Property, intangible

a blog about ownership of intellectual property rights and its licensing

Waiting Too Long

Medical Products Laboratories, Inc. v. Premier Dental Products Co. had the makings of a good tale about joint ownership of a trademark, but alas, it was decided on a statute of limitations basis rather than anything more substantive. Maybe we’ll see something later in the state court.

Medical Products was a contract manufacturer for Premier Dental. The two entered into an agreement that said:

[a]ll current and future trademarks put into interstate commerce by Premier Dental Products Company covering merchandise made for their distribution by Medical Products Laboratories are jointly owned by Medical Products Laboratories and Premier Dental Products Company.

Premier Dental, of course, registered the trademark ENAMEL PRO as the sole owner of the mark — twice, once in 2006 and again in 2008.  Medical Products filed suit in October, 2012, alleging a false and fraudulent registration under Section 38 of the Lanham Act and breach of contract.

Because the Lanham Act does not have a statute of limitations, courts instead apply the statute of limitations for an analogous state law cause of action. In the Third Circuit this is two years for a Section 38 action, because it is analogous to a claim for fraud. The claim also accrues when an aggrieved party “learned or should have learned, through the exercise of due diligence, that they have a cause of action.” Premier therefore didn’t have much problem getting rid of the claim; the court found that, by operation of Section 22 of the Lanham Act, Medical Products was on constructive notice of the registrations in 2006 and 2008 so the claim was time-barred. A theory that the claim accrued again in 2012 when the Section 8 & 15 for the 2006 registration was filed didn’t fly.

Medical Products also argued that the claim was timely because it was only seeking prospective injunctive relief.  But there was an insurmountable pleading problem here:

This argument, however, suffers from one fatal flaw—Plaintiff cannot articulate a legal basis on which it can maintain an action for injunctive relief under § 38. The Lanham Act, 15 U.S.C. § 1116, sets forth the precise circumstances under which a court may award injunctive relief, as follows:

The several courts vested with jurisdiction of civil actions arising under this chapter shall have power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to prevent the violation of any right of the registrant of a mark registered in the Patent and Trademark Office or to prevent a violation under subsection (a), (c), or (d) of section 1125 of this title.

15 U.S.C. § 1116(a) (emphasis added). Plaintiff, however, is not the registrant of either of the Trademarks. Moreover, Plaintiff does not allege a claim of unfair competition—including false designations of origin, false descriptions, and dilution—under § 1125 of the Lanham Act. Finally, § 38—the basis for Plaintiff’s Lanham Act claims—expressly makes a party who fraudulently procures a trademark liable to “any person injured thereby for any damages sustained in consequence thereof.” 15 U.S.C. § 1120 (emphasis added). Nothing in that provision allows for a plaintiff to obtain injunctive relief. Because Plaintiff has no legal basis for recovery of the injunction it seeks, its mere request for such relief cannot end-run the applicable statute of limitations.

The court dismissed the Lanham Act claims and declined to exercise supplemental jurisdiction over the state law breach of contract claim.

I’m intrigued — what provoked the case? The Complaint doesn’t give any insight. Can Medical Products get a breach of contract award of specific performance granting it joint ownership of the mark? (A court has the power to rectify the register, so the registration itself isn’t a barrier.) Does Medical Products want to start distributing ENAMEL PRO? The same or a different product than Premier? What does that do to trademark ownership if the products are different? If there is no award of specific performance, what are Medical Products damages if it is barred from distributing the product because it would be an infringer? Such good fun!

Medical Prods. Labs., Inc. v. Premier Dental Prods. Co., No. 12-6051 (E.D. Pa. Jan 31, 2013).

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