• Just Because You Don’t Manufacture Doesn’t Mean You’re a “Distributor”

    by  • July 16, 2015 • trademark • 1 Comment

    John Welch at The TTABlog summarizes a case that is characterized as a manufacturer-distributor dispute over the ownership of the mark “UVF861” for UV light bulbs. John does a thorough job summarizing the case, which I won’t repeat here. In its opinion, the TTAB applied the presumption that in a manufacturer-distributor relationship, the manufacturer owns the trademark. But the presumption can be rebutted, and it was here. John adds a personal comment, “If ever a case existed for rebutting the presumption of ownership, this was it.”

    Indeed, and in fact I suggest that the time for giving a manufacturer a presumption of ownership has passed. We should excise it from the jurisprudence altogether.

    It has been true for centuries that the trademark owner is not necessarily the manufacturer, Menendez v. Holt, 128 U.S. 514, 520 (U.S. 1888), but when did the presumption arise? The provenance wasn’t clear to me (having devoted an amount of time appropriate for researching a legal issue for a blog post, as compared to, say, a brief). This was the earliest reference I could find in an Article III court’s opinion:

    Professor McCarthy summarizes those principles and applies them in the context of a foreign manufacturer and his exclusive United States distributor in the following paragraph:

    It is well-settled that the question of ownership of a trademark as between the manufacturer of a product to which the mark is applied and the exclusive distributor of that product is a matter of agreement between them. In the absence of any such agreement, there is a legal presumption that the manufacturer is the owner of the mark. The general rule is also applied as between a foreign manufacturer and the exclusive United States distributor. That is, ownership of a trademark in the United States as between a foreign manufacturer and an exclusive United States distributor is a matter of agreement between them. In the absence of express or implied acknowledgement or transfer by the foreign manufacturer of rights in the United States, all rights to the trademark in the United States, are presumed to be in the foreign manufacturer. An exclusive U.S. distributor does not acquire ownership of a mark of a foreign manufacturer any more than a wholesaler can acquire ownership of a mark of an American manufacturer merely through the sale and distribution of goods bearing the manufacturer’s trademark.

    McCarthy, Trademarks and Unfair Competition, § 16.15 (1973). See also Audioson Vertriebs-GmbH v. Kirksaeter Audiosonics, Inc., 196 U.S.P.Q. 453 (TTAB 1977); Jean D’Albret v. Henkel-Khasana G.m.b.H., 185 U.S.P.Q. 317 (TTAB 1975); Bakker v. Steel Nurse of America, Inc., 176 U.S.P.Q. 447 (TTAB 1972); Compania Insular Tabacalera v. Camacho Cigars, Inc., 167 U.S.P.Q. 299 (TTAB 1970), Aff’d, 171 U.S.P.Q. 673 (D.C.1971).

    Hank Thorp, Inc. v. Minilite, Inc., 474 F. Supp. 228, 236 (D. Del. 1979).

    I don’t have access to McCarthy, much less a 1973 McCarthy. (A HT and free subscription to my blog if you can come up with it). But how is it that, apparently, the TTAB, an administrative tribunal, somehow has established a non-statutory legal presumption? The various TTAB opinions I looked at analyzed whether there was an assignment of the trademark by the foreign manufacturer to a US distributor permitting the US entity to register it, or were for a fact pattern where there was no argument that the US “distributor” had no input into the manufacture but rather was a mere reseller.

    The TTAB has also referred to the Paris Convention:

    The decisional law in the United States concerning [the presumption] fully implements Article 6 septies of the International Convention of Paris for the Protection of Industrial Property, as revised at Lisbon in 1958 and Stockholm in 1967 … [which] reads:

    (1) If the agent or representative of the person who is the proprietor of a mark in one of the countries of the Union applies, without such proprietor’s authorization, for the registration of the mark in his own name, in one or more countries of the Union, the proprietor shall be entitled to oppose the registration applied for or demand its cancellation . . . unless such agent or representative justifies his action.

    2) The proprietor of the mark shall, subject to the provisions of paragraph (1), above, be entitled to oppose the use of his mark by his agent or representative if he has not authorized such use.

    Global Maschinen GmbH v. Global Banking Sys., 1985 TTAB LEXIS 41, *16-17, 227 U.S.P.Q. (BNA) 862, 866 (Trademark Trial & App. Bd. Oct. 8, 1985). But that’s still a different case; that is the situation where there is a senior foreign trademark and the Paris Convention simply provides that the foreign owner has standing to oppose or cancel the registration by its US agent.

    But the presumption is now even applied in cases where, as here, the US entity has some—or a lot of—involvement in the manufacturing process. I’ve suggested in the past that “Trying to shoehorn these relationships with different contours into a ‘manufacturer-distributor’ framework … simply muddies the waters. We should just look instead at the full scope of the relationship of the disputing parties and decide who the rightful owner is.” So to reiterate the practice tip: next time you need to advocate for the non-manufacturer, don’t assume that just because the other party is the manufacturer you must be the “distributor.” The party may more accurately be the contractor or licensor or inventor.

    But I’ll go further: it’s time to ditch the presumption altogether. It only encourages manufacturers to pursue weak claims and engage in wasteful litigation, like here. If the challenged entity is just a reseller, then under the standard factors considered in deciding ownership disputes the manufacturer will win hands down. The presumption, if it ever was a reasonable assumption about the parties’ relationship, has no place in our modern, complex manufacturing world.

    UVeritech, Inc. v. Amax Lighting, Inc., Cancellation No. 920570088 (TTAB June 20, 2015).

    Shameless plug: The Board cited to my article Who Owns the Mark? A Single Framework for Resolving Trademark Ownership Disputes, 96 Trademark Rep. 681 (2006).

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