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21 September 2020
On 23 April 2020 the Supreme Court ruled that a plaintiff in a Lanham Act trademark infringement case may recover a defendant's profits without having to prove that the defendant acted wilfully. This precedential decision will make it easier for plaintiffs to obtain monetary recovery for trademark violations and false advertising under the Lanham Act.
Previously, plaintiffs in certain appellate circuits were required to prove that a defendant had acted wilfully in order to disgorge the defendant's profits – a challenging evidentiary burden that often weighed against pursuing a case to judgment. In April 2020 the Supreme Court resolved this circuit split, unanimously agreeing that wilfulness is not required for profits recovery. Justice Gorsuch wrote the majority opinion, with concurrences by Justices Alito and Sotomayor.
Because a profits award is subject to principles of equity, the court noted that "a trademark defendant's mental state [will remain] a highly important consideration in determining whether an award of profits is appropriate". However, "acknowledging that much is a far cry from insisting on the inflexible precondition to recovery" of proving wilfulness.
Thus, while battles will likely continue over a defendant's intent, this decision provides a significant boost to plaintiffs which are pursuing claims for trademark infringement under the Lanham Act. The same should hold true for false advertising claims under the act, which involve the same statutory provision at issue in this case. The threat of a profits award alone may make defendants think twice about proceeding through trial.
For further information on this topic please contact Martin L Saad at Venable LLP by telephone (+1 202 344 4000) or email (firstname.lastname@example.org). The Venable LLP website can be accessed at www.venable.com.
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