized the question
presented by the 1999 amendment but has not yet re-
solved the issue. See Masters v. UHS of Del., Inc., 631
F.3d 464, 471 n.2 (8th Cir. 2011) (acknowledging the issue
of the “effect of amendments to the Lanham Act Congress
made in 1999” but “assum[ing], without deciding, that
willful infringement is a prerequisite of monetary relief”).
ROMAG FASTENERS, INC. v. FOSSIL, INC. 15
as affecting any change to the willfulness requirement for
violations of § 1125(a). See H.R. Rep. No. 106-250, at 6
(1999). Rather, the legislative history indicates only that
Congress sought to correct the mistaken omissions, from
the text of 15 U.S.C. §§ 1117(a) and 1118, of willful viola-
tions of § 1125(c). Id. 7 In short, there is no indication that
Congress in 1999 intended to make a change in the law of
trademark infringement as opposed to dilution. The
history does not even acknowledge the pre-1999 split in
the courts of appeals on the willfulness requirement for a
recovery of infringer’s profits, much less indicate a desire
to change it. Given the alleged significance of the purport-
ed change, one would have expected to see an acknowl-
edgement or discussion from Congress of the courts of
appeals cases in the relevant area if Congress had intend-
ed to resolve the circuit conflict. See Dir. of Revenue of Mo.
7 The House Judiciary Committee Report stated,
[s]ection three seeks to clarify that in passing the
[Federal Trademark] Dilution Act, Congress did
intend to allow for injunctive relief and/or damag-
es against a defendant found to have wilfully in-
tended 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 neces-
sary changes to sections 35(a) [1117(a)] and 36
[1118] 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) [1117(a)] and 36 [1118]
to allow for injunctive relief and damages.
See H.R. Rep. No. 106-250, at 6.
16 ROMAG FASTENERS, INC. v. FOSSIL, INC.
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.”).
Second, the language of the statute as to infringement
liability remained unchanged with regard to the award of
profits under the “principles of equity.” 15 U.S.C.
§ 1117(a). By reenacting that standard, Congress could
not have ratified a consistent judicial construction of
§ 1117(a) because there was a split in the courts of ap-
peals, at the time of the 1999 amendment, as to the
willfulness requirement. See Jama v. Immigration &
Customs Enf’t, 543 U.S. 335, 349 (2005) (holding that
Congress could not have ratified a “settled construction”
of a statute, because there was no “judicial consensus so
broad and unquestioned that we must presume Congress
knew of and endorsed it”); Metro. Stevedore Co. v. Rambo,
515 U.S. 291, 299 (1995) (no ratification where cases
“were not uniform in their approach”).
Third, the inserted language concerning willfulness in
dilution cases does not create a negative pregnant that
willfulness is always required in dilution cases but never
for infringement. The cases relied on by Romag where a
negative pregnant was inferred involve statutory provi-
sions enacted at the same time. See, e.g., Duncan v.
Walker, 533 U.S. 167, 172–73 (2001) (comparing 28 U.S.C.
§ 2244(d)(2) with §§ 2254(i), 2261(e), and 2264(a)(3), all
enacted by the Antiterrorism and Effective Death Penalty
Act of 1996, Pub. L. No. 104-132, 110 Stat. 1214 (1996));
see also Bates v. United States, 522 U.S. 23, 29 (1997)
(comparing two provisions “enacted at the same time”).
The evolution of § 1117(a) is more comparable to when
two closely related statutes are enacted at different times.
See Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 647
(2010); id. at 656 (Scalia, J., concurring). We do not think
ROMAG FASTENERS, INC. v. FOSSIL, INC. 17
that Congressional intent can be inferred from an
amendment passed years after the fact to address a
drafting error. See H.R. Rep. No. 106-250, at 6 (1999).
In any event, the “willful violation” language added in
1999 to cover dilution cannot simply be explained as a
desire to distinguish dilution cases from violations of
§ 1125(a) for purposes of profits awards. The “willful
violation” language was necessary to distinguish dilution
cases from, inter alia, infringement cases in the area of
damages (as opposed to profits), since it was established
in the courts of appeals that willfulness was not required
for damages recovery, see 5 J. Thomas McCarthy, McCar-
thy on Trademarks and Unfair Competition § 30.75
(2015), and Congress wished to limit damages awards for
dilution to cases involving willfulness. So too, even with
respect to awards of profits in dilution cases, the addition
of “willful violation” was necessary to establish a uniform
rule since the courts of appeals were divided as to the
willfulness requirement in the infringement context, and
silence might have generated a circuit split in the dilution
area.
In sum, we see nothing in the 1999 amendment that
allows us to depart from Second Circuit precedent requir-
ing willfulness for the recovery of profits in infringement
cases.
B
In a final effort to find support for its position in the
Lanham Act, Romag argues that various other provisions
of the Act assume that there is no willfulness requirement
for the award of an infringer’s profits. We are uncon-
vinced. Section 1117(c) provides for statutory damages as
an alternative to actual damages and profits for counter-
feit marks, allowing a higher statutory award for willful
use of counterfeit marks. Nothing can be inferred from
this provision, particularly since it applies both to damag-
es and profits, and then only in cases of counterfeiting.
18 ROMAG FASTENERS, INC. v. FOSSIL, INC.
Similarly uninformative is the imposition of a fraud or
bad faith requirement for the award of attorney’s fees, see
Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83,
108, 111 (2d Cir. 2012), and the two exceptions in
§ 1117(a) to monetary liability for two categories of inno-
cent infringers—infringers who had no notice under
§ 1111, and certain “innocent infringers,” e.g., those
“engaged solely in the business of printing the mark” or a
“publisher or distributor of [a] newspaper, magazine, or
other similar periodical or electronic communication” with
paid advertising matter containing the mark,
§ 1114(2)(A), (B). Romag also argues that “early bills that
ultimately culminated in the Lanham Act explicitly
provided that ‘there shall be no recovery of profits from
any defendant whose adoption and use of an infringing
mark was in good faith . . . ,’” and that the absence of that
language in the Lanham Act indicates that Congress
rejected that limitation. Appellant’s Br. at 51–52. We are
not persuaded that this limitation in the proposed acts,
reflecting the common law of trademarks, was not incor-
porated within the Lanham Act’s “principles of equity”
standard. See, e.g., H.R. 13109, 70th Cong. § 30 (1928)
(“[T]his Act is declaratory of the common law of trade-
marks . . . and in case of doubt its provisions are to be
construed accordingly.”).
We conclude that the 1999 amendment to the Lanham
Act left the law where it existed before 1999—namely, it
left a conflict among the courts of appeals as to whether
willfulness was required for recovery of profits. We ac-
cordingly follow the Second Circuit’s decision in George
Basch as reaffirmed in Merck. Under that standard, we
agree with the district court that Romag is not entitled to
recover Fossil’s profits, as Romag did not prove that Fossil
infringed willfully.
ROMAG FASTENERS, INC. v. FOSSIL, INC. 19
III
Fossil submits a conditional cross-appeal challenging
the jury instructions as to profits. Because we affirm, we
do not reach the questions presented by the conditional
cross-appeal.
AFFIRMED
COSTS
Costs to Fossil.