Apparently in the Northern District of California, an exclusive licensee can successfully sue under Section 32 of the Lanham Act even though it doesn’t claim to be either owner or registrant.
In Innovation Ventures, LLC v. Pittsburg Wholesale Grocers, Inc., plaintiff Innovation Ventures, licensee of the “5-Hour Energy” trademark, brought a claim for counterfeiting against numerous defendants. Innovation Ventures was the original trademark owner, but it had assigned the trademarks to non-party International IP Holdings LLC (according to the court, “a mere holding company”) in what the court identified as an assignment and license-back transaction. Innovation Ventures was, rather than the owner of the mark, the exclusive licensee of the mark.
A claim for counterfeiting is brought under Section 32 of the Lanham Act and the remedies for counterfeiting are only available for a suit brought under § 32. But only a “registrant” can bring a claim under § 32: “(1) Any person who shall, without the consent of the registrant [infringe the mark] shall be liable in a civil action by the registrant for the remedies hereinafter provided.” (Emphasis added.) The term “registrant” in the statute “embrace[s]* the legal representatives, predecessors, successors and assigns of . . . the registrant.” Lanham Act § 45, 15 U.S.C. § 1127.
Innovation Ventures doesn’t claim to be either the registrant or owner but claims that, nevertheless, as an exclusive licensee it has standing. And although the word “registrant” is defined by statute, the court doesn’t analyze where Innovation Ventures might fit into that category, like by assessing what “legal representative” might mean, or even whether the assignment/license-back might give Innovation Ventures standing as the “predecessor.” No, after stating that there is a circuit split on whether an exclusive licensee has standing, the court starts riffing.
First we have policy. Summarizing the court’s argument in my own words, “counterfeiting is horrible and therefore we must stop it!” Second, we have the dreaded “its true for other kinds of ‘intellectual property’ so it must be true here.” I’ve pointed out in the past that the enabling language for infringement suits for patents and copyrights is different; the Patent Act refers to “patentees” and the Copyright Act to “owners.” “Registrants” is a statutory category that has no equivalent in the other laws.
The fact that an assignment and license-back structure is valid doesn’t turn a licensee into a true owner — in fact, one would think it does just the opposite. It’s an exchange for value; if the assignor-licensee retains all rights, then what’s the benefit of the bargain for the assignee-licensor? If you decide to restructure your business for tax purposes, or financing purposes, fine, but you have to take your lumps with it, including the inability of the operating company to bring claims for counterfeiting.
One glimmer of hope for the defendant, though. The court wouldn’t decide whether the license was exclusive:
On this record, it is a close call whether “all” significant rights to the trademarks-in-suit were granted. Clearly, some rights were retained. This order declines to rule on the ultimate issue on a Rule 12 motion. The record is too thin to answer questions regarding how plaintiffs contractual arrangement has operated in practice, the extent of the control actually exercised by the licensor, and the intent of the parties at the time of the assignment and license-back transaction. This will be an issue for trial and discovery thereon is hereby permitted.
Innovation Ventures, LLC v. Pittsburg Wholesale Grocers, Inc., No. C 12-05523 WHA (N.D. Calif. Mar. 11, 2013).
* I wonder how many other statutes use the word “embrace.”
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