Property, intangible

Liger6, LLC v. Sarto is right in my wheelhouse, two claimants to the same mark. I passed on it at the district court level, though, because it wasn’t particularly remarkable. However, there is a decision on appeal now, and it’s a slow news week for non-Covid news. The district court opinion is marked “Not for Publication” and the appeals court decision marked “Not Precedential,” so don’t expect to find anything earth-shattering here. I would say the lesson is flimsy evidence can be defeated by common sense.

The Defendants are Sarto S.r.l. and sole proprietor Sarto Antonio, controlled by father Antonio Sarto and son Enrico Sarto. I’ll refer to all of them as “Sarto.” Sarto has manufactured bicycle frames in Italy for 30 years. In 2010 or so, Liger6 became the US distributor of Sarto bicycles, with the parties disputing who approached whom. From January 2011 through December 2012 Liger6 paid Sarto $250,000 for bicycle frames. Liger6 spent $500,000 on marketing. Liger6 claims that Sarto agreed to jointly register the SARTO trademark in the US, which would give Liger6 exclusive rights to the mark in the US. Liger6 had an Italian lawyer draft several versions of an agreement between the two parties but Sarto never signed one. Liger6 set up a US website at sartocycles.com and also owned domain names sartobikes.com and sartobicycles.com that it redirected to sartocycles.com.

Liger6 indeed registered the SARTO mark listing Liger6 and SartoAntonio as joint owners. Liger6 claimed that it provided Sarto with copies of the documents; however, about six months later, “seemingly unaware”¹ of Liger6’s application, Sarto S.r.l. filed a request for extension of its International Registration for the SARTO mark to the United States. Sarto received an office action refusing registration because of the Liger6/SartoAntonio registration. Sarto demanded that Liger6 abandon the registration, which Liger6 did. Liger6 has subsequently filed two new applications, which are blocked by the Sarto pending application. Liger6 has also opposed the Sarto application, with the opposition suspending pending the outcome of this litigation.

Sarto’s evidence of ownership was:

• They were the first ones to use the SARTO mark overseas and in the United States
• Liger6 was only a reseller and identified the Sarto entities as the source of anything it offered for sale
• They were the owner of the SARTO mark in Italy and the rest of Europe
• It’s their surname

Liger6’s evidence of ownership of the mark was:

• The unsigned agreements included joint ownership of the mark and Sarto never objected to that particular term during negotiations
• Sarto’s prior sales in the US were infrequent and sporadic
• Liger6 spent money promoting the mark

The district could concluded:

This Court finds that Liger6 has failed to rebut the prima facie showing by the Sarto Entities of entitlement to summary judgment on the declaratory judgment claim and counterclaim. The Sarto Entities had been using the SARTO mark in the United States and abroad, and never signed off on any of Liger6’s proposed agreements concerning joint ownership of the SARTO mark. The efforts of Liger6 in promoting the products of the Sarto Entities in the United States may support an award of relief as to other claims in the complaint, discussed infra, but not on the issue of the registration of the mark. Therefore, this Court will grant the part of the motion concerning the declaratory judgment claim and counterclaim.

The appeals court affirmed a bit more verbosely, in its entirety:

The District Court did not err in granting Defendants summary judgment as to the declaratory judgment claims. Liger6’s only argument on appeal is that the District Court “failed to address Liger6’s claim that it entered into an oral agreement with [Sarto] to jointly own the SARTO Mark [sic].” But Liger6 conceded for purposes of summary judgment that Sarto never granted it any ownership interest in the mark, and Defendants alerted the District Court to this concession repeatedly at summary judgment. We cannot reverse the District Court for failing to consider a legal argument predicated on a fact unsupported by the record.
 
Moreover, no reasonable jury could conclude from the summary judgment record that Liger6 and Sarto entered an oral agreement to share the SARTO mark. Liger6 argues that a jury might have credited Bonelli’s declaration that the Sartos agreed to share the mark in exchange for Liger6 “pioneering and developing the United States market.” But without any detail about the terms of the alleged agreement and the circumstances surrounding its formation, no reasonable jury could conclude that the parties formed an enforceable contract regarding the mark.
 
Nor do the draft agreements or joint trademark application support a conclusion that the Sartos agreed to share the mark. Liger6 cites a provision in the draft agreements stating that the parties “have … jointly applied in the US to register the trademark ‘Sarto’ of which they are and will be co-owners.” But Sarto never signed any of the agreements. Indeed, when Liger6 sent the first draft agreement to Sarto, it had not yet applied to register the mark. Liger6’s reliance on the joint trademark application to prove that Liger6 and Sarto “agreed they would jointly own the mark, and that Defendants changed their minds” is also unconvincing. In its own complaint, Liger6 alleges that it surrendered its registration because it had “erroneously named” Sarto as a joint owner—not because Defendants changed their minds about joint ownership.
 
Finally, the mere fact that Liger6 devoted substantial resources to selling and promoting bicycle frames bearing the SARTO mark does not support a conclusion that Sarto agreed to share the mark. Because Liger6 was Sarto’s exclusive dealer, its investments would have been in its commercial interest whether or not it owned the mark jointly with Sarto. Thus, Liger6’s investments are “not significantly probative” of whether Liger6 and Sarto agreed to share the mark.

Liger6’s only evidence was its own unilateral acts, that of filing an application and drafting an agreement, evidence that was largely defeated by the common sense conclusion that Sarto wouldn’t have filed its own application in the US if it had agreed to Liger6’s registration. I am glad it takes more than this to acquire someone else’s trademark, even if you win the race to the trademark office.

Liger6, LLC v. Sarto, No. 13-4694 (D.N.J. Aug. 10. 2016).
Liger6, LLC v. Sarto, No. 19-2027 (3rd Cir. Jan 22, 2020)

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