Going to the Back-up Plan – UPDATE
by Pamela Chestek • September 14, 2015 • trademark • 0 Comments
The Court of Appeals for the First Sixth Circuit affirmed the lower court decision that there was an implied assignment of the trademark. The defendant challenged the decision on two bases. First, without using the word “abandoned,” the defendant argued that the trademark rights were lost when Taylor ceased business. But
the owner of a business may retain the right to use its service mark even after the sale of the business, if the owner shows that she intended to resume producing substantially the same product or service, that she resumed doing so within a reasonable time, and that some portion of the company’s goodwill remains with the owner. [¶] Here, undisputed evidence showed that, after Coleman-Etter closed, Taylor continued to provide real-estate services in the same area without interruption, and that members of the community continued to associate her with Coleman-Etter and its intellectual property. In addition, Taylor redirected the old Coleman-Etter website to her new website, where she continuously displayed the skyline mark on the homepage. And only a little over a year after Coleman-Etter closed, she resumed using the skyline mark on her yard signs. Thus, Taylor’s rights to use the mark survived Coleman-Etter’s closure.
Thomas contends that any implied assignment gave Taylor no rights because trademarks must be assigned with their associated goodwill. He says Coleman-Etter no longer had goodwill to assign after it closed under the rule of Hunt v. Street, 184 S.W.2d 553 (1945). But Hunt held only that the goodwill of a partnership evaporates when the partnership dissolves because of the unique nature of partnerships. Id. at 555. And Coleman-Etter was a solely owned corporation, not a partnership. So this argument fails.
The award of $60,770 was affirmed and the case remanded to determine whether attorneys’ fees and costs should be awarded for the appeal too.
Taylor v. Thomas, No. 14-5632 (Aug. 3, 2015) (Not recommended for publication) (Casetext)
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 thefontaines.com:
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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