Romag Fasteners, Inc. v. Fossil, Inc.
817 F.3d 782
| Fed. Cir. | 2016Background
- Romag Fasteners owns U.S. Patent No. 5,777,126 and sells magnetic snap fasteners under the ROMAG trademark; Fossil sold handbags using such fasteners and contracted manufacturers (some licensed by Romag).
- In 2002 Fossil and Romag had a supply arrangement; from 2008–2010 Fossil’s manufacturer purchased far fewer licensed fasteners, and Romag later discovered counterfeit fasteners in Fossil products.
- Romag sued Fossil in November 2010 for patent and trademark (Lanham Act § 1125(a)) infringement and sought a TRO/PI just before Black Friday; a TRO/PI issued temporarily.
- A jury (2014) found Fossil liable for patent and trademark infringement, awarding a reasonable royalty for patent and advisory profits awards for trademark (one based on deterrence, one on unjust enrichment), but found infringement not willful.
- After bench proceedings the district court applied laches to reduce the patent royalty (excluding sales during the delay) and held, as a matter of law under Second Circuit precedent, that Romag could not recover Fossil’s profits because Romag had not proved willful trademark infringement.
- Romag appealed; the Federal Circuit affirmed: laches remains a defense to patent claims (SCA Hygiene controlling), and willfulness is required under Second Circuit law to recover profits for § 1125(a) trademark claims, so profits award was improper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether laches can be asserted as a defense to a patent infringement claim | Romag: Petrella forbids laches against statutory IP claims (citing copyright precedent) | Fossil: Laches remains available in patent cases; Congress codified laches in 35 U.S.C. § 282(b)(1); SCA Hygiene controls | Laches is available in patent suits; district court properly applied laches (SCA Hygiene governs) |
| Whether willfulness is a prerequisite to recover an infringer's profits under the Lanham Act for § 1125(a) claims | Romag: 1999 amendment to § 1117(a) (adding willful language for dilution) shows Congress did not require willfulness for § 1125(a) profits | Fossil: Second Circuit precedent requires proof of willful deceptiveness before awarding profits; 1999 amendment did not alter that rule | Willfulness is required under the governing Second Circuit rule; Romag failed to prove willfulness, so profits recovery was improper |
| Whether the district court erred by reducing the jury’s patent royalty due to laches (equitable adjustment) | Romag: reduction was improper | Fossil: reduction appropriate to account for plaintiff’s delay | Affirmed: district court permissibly reduced the reasonable royalty to exclude sales during the period of delay |
| Conditional cross-appeal challenge to jury instructions on profits | Fossil: jury instructions were erroneous (conditional) | Romag: N/A (not reached absent reversal) | Not reached: because the panel affirmed, the court did not resolve the conditional cross-appeal |
Key Cases Cited
- SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 807 F.3d 1311 (Fed. Cir. 2015) (en banc) (laches remains a defense to patent legal relief; Congress codified laches in the patent statute)
- Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) (Supreme Court holding laches unavailable as defense to copyright damages claims)
- George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992) (Second Circuit rule that willful deceptiveness is a prerequisite to awarding defendant's profits under § 1117(a))
- Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247 (2d Cir. 2014) (affirming Second Circuit’s willfulness prerequisite where willful deception was proven)
- Saxlehner v. Siegel-Cooper Co., 179 U.S. 42 (1900) (pre-Lanham Act authority limiting profit recovery for innocent infringers)
- Hamilton-Brown Shoe Co. v. Wolf Bros., 240 U.S. 251 (1916) (pre-Lanham Act authority affirming accounting of profits when imitation was fraudulent)
- Banjo Buddies, Inc. v. Renosky, 399 F.3d 168 (3d Cir. 2005) (Third Circuit holding that 1999 amendment eliminated a willfulness requirement for § 1125(a) profits)