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Tuesday, 22 November 2011

What to make of a licence for a famous trade mark?


Way back in 1990, squarely facing the onset of mid-life crisis, this Kat did what any rational IP attorney would do --he decided to write a book. And so he did, on the topic of trade mark licensing, the result of five years of labour. He even got involved in writing a second edition, this time with a co-author. When I ponder what I have written, I recognize that one topic, nascent when I first penned the book, remains untreated. That topic is the treatment of licensing in the context of a famous or well-known mark.

From the American perspective, the basic paradigm of trade mark licensing is clear enough. Focusing on a registered trade mark, a licence will govern the use of all or some of the goods/services for which the mark is registered, subject to satisfying the quality control requirement in order to maintain the source identification function. Moving on to the UK, the paradigm applies in part ("a licence will govern the use of all or some of the goods/services for which the mark is registered"). However, ever since the Scandecor saga, the source identification function seems to have been uncoupled from any quality requirement, even if the metes and bounds of this uncoupling are not fully clear.

As for civil law, in Continental Europe (although I admit I am on a bit less firm ground here) neither the source identification function nor quality control appear to play any appreciable role in connection with trade mark licensing. What is central is simply whether the licensee acts within the terms of the licence and the licence covers all or some of the goods/services for which the mark is registered.

All of this brings me to the question of what is missing in this analysis. In one sense, the answer is that nothing in missing in our treatment -- we have accounted for trade mark licensing in light of the accepted legal constructs, having regard primarily to variations in treatment between the US and the UK positions. Seen from another angle, however, there may be some unfinished business here, namely the treatment of famous or well-known marks.

The basic issue with which I am wrestling is the nature of the correlative relationship between the scope of the trade mark right for purposes of infringement and the scope for purposes of licensing. Under any of the traditional paradigms, as discussed above, there is close (if not precisely a one-to-one) correlation. Whatever unauthorized third-party use the owner of a registered trade mark may sue upon, he may also grant a licence to use the mark in a wholly correlative fashion. There is certainly a degree of indeterminancy here in the sense that a claim for infringement will extend beyond the literal scope of the registered specification. But the indeterminacy is ultimately anchored in a reasonable interpretation of the meaning of the registered goods/services.

When we move on to a famous, or well-known mark, however, this indeterminancy becomes much more pronounced, perhaps unmanageably so. The scope of protection for a given famous mark will very much depend upon the circumstances of that mark. It is well-nigh impossible to suggest ab initio the metes and bounds for the scope of protection in such circumstances. If this is correct, then the proper scope for the licensing of a famous mark becomes daunting -- or worse. While a case-by-case determination of what constitues infringement of a famous mark is workable, even if a bit messy, such a case-by-case approach seems simply unworkable to serve as the basis for defining the scope of a licence of that mark.

If so, this raises the question of whether the licensing of a famous mark is conceptually impossible, or whether the problem lies with the application of any given licence and not with the notion per se of a licence to use a famous mark. This Kat has just begun to try and work out his position regarding these questions. Any thoughts any readers might have are most welcome.

More on the Scandecor case here

5 comments:

Anonymous said...

How about this interpretation: a licensor can only license within the scope of registration, and (a) as regards any use beyond that will be akin to the use of an unregistered mark, subject to others' prior rights and outside the defence available under section 11 (b) as regards the scope of rights to injunct third parties it is the usual assessment under the TM law?

Anonymous said...

well that works only to the sense that a "licence" is a perceived as only being legal document providing the third party with the right to do what otherwise might be an infringement.

A licence may also be an agreement to allow a third party, and no other, to use the mark - it is in effect an agreement not to work with others. In such a case there is of course a question as to the ability of the "rightholder" to enjoin the other party at the end of the agreement absent contractual terms, but let us not forget that in the case of a famous mark there will be other materials/undertakings which may form part of the offer, such as (in the case of a sponsorship agreement) the attendence of the person/team at events, the giving of a set number of interviews/press junkets. The agreement will take such things into account and as such I dont see an issue

Anonymous said...

Strangely, your illustration brought to mind a comment I once read, to the effect that film-goers have no brand loyalty. As the person put it, 'No one says "Let's go and see a Paramount movie"'. I suppose in a similar way no-one buys an EMI record because of the brand.

Kharol said...

I don't have anything to say on the famous part, but reading your intro. to the case I just wasn't able to not note that current practice practically eliminated exactly the original very premise for justification of the existence of trademark protection in the first place, that is the fact that the mark identifies a manufacturer and sets an expectation on the type and quality of goods by the reputation of that trade mark owner.
Of course as a consumer I can learn that I'm better off with a product that doesn't bear a well known mark and may thus be more likely to be from the mark owner, but it still doesn't feel right for the system.
In a worst case when all I have is a faulty (or even dangerous) product bearing a mark I might even have a hard time finding the right party to sue..
worrying...

Anonymous said...

As I understand it, use by a licensee is considered to be use by the proprietor and so it is commonplace for a proprietor of a famous mark to grant a licence to a third party for use of the mark in relation to unrelated goods/services, ie for which the proprietor has no actual use or registrations but which it can protect from infringement under Art 6bis (the reliability of which varies greatly between different jurisdictions). By virtue of the licence agreement and use made by the licensee, the proprietor is now able to fulfil the use requirements necessary to file for/validly maintain a registered trademark protection in respect of the g/s for which the licensee is granted the rights to use the proprietor's mark.

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