Property, intangible

a blog about ownership of intellectual property rights and its licensing

Tolerated Infringement

A trademark ownership dispute generally means taking a very mushy set of facts and deciding who has the superior claim. Generally, avoiding likelihood of confusion is the paramount interest, so the outcome will mean that one party will have to cease its use. But sometimes courts allow what I call “tolerated infringement,” concurrent uses that the court recognizes create confusion but nevertheless are allowed to continue.

It arises in contract cases, where the parties have contracted for coexisting confusing uses. Where the parties later disagree about the deal they struck, courts will enforce the terms of the agreement even if the use is confusing. See, e.g., Times Mirror Magazines, Inc. v. Field & Stream Licenses Co., 103 F. Supp. 2d 711, 739 (S.D.N.Y. 2000) aff’d, 294 F.3d 383 (2d Cir. 2002) (“Balancing the risk of confusion and minimal harm that could result from the parties’ shared use of the Field & Stream mark against the public interest in enforcing contracts and protecting the reliance they induce, I conclude as a matter of law that the level of injury does not outweigh the public interest in holding parties to their commitments”); T & T Mfg. Co. v. A.T. Cross Co., 449 F. Supp. 813, 827 (D.R.I.), aff’d, 587 F.2d 533 (1st Cir. 1978), cert. denied, 441 U.S. 908, 99 S. Ct. 2000, 60 L. Ed. 2d 377 (1979) (“The balance [of the public interest against confusion, one of the significant purposes of trademark law, against the interest in enforcing contracts and protecting the reliance they induce] strongly favors enforcement of the contract. But having already found that a likelihood of confusion exists in this case, we must determine whether this necessarily makes the contract against public policy. I conclude that it is not.”). It also happens as the result of settlement of assets in bankruptcy, Vincent’s of Mott St., Inc. v. Quadami, Inc., 423 F. App’x 46, 51 (2d Cir. 2011) (interpreting a bankruptcy decision that allowed what the appeals court characterized as a co-existing unlicensed use of another’s trademark) and divorce, Widman’s Candy Co. v. Knutson, No. 3:07-cv-13, 2008 U.S. Dist. LEXIS 61245, at *6 (D.N.D. Aug. 8, 2008) (former son-in-law was allowed to continue to operate store after divorce; suit was for breach of purchase agreement after buyer of his business was sued by the family for trademark infringement).

And now we have co-existing, confusing uses in a band name case – what else? And we get there through laches.

The musical group Los Iracundos was formed in Uruguay in the early 1960’s. They recorded and toured throughout the world until 1989, when one of the original band members died. After that, the group splintered into three, two of which are involved in the suit.

The plaintiff was the group formed by the original drummer, which the court called Velazquez Inracundos. The defendant was the Pivetta Inracundos, which included several of the original band members (and at one point one original member switched bands). Pivetta Inracundos performed in the United States regularly between the mid-1990s and 2012. Velazquez Inracundos performed in South America, Central American and Europe, but didn’t perform regularly in the US until 2012. Velazquez testified that he was aware Pivetta Inracundos was performing in the US.

One of the members of Pivetta Inracundos registered the LOS INRACUNDOS trademark in 1995 but the registration was cancelled in 2011 after the registrant failed to respond to a petition to cancel.1 Velazquez then registered the trademark. In September, 2013 Velazquez Inracundos sued Pivetta Inracundos.2

There was a bench trial on the sole claim of trademark infringement. The court punted on ownership of the trademark, acknowledging that registration is not determinative and also noting that Pivetta Inracundos was using the trademark in the US well before Velazquez Inracundos.

Instead, the court denied injunctive relief based on laches. Velazquez was aware of Pivetta Inracundos and its trademark registration “long before” Velazquez took steps to cancel the earlier registration, so there was a period of delay. The delay caused prejudice to the defendants since they had invested in using the name. The court concluded,

24. [U]nderlying the whole dispute is a failure of solid proof as to who actually owned the right to the band name over the passage of time. The uncontested proof is that, after the death of Eduardo Franco, the band members went their separate ways and did not challenge — for many years — the ability of the others to use the Iracundos name. The Court received no evidence concerning the actual ownership of the group’s intellectual property or brand name.

25. So, while Velazquez surely has a strong claim to use the name as an original member, Pivetta remains a part of a group that formerly possessed two other founding members and one of their sons (a la Jason Bonham, Sean Lennon, or Zac Starkey). Equitable considerations of this sort weigh both ways under these circumstances.

26. No doubt there is a likelihood of consumer confusion in the future. The Court is concerned that music fans will have difficulty in determining whether the Velzaquez Iracundos or the Pivetta Iracundos are the “real” Los Iracundos. But neither party seriously advanced a consumer confusion argument at trial. Moreover, such confusion may well be inevitable given the parties’ lackadaisical use of the mark in the United States over the years. It provides little incentive to prohibit one side or the other from performing under the band’s brand name going forward.

(Emphasis added.) Injunctive relief denied; both can tour as Los Iracundos.

Velazquez v. Hernandez, No. CV 133-6549 MRW (C.D. Calif. Dec. 5, 2016).

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  1. This webpage claims that the petitioner for cancellation, Nilo Lauz, is an “imposter.” He is not a party in the case and not mentioned in the court’s opinion, although the court said that Velazquez “apparently caused the PTO to cancel” the registration. Golly, band name cases are so much fun. 
  2. Name defendant Celso Hernandez, sued “individually and doing business as Playa las Tunas Restaurant,” settled out early. 
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