Trademark Licensee Estoppel Doctrine

On February 21, 2014, in Trademarks, by Brian A. Hall

Trademark Litigator Alert!!!

A recent case out of the U.S. District Court for the E.D. of Tennessee discussed an issue that should be of interest to any trademark litigator – the licensee estoppel doctrine.  The Court, entertaining motions in limine, held that “equities weigh in favor of applying the doctrine of licensee estoppel with respect to the “invisible fencing” mark. Fido’s Fences must only rely upon post-termination evidence in demonstrating that IFI’s mark is generic.”  Put another way, the Court found that it is not fair for a trademark licensee to be able to attack the trademark rights of the trademark licensor prior to or during the term of the trademark license.  However, the Court did limit the doctrine and allow the trademark licensee to challenge the trademark licensor’s trademark after the termination of the licensee, just as any third party (with standing) can attach the genericness of a trademark.  See below the most relevant language from the decision below:

The doctrine or theory of licensee estoppel provides that a licensee should be, in many cases, “estopped from claiming any rights against the licensor which are inconsistent with the terms of the license.” Westco Group, Inc. v. K.B & Associates, Inc., 128 F.Supp.2d 1082, 1091 (N.D.Ohio 2001). For instance, after obtaining the benefit of a trademark license but breaching the terms thereof, a licensee should not be able to “benefit from its own malfeasance” by “challeng[ing] a licensor’s ownership of a trademark.” Id at 1086–89; see also Big Boy Restaurants v. Cadillac Coffee Co., 238 F.Supp.2d 866, 873–74 (E.D.Mich.2002).The Supreme Court of the United States has done away with licensee estoppel in the patent context, but the doctrine remains part of trademark jurisprudence. Lear, Inc. v. Adkins, 395 U.S. 653, 674, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969); But see, Beer Nuts, Inc. v. King Nut Co., 477 F.2d 326, 328–29 (6th Cir.1973) (distinguishing Lear ).

The following from McCarthy on Trademarks is instructive:

Many courts have adopted a view of trademark license estoppel under which a former licensee may challenge the licensor’s title, but only on facts which arose after the license contract has expired. That is, the estoppel covers only facts which occurred during the time frame of the license. As to facts which occur thereafter, the exlicensee is in the same position as any other challenger of the validity of the mark. For example, the Trademark Board applied the licensee estoppel rule to prevent a former licensee of the REALTOR mark from challenging the mark as being a generic name for real estate agents. The facts on which the genericness challenge was based arose prior to and during the challenger’s 20 years as a dues-paying member of the REALTOR association.

3 Thomas J. McCarthy, McCarthy on Trademarks and Unfair Competition § 18:63 (4th ed.2006).

Invisible Fences, Inc. v. Fido’s Fences, Inc., 3:09-CV-25, 2014 WL 558672 (E.D. Tenn. Feb. 11, 2014).

 

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