Supreme Court Declines to Review Eleventh Circuit Ruling on Individual Liability in Willful Trademark Infringement Case

The U.S. Supreme Court on January 22, 2024, denied certiorari in a case involving individual liability for willful trademark infringement under the Lanham Act. The petition was filed by Diamond J Wholesale, LLC, which sought guidance on how courts should assess the liability of corporate officers for infringing acts committed by their companies.

The underlying dispute arose from a trademark infringement lawsuit filed by Top Tobacco, L.P., Republic Technologies (NA), LLC, and Republic Tobacco, L.P. (collectively, Top Tobacco) against Diamond J Wholesale and its owner, Raj Solomon. The plaintiffs alleged that Diamond sold counterfeit cigarette rolling papers bearing their trademarks.

In August 2023, the U.S. Court of Appeals for the Eleventh Circuit affirmed a Georgia district court’s ruling that Diamond and Solomon willfully infringed Top Tobacco’s trademarks. The appellate court upheld an $11 million verdict in favor of the tobacco companies.

Diamond Wholesale challenged the district court’s exclusion of evidence, including witness testimony and invoices, that purportedly showed the company’s agents believed they were purchasing products from a legitimate supplier, Star Importers. Diamond argued this evidence would have negated willfulness by demonstrating a lack of bad faith.

Regarding Solomon’s individual liability, the district court granted summary judgment against him. Solomon contended that genuine factual disputes remained about his state of mind and that individual liability under the Lanham Act requires knowledge of infringement.

The Eleventh Circuit rejected this argument, citing its precedent in Chanel, Inc. v. Italian Activewear of Fla., Inc. The court explained that under 15 U.S.C. § 1114(1)(a), a showing of intent or bad faith is unnecessary to establish a violation. Instead, liability attaches if the individual “actively and knowingly caused the infringement.”

Because Solomon was the sole owner and member of Diamond and admitted he was “chiefly responsible for buying and selling the counterfeit products,” the court found he “actively caused the infringement as a moving, conscious force.” This sufficed to uphold summary judgment against him.

The Eleventh Circuit further noted in a footnote that while willful infringement requires knowledge, such knowledge is generally a question for the fact-finder. The jury had found Solomon acted willfully.

In its Supreme Court petition, Diamond argued that the Eleventh Circuit’s standards for individual liability were vague and internally inconsistent. The petition highlighted conflicting language about whether personal liability requires knowing and significant participation or merely direct involvement. Diamond contended the court failed to clarify the distinction between “mere participation” and being a “moving and active force.”

Diamond also maintained that Solomon unknowingly acquiesced to the purchase of counterfeit goods and was not the driving force behind the infringing activity.

The Supreme Court’s refusal to grant certiorari leaves the Eleventh Circuit’s ruling and the $11 million judgment intact.

This case underscores the Eleventh Circuit’s approach that individual liability for trademark infringement under the Lanham Act does not require proof of intent or bad faith, only that the individual knowingly caused the infringement. Corporate officers who actively participate in infringing conduct may be held personally liable even absent explicit knowledge of wrongdoing.

Legal practitioners should note the continuing circuit split and the lack of Supreme Court guidance on the precise contours of individual liability in trademark infringement cases.