Property, intangible

a blog about ownership of intellectual property rights and its licensing

Waiving Ownership of the Registration

Do you need to own a trademark to succeed in an infringement claim? Not necessarily.

The plaintiff, I&I Hair Corporation, now owns the registration for the trademark EZBRAID. Except that it originally didn’t; the registration was owned by Eunja Son, a principal of the plaintiff.

I&I Hair sued the defendant, Beauty Plus Trading Co., for trademark infringement. Through its attorney, Beauty Plus alleged that I&I Hair wasn’t the owner of the trademark. The two parties then switched to negotiating directly and ultimately reached a settlement. A Consent Judgment and Permanent Injunction was entered against Beauty Plus.

Which Beauty Plus promptly breached. I&I Hair went to a trade show and found Beauty Plus still selling EZBRAID product.

I&I Hair filed a motion for contempt. Beauty Plus argued in response that, because I&I did not own the registration, it was fraudulently induced into agreeing to the Consent Judgment and that I&I Hair did not have standing for the action. After the Beauty Plus response, I&I Hair entered into a nunc pro tunc assignment of the mark from Eunja Son to I&I Hair.

The court did not find that Beauty Plus was fraudulently induced into the Consent Judgment. Beauty Plus’s counsel knew of the ownership issue and the client is deemed to have notice of the facts known to its counsel.

On standing, a consent judgment can be invalidated if the court that issued it lacked jurisdiction. Where there is no constitutional standing, there is no jurisdiction. A plaintiff will also lack standing if there is no statutory standing and the law is clear that the statutory requirement is jurisdictional.

Here, though, under Section 32 of the Lanham Act for infringement of a registered trademark, the statutory requirement for ownership of a trademark registration can be waived:

Whether a party owns the trademark affects whether it is in the class of plaintiffs that can seek relief under the terms of 15 U.S.C. 1114(b), but nothing indicates an intent by Congress to designate trademark ownership as a jurisdictional requirement. Multiple courts have agreed that trademark ownership is a statutory requirement. … Because Plaintiff’s ownership status of the EZBRAID Mark is not an issue of constitutional standing, it does not impact the Court’s jurisdiction and does not warrant invalidating the Consent Judgment.

The court also accepted that the nunc pro tunc assignment cured the problem:

Additionally, unlike constitutional standing, statutory standing issues can be waived or cured. This includes attempted curing through a nunc pro tunc assignment. As Defendant argues, the Federal Circuit has held that nunc pro tunc assignments cannot retroactively cure a lack of standing. Enzo APA & Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093 (Fed. Cir. 1998); Gaia Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 779 (Fed. Cir. 1996). However, the plaintiffs in both of those cases lacked both statutory and constitutional standing, and several courts have distinguished those decisions and found that a nunc pro tunc assignment can cure a lack of statutory standing. Positive Techs., Inc. v. LG Display Co., No. CIV. 2:07 CV 67, 2008 WL 4425372, at *2 (E.D. Tex. Sept. 24, 2008); Advanced Tech. Incubator, Inc. v. Sharp Corp., No. CIV.A. 2:07-CV-468, 2009 WL 2460985, at *5–6 (E.D. Tex. Aug. 10, 2009). As a non-jurisdictional issue, Plaintiff’s lack of ownership of the EZBRAID Mark was both waived by Defendant by agreeing to the Consent Judgment and cured through the nunc pro tunc assignment between Plaintiff and Ms. Son.

Further, even if I&I Hair lacked statutory standing for infringement of a registered trademark, a claim of false designation of origin under Section 43(a) of the Lanham Act can be brought by “any person who believes that he or she is or is likely to be damaged.” I&I did not lack statutory standing for a claim under Section 43(a) for which the relief was the same, and therefore sufficient to validate the Consent Judgment.

However, there was no contempt because of the uncertainty:

The Consent Judgment, here, recites that Plaintiff owns the EZBRAID Mark [Consent Judgment ¶ 3], and then phrases its operative provisions in terms of the EZBRAID Mark, Plaintiff’s EZBRAID Mark, and Plaintiff’s rights in the EZBRAID Mark. [Id. ¶ 10]. However, given that Plaintiff may not have owned or had rights in the EZBRAID Mark at the time of the alleged contemptuous conduct, it is unclear what obligations, if any, Defendant and Femi may have violated. “The judicial contempt power is a potent weapon which should not be used if the court’s order upon which the contempt was founded is vague or ambiguous.” Martin v. Trinity Indus., Inc., 959 F.2d 45, 47 (5th Cir. 1992). Accordingly, the Court finds that Plaintiff has not provided sufficient evidence to justify holding Defendant in contempt.

But don’t try it again:

Nevertheless, as of the date of this Order Plaintiff indisputably owns the EZBRAID Mark, following the assignment from Ms. Son. Accordingly, any ambiguity in the Consent Judgment has been remedied and similar actions by Defendant in the future would likely warrant a finding of contempt.

I & I Hair Corp. v. Beauty Plus Trading Co., No. 3:18-cv-03254-M (N.D. Tex. Sep 13, 2019).

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