Property, intangible

a blog about ownership of intellectual property rights and its licensing

Wrist-Rocket Factors Applied

Haggar International Corp. v. United Company for Food Industry Corp. is a fairly classic manufacturer-distributor dispute. The conflict started over twenty years ago and the suit has been pending for nine years, which explains why the parties have widely differing recollection of relevant events. Hat’s off to the court for sorting out the mess.

The mark in dispute was MONTANA for frozen and dried vegetables imported from Egypt. Plaintiff Haggar was the U.S. seller of product originally manufactured and packaged by United, although Haggar later marked goods manufactured by a different company with the MONTANA brand.

Both parties made several attempts to register the MONTANA mark. Haggar was the first to the PTO, in 1987. It failed with its first attempt

because the specimen identified United on it. The examining attorney asked for clarification of the relationship between Haggar and United and Haggar thereafter abandoned the application. It then successfully registered the MONTANA mark in 1990, after it ceased its relationship with United. It also recorded its trademark with Customs, successfully excluding some United goods.
Twelve years later, in 2002, United filed a petition to cancel Haggar’s MONTANA registration. Haggar defaulted, which allowed United to obtain its own registration. But Haggar’s registration was reinstated, so both parties ended up with registrations. Somewhere in the mess a federal lawsuit was filed.

The court adopted the factors described in Tecnimed SRL v. Kidz-Med, Inc., 763 F. Supp. 2d 395 (S.D.N.Y. 2011) (blogged here) as the framework for deciding who the rightful owner of the mark is. While the court considered United the manufacturer and Haggar the distributor, it noted that it doesn’t really matter which is which: “the factors used in determining the question of ownership of the MONTANA mark are the same whether or not Haggar is given the title of ‘distributor.’” The court considered:

1) which party invented and first affixed the mark onto the product; 2) which party’s name appeared with the trademark;
3) which party maintained the quality and uniformity of the product;
4) with which party the public identified the product and to whom purchasers made complaints;
5) which party paid for advertising and promotion of the trademarked product; and
6) which party possesses the goodwill associated with the product, or which party the public believes stands behind the product.

I leave you to the 70 pages of detailed discussion of the law and the facts, including a dicta frolic through Person’s Co., Ltd. v. Christman. At the end of the day, this is the rare case where the distributor defeats the presumption that the manufacturer owns the mark. I think the case is most notable for highlighting that defining a relationship as manufacturer-distributor is really is a legal conclusion, not a predicate fact. (See, for example, here and here for similar problems.)

Therefore Haggar’s registrations were not fraudulent (the only basis available for cancellation, since the registrations were so old they were incontestable). United tried claiming that it could continue its use of the mark under Section 15(b)(5) of the Lanham Act as a senior user, but it didn’t have continuous use. The court decided in favor of Haggar that United was infringing the Haggar trademark and ordered an accounting of damages owed Haggar as well as cancellation of the United trademark registration.

Haggar International Corp. v. United Company for Food Industry Corp., No. 03 CV 5789 (CLP) (E.D.N.Y. Nov. 28, 2012).

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