It’s not intellectual property, but it is intangible property, a court case and lawyers. ESPN reports that a judge has rejected the sale of a 20% interest in the Horse of the Year Curlin for $4 million. The 20% share is owned by disbarred attorneys who need to raise money to pay former phen-fen clients. The offer to buy it was from the owner of the other 80%.
© 2008 Pamela Chestek
Judge Alsup from the patent-heavy Northern District of California court has taken advantage of the almost certain appeal of patent cases by writing an “Appendix” to point out what he perceives as an unfairness in patent jurisprudence. He asks the Federal Circuit to address the burden of proof in swearing behind references.
The patent in suit was for an improvement in bundle breakers, which are machines that break stacked sheets of materials along scored lines, like for cardboard boxes. By the plaintiff’s admission an existing machine had every limitation of the patent, so the only question was whether the machine was prior art. It was sold in June, 2002 and the patent application was filed on August 28, 2002, so the patent owner had to come forward with evidence demonstrating that the inventor conceived of the patented invention before June, 2002.
The court ultimately held that the patent was invalid for obviousness based on other references. It took the opportunity, though, to comment on the burden of proof for swearing behind a reference. The court was clearly troubled by the amount of evidence that the plaintiff was able to rely on for swearing behind the earlier machine, just a lab notebook and oral evidence (presumably from the person who kept the lab notebook).
In 1935, it was the patent owner who had to prove, by clear and convincing evidence, that the true invention date was earlier than the presumptive invention date, the date of the application:
When the invention date is due to be carried back beyond his application, courts regard the effort with great jealousy, and must be persuaded with certainty which is seldom demanded elsewhere; quite as absolute as in a criminal case, in practice perhaps even more so.
United Shoe Mach. Corp. v. Brooklyn Wood Heel Corp., 77 F.2d 263, 264 (2nd Cir. 1935). (As an aside, this is currently the standard when a trademark owner has to prove it had an earlier date of first use than what was stated in its trademark application. McCarthy § 19:52).
The court explained, though, that based on current Federal Circuit precedent the burden is now on the challenger to prove invention date by clear and convincing evidence, no matter whether it has to prove that a piece of invalidating art was invented before the patent, or that the invention described in the patent was not before the invention of the invalidating art.
The court pointed out that in the latter case, there are reasons the challenger should not have such a heavy burden. First, the invention date is a fact question rarely examined during the prosecution of the patent, so the court felt it should not entitled to the same degree of deference. Further, where the challenger has to prove that the patent was not invented before the invalidating art, the accused is in the position of proving a negative, i.e., that invention did not happen at a certain point in time. There is a difference of authority on how much evidence the patentee must provide to prove its invention date (minimum evidence, as in Apotex USA, Inc. v. Merck & Co., Inc., 254 F.3d 1031, 1037-38 (Fed. Cir. 2001) or corroborated evidence of conception, as in Mahurkar v. C.R. Bard, Inc., 79 F.3d 1577 (Fed. Cir. 1996)), but certainly not as much proof as required when the accused infringer has to prove the positive, that an invalidating reference was invented before the filing date of an application. The court concluded:
It is true that the Patent Act presumes the validity of all issued patents and places the burden of invalidating them on the challengers. Once a challenger does so, however, it is respectfully submitted that the challenger should not have the further burden to disprove a patentee’s suggestion (based on merely enough evidence to defeat summary judgment) of an even earlier invention date, much less to prove the negative by clear and convincing evidence. Rather, once the challenger has proven, by clear and convincing evidence, the existence of anticipatory prior art earlier than the presumed date of invention (the filing date), the burden of persuasion should rest on the patentee to “swear behind” the anticipatory art.
Geo. M. Martin Co. v. Alliance Machine Sys. Intl, LLC, No. C 07-00692 WHA, 2008 U.S. Dist. LEXIS 95700 (N.D. Cal. Nov. 17. 2008).
© 2008 Pamela Chestek
Plaintiff Robert Welsh d/b/a Big Ten Development pitched the idea of a “Big Ten Network” to the Big Ten Conference. Big Ten Conference wasn’t interested at the time, but several years later introduced the “Big Ten Network” and filed trademark applications to register the mark in various classes.
Welsh brought suit under § 38 of the Lanham Act, which says:
any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof.
This is usually a claim that one party was aware of another already using a mark but nevertheless filed an application. Welsh had a different twist, though – he didn’t claim that he had trademark rights in “Big Ten Network,” but that the Big Ten Conference’s applications were based on his trade secret, the idea for the network. Welsh claimed that the declaration in the applications, the one that says that the Big Ten Conference was, to the best of its knowledge, the only person who had the right to use the mark in commerce, was fraudulent because the idea was stolen from Welsh.
Relying on similar cases that distinguished ideas from products – Carmichael v. Prime, No. 02-379-C-T/K, 2003 WL 1903355 (S.D. Ind. Jan. 6, 2003) (the idea for STARDUST for a fragrance), Keane v. Fox Television Stations, Inc., 297 F. Supp. 2d 921 (S.D. Tex. 2004) (the idea for AMERICAN IDOL for a talent show); and American Express Co. v. Goetz, 515 F.3d 156 (2d Cir. 2008) (the idea for MY LIFE, MY CARD for credit card services) – the court held on a motion to dismiss under Fed. R. Civ. P. 12(b)(6) that this theory didn’t state a claim. He also hadn’t used the mark and thus did not own it through use, so the Lanham Act claim was dismissed.
The misappropriation of trade secret claim was dismissed because the court declined to exercise supplemental jurisdiction where there was no federal question jurisdiction and no diversity. One loss for the Big Ten Conference; it wasn’t successful in its claim for attorneys’ fees under § 35 of the Lanham Act, even though the court called the plaintiff’s theory “patently untenable.”
No mention of a counterclaim by the Big Ten Conference for Welsh doing business as “Big Ten Development.”
© 2008 Pamela Chestek
The legal blog with what has to be the longest name ever, the Los Angeles Intellectual Property Trademark Attorney Blog, brings our attention to an almost perfect trifecta of intellectual property ownership, where jeans are protected by patent, trademark and copyright. Almost perfect, because while the same stitching design on the back pockets is protect by both patent and trademark, the copyright registration is for the label. There’s no reason one couldn’t obtain a copyright registration for an applied stitching design, though.
© 2008 Pamela Chestek
You know a lawsuit has been going on a long time when the decision starts with “The parties’ familiarity with the prior proceedings and facts underlying this dispute is assumed. In brief,” and then goes on for 7 pages of a 33 page opinion just to explain the procedural history of the case. Empresa Cubana del Tabaco d/b/a Cubatabaco v Culbro Corp. and General Cigar Co. just passed its 11th anniversary, with 14 decisions available in the Westlaw database. In 2000, when I worked at Cantor Colburn LLP we moved in to the building in Bloomfield, Connecticut formerly occupied by General Cigar, a building surrounded by tobacco fields. Gap reminds me that we had a Cohiba conference room. I’m three jobs past Cantor Colburn (and Cantor Colburn has itself moved to snazzy new offices in downtown Hartford), but the cigar case still rolls along.
The most recent decision was in the trial court, relieving Cubatabaco of final judgment under Fed. R. Civ. P. 60(b)(6). With the decision, Cubatabaco’s protection of its COHIBA trademark in the U.S. has been revived.
The Las Vegas Trademark Attorney has previously summarized the convoluted proceedings. For those of you who haven’t stumbled across it in the past decade, it’s a dispute between Cubatabaco and General Cigar over the ownership of the trademark COHIBA for cigars (the senior General Cigar registration (with pending cancellation proceeding) is here and the junior suspended Cubatabaco application here). The trial court originally held that Cubatabaco owned the COHIBA mark under the well-known marks doctrine, but the decision was reversed on appeal. Cubatabaco’s problem, according to the Court of Appeals for the Second Circuit, was that it is a Cuban company and under the Cuban Assets Control Regulations (CACRs), a Cuban national cannot acquire property rights, i.e., a trademark, in the United States.
In the original lawsuit, in addition to Lanham Act claims Cubatabaco also alleged misappropriation of its trademark under state common law. That claim was dismissed by the trial court and affirmed by the appeals court because Cubatabaco had not proven that General Cigar had bad faith when it adopted the COHIBA mark.
Then the New York Court of Appeals, on a question certified from the Court of Appeals for the Second Circuit, decided ITC Limited v. Punchgini, Inc., 880 N.E.2d 852, 9 N.Y.3d 467, 850 N.Y.S.2d 366 (2007). In the decision, the New York court elaborated on the standard for protection of well-known marks under New York state common law. There was no mention of bad faith as a required element.
As a result Cubatabaco moved for relief from judgment under Fed. R. Civ. P. 60(b)(6). Although rarely granted, the clarification of state law in the ITC Limited decision demonstrated that the Cubatobaco court’s earlier decision on the state law misappropriation claim was in error, so the district court granted the requested relief.
The district court then held that Cubatabaco had adequately proven its claim for misappropriation of the COHIBA trademark under the ITC Limited standard. Misappropriation occurs under New York state common law when (1) the defendant deliberately copies and (2) consumers primarily associate the mark with the foreign plaintiff. The record had ample evidence that this was the case for the COHIBA mark.
The federal embargo in CACRs was not a bar to the suit because the misappropriation claim was not about ownership of a U.S. trademark, but instead about the misappropriation of commercial advantage. The court noted that misappropriation law does not provide a foreign party with the right to exclude others or reserve a designation for its exclusive use (ed note.: this would be true since the misappropriation standard does not bar innocent infringement). Rather, here Cubatobaco’s claim was in protection of the goodwill in its Cuban mark, not a claim of ownership in a U.S. mark, so not prohibited by the CACRs. Judgment therefore entered in favor of Cubatabaco on its misappropriation claim and presumably General Cigar will be enjoined from using the COHIBA mark.
No doubt an appeal will follow, so this suit will linger on for several more years. Cubatabaco’s petition to cancel the General Cigar mark remains outstanding and suspended. I can’t even begin to imagine the struggle the TTAB will have with this one.
Empresa Cubana del Tabaco d/b/a Cubatabaco v Culbro Corp., 97 Civ 8399, 2008 U.S. Dist. LEXIS 94085 (S.D.N.Y. Nov. 19, 2008)
© 2008 Pamela Chestek
In Halicki Films, LLC v. Sanderson Sales & Marketing, plaintiff Denice Shakarian Halicki and various related entities owned some rights – exactly what, to be decided by the court – in Eleanor, billed as “the only Ford Mustang in history to receive STARRING credit in a motion picture.”
There are really two Eleanors: a yellow 1971 Fastback Ford Mustang customized to look like a 1973 Mach 1 Fastback Mustang that appeared in the original 1974 “Gone in 60 Seconds” starring Toby Halicki
Original Eleanorand a gray 1967 Shelby GT-500 from the 2000 remake “Gone in Sixty Seconds” starring Nicolas Cage and Angelina Jolie.
Remake EleanorToby Halicki’s widow, Denice, owned the rights in the 1974 film and also the original automobile:
Halicki showed the Original Eleanor at car shows and licensed the name and likeness for a line of toy cars. In 1995 she sold the rights to remake the film to Hollywood Pictures, a division of Walt Disney. In the agreement, Halicki retained the “right to manufacture, sell and distribute merchandise utilizing the car known as ‘Eleanor’ from the Original [film].”
Defendant Carroll Shelby developed the Remake Eleanor used in the new film. Shelby is no stranger to intellectual property rights and is a fairly frequent trademark litigant. He (or his trust) owns at least 49 active U.S. trademark applications or registrations, including “GT-500” and “Shelby” for automobiles. After the picture was released, Shelby filed applications to register the trademark “Eleanor” for model cars and automobiles and licensed the marks “Shelby GT-500” and “Eleanor” to Unique Motors for the manufacture of replica Remake Eleanor automobiles.
Halicki sued Shelby for copyright and trademark infringement. The copyright infringed was of the fictional character Eleanor; the infringed trademarks were “Eleanor” and “Gone in 60 Seconds.” The district court held on summary judgment that Halicki didn’t have standing for the copyright, trademark, unfair competition and related declaratory judgment claims because she did not own any rights in Remake Eleanor.
The agreement between Hollywood Pictures and Halicki was far from explicit about what rights Halicki might have in the derivative work Remake Eleanor. The grant of rights for the remake obtusely carved out “‘Eleanor’ from the Original [film]” for Halicki. Was it belt and suspenders to make sure that there was no question Halicki retained the rights in Original Eleanor? Did the contracting parties mistakenly assume that Original Eleanor would be used in the remake and didn’t consider the possibility that Remake Eleanor would be different? Was it a poorly drafted but deliberate retention of ownership of any derivative works of Eleanor created for the remake?
The court found that the agreement was “reasonably susceptible to the interpretation [Halicki] urges” but did not “command Halicki’s interpretation,” so therefore under California law considered extrinsic evidence. Halicki had declarations from her attorneys in the movie negotiation that it was clear to all parties that Halicki would retain all rights to Eleanor in the remake. In her own declaration, Halicki said that her retention of the merchandising rights to Eleanor was a non-negotiable deal point. Later, on a request for reconsideration, Halicki also provided an “Acknowledgement and Agreement” between Hollywood Pictures and Halicki which stated that “as between [Hollywood Pictures] and Halicki, Halicki retained the merchandising rights to that cetain car called ‘Eleanor’ as such car appears in the Remake . . . .”
Stating “this is not the more usual situation where parties to an agreement disagree as to the meaning of its terms” and noting “[h]ere, statements by both parties to the Agreement . . . demonstrate that each party had the same intention as to the meaning,” the appeals court concluded that the extrinsic evidence was unequivocal and Halicki owned the rights to Remake Eleanor.
The district court also made significant missteps regarding trademark standing, corrected by the appeals court. First, the district court held Halicki didn’t have standing to claim infringement of the “Eleanor” mark because she didn’t own a registration; the appeals court remanded for the district court to decide whether she was the owner of the unregistered mark. The district court also held Halicki didn’t have standing to sue on the “Gone in 60 Seconds” mark because her registration was for toy cars and baseball caps but the infringement was for use of the mark on actual cars. Also wrong, as explained in more detail by the Seattle Trademark Lawyer.
But the story between the lines is the one that interests me the most. It would have been a bold move by Carroll Shelby to apply to register “Eleanor” and license replica cars without an agreement with Hollywood Pictures that, as between it and Shelby, Shelby was the owner of the rights in the car. The “Acknowledgement and Agreement” from Hollywood Pictures, nine months in the making, was carefully worded to describe only the relative rights of Halicki and the studio, and obtained only after summary judgment was entered against Halicki. Hollywood Pictures is right in the middle of all this – did it recognize the conflict but knew it could reconcile the two agreements? Or did it mistakenly grant the same thing to two entities? Will a lawsuit between Shelby and Hollywood Pictures be next?
Halicki Films, LLC v. Sanderson Sales & Marketing, NO. 06-55807, 06-55806, 2008 U.S. App. LEXIS 23396 (9th Cir. November 12, 2008).
© 2008 Pamela Chestek
The requirement for a written assignment of copyright can bedevil a copyright claimant, as in Tacori Enterprises v. Rego Manufacturing. In Tacori, the plaintiff was vulnerable because the assignment of copyright was not in a writing, although the original copyright owner and assignee agreed that the copyright had been assigned. Luckily for copyright owners, the cases generally teach that a defendant cannot collaterally attack the validity of the assignment where there is no dispute between the transferring parties about who owns the copyright.
But the rule is not a free pass on ownership questions. In any copyright case the plaintiff has the burden of proving the ownership of a valid copyright. In the case like Tacori of a non-written assignment, there is no question who the owner is at the time of suit, it’s only a question of complying with the writing requirement (although the absence of a writing creates all sorts of problems with the accuracy of the registration, another basis for attack).
In Giddings v. Vision House Production, Inc., years before she filed the lawsuit plaintiff Lori Jo Giddings had assigned her copyright in nine paintings to various family members and her lawyer in order to keep them out of the reach of the bankruptcy court. The assignment was abundantly clear:
The undersigned does hereby sell, transfer, convey, absolutely assign and set over . . . all right, title and interest in said original mixed media painting . . . including without limitation all copyrights and the right to secure copyright registration and any and all copyright renewal rights and in any works derived therefrom throughout the entire world and any and all rights the assignor now has or to which he may become entitled under existing or subsequently enacted federal, state or foreign law statutes or regulations for or during the full term of said copyright including without limitation the right to produce the artwork and copies of prints, the right to prepare derivative works based on the artwork, the right to distribute copies of the artwork, the right to perform and display the artwork publically [sic].
[ellipses in original; brackets added]. The alleged infringement arose as the result of a failed business relationship and revolved around how the defendant used some of the works after the relationship ended, with the infringement ending in September, 2005 when the lawsuit was filed. But Giddings didn’t have the works assigned back to her until February 8, 2008, and assigned back without the express transfer of accrued causes of action.
Giddings claimed that the defendant didn’t have standing to attack the validity of her ownership, based on the oral transfer cases. The argument didn’t work for the court and, while “the Court is reluctant to dispose of a case without addressing the merits of the claim,” her case was dismissed for lack of subject matter jurisdiction.
Giddings v. Vision House Prod., Inc., No. CV-05-2963 PHX MHM, 2008 U.S. Dist. LEXIS 89419 (D. Ariz. Oct. 21, 2008).
© 2008 Pamela Chestek
A recent New York case explores a trademark licensor’s tort liability for defective merchandise, but with a twist: the licensor is a wholly-owned trademark holding company. The biggest lesson from the case is “get the left hand talking to the right.” Here, a low-probability, ultimately unsuccessful defense in a tort case only succeeded in providing fodder for future attacks on a valuable trademark.
In 1996 Scotts exclusively licensed Home Depot to sell Scotts-branded lawnmowers manufactured by co-defendant Murray, Inc. The Scotts trademarks were subsequently assigned from The O.M. Scott & Sons Company to OMS Investments, Inc., a wholly-owned trademark holding company subsidiary, in 1998. In 2001 OMS Investments entered into a second licensing agreement with Home Depot for the sale of lawnmowers and a separate agreement with Murray for their manufacture. The OMS-Murray manufacturing agreement said that OMS or “a third party” was authorized to conduct inspections and the case details that Scotts was a very active participant in the design and manufacturing of the lawnmowers.
Homeowners purchased a Scotts-branded lawnmower. The lawnmower ignited a fire in the homeowners’ attached garage and the house suffered fire damage. Homeowners sued The Scotts Company and Murray, Inc. on various product liability theories, the insurance company paid the claim, and the insurance company was substituted as plaintiff.
McCarthy states that “In general, it is accurate to conclude that there is a very substantial risk that a trademark licensor or franchisor will be held liable for the torts of licensees and franchisees.” McCarthy § 18:74. Nevertheless, Scotts moved for summary judgment on two theories: that Scotts was the wrong party in interest since OMS was the trademark licensor; and that OMS, or alternatively Scotts, was a “mere licensor” and not liable under New York tort law.
For those interested in the topic, this case is a thorough study of New York law on tort liability of licensors. Briefly, a trademark licensor will be liable on a strict liability theory for a defective product where the licensor participates substantially in the design, manufacture, or distribution of the licensed products. While a licensing relationship per se is not enough, the licensor can be liable where there is the capacity to exercise control over product quality or distribution of a defective product. While the Scotts court acknowledged that, in theory, the licensor may escape liability where the “trademark ownership or registration ‘may indicate nothing more than the fact that the registrant had a marketing idea or concept . . .’,” the court stated that, in general, a program to avoid abandonment through naked licensing is sufficient to establish enough involvement for tort liability. The court had no sympathy that a licensor may not be able to insulate itself from strict liability claims:
Exposing the trademark licensor to strict products liability proportional to the degree it polices its mark through rigorous quality assurance policies, including oversight of product design, also prevents the licensor from becoming an economic ‘free rider,’ obtaining the benefits of consumer confidence in the mark, manifested by increased sales and associated royalties, while sidestepping potential strict products liability claims that may arise where compliance with such quality assurance policies prove imperfect.
As described in detail in the case, Scotts was intimately involved in the production of the lawnmowers, so playing a shell game based on trademark ownership to try to avoid liability promised to be a lost cause. Scotts instead paid what might turn out to be a high price for making an argument with a low likelihood of success, since the decision puts the validity of the trademarks into question.
The first mistake was right out of the box – Scotts admitted in the Answer that it was the licensor of the Scotts mark (“Admit to the allegation set forth in Paragraph 10 of the Complaint that Scotts licensed the subject lawnmower, and denies the remaining allegation set forth therein.” Answer here). When Scotts then tried to argue on a motion for summary judgment that it wasn’t liable because OMS Investments was the actual owner of the marks the plaintiff insurance company cried foul and Scotts abandoned the argument. So, the answer alone casts doubt on the actual ownership of the trademarks; Scotts itself doesn’t appear to recognize that it is merely a licensee of marks. (Shameless self-promotion – see a discussion of the risks of placing trademark ownership in a wholly-owned subsidiary in Pamela S. Chestek, Control of Trademarks by the Intellectual Property Holding Company, 41 IDEA 1 (2001)).
But the court goes on to do some more damage of its own. Even though it found that Scotts made a binding admission that it was the licensor, as court’s are wont to do it discussed alternative theories for finding that Scotts is the true trademark licensor. It questioned the legitimacy of the trademark holding company (“OMS is a wholly-owned subsidiary of Scotts with no other business purpose apparent from the record except to hold and license the Scotts mark”), that Scotts, not OMS, actually controlled the mark (“the record is replete with other evidence that Scotts’s quality control personnel actively exercised such quality control authority by regularly visiting Murray’s manufacturing facilities and reviewing Murray’s quality control processes and records to assure Murray’s compliance with Scotts’s quality control requirements and recommendations with the intent to police and protect the Scotts trademark”), and suggested piercing the corporate veil (“Plaintiff’s allegations, charging Scotts as the licensor of the trademark lawnmower, are broad enough, subject to proof at trial, to include imposition of liability against Scotts based on the corporate alter ego doctrine, such that OMS’s status as Scotts’s wholly-owned subsidiary may be disregarded by the jury in determining which entity was, in fact, responsible for the licensing of the Scotts trademark to Murray.”). The court concluded that
a reasonable juror could find that Scotts, not OMS, was the de facto or actual licensor of the Scotts trademark applied by Murray to the lawnmower manufactured by Murray and sold by Home Depot . . . .
Of course if Scotts, not OMS, is the “de facto” or “actual” licensor of the trademark, OMS is not the owner of the trademarks. Any applications or maintenance action filed by OMS, if it wasn’t the true owner, were fraudulent. All may not be lost if Scotts is still the owner of common law rights, but the decision is an invitation to attack the validity of a conceptually weak surname trademark in the future.
The decision also risks the tax benefits deliberately created through Scotts’ use of a trademark holding company vehicle. Intellectual property holding companies are generally set up for tax reduction purposes, but the holding company has to have a legitimate business purpose other than tax avoidance. Here, the court questioned the business purpose of the holding company and highlights in excruciating detail that the parent company, Scotts, is really performing all the activities that are normally used to explain the business purpose of a trademark holding company.
Further, one of the business justifications for the use of a trademark holding company is to protect trademarks from a parent company’s liabilities. Sherwin-Williams Co. v. Commissioner Of Revenue, 438 Mass. 71, 75, 778 N.E.2d 504, 509-10 (Mass. 2002). Rather than protecting the trademarks from risk, though, here the defense tactic, claiming that OMS was the real party-in-interest, put the trademarks right in the firing line.
A Hail Mary attempt to slip through the thinnest of cracks in tort law liability puts the validity of the crown jewel trademarks, not to mention a company’s tax strategy, at risk. Automobile Ins. Co. of Hartford Conn. v. Murray, Inc., 571 F. Supp. 2d 408 (W.D.N.Y. 2008).
© 2008 Pamela Chestek
I’ve mentioned in the past that the naked licensing doctrine has taken on a life of its own disconnected from the statutory basis for it, abandonment. Fuller v. Heintz/Candee takes the naked licensing doctrine to an extreme, apparently holding that only one “naked license” is enough to invalidate the trademark.
The case is tantalizing in its lack of detail. The plaintiff had voluntarily dismissed his claim and the court only had to decide costs and attorneys fees, in particular the date on which the claim became exceptional.
It seems that the plaintiff, Jason Fuller, had a trademark registration for “Teddy Bear Puppy” and sued the defendant, Patricia Heintz/Candee, for infringement.
Plaintiff’s puppiesFuller had granted at least two licenses the defendant claimed were “naked,” one to Amy Zehe granted before the suit was filed and one to Sherri Smeraglia granted after the suit was filed.
What’s most surprising in this case is the plaintiff’s behavior. In an unrelated lawsuit over whether the Zehe license was a franchise agreement, Fuller himself argued that the trademark was invalid:
Further, it is doubtful that the trademark “license” presented would even pass muster as a bona fide license since the usual quality control provisions imposed by the owner of such mark are completely lacking in the documents of record. While a concern for the welfare of the dogs is clearly expressed, no provisions are made for policing the use of the mark by, for example, requiring the licensee to periodically provide the Respondents with specimens showing use of the mark.
The court nevertheless found that the Zehe license was not naked, stating “the agreement provides just enough quality control to insure consistency and quality of the product. . . . I am persuaded from the quality control mechanisms in place in the Zehe agreement that it was not a ‘naked’ license and does not establish the plaintiff’s infringement suit ‘lacked merit’ when he filed it.”
The Smeraglia license was naked, though, although the court did not explain why because the plaintiff conceded it was. He consequently dismissed his case and cancelled his registration. The court stated bluntly, “Plaintiff issued a naked license on February 25, 2008, which automatically invalidated his trademark and undermined his infringement suit.”
Hopefully this case will die a quiet death. A single unexplained “naked” license is simply not a legitimate basis for invalidating a trademark in ordinary circumstances.
Fuller v. Heintz/Candee, 07-cv305-bbc, 2008 U.S. Dist. LEXIS 89620 (W.D. Wis. Nov. 4, 2008).
© 2008 Pamela Chestek
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