Property, intangible

a blog about ownership of intellectual property rights and its licensing

A Registrant, Its Assigns – and Exclusive Licensee

Section 32 of the Lanham Act, 15 U.S.C. § 1114, provides a cause of action for a “registrant” of a trademark. Section 45, 15 U.S.C. § 1127, defines a “registrant” as including “legal representatives, predecessors, successors and assigns.” So one only has a cause of action under Section 32 if one is the registrant or its legal representative, predecessor, successor or assign.

But despite the express language, an “exclusive licensee” can also bring an action under Section 32. As explained in Experian Marketing Solutions, Inc. v. U.S. Data Corp., though, it’s really just an analysis of whether there is a de facto assignment of the mark, thus:

To rise to the level of a property interest, the license must be truly exclusive in that the licensor retains no rights to use the mark and the licensee can exclude the licensor from use. A license may also be tantamount to an assignment where the license agreement grants exclusive use of the trademark without restrictions on the licensee’s ability to enforce it. Courts have found that a licensee has no property interest where (1) the license agreement imposes geographical limitations on the use of the trademark, (2) the licensing agreement requires the licensee to maintain the trademark’s quality and reserves the right to monitor the licensee’s product quality, (3) the rights and duties in the license agreement are inconsistent with an assignment, and (4) the license agreement states that the licensor retains ownership of the trademark.

Which makes it a long shot for a plaintiff. In the ten cases cited in Experian Marketing, there were only three where the plaintiff was successful. One, G.H. Mumm Champagne v. E. Wine Corp., 142 F.2d 499, 502 (2d Cir. 1944), was pre-Lanham Act and wartime, involving the right of a U.S. licensee of French champagne maker Mumm to bring suit. In Ultrapure Systems, Inc. v. Ham-Let Group, 921 F. Supp. 659, 665-66 (N.D. Cal. 1995), Ultrapure Systems (standing in the shoes of ACOA) was successful on the following basis:

Here, the contract between CGMI and ACOA contains the following provision:

ACOA [Licensee] will have the right to register in the TERRITORY the CGMI brands in CGMI’s name but at ACOA’s expense. ACOA [Licensee] will have exclusive rights to their use in the TERRITORY for the duration of the contract.

Thus, the contract gives exclusive use of the trademarks in the U.S. to the licensee. Further, the contract does not set forth any restrictions on the licensee’s ability to enforce the trademarks.

In Bliss Clearing Niagara, Inc. v. Midwest Brake Bond Co., 339 F. Supp. 2d 944, 960-961 (W.D. Mich. 2004) the plaintiff also succeeded. It had an agreement with the record owner, Chicago Services, Inc. (CSI), in settlement of an earlier dispute over an asset purchase. The court decided the Settlement Agreement was a de facto assignment:

The Settlement Agreement grants to [plaintiff] BCN/Clearing “the exclusive and perpetual right and license to utilize the Proprietary Rights … to … design, engineer, manufacture, service, maintain, repair, rebuild, retrofit, use and sell Clearing Machines and Parts throughout the world and the right to sublicense such rights,” subject to certain rights reserved by CSI. The Settlement Agreement also emphasizes that CSI retains its ownership interest in the mark: “The Verson Parties [Clearing] acknowledge that the Hitachi Parties [CSI] are and shall remain the exclusive owners of all Proprietary Rights.” Section 2.6 grants BCN/Clearing the right to grant sublicenses, but that right is subject to various restrictions. For example, a non-affiliate sublicensee may not grant sublicenses; BCN/Clearing must provide immediate notice to CSI when it enters into a sublicense; and BCN/Clearing may not grant a sublicense to a non-affiliate in the United States, England, or Japan without the prior written consent of CSI. Section 2.15 reserves to CSI “the continuing right in perpetuity to utilize the Proprietary Rights” and to license others to utilize the Proprietary Rights with regard to “HZC Machines,” but neither CSI nor its affiliates and licensees has the right to grant any licenses or sublicenses with regard to Torc-Pac clutch equipment or to manufacture Clearing Machines and Parts. BCN/Clearing is required to make royalty payments to CSI, and BCN/Clearing’s failure to make such payments constitutes an event of default, entitling CSI to terminate the license. BCN/Clearing has no further right to use the mark in the event the license is terminated. Finally, the Settlement Agreement designates CSI as the party responsible for maintaining all registrations of the trademarks and provides that BCN/Clearing “will cooperate with and assist CSI in reestablishing CSI’s ownership rights” in any trademarks for which the registrations have expired. CSI is not required to initiate any actions with regard to alleged infringement of the trademarks, but BCN/Clearing has the right to pursue any infringement actions at its own expense. In the event BCN/Clearing decides to pursue an infringement action, CSI is required to “sign all documents and provide such other assistance” as BCN/Clearing may request.

Based upon the foregoing provisions, the Court concludes that BCN/Clearing’s interest as an exclusive licensee of the Torc-Pac mark is sufficient to confer standing on BCN/Clearing to maintain its infringement and dilution claims.

But Experian Marketing didn’t have a prayer. It apparently didn’t provide a copy of its license and instead relied on the allegations in the complaint: “In connection with their activities, Experian Marketing, Experian Information and their affiliates have provided products and services under the trademark EXPERIAN® and other distinctive marks,” and “Experian Marketing’s affiliate owns and Experian Marketing has the right as an exclusive licensee to use and enforce the violation of the federally, [sic] registered, incontestable trademark MOSAIC®, including the right to initiate litigation against infringement . . . . Experian Marketing is a licensed user of the MOSAIC® mark in the United States.”

This just didn’t cut it. The first statement alleged no more than various entities were using the mark. The second granted that an affiliate actually owned the mark and also didn’t allege that Experian Marketing had the right to exclude all, including the licensor. Experian Marketing didn’t have standing under § 32. No harm, no foul though, since the § 43(a) claim survived.

Experian Marketing Solutions, Inc. v. U.S. Data Corp., No. 8:09CV24, 2009 WL 290957 (D. Neb. Sept. 9, 2009).

© 2009 Pamela Chestek

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