Property, intangible

This is a litigation strategist’s dream. I don’t think the outcome is right, but I will say it was really excellent lawyering.

Plaintiff Business Moves Consulting, Inc. owns a trademark registration for:

for a long list of clothing items. It sued Collegiate Licensing Company, LLC and others for trademark infringement.¹ CLC is a licensing agent for colleges and universities, licensing the institutions’ trademarks to third parties who want to make licensing goods. Business Moves also sued Thaddeus Reed, one of CLC’s customers and a licensee of university trademarks, specifically Jackson State University trademarks.

So what makes this case something out of the ordinary? CLC claims that the phrase “Thee I Love” “has been the alma mater [sic, slogan?] for Jackson State University” since the 1940s. It has two Mississippi state trademark regstrations for the slogan and two pending federal applications. JSU “is in the process of” petitioning to cancel the Business Moves registration, although I could not find a cancellation pending. The defendants claim that JSU’s rights are superior to Busines Moves’ rights.

But JSU is not a party, making this a jus tertii defense:

The defense of jus tertii arises when defendant raises the right of a third party. In a trademark infringement suit, a claim by defendant that a third party has rights in the mark superior to plaintiff is in effect, a jus tertii defense.

J. Joseph McCarthy, Defining Jus Tertii, 6 McCarthy on Trademarks and Unfair Competition § 31:157 (5th ed.).

Many cases described it as “unfavored.” McCarthy’s opinion on the defense?

As a matter of policy, jus tertii should not be allowed as a defense in any trademark case. So long as plaintiff proves rights superior to defendant, that is enough. Defendant is no less an infringer because it is brought to account by a plaintiff whose rights may or may not be superior to the whole world. The plaintiff’s speculative dispute with a third party does not concern the defendant.

To permit a jus tertii defense would be unwise judicial policy because it would expand many trademark disputes far beyond a mere two-party conflict. Before plaintiff could prevail, it would have to prove that it was not an infringer of one or more third parties that the defendant can conjure up.

If the defense were allowed, would the court then declare that the third party is an indispensable party to the case, require the third party to intervene, or would it permit defendant to act as surrogate advocate for the third party’s rights? By raising jus tertii, a defendant could effectively divert attention from its own alleged infringement and become a vicarious avenger of another’s purported rights against plaintiff (and assumably not against itself). A case could be expanded beyond reasonable bounds and effectively slowed to a crawl.

J. Joseph McCarthy, Jus Tertii Is Not a Defense, 6 McCarthy on Trademarks and Unfair Competition § 31:160 (5th ed.)

Professor McCarthy nailed it and CSC took it up a notch. CLC filed a motion to dismiss under Rule 12(b)(7) on the basis the that JSU is an indispensibe party but one that cannot be joined because, as an arm of the state, the university has sovereign immunity. Which worked.

As to whether the University is a required party:

Defendants are correct that JSU’s possession of “an interest relating to the subject of the action may as a practical matter impair or impede the person’s ability to protect the interest.” F. R. Civ. P. 19(a)(1)(B)(i). JSU claims a trademark owner’s interest in the phrase “Thee I Love,” and engaging the merits of plaintiffs’ complaint absent JSU’s participation in the case would, as a practical matter, hinder JSU’s ability to protect its interest. This is particularly true in light of the ongoing petition process between JSU and plaintiffs [Where! Nothing has been filed, what’s the hold up? – Ed.] over the trademark.

I’m not buying it; the case should not implicate JSU’s rights at all. The legal question is whether CSC has rights superior to Business Moves and the answer is no, it doesn’t have any rights at all. CSC itself pointed out (to bolster the claim that JSU was required) tht it’s just an agent who doesn’t own the mark.

JSU’s sovereign immunity is clear, followed by the court’s conclusion that the case could not proceed without JSU:

Though plaintiffs insist that the case is about their federal trademark, not about JSU’s state or alleged common law trademark to Thee I Love, those marks are not so clearly distinguished.… JSU’s interest in the lawsuit is implicated not only by potential judgment or the form of relief, but by the necessary inquiry into ownership of the trademark itself.… Plaintiffs in the instant case would not be fully without recourse if the instant case were dismissed. Rather, as defendants suggest, plaintiffs could challenge “JSU’s applications for THEE I LOVE at the United States Patent and Trademark Office.”

And so the case was dismissed.

CSC characterized Business Moves as a “trademark pirate,” the court finding it sufficiently relevant to quote CSC: “the latest example of a long-running pattern of abusive conduct, whereby Mr. Bordenave seeks to register trademarks to which he has no prior connection in the hope of converting or holding for ransom goodwill created through efforts, traditions, and creativity of others.” Query how much this gloss affected the outcome. What if the trademark owner was instead a church with no relationship to collegiate apparel, would the court allow dragging JSU in then?

But what a pièce de résistance. Well done, CSC. This case is not limited to just JSU either – CSC has just succeeded in establishing a successeful defense for every single suit it receives based on infringement of a public college or university’s trademark. Not sure it’s going to survive appeal, though.

Lee v. Learfield Comm., LLC, No. 20-839 (E.D. La. Sept. 15, 2020).

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