Romag Fasteners, Inc. v. Fossil, Inc. et al

Filing 471

FINDINGS OF FACT AND CONCLUSIONS OF LAW Signed by Judge Janet Bond Arterton on 6/27/14.(Torday, B.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ROMAG FASTENERS, INC.,
Plaintiff,
v.
FOSSIL, INC., et al.,
Defendants.

Civil No. 3:10cv1827 (JBA)

June 27, 2014

MEMORANDUM OF DECISION
On April 3, 2014, after a seven-day trial, a jury returned a verdict finding
Defendants Fossil, Inc. and Fossil Stores I, Inc. (“Fossil”) liable for trademark
infringement, false designation of origin, state common law unfair competition, and
violation of the Connecticut Unfair Trade Practices Act (“CUTPA”). (See Jury Verdict
[Doc. # 417].) The jury also found Fossil and Macy’s, Inc. and Macy’s Retail, Inc.
(“Macy’s”) liable for patent infringement. (Id.) The jury returned a verdict of no liability
for the remaining defendants, and found that neither Fossil nor Macy’s had willfully
infringed Plaintiff Romag Fasteners, Inc.’s (“Romag”) patent or trademark. (Id.) The
jury made an advisory award of $90,759.36 of Fossil’s profits for trademark infringement
under an unjust enrichment theory and $6,704,046.00 of Fossil’s profits for trademark
infringement under a deterrence theory and determined that one percent of Fossil’s
profits were attributable to its infringement of the ROMAG mark. (Id.) Finally, the jury
awarded a reasonable royalty of $51,052.14 against Fossil and $15,320.61 against Macy’s
for patent infringement. (Id.)
The Court then held a two-day bench trial on April 8 and 9, 2014 to address “the
equitable defenses of estoppel, acquiescence, unclean hands, and laches; the equitable
adjustment of the amount of profits awarded by the jury; the calculation of punitive

damages; treble damages; attorneys’ fees; and the amount of statutory damages to be
awarded,” (Ruling Granting Mot. to Bifurcate [Doc. # 360] ¶ 15), as well as Romag’s claim
for a permanent injunction.1 Defendants also asserted that Romag failed to mitigate its
damages and sought sanctions as a result of Romag’s conduct in procuring a temporary
restraining order (“TRO”) at the outset of this case. (See Defs.’ Prop. Findings of Fact and
Conclusions of Law [Doc. # 419] at 42–45.)
For the following reasons, the Court concludes that Defendants have failed to
establish that Romag is barred from relief by unclean hands or that Romag had a duty to
mitigate its damages. However, the Court concludes that Defendants have established
their laches defense and that the Court should impose sanctions. The Court further
concludes as a matter of law that based on the jury’s finding that the trademark
infringement in this case was not willful, Romag is not entitled to recover an award of
Fossil’s profits associated with that infringement. Finally, a permanent injunction will
enter against Fossil.
I.

Findings of Fact
Based on the evidence presented during the seven-day jury trial and the two-day

bench trial, the Court makes the following findings of fact with respect to the affirmative
defenses and the other equitable issues in this case.
1

In their Proposed Findings of Fact and Conclusions of Law [Doc. # 419],
Defendants address only the unclean hands and laches defenses, in addition to a newly
asserted defense of failure to mitigate damages. Thus, this ruling will not address the
defenses of acquiescence or estoppel. The issue of attorneys’ fees, and any potential
election of statutory damages by Romag will be addressed in separate rulings. This ruling
also will not address the calculation of punitive damages, because the jury did not find
such damages warranted in this case, nor will it address treble damages, because the jury
found that Fossil’s trademark infringement was not willful, and because Romag did not
brief the issue in its Proposed Findings of Fact and Conclusions of Law [Doc. # 421] or its
Trial Memorandum in Support of Damages [Doc. # 448].
2

A.

The Parties

Romag is a corporation organized under the laws of the State of Connecticut
having a place of business in Milford, Connecticut. (Trial. Tr. Vol. VI [Doc. # 438] at
1398.) Howard Reiter founded Romag in 1996 and has served as its President ever since.
(Trial Tr. Vol. I [Doc. # 433] at 79–80.) Romag manufactures magnetic snap fasteners
that are protected by United States Patent No. 5,777,126 (the “‘126 Patent”) (see Pl.’s Ex.
1), which it owns by assignment (Trial Tr. Vol. VI at 1398–1401), and sells them under its
registered trademark, “ROMAG,” (see Pl.’s Ex. 2; Trial Tr. Vol. VI at 1398–1401). These
snaps are manufactured in factories in China by a company called Wing Yip Metal
Manufactory Accessories Limited (“Wing Yip”). (Defs.’ Ex. 548; Trial Tr. Vol. I at 82–85,
121–25.) When Mr. Reiter decided to manufacture ROMAG snaps in Hong Kong, he
was looking for “a very deep relationship,” and so in 1997 he started Wing Yip with
Timmy Cheung, whose family had previously worked with Mr. Reiter’s family. (Trial Tr.
Vol. I at 122.) Although the companies are distinct legal entities, Mr. Reiter considers
Mr. Cheung to be his business partner. (Id. at 122–23.) Wing Yip employs inspectors in
its Chinese factories to monitor its production, but Romag also has its own inspectors in
China, who work directly for Romag and are Mr. Reiter’s “eyes and ears on the ground in
China.” (Id. at 111.)
All of the goods that Wing Yip manufacturers are made for Romag. (Id. at 123.)
Pursuant to the License Agreement between these two companies, Wing Yip pays Romag
a $0.05 royalty for every snap it sells. (Defs.’ Ex. 548.) Wing Yip’s first factory—Kong
Yip—was located in mainland China. (Trial Tr. Vol. I at 124.) In 2004, Mr. Reiter and
Mr. Cheung decided to open an additional factory, called Timake. (Id. at 125.) Mr.
Reiter financed the construction of this factory, and purchased new equipment for
3

production there. (Id. at 126–27.) The machinery used to make ROMAG snaps at Kong
Yip was also transferred to Timake, which began producing ROMAG snaps in December
2007. (Id. at 127–28.) In early 2008, the workers at Kong Yip went on strike, the factory
was shut down, and some of the manufacturing equipment there was seized. (Id. at 222.)
Several former Wing Yip employees left the company at that time, and started a new
manufacturing company known as Hechuang Metal Manufactory (“Hechuang”), which
was not an authorized manufacturer of ROMAG snaps. (Pl.’s Ex. 27.)
Fossil is a corporation organized under the laws of the State of Delaware, having a
place of business in Richardson, Texas (Trial Tr. Vol. VI at 1398), which designs, markets,
and distributes fashion accessories, including jewelry, handbags, and small leather goods,
(Trial Tr. Vol. IV [Doc. # 436] at 899), and sells its products through its own retail stores
and website, and through other retailers, including the Retailer Defendants: Macy’s, Belk,
Inc., The Bon-Ton Stores, Inc., The Bon-Ton Department Stores, Inc., Dillard’s, Inc.,
Nordstrom, Inc., Zappos.com, Inc., and Zappos Retail, Inc., (Trial Tr. Vol. VI at 1400).
Like Romag, Fossil does not manufacture its products itself, but rather, contracts with
independent business entities to do so. (Pl.’s Ex. 47.)

One of Fossil’s independent

authorized manufacturers is Superior Leather Limited a/k/a Dong Guan Red Lion Leather
Products, Limited (“Superior”), which operates a factory in China. (Id.; Trial Tr. Vol. VI
at 1401.)

Superior manufactured the handbags at issue in this case on behalf of Fossil.

(Id.) As Fossil’s designated manufacturer, Superior, not Fossil, purchases the component
parts for handbags, including the magnetic snaps used in the handbags at issue in this
case. (Trial Tr. Vol. III [Doc. # 435] at 527–28.)
In 2002, Romag and Fossil entered into an agreement for the use of ROMAG
magnetic snap fasteners in Fossil products. (Pl.’s Exs. 37–39; Trial Tr. Vol. I at 144–45.)
4

Pursuant to the agreement, Fossil instructed its factories, where necessary, to purchase
ROMAG snaps from Wing Yip. (Pl.’s Ex. 38; Trial Tr. Vol. I at 144.) Via Wing Yip,
Romag has sold magnetic snaps to Superior for use by multiple designers and retailers
since 2001. (Trial Tr. Vol. I at 138, 168.) Although Mr. Reiter was forwarded an email in
July 2002 identifying Superior as a Fossil manufacturer (see Pl.’s Ex. 42), the invoices
between Wing Yip and Superior would not typically have identified the orders as being
specifically for Fossil (Trial Tr. Vol. I at 146–47.) From 2002 through 2008, Superior
purchased tens of thousands of ROMAG snaps from Wing Yip for use in Fossil products.
(Pl.’s Ex. 35.) However, between August 2008 and the commencement of this action,
Superior purchased only a few thousand ROMAG snaps from Wing Yip. (Id.; see also
Pl.’s Ex. 54.) On December 2, 2010, in response to Fossil’s inquiries after this action
commenced, Superior informed Fossil that it had purchased ROMAG snaps from a
manufacturer that was “not the authorized licensee of Romag.” (Pl.’s Ex. 53A.)
B.

Prior Instances of Counterfeiting

Three years before the events at issue here, in November 2007, shortly before
Thanksgiving, Mr. Reiter testified that he discovered that counterfeit ROMAG snaps were
being used in handbags for sale at J.C. Penney. (Trial Tr. Vol. I at 231–32.) Mr. Reiter
stated that he discovered these bags during a routine shopping trip to the J.C. Penney
store near his office. (J.C. Penney Reiter Decl. [Doc. # 5] ¶¶ 8–9, Romag Fasteners, Inc. v.
J.C. Penney Co. (“Romag I”), Civil No. 07cv1667 (JBA) (D. Conn. 2007).) On November
12, 2007, Romag’s counsel in this action, Attorney Norman Zivin sent a cease and desist
letter to J.C. Penney detailing the alleged counterfeiting. (Defs.’ Ex. 557.) The next day,
Romag filed suit against J.C. Penney, and on November 15, 2007, moved for a TRO and
preliminary injunction enjoining J.C. Penney from selling the accused products. (See
5

Compl. [Doc. # 1], Mot. for TRO [Doc. # 3], and Mot. for Prelim. Inj. [Doc. # 6], Romag
I.) On November 28, 2007, after a hearing, this Court granted Romag’s motion for a TRO
and a Preliminary Injunction. (TRO Order [Doc. # 22], Romag I.) A few weeks later, the
parties reached a settlement in the suit and the TRO was dissolved. (Stip. Of Dismissal
[Doc. # 30], Romag I.)
In November 2009, Romag again discovered the presence of counterfeit ROMAG
snaps in the market, this time, on handbags being sold by DSW, Inc. (“DSW”). (Id. at
233). One of Mr. Reiter’s employees received a bag with purchase at DSW and discovered
that the bag contained a snap with the ROMAG mark. (Id.) On November 17, 2009,
almost two years to the day from the last counterfeiting incident, Attorney Zivin sent a
cease and desist letter to DSW demanding that it immediately discontinue the sale of the
accused products. (Defs.’ Ex. 560.) The two companies were able to reach a settlement
agreement regarding the handbags before a civil action was initiated. (Defs.’ Ex. 564.)
Romag never informed Fossil about either incident, nor warned Fossil about the presence
of counterfeit ROMAG snaps in the United States market. (Trial Tr. Vol. I at 232–34.)
C.

Romag’s Discovery of Counterfeiting by Fossil

On May 12, 2010, Mr. Reiter received an email from an unidentified former
employee of Wing Yip who went by the name “Joe.” (Pl.’s Ex. 27.) In the email “Joe”
stated that another factory in China had been producing magnetic snap fasteners bearing
the ROMAG mark without authorization. (Id.) On May 19, 2010, Mr. Reiter replied to
the email, inquiring as to the identity of the factory and asking whether it was “the factory
that many former workers from [W]ing [Y]ip went to.” (Id.) Mr. Reiter further stated
that the identity of the handbag maker using the snaps was the most important
information for him because “it is hard for the law to work in [C]hina . . . easier in [the]
6

USA.” (Id.) On May 20, 2010, “Joe” responded to Mr. Reiter’s queries, identifying
Hechuang as the factory in question and attaching two Superior invoices to the email to
indicate which manufacturer was purchasing the unauthorized snaps. (Id.) Mr. Reiter
testified that the only brand that he knew to be associated with Superior at that time was
the defunct Ruehl division of Abercrombie & Fitch, and that because Ruehl had ceased
operations, he felt that contacting Abercrombie & Fitch about the email would be futile.
(Trial Tr. Vol. I at 169–70.)

Mr. Reiter testified that he did not search his email

correspondence for any references to Superior when he received the email from “Joe” in
May, but he did perform such a search in October or November, and found an email
identifying Superior as a Fossil manufacturer. (Trial Tr. Vol. IX [Doc. # 442] at 1685–86.)
The next day, on May 21, 2010, Mr. Reiter contacted Attorney Zivin on four
separate occasions. (Trial Tr. Vol. II [Doc. # 434] at 294–95; Defs.’ Ex. 584.) Then, on
May 24, 2010, Mr. Reiter’s sister-in-law, Elissa Ellant Katz, contacted his wife—Jody
Ellant, who is Romag’s General Counsel, (Trial Tr. Vol. II at 295)—to report to Ms. Ellant
that she had discovered ROMAG snaps on Fossil handbags at a Macy’s store in Boca
Raton, Florida, where she and her daughter had been shopping, (Trial Tr. Vol. I at 155;
Trial Tr. Vol. IX at 1689). Ms. Ellant was concerned by this discovery because she did not
believe that Fossil was a Romag customer, so she asked her sister to purchase several bags
and send them to her in Connecticut. (Trial. Tr. Vol. I at 155, 157.) Ms. Ellant also went
to the Macy’s in Milford Connecticut and purchased additional Fossil bags containing
ROMAG snaps. (Id. at 155; Trial Tr. Vol. IX at 1689–90.) Ms. Ellant told Mr. Reiter
about her discovery and her suspicion that these were counterfeit snaps, but he assured
her that Fossil was a customer. (Trial Tr. Vol. I at 155–57.) Mr. Reiter testified that he
did not suspect that the snaps were counterfeit because he knew Fossil was a customer.
7

(Id. at 157–58.) Mr. Reiter testified that he put the bags that Ms. Katz and Ms. Ellant had
purchased aside for several months. (Trial. Tr. Vol. II at 299.)
In July 2010, Mr. Reiter traveled to the Timake factory in China, but did not
investigate the information he had received regarding counterfeit manufacturing at
Hechuang at that time. (Trial Tr. Vol. I at 171–72.) Then, at the end of October, Mr.
Reiter claims he suddenly had an epiphany that he should investigate the bags his wife
and sister-in-law had purchased in connection with the alleged purchase of counterfeit
snaps by Superior. (Id. at 174; Trial Tr. Vol. II at 299–300.) Mr. Reiter testified that he
does not know what prompted him to make the connection between the alleged
counterfeiting and the Fossil bags so suddenly at that time. (Trial Tr. Vol. I at 174–75.)
He did not contact anyone at Fossil to report his initial suspicions. (Trial. Tr. Vol. II at
298.)

Rather, Mr. Reiter contacted Wing Yip and asked for computer reports on

Superior’s purchases. (Trial Tr. Vol. I at 175.) Mr. Reiter had not investigated Wing
Yip’s sales records prior to this request, but gave no indication they were not previously
available to him. (Id. at 240.) Mr. Reiter found that Superior’s purchases of ROMAG
snaps had dropped off precipitously in 2008 and decided to investigate further. (Id. at
177.) He personally inspected the snaps from the Fossil bags purchased by Ms. Katz and
Ms. Ellant, and sent them to Wing Yip for testing. (Id. at 177–78.) After performing
some testing on the snaps, Wing Yip reported that the snaps could not have been made
with Wing Yip’s tooling. (Id. at 178; Pl.’s Ex. 149.)
On November 8, 2010, Mr. Reiter emailed Doug Dyment at Fossil and requested
information about which of Fossil’s factories manufactured the types of handbags his wife
and sister-in-law had purchased in May. (Pl.’s Ex. 28.) The email made no mention of
Mr. Reiter’s suspicions of counterfeiting. (Id.) Mr. Dyment replied via email that the
8

information Mr. Reiter had requested was proprietary (id.), and in a subsequent phone
conversation with Mr. Reiter that day, directed Mr. Reiter to the legal department if he
had further questions. (Trial Tr. Vol. I at 183–84.) After this conversation, Mr. Reiter
testified that he went to Macy’s specifically to confirm his suspicions regarding
counterfeiting by Fossil, and purchased several additional bags from Macy’s and from a
Fossil outlet store. (Id. at 202.) On November 17, 2010, exactly one year after he sent a
cease and desist letter to DSW, Attorney Zivin sent a cease and desist letter to Fossil,
demanding that Fossil suspend all sales of products containing the counterfeit snaps. (Ex.
32.) Fossil began an investigation of the allegations and confirmed that Superior had
manufactured the bags in question. (Pl.’s Exs. 48–49, 665; Trial Tr. Vol. IX at 1697–
1705.)
D.

The Commencement of this Action

On November 22, 2010, Romag commenced this action against Defendants Fossil
and Macy’s (Compl. [Doc. # 1]),2 and the next day, moved [Doc. # 10] for a TRO and
preliminary injunction. This motion was filed on the eve of “Black Friday,”3 which is the
highest volume shopping day in the United States and kicks off the holiday shopping
season. (Trial. Tr. Vol. IV at 956; see also Reiter Decl. [Doc. # 12] ¶ 19 (noting that “it is,
of course, a well-known fact that the holiday selling season is the busiest time of year for
retailers.”).) Mr. Reiter submitted a sworn declaration [Doc. # 12] in connection with
that motion. Portions of this declaration bear a striking resemblance to the declaration
Mr. Reiter filed in connection with the J.C. Penney TRO application. (Compare Reiter

2

The other Retailer Defendants were later sued in a separate action, filed on June
9, 2011, that was combined with this case.
3
“Black Friday”—the Friday after Thanksgiving—fell on November 26th in 2010,
a mere three days after Plaintiff’s TRO application was filed.
9

Decl. ¶¶ 8–9 with J.C. Penney Reiter Decl. ¶¶ 8–9.) The declaration makes no mention of
the May 19, 2010 email, Ms. Katz’s and Ms. Ellant’s May 2010 purchases of Fossil bags, or
Mr. Reiter’s investigation into the connection between the two in late October and early
November. Rather, the declaration implies that the November shopping trip was the
result of “habit and custom.” (Reiter Decl. ¶ 8.) In it, Mr. Reiter stated that he “was
somewhat surprised that so many of the handbags . . . had [ROMAG] magnetic snap
fasteners,” (id.), and that he was “shocked to find that the magnetic snap fasteners on the
Fossil handbags were counterfeits,” (id. ¶ 9). These statements are inconsistent with Mr.
Reiter’s testimony at trial that he went to Macy’s in November 2010 with the specific
purpose of confirming his suspicions that Fossil was using counterfeit ROMAG snaps.
(See Trial Tr. Vol. I at 202 (“Well, after we contacted Fossil, I wanted to be sure before we
went to the next step that they were still in the stores and verify the existence of these
Fossil bags with counterfeits being on the floor of some stores. So I went to Macy’s and I
went to Fossil’s outlet in Clinton, Connecticut, to check bags.”).)
On November 30, 2010, Judge Droney,4 granted Romag’s motion for a temporary
restraining order, and enjoined Fossil and Macy’s from “selling or offering for sale Fossil
Handbags bearing counterfeit [ROMAG] fasteners.” (TRO Ruling [Doc. # 20] at 9.)
Fossil worked with its employees and retailers to put a hold on all of the affected products
and to prevent any items that had already been delivered to retailers from being sold to
customers. (Trial Tr. Vol. IX at 1697–1705.) Because of the timing of the suit, this all had
to be done during the busy holiday season, diverting workers from their other holiday

4

This case was assigned to several judges, including Judge Christopher Droney,
Judge Mark Kravitz, Judge Stefan Underhill, and Judge William Young, before it was
transferred to the undersigned for trial.
10

sales tasks. (Id.) The inventory that Fossil ultimately had to remove from its sales
channels was worth $4,148,093.39. (Id. at 1712; Defs.’ Ex. 736.) If the TRO had been
entered in May, when Mr. Reiter first received evidence of counterfeit sales to Superior,
Fossil’s tainted inventory would have been much smaller—Fossil estimates that its
inventory in May would have been about half as valuable. (Trial Tr. Vol. IX at 1712–14.)
Fossil also believes that it could have replaced its holiday inventory with non-infringing
products if it had been notified of the counterfeiting by September 2010. (Id. at 1724–26.)
II.

Conclusions of Law
Defendants have asserted the equitable defenses of unclean hands and laches as a

bar to Plaintiff’s recovery in this action, and argue that Plaintiff failed to mitigate its
damages once it discovered the infringing conduct. Defendants also ask the Court to
impose sanctions as a result of Plaintiff’s deceptive conduct in procuring a TRO in this
case.

Finally, Defendants assert that the Court should vacate the jury’s award of profits

based on its finding that Fossil’s trademark infringement was not willful, and argue that
even if the Court concludes that Plaintiff may seek an accounting of profits absent a
finding of willfulness, the equitable considerations in this case warrant a drastic reduction
or elimination of the jury’s award.

Plaintiff counters that it is legally entitled to an

accounting of profits absent a finding of willfulness and that the Court should increase
the jury’s award of profits based on a consideration of the equitable factors. Plaintiff
further seeks a permanent injunction enjoining Fossil from further infringement and
ordering it to destroy all counterfeit ROMAG snaps in its possession.

11

A.

Unclean Hands

Defendants argue that Romag’s unclean hands with respect to its delay in
commencing suit and its submission of a false declaration to obtain a TRO “bars the
equitable remedy of recovery of Defendants’ Profits.” (Defs.’ Prop. Findings of Fact and
Conclusions of Law at 37.) Plaintiff counters that in the context of a trademark action,
the unclean hands doctrine applies only to a plaintiff’s acquisition or use of a trademark,
and not to litigation conduct. Plaintiff further denies that it acted inequitably with
respect to the commencement of this action and the procurement of the TRO, and argues
that even if its conduct could be the basis for an unclean hands argument, the balance of
the equities weighs in favor of permitting recovery in this action.
“He who comes into equity must come with clean hands.” Precision Instrument
Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814 (1945). “The ‘clean
hands’ doctrine is ‘far more than a mere banality. It is a self-imposed ordinance that
closes the doors of a court of equity to one tainted with inequitableness or bad faith
relative to the matter in which he seeks relief, however improper may have been the
behavior of the defendant.’” Motorola Credit Corp. v. Uzan, 561 F.3d 123, 129 (2d Cir.
2009) (quoting Precision Instrument Mfg. Co., 324 U.S. at 814). The Second Circuit has
recognized that “the defense of unclean hands applies only with respect to the right in
suit.” Warner Bros., Inc. v. Gay Toys, Inc., 724 F.2d 327, 334 (2d Cir. 1983). “[T]he
doctrine of unclean hands requires a balancing of the equities and the relative extent of
each party’s wrong upon the other and upon the public should be taken into account, and
an equitable balance struck.” Patsy’s Italian Rest., Inc. v. Banas, 575 F. Supp. 2d 427, 461
(S.D.N.Y. 2008) aff’d, 658 F.3d 254 (2d Cir. 2011) (internal citations and quotation marks
omitted). “Further, because trademark law also involves protecting the public’s interest,
12

courts typically only bar recovery under a theory of unclean hands when a plaintiff’s
conduct was egregious or clear, unequivocal and convincing.” Id. (internal citations and
quotation marks omitted).
Defendants rely on a case from the Tenth Circuit for the proposition that
litigation conduct in a trademark action may be the basis for an unclean hands defense.
In Worthington v. Anderson, 386 F.3d 1314, 1321 (10th Cir. 2004), the Tenth Circuit
recognized that historically, two types of inequitable conduct are covered by the unclean
hands doctrine: (1) “inequitable conduct toward the public, such as deception in or
misuse of the trademark itself, resulting in harm to the public such that it would be wrong
for a court of equity to reward the plaintiff’s conduct by granting relief,” and (2) “when
the plaintiff has acted inequitably toward the defendant in relation to the trademark.” Id.
In Worthington, the plaintiffs had failed to pay off a loan on which the defendants were
guarantors, making it difficult for the defendants to fully comply with an arbitral award
granting ownership of the trademark in suit to the plaintiffs. Id. at 1320. The Tenth
Circuit held that the plaintiffs’ interference with the defendants’ ability to comply with
their legal obligations was a proper ground for an unclean hands defense. Id. at 1321–22.
In so holding, the Tenth Circuit cited with favor Federal Folding Wall Corp. v. Nat’l
Folding Wall Corp., 340 F. Supp. 141, 146 (S.D.N.Y. 1971), in which the court held that
where the plaintiff induced the trademark owner to cancel its license agreement with the
defendant and to award a license to the plaintiff instead, unclean hands would operate to
bar the plaintiff’s recovery. Id.
However, neither of the cases cited by Defendants specifically held that a
plaintiff’s conduct in the course of the trademark litigation itself could be a proper basis
for an unclean hands defense in such a suit. Rather, the weight of the authority in this
13

Circuit holds that the inequitable conduct at issue must relate to the use or procurement
of the trademark, rather than a position taken in the lawsuit. See Jackson v. Odenat, -- F.
Supp. 2d ---, 2014 WL 1202745, at *17 (S.D.N.Y. Mar. 24, 2014) (“In the trademark
context, the fraud or deceit must relate to plaintiff’s ‘acquisition or use’ of the trademark.”
(quoting Gidatex, S.r.L. v. Campaniello Imports, Ltd., 82 F. Supp. 2d 126, 131 (S.D.N.Y.
1999)); Coach, Inc. v. Kmart Corporations, 756 F. Supp. 2d 421, 429 (S.D.N.Y. 2010) (“[I]t
is well settled in trademark law that the defense of unclean hands applies only with
respect to the right in suit. Filing a trademark or trade dress infringement lawsuit,
therefore, cannot be a basis for an unclean hands defense to that lawsuit because any bad
faith or inequitable conduct in filing the lawsuit is unrelated to the plaintiff’s acquisition
or use of the trademark or trade dress.” (internal citations and quotation marks omitted)).
Here, Defendants do not allege that Romag engaged in any fraudulent or misleading
conduct with respect to its registration or use of the ROMAG mark, or that Romag in any
way acted inequitably with respect to Defendants’ use of that mark. The sole basis for
Defendants’ unclean hands defense is that Plaintiff delayed filing suit to obtain a tactical
advantage and then filed a misleading declaration with the Court once the suit had
commenced in order to obtain specifically-timed emergency injunctive relief. Because
these allegations are unrelated to Romag’s use or acquisition of the ROMAG mark,
Defendants’ unclean hands defense to bar Plaintiff’s recovery of Defendants’ profits on
the trademark infringement claim must fail.
B.

Laches

Defendants also assert the equitable defense of laches, arguing that Plaintiff’s delay
in filing suit after receiving the May 19, 2010 email resulted in economic prejudice to
Defendants and that Plaintiff should therefore be barred from recovery with respect to its
14

trademark and patent claims. Romag counters that Defendants have failed to establish
either unreasonable delay or economic prejudice, and that their claim for laches therefore
fails.
1.

Laches—Patent Claim

In the context of patent litigation the Federal Circuit has held that, “laches may be
defined as the neglect or delay in bringing suit to remedy an alleged wrong, which taken
together with lapse of time and other circumstances, causes prejudice to the adverse party
and operates as an equitable bar.” A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960
F.2d 1020, 128–29 (Fed. Cir. 1992) (en banc). “Laches bars relief on a patentee’s claim
only with respect to damages accrued prior to suit.” Id. at 1041. “The application of the
defense of laches is committed to the sound discretion of the district court.” Id. at 1032.
“With its origins in equity, a determination of laches is not made upon the application of
‘mechanical rules.’” Id. “The defense, being personal to the particular party and equitable
in nature, must have flexibility in its application. A court must look at all of the particular
facts and circumstances of each case and weigh the equities of the parties.” Id. (internal
citations omitted).
To succeed on a laches defense a defendant bears the burden of establishing the
following two factors by a preponderance of the evidence: “(1) the plaintiff delayed filing
suit for an unreasonable and inexcusable length of time from the time the plaintiff knew
or reasonably should have known of its claim against the defendant, and (2) the delay
operated to the prejudice or injury of the defendant.” Id. at 1032, 1045. “A court must
also consider and weigh any justification offered by the plaintiff for its delay.” Id. at 1033.
“A patentee may also defeat a laches defense if the infringer has engaged in particularly
egregious conduct which would change the equities significantly in plaintiff’s favor.” Id.
15

(internal citations and quotation marks omitted). “Thus, for laches, the length of delay,
the seriousness of prejudice, the reasonableness of excuses, and the defendant’s conduct
or culpability must be weighed to determine whether the patentee dealt unfairly with the
alleged infringer by not promptly bringing suit. In sum, a district court must weigh all
pertinent facts and equities in making a decision on the laches defense.” Id. at 1034.
Plaintiff argues that Defendants have failed to establish unreasonable delay.
Specifically, Plaintiff claims that because its alleged delay is shorter than the six-year
statute of limitations, Defendants are categorically barred from asserting the laches
defense. However, in the patent context, the Federal Circuit has held that laches may be
applied within the limitations period. Id. at 1030 (“First, Aukerman is in error in its
position that, where an express statute of limitations applies against a claim, laches cannot
apply within the limitation period.”). Rather, the statute of limitations functions to create
a presumption of laches where the delay is alleged to have lasted longer than the six-year
limitation period. Id. at 1035. Therefore, although the alleged delay in this case lasted
only for a period of months, the length of the delay does not operate as a per se bar to
Defendants’ laches defense.
“The length of time which may be deemed unreasonable has no fixed boundaries
but rather depends on the circumstances. The period of delay is measured from the time
the plaintiff knew or reasonably should have known of the defendant’s alleged infringing
activities to the date of suit.” Id. at 1032. Despite Romag’s assertion that it did not know
of the alleged counterfeiting until late fall of 2010, the Court concludes that Romag knew
or should have known of the use of counterfeit snaps in Fossil bags prior to that date. Mr.
Reiter received an email communication from China informing him that Superior was
selling counterfeit ROMAG snaps on May 21, 2010. (Pl.’s Ex. 27.) Although Mr. Reiter
16

claims he did not immediately make the connection between Fossil and Superior, a
prompt search of his email archive would have identified Superior as a Fossil
manufacturer. (Trial Tr. Vol. IX at 1685–86.) Although Mr. Reiter testified that he did
not know the bona fides of “Joe,” he also contacted his longtime intellectual property
counsel, Attorney Zivin, several times the day after he received the email about the
counterfeiting at Superior. (Trial Tr. Vol. II at 294–95; Defs.’ Ex. 584.) In recognition of
Romag’s attorney-client privilege, the Court declines Defendants’ invitation to draw
inferences regarding the content of those communications from their timing. However,
the contact between Mr. Reiter and his attorney does establish that Romag had access to
intellectual property counsel at that time to help thoroughly investigate and develop its
legal claims of counterfeiting. Furthermore, three days after receiving the email, Ms.
Ellant and Ms. Katz purchased multiple Fossil bags containing ROMAG snaps and
Romag’s General Counsel, Ms. Ellant, brought this news and the handbags to Mr. Reiter,
expressing her suspicion that the snaps used could be counterfeits. (Trial Tr. Vol. I at
155–57; Trial Tr. Vol. IX at 1689.)
Despite having notice of possible sales of counterfeit snaps by Hechuang to
Superior, having access to information tying Fossil, through Superior, to that
counterfeiting, having actual possession of the infringing products, as well as having
access to specialized legal counsel, all within one week, Mr. Reiter testified, inexplicably,
that he drew no connection between his wife’s concerns regarding the Fossil bags and the
email alleging that Superior was purchasing counterfeit snaps. He offered no explanation
for why he did not contact Romag’s inspectors in China to investigate Hechuang, the
counterfeiting allegations, or his wife’s suspicions, or for why he failed to investigate these
matters himself when he was in China at the Timake factory two months later in July
17

2010, where sales records would have disabused him of his belief that Fossil remained a
purchaser of ROMAG snaps through authorized channels. Rather, Mr. Reiter claims to
have had an epiphany in late October, the trigger for which he could not recall,5 that led
him to finally make the connection between the Fossil bags and the Superior invoices.
Mr. Reiter’s testimony does not ring true, especially in light of his prior track record of
issuing cease and desist letters and seeking emergency relief on the eve of Black Friday, a
time that is an obvious pressure point for retailer defendants. Although Mr. Reiter
claimed not to know what Black Friday was, he made note of the holiday selling season in
his own declaration in support of the TRO in this case. (See Reiter Decl. ¶ 19.)
Even if the Court were to credit Mr. Reiter’s testimony that he actually made no
connection between Fossil and Superior until late October 2010, the record is clear that
he had all the information he needed to make that connection by the end of May 2010:
Superior invoices from Hechuang, an email in his archives linking Superior to Fossil, and
several Fossil handbags with likely counterfeit snaps. With this information, by Mr.
Reiter’s estimation, it took him no more than three or four weeks to confirm his postepiphany suspicions by requesting Superior invoices from Wing Yip, examining the snaps
on the bags, requesting information about Fossil’s factories, and purchasing additional
handbags containing ROMAG snaps. Therefore, Romag knew or should have known by
June 2010 of its good faith basis for believing that Fossil was infringing. The Court thus
concludes that the period of delay with respect to Defendants’ laches claim should be

5

The Meriam-Webster Dictionary defines an epiphany as “an intuitive grasp of
reality through something (as an event) usually simple and striking.” (Available at
http://www.merriam-webster.com/dictionary/epiphany.)
However, Mr. Reiter was
unable to identify any event in late October, as opposed to late May, that would have led
him to the sudden understanding that the Fossil handbags were connected to Superior’s
counterfeit purchases.
18

measured from June 2010 to the commencement of this suit in November 2010—a period
of five months. Although a delay of several months might not typically sound like
unreasonable delay, based on the circumstances of this case, Romag’s delay was
unreasonable. The inescapable conclusion is that Plaintiff carefully timed this suit to take
advantage of the imminent holiday shopping season to be able to exercise the most
leverage over Defendants in an attempt to extract a quick and profitable settlement, as it
had done twice before in the past three years. Furthermore, Plaintiff, in filing for
emergency relief, relied on misleading representations that obfuscated the months of
delay, where full disclosure would have undermined its claim of irreparable harm. The
Court thus finds that Defendants have met their burden with respect to the first factor of
their laches defense.
Plaintiff also argues that Defendants have not established that they suffered
material economic prejudice as a result of the delay. “Economic prejudice may arise
where a defendant and possibly others will suffer the loss of monetary investments or
incur damages which likely would have been prevented by earlier suit.” A.C. Aukerman
Co., 960 F.2d at 1020.

“Such damages or monetary losses are not merely those

attributable to a finding of liability for infringement. . . . The courts must look for a
change in the economic position of the alleged infringer during the period of delay. On
the other hand, this does not mean that a patentee may intentionally lie silently in wait
watching damages escalate, particularly where an infringer, if he had had notice, could
have switched to a noninfringing product.” Id. (internal citations omitted) (emphasis in
original).
Defendants presented testimony that the value of the accused inventory that Fossil
had to remove from its sales channels was worth $4,148,093.39. (Trial Tr. Vol. IX at 1712;
19

Defs.’ Ex. 736.) If the TRO had been sought and entered in May or June, when Romag
first had a basis for asserting its infringement claims, Fossil’s inventory would have been
much smaller and half as valuable as its November inventory. (Trial Tr. Vol. IX at 1712–
14.) Fossil’s corporate representative also testified that Fossil could have replaced its
holiday inventory with non-infringing products if it had been notified of the
counterfeiting by September 2010. (Id. at 1724-26.) Plaintiff, citing mostly trademark
cases, argues that this financial impact is insufficient to establish material prejudice
because Defendants are “required to show that they had taken affirmative steps to
increase their reliance on [the patent] during Plaintiff[’s] alleged delay.” Tri-Star Pictures,
Inc. v. Unger, 14 F. Supp. 2d 339, 361 (S.D.N.Y. 1998).

However, the nature of

Defendants’ claimed loss goes beyond just showing that they conducted business as usual
during the period of delay. Defendants were ramping up production of their products in
preparation for the holidays while Plaintiff sat on its rights. As a result of the American
retail cycle, the timing of Plaintiff’s suit meant that Defendants had nearly doubled their
inventory by the time they were first told of their alleged counterfeiting. Furthermore,
Fossil’s representative testified that if the TRO had been filed prior to September 2010,
Fossil could have switched the snaps on its handbags to generic snaps and still have been
able to take its products to market for the profitable holiday selling season. Based on this
evidence, Defendants have met their burden of establishing that they suffered material
economic prejudice as a result of Plaintiff’s unreasonable delay in bringing suit.
Plaintiff has not offered any excuse for its delay in this case, beyond Mr. Reiter’s
discredited claim that he had no idea of Fossil’s infringement until October 2010.
Plaintiff points to no egregious or outrageous conduct by Defendants that would counsel
against the application of laches in this case, especially in light of the jury’s finding that
20

Defendants’ infringement was not willful. Thus, the Court concludes that based on the
balance of the equities, laches should be applied in this case. Therefore, the Court will
exclude the sales between June 2010 and November 2010 from the jury’s award of a
reasonable royalty, representing approximately eighteen percent of the twenty-eightmonth period of infringement, and the jury’s reasonable royalty awards will be reduced
by eighteen percent to $41,862.75 and $12,562.90 respectively.
2.

Laches—Trademark Claims

Defendants also claim that laches operates as a complete bar to Plaintiff’s recovery
of profits on its trademark infringement claims.

In this context, Defendants must

demonstrate that Romag had knowledge of their use of counterfeit snaps, that Romag
inexcusably delayed in taking action, and that Defendants suffered prejudice as a result of
Romag’s delay. Tri-Star Pictures, Inc. v. Leisure Time Productions, B.V., 17 F.3d 38, 44
(2d Cir. 1994). “The inquiry is a factual one. The determination of whether laches bars a
plaintiff from equitable relief is entirely within the discretion of the trial court.” Id.
Plaintiff raises largely the same arguments against Defendants’ trademark laches defense
as it does against Defendants’ patent laches defense.
First, relying primarily on precedent other than civil trademark cases, Plaintiff
maintains that Defendants have no valid laches defense because Plaintiff’s delay was not
longer than Connecticut’s analogous three-year statute of limitations for fraud. See, e.g.,
United States v. Milstein, 401 F.3d 53, 63 (2d Cir. 2005) (“[A]s a general rule, laches is not
a defense to an action filed within the applicable statute of limitations.”). However, in
Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187 (2d Cir. 1996), the Second Circuit upheld
a district court’s application of laches in a trademark suit where suit was brought within
the analogous limitation period, explaining that “[a]lthough laches is an equitable
21

defense, employed instead of a statutory time-bar, analogous statutes of limitation remain
an important determinant in the application of a laches defense. . . . [the analogous state]
statute of limitation . . . determines which party possesses the burden of proving or
rebutting the defense.” Id. at 191. Thus, similar to the patent context, in a trademark
action, if the plaintiff’s delay is longer than the analogous state statute of limitations, a
presumption of laches applies, whereas if suit is brought within the limitations period,
there is no presumption, and a defendant assumes the burden of proving the defense. Id.
Therefore, although there is no presumption of laches in this case, the fact that Plaintiff
delayed less than three years is not dispositive of Defendants’ laches defense.
Plaintiff again claims that it had no knowledge of Defendants’ use of counterfeit
snaps until shortly before filing suit in November 2010, but the Court has not credited
Mr. Reiter’s testimony purporting to justify his delay in investigating or asserting
potential counterfeiting claims until his alleged “epiphany” in late October 2010. Ms.
Ellant raised her suspicions that Fossil was selling handbags with counterfeit ROMAG
snaps on May 24, 2010, a mere three days after Mr. Reiter received the May 21, 2010
email informing him that Superior had been purchasing ROMAG snaps from an
unauthorized source. These two events are simply too close in time for Mr. Reiter not to
have made some connection between counterfeiting by Superior and potential
infringement by Fossil and to have investigated it further. Mr. Reiter’s response to “Joe”
was immediate and expressed a desire to uncover the identity of the American brands
using the counterfeit snaps in order to use the United States’ legal system to enforce
Romag’s rights. (Pl.’s Ex. 27 (“What is more important to us is what handbag maker and
what brands in [the USA] are getting these on their handbags. It is hard for the law to
work in [C]hina . . . easier in [the USA].”).) Thus, it defies belief that once he knew the
22

identity of the Chinese manufacturer purchasing the snaps, i.e., Superior, and was
presented with Ms. Ellant’s suspicions that counterfeit snaps were being used on Fossilbranded bags that he would have stopped any further investigation, especially in light of
Romag’s prior record of aggressive enforcement of its intellectual property rights.
Because the Court does not credit Mr. Reiter’s testimony that it was only his
“epiphany” in October 2010 that motivated him to act on the evidence of counterfeiting,
rather than the evidence he had in May 2010, his testimony that he did not check or think
to check his email archive for references to Superior until his October 2010 “epiphany” is
called into doubt. At best, his failure to search for references to Superior as soon as he
received the May 21, 2010 email appears to have been the result of conscious avoidance.
Similarly, his failure to raise the allegations regarding Hechuang and Fossil with Romag’s
inspectors in China, or to investigate these allegations himself when he visited his Chinese
factories in July 2010, lacks a good faith explanation. Therefore, as discussed above, the
Court concludes that Romag had sufficient knowledge of Fossil’s counterfeiting by June
2010 to bring suit. Additionally, as detailed above, the Court concludes that Plaintiff’s
five-month delay before filing suit was inexcusable and is tainted by its prior track record
of similarly seeking emergency relief on the eve of Black Friday to maximize the
economic pressure on retailers.
Finally, Plaintiff argues that Defendants have not established that they suffered
prejudice as a result in the delay in filing suit. In the context of a trademark infringement
action, “[a] defendant has been prejudiced by a delay when the assertion of a claim
available some time ago would be inequitable in light of the delay in bringing that claim.
Specifically, prejudice ensues when a defendant has changed his position in a way that
would not have occurred if the plaintiff had not delayed.” Id. at 192. In Conopco, the
23

Second Circuit found that the defendant had been prejudiced by the plaintiff’s delay
because it had forgone other marketing positions that had been assumed by other
producers in the interval of the plaintiff’s delay. Id. at 192–93. Plaintiff argues that
Defendants did not change their position between May 2010 and November 2010.
However, Fossil’s representative testified that Fossil had increased its inventory during
that time period to prepare for the holiday shopping season. She further testified that
because of Plaintiff’s delay, Fossil lost the opportunity to replace the counterfeit snaps
with generic snaps in time for the higher holiday demand. Therefore, the Court finds that
Defendants have established that they were prejudiced by their delay.
Although the Court concludes that Defendants have sustained their burden with
respect to their trademark laches defense, the Court does not believe that Plaintiff’s delay
should operate as a total bar to its recovery of profits in this case. The delay at issue here,
while significant in light of the unique timing circumstances of this case, does not cover
the majority of Defendants’ infringement. Therefore, the Court will consider Plaintiff’s
laches as a factor in reducing the jury’s advisory award of profits when it performs the
equitable adjustment of that award. See George Basch Co., Inc. v. Blue Coral, Inc., 968
F.2d 1532, 1540 (2d Cir. 1992) (listing plaintiff’s laches as a factor courts should consider
in awarding an accounting of profits).
C.

Mitigation of Damages

Defendants assert that Romag failed to mitigate its damages by not filing suit
when it first learned of Fossil’s counterfeiting. Plaintiff counters that Defendants have
waived this affirmative defense by failing to plead it in their Answer [Doc. # 31] and that
Defendants have failed to show that the concept of mitigation of damages is applicable in
trademark and patent actions. “Failure to mitigate damages is an affirmative defense and
24

therefore must be pleaded. The general rule in federal courts is that a failure to plead an
affirmative defense results in waiver.” Travellers Internat’l, A.G. v. Trans World Airlines,
Inc., 41 F.3d 1570, 1580 (2d Cir. 1994). Here Defendants did not plead a failure to
mitigate defense in their Answer and did not raise the issue until the eve of trial.
Therefore, Defendants have waived this defense. Id. at 1580–81.
Furthermore, even if the defense had not been waived, Defendants have failed to
establish that the concept of mitigation of damages has relevance to this case. Defendants
rely on one case, IMX, Inc. v. E-Loan, Inc., 748 F. Supp. 2d 1354 (S.D. Fla. 2010) for the
proposition that plaintiffs have a duty to mitigate in patent and trademark cases. In that
case, which included no trademark claims, the court rejected the plaintiff’s argument that
because there was no authority recognizing a failure to mitigate defenses in the patent
context, such a defense could never be relevant in a patent action. Id. at 1361. The court
concluded that because the plaintiff was seeking compensatory damages for the alleged
infringement “it is entirely appropriate for a defendant to assert a defense of failure to
mitigate damages when considering what amount of compensation is appropriate for [the
p]laintiff.” Id. Thus, IMX is distinguishable from this case where Plaintiff seeks a
reasonable royalty, rather than compensatory damages. See Robert A. Matthews, Jr., 4
Annotated Patent Digest § 30:6.100 (interpreting IMX to find that a mitigation defense
would not apply to a reasonable royalty damage award because such an award
“determines compensation to the patentee based on the infringer’s use of the patented
invention, not ‘harm’ suffered by the patentee”). By analogy, the same principle would
apply to an award of a defendant’s profits, rather than compensatory trademark damages,
because such an award is based on the unjust enrichment or deterrence of a defendant,
rather than on harm to the plaintiff.
25

Additionally, Defendants’ argument that Romag failed to mitigate its damages by
not giving notice of its claims earlier, either by contacting Fossil or by bringing suit
immediately, is merely a re-tooling of their laches defense. In Voda v. Medtronic, Inc.,
No. CIV-09-95-L, 2011 WL 6210760, at *3 (W.D. Okla. Dec. 14, 2011), another patent
case, the court reasoned that “[a]lthough defendants present[ed] failure to mitigate as a
separate defense . . . it is simply the opposite side of the laches defense. Both defenses
have their genesis in plaintiff’s delay in bringing this action.” Id.; see also Robert A.
Matthews, Jr., 4 Annotated Patent Digest § 30:6.100 (“Under some circumstances a
‘failure to mitigate’ defense may be nothing more than a laches defense if the lack of
mitigation is based on an allegation that the patentee should have sued earlier.”). The
court went on to analyze both defenses under the doctrine of laches. Here, Defendants
have already asserted and succeeded on a laches defense, and the only appreciable
difference between the two defenses asserted by Defendants is their claim that Plaintiff
had a duty to warn them about possible counterfeiting as early as 2007, when the J.C.
Penney suit was filed. However, the Court is not persuaded that such a duty existed, and
the claim that such a warning would have mitigated all damages in this case is speculative
at best. Therefore, the Court concludes that Defendants’ arguments with respect to
Plaintiff’s delay are properly addressed under the rubric of laches.
Finally, during the jury portion of the trial, Defendants raised the argument that
the failure to mitigate damages was relevant to the determination of whether Plaintiff
suffered an ascertainable loss with respect to its CUTPA claim. In support of this
argument, Defendants relied on Landmark Inv. Group, LLC v. Calco Const. &
Development Co., No. CV096002117, 2013 WL 5969076 (Conn. Super. Ct. Oct. 11, 2013),
in which the court held that because the plaintiff failed to mitigate its damages, it could
26

not prove actual loss with respect to its tortious interference claim or an ascertainable loss
with respect to its CUTPA claim. Id. at *22–23. There, the plaintiff based its claims for
actual and ascertainable loss on the loss of its anticipated profits in developing a piece of
real estate. Id. However, the court concluded that the plaintiff had failed to purchase the
property in question after it had been awarded a judgment of specific performance to do
so. Id. Because the plaintiff failed to purchase the property when given a chance to do so,
it could not claim that it lost profit from not being able to develop that same property. Id.
Thus, the Landmark decision is distinguishable from this action, which lacks any similar
condition precedent to the claimed loss. Although Romag improperly delayed filing this
action, it cannot be claimed that Romag completely failed to exercise its rights pursuant
to the ROMAG mark and the ‘126 patent. Furthermore, Fossil’s counterfeiting began
long before Mr. Reiter received the email from “Joe” warning him about Superior’s
purchase of counterfeit snaps. Therefore, the Court further concludes that Defendants’
failure to mitigate defense is not relevant to Plaintiff’s CUTPA claim.
Because the Court concludes that Defendants waived their failure to mitigate
defense, and that the defense was not relevant to any of Plaintiff’s claims, Plaintiff’s
recovery is unaffected by mitigation considerations.
D.

Sanctions

Defendants ask this Court to impose sanctions pursuant to its inherent authority
and under section 1927 of the Judicial Code based on the submission of the Reiter
Declaration in support of the TRO in this case, which Defendants claim was false and
misleading. “In order to impose sanctions pursuant to its inherent power, a district court
must find that: (1) the challenged claim was without a colorable basis and (2) the claim
was brought in bad faith, i.e., motivated by improper purposes such as harassment and
27

delay.” Enmon v. Prospect Capital Corp., 675 F.3d 128, 143 (2d Cir. 2012) (internal
citations and quotation marks omitted). “Although both findings must be supported by
a high degree of specificity in the factual findings, bad faith may be inferred only if
actions are so completely without merit as to require the conclusion that they must have
been undertaken for some improper purpose such as delay.” Id. (internal citations and
quotation marks omitted). “The showing of bad faith required to support sanctions
under 28 U.S.C. §1927 is similar to that necessary to invoke the court’s inherent power.
In practice, the only meaningful difference between an award made under § 1927 and one
made pursuant to the court’s inherent power is that awards under § 1927 are made only
against attorneys or other persons authorized to practice before the courts while an award
made under the court’s inherent power may be made against an attorney, a party, or
both.” Id. at 143–44 (internal citations and quotation marks omitted).
As discussed above, the Court believes that the Reiter Declaration, which contains
language that is nearly identical to the declaration filed in connection with the J.C.
Penney case three years earlier, (compare Reiter Decl. ¶¶ 8–9 with J.C. Penney Reiter
Decl. ¶¶ 8–9), was misleading in several respects. Its limited contents conveyed the
impression that Mr. Reiter had just discovered the counterfeit ROMAG snaps and only
by mere happenstance, (see Reiter Decl. ¶ 8 (“On November 15, 2010, I was shopping in a
Macy’s store in Milford, Connecticut, near my office. As is my habit and custom, I
looked at some of the handbags in the handbag department.”)), contrary to his sworn trial
testimony that he went to Macy’s that day with the express purpose of confirming his
suspicions that Fossil was using counterfeit ROMAG snaps in their handbags, (see Trial
Tr. Vol. I at 202 (“Well, after we contacted Fossil, I wanted to be sure before we went to
the next step that they were still in the stores and verify the existence of these Fossil bags
28

with counterfeits being on the floor of some stores. So I went to Macy’s and I went to
Fossil’s outlet in Clinton, Connecticut, to check bags.”)). His testimony also belies his
sworn statements in his declaration that he was “surprised” that the Fossil handbags
contained ROMAG snaps and that he was “shocked” to discover that they were
counterfeits. (See Reiter Decl. ¶¶ 8–9.)
More troubling, however, is the absence in the declaration of any reference to Mr.
Reiter’s knowledge about this counterfeiting prior to his November shopping trip,
particularly because he acknowledged at trial that by late October he had strong
suspicions that the counterfeit snaps purchased by Superior were being used in Fossil
bags, and that once those suspicions were aroused, he requested Superior’s invoices from
Wing Yip, inspected the snaps from the bags purchased by Ms. Ellant and Ms. Katz, sent
them to China for further inspection, and contacted Fossil both directly and through his
attorney. (Trial Tr. Vol. I at 174–75, 177–78, 183–84; Trial Tr. Vol. II at 299–300; Pl.’s
Exs. 28, 149.) Without mention of the May 19, 2010 email, Romag’s General Counsel’s
May 24, 2010 shopping trip, or Mr. Reiter’s investigation in late October and early
November, the import of the declaration was that Mr. Reiter had no knowledge of
counterfeiting before the November trip to Macy’s and his chance discovery of the
counterfeit snaps at that time.
The obvious significance of the omissions and contrived language in the Reiter
Declaration was on Romag’s claim of irreparable injury when it sought a TRO in this
case. “In a trademark case, irreparable injury may be found where there is any likelihood
that an appreciable number of ordinarily prudent purchasers are likely to be misled, or
indeed simply confused, as to the source of the goods in question.” Media Group, Inc. v.
Ontel Products Corp., No. CIVA300CV2034 (JCH), 2001 WL 169776, at *2 (D. Conn. Feb.
29

14, 2001) (quoting Tough Traveler Ltd v. Outbound Products, 60 F.3d 964, 968 (2d Cir.
1995) (internal quotation marks omitted). Although Romag may have had a colorable
claim for consumer confusion at the time it applied for the TRO, “any such presumption
of irreparable harm does not operate, however, when the plaintiff has delayed bringing
suit or in moving for preliminary injunctive relief.” Id. In Media Group, the plaintiff had
delayed approximately six months from its discovery of the allegedly infringing product
until it sought a preliminary injunction, and based on this delay, the court denied
preliminary injunctive relief, finding that the plaintiff could not show irreparable harm.
Id. at *4. Thus, Romag’s sparse and misleading representations deprived Judge Droney of
the ability to accurately apply the appropriate standard in considering Romag’s request
for emergency injunctive relief.
The Court further concludes that Romag acted in bad faith by delaying its TRO
filing until the beginning of the holidays. Romag explicitly relied on the fact that the
holiday selling season was in full swing when it sought emergency injunctive relief, (see
Reiter Decl. ¶ 19 (“It is, of course, a well-known fact that the holiday selling season is the
busiest time of year for retailers.”)), and Judge Droney relied on this timing in granting
the TRO, (see TRO Ruling [Doc. # 20] at 4 (“Finally, given the high volume of shopping
during the holiday season, Romag stands to suffer an even more significant injury to its
reputation as it is likely that many Fossil handbags, which include the counterfeit snap
fasteners, will be purchased in the coming weeks.”)). Given Romag’s unmistakable
pattern of relying on the pressure point of the holiday season when seeking to enforce its
intellectual property rights, it is evident that Romag intentionally sat on its rights between
late May 2010 and late November 2010 to orchestrate a strategic advantage and

30

improperly obtain emergency injunctive relief on a timetable of its choosing, not on the
irreparability of its harm.
Based on these findings, the Court concludes that Defendants have shown
through clear and convincing evidence that sanctions should be imposed on Romag
pursuant to the Court’s inherent powers.

However, because there is no evidence

implicating Plaintiff’s counsel in this deception, the Court declines to impose sanctions
pursuant to section 1927.

Because the Court concludes that Romag’s sanctionable

conduct was limited to the TRO proceedings, and had no bearing on the underlying
merits of this suit, the Court will not bar Romag’s recovery or impose a large monetary
fine, but instead will limit the sanction to preclude Romag from recovering its
expenditures in relation to the prosecution of its TRO.
E.

Award of Profits

In granting Plaintiff’s motion to bifurcate the trial, the Court ruled that the jury
would make an initial determination of the amount of Defendants’ profits that Plaintiff
was entitled to recover for Defendants’ trademark infringement, and that a bench trial
would be held to address the equitable factors affecting the final profits award to be
imposed by the Court.

The Court reserved judgment as to whether a finding of

willfulness was necessary as a matter of law to entitle Plaintiff to an award of Defendants’
profits in order to have the jury make an advisory determination on profits. At the bench
trial, Fossil argued that Plaintiff was not entitled to any award of profits because the jury
found that Fossil’s trademark infringement was not willful, and asserted that even if the
Court were to determine that willful infringement was not necessary for an award of
profits, the jury’s advisory award should be reduced to zero based on the equitable factors
to be considered in granting an accounting of profits. Plaintiff urges that the 1999
31

amendments to the Lanham Act effectively abrogated Second Circuit precedent requiring
willfulness for an award of profits for proven infringement, and maintains that the Court
should award the full amount of Fossil’s profits to compensate Plaintiff for Fossil’s
infringement of the ROMAG mark.
The jury awarded $90,759.36 of Fossil’s profits for trademark infringement under
an unjust enrichment theory and $6,704,046.00 of Fossil’s profits for trademark
infringement under a deterrence theory, determining that one percent of Fossil’s profits
was attributable to its infringement of the ROMAG mark. Defendants argue that if the
Court determines that Romag may recover an award of profits absent willful
infringement, the jury’s award should be reduced to zero based on a consideration of the
equitable factors. Plaintiff contends that the award should be increased to $9,075,936,
theorizing that because the jury awarded $90,759.36 in unjust enrichment profits, and
found that only one percent of Fossil’s total profits was attributable to the use of the
ROMAG mark, the jury must have determined that the total amount of profits Fossil
made on the sale of the accused handbags was in fact $9,075,936. While there are several
equitable factors present in this case that would bear on an award of profits, the Court
need not perform this equitable analysis because it concludes that Romag is not entitled
to any award of profits as a result of Plaintiff’s failure to prove that Fossil’s trademark
infringement was willful.
Under existing Second Circuit precedent, a plaintiff must establish willful
infringement in order to recover an award of the defendant’s profits in a trademark
action. Internat’l Star Class 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.”); George Basch, 968 F.2d at 1540
32

(“[U]nder § 35(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.”).
However, in 1999, after both of these cases were decided, section 1117(a), which provides
for an accounting of profits under the Lanham Act, was amended to read:
When 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 principles of equity, to recover (1)
defendant’s profits . . . .
25 U.S.C. § 1117(a) (emphasis added). Plaintiff argues that this amendment, which added
the language “or a willful violation under section 1125(c),” effectively abrogated prior
Second Circuit law requiring a finding of willfulness before defendant’s profits could be
awarded for a violation of section 1125(a) because Congress failed to insert the word
“willful” in the phrase “a violation under section 1125(a) or (d) of this title.” The Second
Circuit has expressly declined to decide this question thus far. See Fendi Adele, S.R.L. v.
Ashley Reed Trading, Inc., 507 F. App’x 26, 31 (2d Cir. 2013).
The circuits that have considered the issue of whether willfulness is required for
an award of profits after the 1999 amendments were passed are split. The Tenth Circuit
is the only circuit to affirmatively maintain its prior willfulness requirement after the
1999 amendments. In Western Diversified Servs., Inc. v. Hyundai Motor America, Inc.,
427 F.3d 1269 (10th Cir. 2005), the court held that in light of section 1117(a)’s direction
that an award of profits is “subject to the principles of equity” and in light of the punitive
nature of such an award and the increased risk of granting plaintiff a windfall, it was
appropriate under the statute to require “a showing that Defendant’s actions were willful
to support an award of profits under 15 U.S.C. § 1117(a).” Id. at 1272–73. Additionally,
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the First Circuit, while not speaking in terms of whether willfulness was a condition
precedent to the recovery of the defendant’s profits, has noted in a decision post-dating
the 1999 amendments that a finding of willfulness is usually required for disgorgement of
profits. Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 191 (1st Cir. 2012). 6
Two other circuits have declined to address the issue of abrogation directly. The
Ninth Circuit has expressed doubts that the 1999 amendments abrogated the willfulness
requirement in that Circuit without affirmatively deciding the question. M2 Software,
Inc. v. Viacom, Inc., 223 F. App’x 653, 656–57 (9th Cir. 2007) (characterizing the
argument that the 1999 amendments abrogated prior case law as a “shaky assumption”).
The Eighth Circuit has similarly declined to address the question, but has assumed
without deciding that willful infringement is a prerequisite for an award of profits. See
Masters v. UHS of Delaware, Inc., 631 F.3d 464, 472 n.2 (8th Cir. 2011) (noting circuit
split).
Finally, three circuits have interpreted the 1999 amendments to permit an award
of defendant’s profits absent a finding of willful infringement. In Banjo Buddies, Inc. v.
Renosky, 399 F.3d 168 (3d Cir. 2005), the Third Circuit concluded that the 1999
amendment did abrogate Third Circuit precedent requiring a finding of willfulness before
an award of defendant’s profits could be made. Id. at 176. It presumed that Congress was
aware of the large body of case law requiring a finding of willfulness for an accounting of

6

One leading commentator has dubbed as “inaccurate” a reading of the 1999
amendments as reflecting Congressional intent to abrogate the willfulness requirement
typically imposed by courts. J. Thomas McCarthy, 5 McCarthy on Trademarks and
Unfair Competition § 30:62 (4th ed.) (“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 when Congress intended to limit the recovery of damages in dilution cases
(and only dilution cases) to instances of ‘willful violation.’”).
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profits under section 1125(a) and reasoned that in light of this awareness, Congress’s
failure to add the word willfulness to that section of the statute indicated a desire to
supersede the judicially created doctrine requiring willfulness. Id. at 174. The Fifth
Circuit reached a similar conclusion in Quick Technologies, Inc. v. Sage Group PLC, 313
F.3d 338 (5th Cir. 2002). Although Quick Technologies does not address the issue of
abrogation because the Fifth Circuit had never adopted a bright-line rule, it noted that the
decisions in other circuits adopting such a rule were of limited value because they
predated the 1999 amendments, and held that the plain language of section 1117(a)
indicated that such a bright-line rule requiring a finding of willfulness for an accounting
of profits would be contrary to the statute. Id. at 350. Similarly, the Fourth Circuit,
noting the 1999 amendments, has held that a finding of willfulness, although an
important factor in the court’s equitable analysis, is not a condition precedent to an
accounting of profits. Synergistic Internat’l, LLC v. Korman, 470 F.3d 162, 175 & n.13
(4th Cir. 2006).
District courts within this Circuit are also split with respect to the effect of the
1999 amendments on the willfulness requirement, with the majority of courts and the
more recent decisions favoring the interpretation that the requirement has not been
abrogated.

Two judges in the Southern District of New York have concluded that the

plain meaning of section 1117(a) indicates that the willfulness requirement has been
abrogated, while eight judges from the Southern and Eastern Districts of New York have
held that the willfulness requirement remains good law.

Compare Chanel, Inc. v.

Veronique Idea Corp., 795 F. Supp. 2d 262, 268–69 (S.D.N.Y. 2011) (Marrero, J.) (holding
that the 1999 amendments abrogated the willfulness requirement), and Cartier v. Aaron
Faber, Inc., 512 F. Supp. 2d 165, 172–73 (S.D.N.Y. 2007) (Marrero, J.) (same), and Nike,
35

Inc. v. Top Brand Co. Ltd., No. 00 Civ. 8179 (KMW)(RLE), 2005 WL 1654859, at *9–11
(S.D.N.Y. July 13, 2005) (same), with Beastie Boys v. Monster Energy Co., No. 12 Civ. 6065
(PAE), 2014 WL 1099809, at *9–11 (S.D.N.Y. Mar. 18, 2014) (holding that the 1999
amendments did not abrogate the willfulness requirement), and Guthrie Healthcare v.
Contextmedia, Inc., No. 12 Civ. 7992 (KBF), 2014 WL 185222, at *5–6 (S.D.N.Y. Jan. 16,
2014) (same), and GMA Accessories, Inc. v. BOP, LLC, 765 F. Supp. 2d 457, 469–71
(S.D.N.Y. 2011) (Castel, J.) (same), and Mr. Water Heater Enterprises, Inc. v. 1-800-Hot
Water Heater, LLC, 648 F. Supp. 2d 576, 589–90 (S.D.N.Y. 2009) (Pauley, J.) (same), and
Pedinol Pharmacal, Inc. v. Rising Pharmaceuticals, Inc., 570 F. Supp. 2d 498, 502–503
(E.D.N.Y. 2008) (Wexler, J.) (same), and Life Servs. Supplements, Inc. v. Natural Organics,
Inc., No. 03 Civ. 6030 (SHS), 2007 WL 4437168, at *2–7 (S.D.N.Y. Dec. 17, 2007) (same),
and Luis Vuitton Malletier v. Dooney & Bourke, Inc., 500 F. Supp. 2d 276, 278–82
(S.D.N.Y. 2007) (Scheindlin, J.) (same), and Mastercard Internat’l, Inc. v. First Nat’l Bank
of Omaha, Inc., No. 02 Civ. 3691 (DLC), 2004 WL 326708, at *10–11 (S.D.N.Y. Feb. 23,
2004) (same).
After reviewing this precedent and the parties’ respective arguments, this Court is
persuaded by those authorities that have concluded that a finding of willfulness remains a
requirement for an award of defendants’ profits in this Circuit. Contrary to Romag’s
arguments, the plain language of § 1117(a) does not indicate that Congress intended to
abrogate the common-law willfulness requirement by adding the word “willful” to modify
the trademark dilution section of the statute. Congress made no change with respect to
the language governing section 1125(a) violations. The post-amendment language with
respect to section 1125(a) is the same language that the Second Circuit interpreted, based
on the principles of equity, to require a finding of willfulness before disgorgement of
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profits could be awarded. Pedinol Pharmacal, Inc., 570 F. Supp. 2d at 502–03 (“First and
most importantly, when Section 1117 was amended to provide for recovery of a
defendant’s profits for a willful violation under Section 1125(c), no changes were made
regarding the recovery provisions of Section 1125(a) or (d). . . . The court holds therefore,
that the Second Circuit’s interpretation of 1117(a) in Basch, which construed the same
statutory language that existed prior to the 1999 amendment of the statute, remains good
law.”); Life Servs. Supplements, 2007 WL 4437168, at *6 (“On its face, then, the amended
statute restricts monetary awards in dilution cases to willful violations, but leaves the
appropriate remedy for other Lanham Act remedies subject to the principles of equity,
just as it was prior to 1999 amendments.”); Louis Vuitton Malletier, 500 F. Supp. 2d at 281
(“[T]he addition of ‘willful violation under section 1125(c)’ does not indicate that it was
Congress’s intention to simultaneously sub silentio overturn the weight of authority with
respect to 1125(a).”).
Plaintiff’s argument that this interpretation renders the provisions for treble
damages in cases of willful counterfeiting in section 1117(b) superfluous is unavailing.
Plaintiff claims that Congress has already provided for increased damages in cases of
willful infringement by including this provision for treble damages, and that to require
willful damages for a simple award of profits would upset this scheme. However, this
argument ignores the fact that section 1117(b) applies only to the use of a counterfeit
mark, whereas section 1117(a) applies to all cases of trademark infringement. 15 U.S.C.
§ 1117(b). Other courts in this Circuit have reasoned that the addition of the “willful”
modifier to section 1125(c) violations was not superfluous, because the Second Circuit
draws a distinction between the requirements for a recovery of damages and a recovery of
profits. Mastercard Internat’l, Inc., 2004 WL 326708, at * 11 (“Since the Second Circuit
37

permits the recovery of damages when a plaintiff is able to prove actual confusion but not
intentional deception, . . . the inclusion of the “willful” modifier before “section 1125(c)”
in the 1999 Amendment provides a more stringent standard for recovery than is available
for a violation under Section 1125(a). The language of the 1999 Amendment is not
rendered superfluous by the incorporation of the standards in this Circuit governing
recovery under Section 35(a) of the Lanham Act.”). Thus, under the interpretation that
willfulness is required for an award of profits, section 1117 sets forth a three-tiered system
of recovery: compensatory damages for non-willful infringement, an award of profits for
willful infringement, and treble damages or profits for willful counterfeiting.
As Judge Sidney Stein outlined in his opinion on this issue, the legislative history
of the 1999 amendments supports the view that they addressed only recovery in dilution
actions, as the history is silent as to any other intended consequence of the amendments.
See Life Servs. Supplements, Inc., 2007 WL 4437168, at *6. The section of the Trademark
Amendments Act of 1999 containing the relevant amendment is entitled “Remedies in
Cases of Dilution of Famous Trademarks.” Pub. L. No. 106-43, 113 Stat. 218 (emphasis
added). Furthermore, the Congressional Record contains comments by Congressman
Elijah E. Cummings indicating that the purpose of the bill was to harmonize section
1117(a) with the recent Federal Trademark Dilution Act of 1995:
This legislation is a necessary follow-up to the Federal Trademark Dilution
Act of 1995, which was enacted last Congress and which gave a Federal
cause of action to holders of famous trademarks for dilution. The bill
before us today is necessary to clear up certain issues in the interpretation of
the dilution act which the Federal courts have grappled with since its
enactment.
145 Cong. Rec. H6363 (emphasis added). Thus, the legislative history gives no support to
the argument that the 1999 amendments were intended to abrogate the common-law
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willfulness requirement enacted by this Circuit because they are silent with respect to
their intended consequences for awards made pursuant to section 1125(a).
Therefore, in light of the absence of evidence in the language of the statute or the
legislative history of the 1999 amendments of a clear congressional intent to abrogate the
existing Second Circuit precedent requiring a finding of willfulness before an award of
profits can be made, the Court concludes that the holdings of Internat’l Star Class Yacht
Racing Ass’n and George Basch remain good law. Life Servs. Supplements, Inc., 2007 WL
4437168, at *7 (“Finally, jurisprudential considerations counsel in favor of this Court
recognizing the continued validity of the willfulness standard. The law of this circuit is
that profits cannot be awarded under the Lanham Act absent a showing of willfulness.
While it is true that the Second Circuit has not revisited that question since the enactment
of the 1999 amendments, the 1999 amendments do not directly contradict that precedent;
at the most, they do so only by implication. Therefore, to the extent that the impact of
the 1999 amendments is ambiguous, this Court should follow Second Circuit precedent.”
(internal citation omitted)). Thus, based on the jury’s finding that Fossil’s trademark
infringement had not been proved willful, the Court concludes that Romag is not entitled
to an award of Fossil’s profits.
G.

Permanent Injunction

In its Proposed Findings of Fact and Conclusions of Law [Doc. # 421], Romag
claims entitlement to a permanent injunction under the Lanham Act and Connecticut
law barring Fossil from importing, selling, or offering for sale Fossil handbags bearing
counterfeit ROMAG snaps and directing Fossil to destroy all counterfeit ROMAG snaps
in its possession, custody, or control. See 15 U.S.C. §§ 1116, 1118. Defendants did not
specifically object to the issuance of a permanent injunction in their Proposed Findings of
39

Fact and Conclusions of Law. “A permanent injunction is appropriate where the party
seeking the injunction has succeeded on the merits and shows the absence of an adequate
remedy at law and irreparable harm if the relief is not granted.”

Patsy’s Italian

Restaurant, Inc. v. Banas, 658 F.3d 254, 272 (2d Cir. 2011) (internal citations and
quotation marks omitted). “A district court has a ‘wide range of discretion in framing an
injunction in terms it deems reasonable to prevent wrongful conduct.’” Id. at 273.
“However, the injunctive relief should be narrowly tailored to fit specific legal violations.”
Thus, in fashioning the injunction, the Court should balance the equities to reach an
appropriate result protective of the interests of both parties.” Id. “In trademark cases,
irreparable harm is presumed once infringement or dilution has been shown, based on
the ensuing loss of goodwill and ability to control one’s reputation.” Gucci America, Inc.
v. Guess?, Inc., 868 F. Supp. 2d 207, 243 (S.D.N.Y. 2012). “Courts in this circuit have long
held that a permanent injunction should issue in trademark cases where a defendant
asserts that its pre-lawsuit use was lawful.” Id. at 256.
Here, the jury found that the snaps on the accused handbags were counterfeits,
and that Fossil was liable for trademark infringement and false designation of origin. In
light of these findings, Romag is entitled to a presumption of irreparable injury based on
loss of goodwill and the inability to control its reputation. The Court concludes that a
monetary award would be inadequate to protect Plaintiff from the ongoing threat posed
by such counterfeiting. Although the Court has found merit in Fossil’s laches defense, the
Court does not conclude that Plaintiff’s laches should bar all recovery and injunctive
relief in this suit, especially because Fossil had been selling handbags with counterfeit
ROMAG snaps long before May 2010. The balance of the equities weighs in favor of
granting a permanent injunction enjoining Fossil from selling bags with counterfeit
40

ROMAG snaps given Fossil’s position at trial that the snaps were genuine, Fossil’s own
testimony that the counterfeit snaps can easily be replaced with non-infringing generics,
and the public’s interest in avoiding the sale of counterfeit goods.
Romag also requests that Fossil be ordered to destroy all counterfeit snaps in its
possession. However, “it has been held that where an injunction is issued under the
Lanham Act enjoining an infringer from further infringement, the rights of the plaintiff
are adequately protected and an order requiring destruction of infringing articles, though
permitted, may be unnecessary.”

Breaking the Chain Foundation, Inc. v. Capitol

Educational Support, Inc., 589 F. Supp. 2d 25, 33 (D.D.C. 2008) (citing Kelley Blue Book v.
Car-Smarts, Inc., 802 F. Supp. 278, 293 (C.D. Cal. 1992)); Neva, Inc. v. Christian
Duplications Int’l, Inc., 743 F. Supp. 1533, 1549 (M.D. Fla. 1990); see also Bonanza Int’l,
Inc. v. Double “B”, 331 F. Supp. 694, 697 (D. Minn. 1971). The court concludes that an
injunction barring Fossil from further infringement is adequate to protect Plaintiff’s
rights in this case. Therefore Fossil is hereby permanently enjoined from importing,
selling, or offering for sale Fossil products bearing counterfeit Romag magnetic snap
fasteners.
III.

Conclusion
For the reasons set forth in this Memorandum of Decision, the Court concludes

that Defendants have failed to establish their equitable defense of unclean hands or that
Plaintiff had a duty to mitigate its patent or trademark damages. The Court further finds
that Defendants have established their equitable defense of laches and the jury’s award of
a reasonably royalty shall be reduced accordingly. The Court also finds that sanctions are
merited in this case. Plaintiff shall not be entitled to recover its attorney’s fees in
connection with the TRO proceedings. Finally, the Court concludes that Plaintiff is not
41

entitled to an award of Fossil’s profits because there was no willful infringement in this
case. A permanent injunction shall issue as set forth above. The jury’s verdict is altered
only with respect to its award of a reasonable royalty, which is reduced $41,862.75 for
Fossil and $12,562.90 for Macy’s, and that the award of Fossil’s profits is eliminated in its
entirety.

IT IS SO ORDERED.
/s/
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 27th day of June, 2014.

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