Property, intangible

a blog about ownership of intellectual property rights and its licensing

Going to the Back-up Plan

This is a blog about ownership of all types of intellectual property, but it is undoubtedly the ownership of trademarks that provides the most litigation fodder.  I think it is because no one thinks of the trademarks, or else they only become important in hindsight. Taylor v. Thomas is a typical example of what a court might have to deal with.

Plaintiff Fontaine Taylor was the owner of a real estate brokerage firm called Coleman-Etter-Fontaine. The firm used a logo with red letters and a blue skyline silhouette:

Taylor decided she didn’t want to run her own business but also didn’t want anyone else to own it. She therefore became a real estate agent for non-party Crye-Leike Realtors. In her agreement with Crye-Leike, Crye-Leike agreed that it would not use the marks without Taylor’s permission and that the Coleman-Etter-Fontaine name, service marks and goodwill would remain “Plaintiff’s property.” (This is how the court described it, based on the the Defendant’s Response to Statement of Undisputed Facts Supporting Plaintiff’s Motion for Partial Summary Judgment.) Taylor did, though, use the design herself on her website

and later, after the infringement began, on her own yard signs:

After the Coleman-Etter-Fontaine and Crye-Leike “merger” was announced, defendant Mark Thomas started using a sign that was similar to the Coleman-Etter-Fontaine sign:

In his defense, he retorted that Taylor wasn’t the owner of the marks. As framed by the court, “there is no dispute as to whether the Service Mark was owned by Coleman-Etter-Fontaine prior to February or March of 2011. The dispute concerns if or when Plaintiff obtained ownership of the Service Mark from Coleman-Etter-Fontaine.”

First, Taylor claimed that she owned the mark because she was the sole shareholder and owner of Coleman-Etter-Fontaine. She had McCarthy on her side, which states that:

[i]f a corporation is using a mark, then a principle [sic] officer and shareholder is not the “owner.” It is presumed, however, that a real person who owns all the stock of a corporation controls the corporation so that use of the mark by the corporation inures to the benefit of the real person, who is presumed to be the “owner” of the mark.

2 McCarthy on Trademarks and Unfair Competition § 16:36.

But the court wasn’t buying it. It agreed with the defendant that construing trademark law to allow for individual ownership based on sole-shareholder status would conflict with Tennessee law governing corporations, where “even if one stockholder holds all of the stock in a corporation, the corporation and that single stockholder remain distinct legal entities.”

Taylor had more luck though with the doctrine of implied assignment. “An assignment of a service mark need not be in writing to be valid. Where there is no written assignment, an assignment can be implied from conduct manifesting agreement.” The court found that Taylor’s conduct — retaining ownership in the Crye-Leike agreement, her continued use, and her exclusive control as the sole shareholder over the marks — was enough evidence to find there was an implied assignment of the mark from Coleman-Etter-Fontaine to Taylor.  She therefore owned the mark and her motion for partial summary judgment of ownership was granted.

But here’s a can of worms that the court didn’t address. The Lanham Act has a writing requirement, as does Tennessee law: “Any mark and its registration hereunder shall be assignable with the good will of the business in which the mark is used, or with that part of the good will of the business connected with the use of and symbolized by the mark. Assignment shall be by instruments in writing duly ….”  Tennessee Code Annotated, Sections 47-25-507. (Here’s a post where the argument was raised about a similar provision under New Jersey law, but not decided.) Taylor later executed an assignment of the mark from the corporation to herself, although it was not nunc pro tunc, and it was dated after the infringement began. What do you think, how rigorous should we be with the writing requirement?

Taylor v. Thomas, No. 2:12-cv-02309-JPM-cgc (W.D. Tenn. Jan. 22, 2013)

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