Two long-stand fashion fights will finally get their day in the Supreme Court with oral arguments this week.
The cases might offer some clarity on just what the penalties should be for accidentally stepping on another’s trademark and how to resolve fashion feuds when competitors can’t put the past behind them.
The accidental infringer was Fossil, which sold some handbags with counterfeit magnetic snap fasteners. On Tuesday, the U.S. Supreme Court will hear arguments on when a company accused of trademark infringement should lose its profits for the transgression.
The question for the high court in Romag Fasteners Inc. v. Fossil Inc. boils down to one of intent. Can a trademark owner demand damages in the form of an infringer’s profits only if the company was found to have purposely or recklessly — or “willfully,” as the legal standard goes — infringed a trademark? Or is it enough to show that the trademark was infringed at all, even if perhaps just in an oversight?
The question has far-reaching implications for brand owners and apparel-makers, where long supply chains involve overseas manufacturers and suppliers that may wind up with counterfeit parts. Such was the case for Fossil, which had an agreement with Connecticut-based Romag Fasteners to use its fasteners in its products, though a Chinese manufacturer who made the disputed bags in this case apparently ended up using counterfeit Romag fasteners on some products.
“It’s a cautionary tale for companies to make sure they’re exerting control over manufacturers in other countries,” said Danielle Johnson, an attorney at Goldberg Kohn and a former trademark attorney at the U.S. Patent & Trademark Office.
A representative for Fossil Group Inc. said the company does not comment on pending litigation.
The case draws attention to some of the monetary remedies that companies often pursue under the Lanham Act, the federal trademark statute, but it also highlights the legal liability brands face in these cases.
In the Fossil case, which went to trial in April 2014, a jury had found that Fossil had infringed Romag’s trademark but that it was not willful. The jury still went on to find that Romag was entitled to some $6.8 million in profits from Fossil, but the court overseeing the dispute did not grant that award, saying that Fossil’s infringement needed to be willful in order for Romag to pursue its profits.
“One of the things you’re often looking for with a trademark lawsuit is you want the infringer to stop — you want the court to issue an injunction so you can stop this likelihood of confusion between you and the defendant,” said Edward Weisz, who co-chairs the patent prosecution practice at Cozen O’Connor.
“But you also want to know, when can I get money, when can I get their profits?” he said.
And then there are those companies that can’t seem to bury the hatchet.
On Monday, the Court is scheduled to hear oral arguments in Lucky Brand Dungarees Inc. v. Marcel Fashion Group Inc., a case between two brands that have butted heads for nearly two decades over Marcel’s “Get Lucky” trademark and Lucky’s own trademarks.
That case is less about trademark law, and more about how parties can re-litigate claims and issues that they already more or less resolved in a previous case or through a past settlement. It also has implications for companies’ legal strategy in successive disputes with the same parties, over arguably the same trademarks.
“I think because a trademark is a living, breathing entity, it changes over time and it’s important that the parties essentially foresee what could happen in the future when settling a dispute,” said Thomas Williams, an intellectual property litigator at Ulmer & Berne LLP.
“This case is going to shed some light on the effect of a prior settlement as the brand evolves,” he said.