Trademark licensees long have had standing to sue for infringement of the licensed mark under Section 43(a) of the U.S. Trademark (Lanham) Act. Occasionally, when the license in fact operates more like an assignment, licensees have been allowed to sue under Section 32(1) as if they were the licensor who registered the licensed mark. In some instances, courts even have used such an analysis to provide trademark licensees with the right to sue for dilution as the owner of a famous licensed mark under Section 43(c).
What has received less attention in the reported cases is the issue of joining the licensor as a party to actions instituted by the licensee. That issue deserves more attention because certain trademark licensors—particularly foreign entities seeking to avoid appearing in a U.S. legal proceeding—may desire to provide their licensees with the right to enforce the licensed mark in the United States to avoiding entanglements in lawsuits.
This article first will review the principal reported decisions in which a set of factors have developed that courts used to resolve standing and joinder questions in trademark litigation. Those factors include the specific statutory claims being asserted, whether the license is exclusive or non-exclusive, the nature of the specific rights that have been granted to the licensee, and the restrictions on the licensee’s rights set forth in the license agreement. These cases provide litigators with guidance on how to avoid or overcome procedural hurdles if the client is the claimant, or if the client is the alleged infringer, and how to derail a case (or at least add expense and inconvenience to the other side) by raising issues concerning the absence of parties with an interest in the licensed mark.
This article also addresses the implications of standing and joinder rules for transactional lawyers who draft and negotiate trademark licenses. As the cases described below make clear, it is crucially important to negotiate and carefully delineate the licensor and licensee’s respective rights to make decisions about enforcing the licensed mark in the United States, as well as the right to be left out of litigation if the other party to a license brings an infringement or dilution action against potential infringers.
Copyright® 2009 the International Trademark Association. Reprinted with permission from The Trademark Reporter, 99 TMR 1437 (2009).