• Shocking Result – You Can’t Cancel a Registration the Other Party Doesn’t Own

    by  • March 19, 2018 • trademark • 1 Comment

    “The issue before the Court is whether an entity other than the trademark registrant and owner may properly be sued for trademark cancellation.” And my head explodes. One owns a property, a trademark registration. A claim that the property right doesn’t exist can only be brought against the entity that claims to own the property right, right? No surprise here:

    The Second Circuit has yet to address that question. To be sure, the Second Circuit has held that trademark infringement claims under the Lanham Act may only be brought by the owner of the trademark. But the Court has not addressed whether a party other than the trademark owner may be named in a trademark-cancellation claim. And the Lanham Act does not provide a ready answer: Neither 15 U.S.C. § 1119, which provides for concurrent jurisdiction of the federal courts and the Trademark Trial and Appeal Board over cancellation of trademarks, nor 15 U.S.C. § 1064, which identifies the party who may bring a trademark-cancellation action, explicitly addresses the question.

    Perhaps because it is so obvious it shouldn’t have to be said. But shockingly, this isn’t the first time someone has argued this theory:

    Courts in this and other districts that have addressed the issue have held that trademark-cancellation claims may only be brought against the trademark owner. In Informix Software, Inc. v. Oracle Corp., a software company sued the owner of a trademark and the licensee of the trademark for, inter alia, cancellation of trademark. 927 F. Supp. 1283, 1284 (N.D. Cal. 1996). In deciding whether the trademark-cancellation claim could be brought against the licensee, the court noted that 15 U.S.C. § 1119 “provides that the Court may rectify the trademark register with respect to ‘the registrations of any party to the action,'” and found that the statutory language “suggests that a complaint for trademark cancellation should proceed against the party who currently owns the trademark.” Id. at 1286 (quoting 15 U.S.C. § 1119).

    Gratefully I see the court reaches the correct conclusion, albeit in a very orthogonal way:

    The district court in Informix further held that, though “an exclusive licensee stands in the shoes of the trademark owner[,]” the Lanham Act “imposes a duty upon the licensor … to supervise a licensee’s use of its trademark … [and] specif[ies] that a registrant’s trademark may be cancelled if the registrant fails to control its licensee’s use of the licensed mark.” 927 F. Supp. at 1286. “This duty imposed by statute also strongly suggests that the ultimate responsibility for the validity of a trademark lies with the licensor, not with the licensee.” Id. Ultimately, the court held that “the owner of the trademark is the only proper defendant.” Id. Other courts have held similarly. See, e.g., Hokto Kinoko Co. v. Concord Farms, Inc., 810 F. Supp. 2d 1013, 1034 (C.D. Cal. 2011) (“[A] complaint for trademark cancellation in federal court must proceed against the party who currently owns the trademark[.]”), aff’d, 738 F.3d 1085 (9th Cir. 2013); Van Well Nursery, Inc. v. Mony Life Ins. Co., 421 F. Supp. 2d 1321, 1332 (E.D. Wash. 2006); Iowa Health Sys. v. Trinity Health Corp., 177 F. Supp. 2d 897, 911 (N.D. Iowa 2001); cf. Sojuzplodoimport, 2011 U.S. Dist. LEXIS 100474, 2011 WL 4005321, at *8 n.17 (noting without analysis that for a trademark-cancellation claim, “the relief sought cannot be obtained from these non-registrant/owner defendants”).

    This Court finds persuasive the reasoning adopted by these other courts. Counter-Plaintiffs have identified no basis, either in law or in logic, to allow them to bring a trademark-cancellation claim against anyone other than the trademark’s registrant/owner. This Court believes that no such basis exists. Accordingly, this Court holds that Counter-Plaintiffs may only bring their trademark-cancellation claim against the trademark owner.

    Phew. But how did this legal question even come up? By conflating a trademark and a registration. Here, “Monroe,” the Marilyn Monroe Estate, is the registrant and “ABG” was its exclusive licensee. A.V.E.L.A. Inc., maker of nostalgic merchandise and therefore serial defendant in copyright and right-of-publicity cases, was arguing that, (1) while Monroe is the record owner of the registration; (2) ABG is the actual owner of the mark so therefore (3) ABG is the proper party to the cancellation of the registration.

    This is instead a straightforward a naked license theory, that the Monroe estate didn’t control the quality of the goods and services of its licensee. It is a species of abandonment. The decision doesn’t report what the basis for the cancellation was (not having gotten past whether ABG was a party), so I’m not sure what A.V.E.L.A. had to gain by arguing that ABG somehow had to be involved in the cancellation claim. Perhaps the clue is this:

    In [prior decision] AVELA II, this Court expressed skepticism that any amended counterclaims would survive future dispositive motions and advised Counter-Plaintiffs “to consider this Opinion carefully in deciding whether and what to replead.” Counter-Plaintiffs have not done so ….

    A.V.E.L.A., Inc. v. The Estate of Marilyn Monroe, LLC, No. 12 Civ. 4828 (KPF) (S.D.N.Y. Mar. 5, 2018).

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    One Response to Shocking Result – You Can’t Cancel a Registration the Other Party Doesn’t Own

    1. Daniel Cole
      May 18, 2018 at 4:19 pm

      Wow – I am going to have to find this case. My head exploded reading the title. I love that the court took it seriously enough to look at the law, but really this should have been a quick um no you can’t.

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