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© 2003, Gallagher & Dawsey Co., LPA
March 2003
The underlying purpose behind trademark law is to prevent confusion in
the consumer as to the source of goods or services, and, as a result,
to aid consumers in getting the level of quality in goods and services
that they have come to expect from a provider. Without consistency in
quality, consumers would tend to be misled, not aided, by reliance on
trademarks.
An important case illustrating the real world consequences of this
doctrine was decided recently in the 9th Circuit Court of Appeals:
Barcamerica International v. Tyfield. The dispute was over which party
had the right to the trademark "Leonardo da Vinci" for wines.
Barcamerica federally registered its trademark in 1984, and Tyfield
pursued its first federal registration in 1996. Issues as to actual
number of sales and use in commerce were complex, and portended a
difficult weighing of evidence. But Tyfield cut through with a direct
and aggressive legal strategy - charging that Barcamerica had lost,
irrespective of use in commerce, the right to the trademark by
engaging in "naked licensing," by failing to insure that licensees
maintained quality of the product.
Testimony showed that Barcamerica had exclusively licensed the use of
the "Leonardo da Vinci" trademark to a third party, Renaissance
Vineyards. The agreement contained no quality control mechanism and
was to continue in effect in perpetuity. The agreement made
Renaissance solely responsible for any claims for negligence, breach
of warranty, or products liability in the sale of the wine. All
Barcamerica could muster was its belief that Renaissance made "good
wine."
The appeals court agreed with the trial court that this was not
enough, even assuming that it might be correct. The court held that
whether Renaissance wines were objectively good or not was "simply
irrelevant." The key factor was that Barcamerica had played no
meaningful role in holding the wine to a standard of quality. Perhaps
surprisingly, even an effort to insure that bad wine was being made
might have been better for the plaintiff. The court reasoned that the
public had a right to a consistent expectation, high, middle, or low,
and that "customers are entitled to assume that the nature and quality
of goods and services sold under the mark … will be consistent and
predictable." The court quoted a licensing treatise that "naked
licensing, without any control over the quality of the goods … is
inherently deceptive and constitutes abandonment…"
Barcamerica might have had a good argument on their use in commerce,
but lost on the initial examination of abandonment; a warning on the
dangers of naked licensing. |
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