Federal Circuit on TM Licensing: We’re going to Enforce the Terms

Authentic Apparel v. US (Fed. Cir. 2021)

Authentic makes branded apparel, and had a non-exclusive license from the US Army to make Army branded items. (Signed back in Aug 2010).  One line of clothing was going to feature The Rock (Duane Johnson) with Army-Style clothing. (Seriously though, tie those shoes).

The license included a requirement that any sale/distribution must first receive the Army’s “advance written approval” subject to the Army’s “sole and absolute discretion.”

The Army refused an expansion of The Rock line of clothing; rejected other proposal; and also allegedly delayed in approving other initiatives. Eventually Authentic sued the Army for Breach in the Court of Federal Claims (CFC).

On appeal, the Federal Circuit has affirmed the CFC’s summary judgment favoring the Army — holding that the “sole and absolute discretion” provision controls.  The license agreement also included specific “exculpatory clauses” that indicated no remedy would be available for the Army’s refusal to approve proposals:

[Authentic] shall not have any rights against [the Army] for damages or other remedies by reason of [the Army]’s failure or refusal to grant any approval [of product line or] advertising.

Slip Op. (quoting the agreement).  Authentic argued that the Army has an obligation of good faith and fair dealing in its contracting, and that complete enforcement of these covenants would contravene those principles.  On appeal, the Federal Circuit agreed that it would be improper for the Army to act in an arbitrary or bad-faith manner when denying approval. That said, count found the provisions otherwise enforceable:

At bottom, Authentic agreed to give the Army broad approval discretion. . . . Authentic agreed to bear the risk that the Army would exercise that discretion to Authentic’s detriment, at least so long as the government did not act arbitrarily or in bad faith, a matter which we discuss below. Authentic’s allegation that the detriment has indeed come to pass is simply not a reason to uproot the parties’ bargain.


Who is the source of goods: One reason that the Army did not approve various advertisements was that the Army did not want to be recognized as the source of the licensed goods. Authentic argued that source identification is the key function of trademark law and is implicit in its license to use the Army mark “for trademark purposes.”

On appeal, the Federal Circuit disagreed noting that the licensee is the source of goods, and identifying the Army as the source would be factually erroneous:

Authentic’s argument is based on rights that Authentic did not have, namely, an alleged “right to identify [the Army] as the source/sponsor of the licensed goods.” Under the law, because Authentic was itself the source of the licensed goods, Authentic could not have had the right to mislead consumers to believe that the Army was the “source.”

The court then went on to hold that a decorative use of a Mark can still count as a trademark-use for licensing purposes.

In view of the clear shift in the law toward allowing trademark licenses, we do not agree with Authentic that a “decorative” use of a trademark is necessarily divorced from the goodwill associated with the trademark such that it cannot be considered a licensed use “for trademark purposes.” We recognize, of course, that a purely decorative design may not qualify for trademark protection in the first place. . . . But, again, this appeal does not involve a challenge to the validity of the Army’s trademarks, but rather a question of what limitations the Army may place on the use by a licensee of trademarks that the Army already owns.


14 thoughts on “Federal Circuit on TM Licensing: We’re going to Enforce the Terms

  1. 4

    Now companies will think twice about doing business with the Army.

    No problem.

    The Army can have its uniforms made in China.

    The uniforms will be cheaper but the buttons will contain explosives that can be remotely detonated.

    1. 4.1

      …leaching hormones that create passivity

      (and the opposite, to provoke irrational aggression)

  2. 3

    “Can you smell-l-l-l-l what The Rock is wearing?” just doesn’t have the same ring to it.

  3. 2

    Just to be brief the key issue is this: in Williamson the assertion that was used in the opinion was that a person of ordinary skill could sit down and write a computer program to perform the function. In the instant case, the appellee said that there were known computer programs available as shareware that performed the functions.

    So you see Moore pushed the line for 112(f) to include where there are known solutions. So would that mean if a claim “an electronic element to limit the flow of electrons in one direction” that this would go to 112(f)? I would say, but this function is well known and I can buy off-the-shelf diodes that perform this function. But under Moore’s reasoning this would go to 112(f) as there was no structure in the claim but only functional specification that refers a person of ordinary skill back to a set of solutions.

    This opinion should be overturned and not made precedential.

  4. 1

    J Doerre makes the arguments below in another thread.

    1) The test is judicial activism and the CAFC creating an Alice type of mushy test so they turn any claim they don’t like it into a 112(f) claim. The fact is that “know how to create” is exactly what the test should be. “But the fact that one of skill in the art >>could<>>Literally this exact argument was made in Williamson. See Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1351 (Fed. Cir. 2015) (“Williamson also points to the declaration of Dr. Shukri Souri to show that one of ordinary skill in the art would understand the term ‘distributed learning control module’ to connote structure. … We have considered it but do not find it persuasive. Dr. Souri’s declaration, like the claim language and portions of the written description Williamson identifies, fails to describe how the distributed learning control module, by its interaction with the other components in the distributed learning control server, is understood as the name for structure. Dr. Souri also testified that, ‘as one of ordinary skill in the art, reading the specification, I would know exactly how to program’ a computer to perform the recited functions and further testified that structure ‘could be in software or it could be in hardware.’ … But the fact that one of skill in the art could program a computer to perform the recited functions cannot create structure where none otherwise is disclosed.” (citing Function Media, L.L.C. v. Google, Inc., 708 F.3d 1310, 1319 (Fed.Cir.2013)).

    Again, the panel could not depart from this precedent.

    Even in the very test you quote, the question is not whether an ordinary artisan would know how to create the structure, but “whether the words of the claim are understood by persons of ordinary skill in the art to have a sufficiently definite meaning as the name for structure.”

    1. 1.1

      Here is my response:

      1) The test is judicial activism and the CAFC creating an Alice type of mushy test so they turn any claim they don’t like it into a 112(f) claim. The fact is that “know how to create” is exactly what the test should be. “But the fact that one of skill in the art >>could<< program a computer to perform the recited functions cannot create structure where none otherwise is disclosed."

      The test should be whether the recited function is within the known solutions in the appropriate art. The CAFC has played games by moving from a simple test of whether something is within the known solutions or not.

      2) Using the proper test the module recited in the claims does recite structure. And using their current test it does recite structure. Again, there were known solutions to the problems available on the internet in shareware. These facts are different than Williamson where the CAFC was condemning statements that a person could program a computer to do something, but here a person already had programmed the computer to perform the function. The function was a known function with readily available solutions. So the facts are different than Williamson and if you read what Moore wrote she just skipped over this whole part of the opinion and made ridiculous references to rain and did not address the real issue.

      And I would point out that Moore could follow the precedent and not find that the claim terms invoke 112(f) as here, in contrast to Williamson, there was evidence on the record that the recited function was a known function with known solutions. Not that a person would have to for the first time sit down and create a solution.

      But it was good interacting with you. I don't think you understand the issues and I don't think you understand the games the CAFC are playing. The 112(f) game is as heinous as the Alice game. And just like in Alice good judges could easily cabin Williamson by properly distinguishing the facts as Moore could have done–as in distinguishing between an expert saying a person could sit down and create a solution compared with an expert saying the function is known and defined and there are known solutions that are available in shareware and available in papers and textbooks. And this strikes at the heart of functional claiming capturing known solutions. Moore for these reasons is a terrible judge and this has been her pattern where she reinforces bad law rather than trying to distinguish or cabin bad case law.

      Anyway, sorry this is a bit meandering.

      1. 1.2.1

        This 112 and 112(f) business is perhaps the most active area of judicial activism by the CAFC other than their complete lack at any attempt to cabin Alice.

        J. Doerre is good at presenting the anti-patent judicial activisms views so it is important to respond to him.


          I do not view J. Doerre as an anti-patentist. Most anti-patentists actively per ve rt the larger legal understanding, and merely use (and mis-use) cases selectively, or like Paul Morgan, merely snipe from the sidelines and do not actually engage on the merits.

          I do view him as a person that perhaps cannot see the forest for the trees.

          I also see a LOT of value in his diligence of noting the particular trees.


            The more I interact with J. Doerre the more convinced I am he is a paid blogger.


              I am not getting that impression.

              I do get the impression that he is diligent and fairly good at issue spotting to the point of identifying and providing meaningful cases.

              But I think that nears his limit, and he does not show that critical ability to independently— and critically — think about the cases, and how the law may be being bent (or broken) by the judicial branch.

              It is critical to note the limits of proper Common Law law writing in our very particular area of law.

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