Continuing to feed its appetite for trademark rulings, the U.S. Supreme Court has recently granted petitions for certiorari of two Second Circuit decisions implicating trademark law. The first case could change the burden of proof for recovering an infringer’s profits as damages in trademark disputes, while the second case may limit a defendant’s ability to invoke new defenses to trademark claims. Both cases have the potential to create seismic shifts in trademark jurisprudence.
In Romag Fasteners, Inc. v. Fossil Inc. the justices will decide on an issue splitting the circuit courts: whether awards of an infringer’s profits from trademark infringement require evidence that the infringer acted willfully. The Ninth Circuit—like the Second Circuit, where this appeal originated—predicates profits awards on the plaintiff’s ability to prove that any infringement is willful. But other circuit courts do not require a showing of willful infringement for damages to be awarded. Romag argues that the “willfulness requirement sets the bar too high” by forcing mark holders to prove that infringement of their trademark was intentional. This high burden arguably fails to adequately deter trademark infringement. Ninth Circuit precedent will be reversed if the high court rules in favor of Romag, eroding mark holders’ burden of proof, thus raising the likelihood of securing meaningful monetary relief from trademark infringement. The case should be closely monitored over the Court’s next term, since it could open the door for an increase in trademark suits.
Defendants in trademark infringement disputes may face new challenges when invoking defenses after the U.S. Supreme Court rules in Lucky Brand Dungarees, Inc. v. Marcel Fashion Group, Inc. The Court will consider another Second Circuit ruling that permitted a plaintiff’s new claims, but reasoned that federal preclusion principles bar corresponding defenses not previously invoked. Judge John Walker penned the decision, explaining how, under certain conditions, claim preclusion may prohibit parties “from litigating defenses that they could have asserted in an earlier action.” If the justices agree with Judge Walker, defense strategies in trademark disputes would require a defendant to invoke all possible defenses when challenging a plaintiff’s claim, even before new claims are pleaded. Lucky argues that an affirmative ruling by the Supreme Court would run “roughshod over basic preclusion principles and basic common sense” because it would call on defendants to predict all defenses they may need to invoke in the future.
These cases follow a trend showing the Supreme Court’s interest in clarifying intellectual property law, even if it involves upsetting settled expectations. A resolution of both cases will likely come in the spring of next year, potentially affecting trademark law for years to come.