Naked TM Licensing Allowed, even if Insufficient establishing TM Rights

by Dennis Crouch

The Federal Circuit has denied en banc rehearing in the interesting case of Authentic Apparel Group, LLC v. US.  In the case, the court enforced an agreement that was pretty-dang-close to a naked trademark license — holding that use of a mark for decoration on clothing still counts 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.

Slip Op.  In its rehearing petition, the licensee asked the following:

Whether a trademark owner can lawfully transfer an interest in only the “aesthetic aspects” of its trademark pursuant to a license without simultaneously transferring the goodwill of the business in which the mark is used, or that part of the goodwill of the business connected with the use of and symbolized by the mark.

AuthenticPetitionForRehearing.

I see this as a very interesting issue for the US Supreme Court, but the briefing and setup of the case has not been 100% top notch.

Authentic Apparel Group, LLC v. U.S., 989 F.3d 1008 (Fed. Cir. 2021) (en banc  subsequently denied)

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

 

One thought on “Naked TM Licensing Allowed, even if Insufficient establishing TM Rights

  1. 1

    Pardon Potential (re)Peat (the system glitched as I hit enter)….

    I do not know if I can get to your “holding” in the choice of phrasing of “that use of a mark for decoration on clothing still counts as a trademark-use for licensing purposes.” from the court’s actual words of “recognize, of course, that a purely decorative design may not qualify for trademark protection in the first place.”

    That “in the first place becomes an absolute nullity with your prescribed ‘holding.’

    Instead (and I could be off, as I typically am more interested in TM law as it intersects with other laws, such as First Amendment Law), I tend to view this as NOT dismissing an otherwise valid trademark use (the trademark serving its trademark purposes) JUST BECAUSE that particular mark may also be ‘fancy’ (or stylish) and that particular style IS ALSO serving a decorative function.

    After all, Trademarks come in all types of styles (even as BLOCK TEXT styles have certain value).

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