Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-01786/USCOURTS-cand-3_02-cv-01786-21/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VISA U.S.A. INC., a Delaware corporation,

Plaintiff and Counterdefendant,

 v.

FIRST DATA CORPORATION, a Delaware

corporation; FIRST DATA RESOURCES,

INC., a Delaware corporation; and FIRST

DATA MERCHANT SERVICES

CORPORATION, a Florida corporation,

Defendants and

Counterclaimants. /

No. C 02-01786 JSW

ORDER GRANTING FIRST

DATA’S MOTION FOR PARTIAL

SUMMARY JUDGMENT OF

VISA’S TRADEMARK CLAIMS

Now before the Court is First Data Corporation (“First Data)’s motion for partial

summary judgment of Visa’s trademark claims. Having carefully read the parties’ papers and

considered the arguments and the relevant legal authority, the Court hereby GRANTS First

Data’s motion. The Court finds that Visa, U.S.A., Inc. (Visa, U.S.A.”) lacks standing under

both 15 U.S.C. § 1114 for trademark infringement and under 15 U.S.C. § 1525(a) for unfair

competition.

BACKGROUND

On April 15, 2002, Visa, U.S.A. brought this action against First Data to prevent its

allegedly unauthorized use of the Visa payment system to operate a new private arrangement in

the United States which would, effectively, bypass Visa’s own system, VisaNet, for the

authorization, clearing and settling of Visa transactions. The original and first amended 

complaint includes three separate claims for violations of the Lanham Act: (1) trademark 

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 In addition, the remaining claims for breach of contract, breach of the covenant of

good faith and fair dealing, and declaratory relief are not at issue here.

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infringement under 15 U.S.C. § 1114; (2) trademark dilution under 15 U.S.C. § 1525(c); and (3)

false designation of origin and false impression of association (“unfair competition”) under 15

U.S.C. § 1125(a). Only the infringement and unfair competition claims are the subject of this

motion, as Visa has agreed to withdraw its claim for trademark dilution.1 Visa, U.S.A. sued

over the use of the marks used in connection with the Visa payment system, including the word

mark “VISA” and a design mark consisting of horizontal blue, white and gold bands (the

“VISA Marks”). (Declaration of Joanna D. Malaczynski in Support of Visa U.S.A.’s

Opposition (“Malaczynski Decl.”), Ex. A (First Amended Complaint), ¶ 11.) 

The complaint also clearly states that Visa International, who is not a party to this

action, is the owner of the marks at issue. (See id.) Visa, U.S.A. represented in the complaint

that Visa International had granted it the right to enforce the VISA Marks in the United States

with respect to First Data’s private arrangement application and the subject of the complaint. 

(See id. at ¶ 13.) The operative license agreement between Visa International and Visa, U.S.A.

indicates that Visa, U.S.A. has a “nonexclusive, nontransferable license to use [Visa

International’s] marks” in the United States. (See Declaration of Aaron Schur (“Schur Decl.”),

Ex. N (1977 license agreement), ¶ 1.) The license agreement also provides that Visa, U.S.A.

acknowledges that the ownership of the marks remains with Visa International and that all use

of the marks by Visa, U.S.A. shall inure to the benefit of and be on behalf of Visa International. 

(Id., ¶ 2.) Lastly, the license agreement provides that Visa International “shall have the sole

right to engage in infringement or unfair competition proceedings involving” the VISA Marks. 

(Id., ¶ 6.) 

In the course of discovery, Visa U.S.A. produced an October 10, 2002 letter, created six

months after the filing of the original complaint, which purports to memorialize an oral

agreement whereby Visa International consented to Visa, U.S.A.’s engagement in the current

suit alleging trademark infringement and related causes of action against First Data. The letter

sets out that Visa International agrees to the current lawsuit in consideration of Visa, U.S.A.’s

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agreement to indemnify Visa International against any claims or obligations arising out of this

trademark action. (Schur Decl., Ex. O.) The letter purports to reduce to writing the prior oral

authorization by Visa International to institute the lawsuit. (See Declaration of Paul A. Allen in

Support of Visa, U.S.A.’s Opposition, ¶ 6; Declaration of Guy Rounsaville, ¶¶ 5-6.) 

ANALYSIS

A. Legal Standard on Summary Judgment.

A principal purpose of the summary judgment procedure is to identify and dispose of

factually unsupported claims. Celotex Corp. v. Cattrett, 477 U.S. 317, 323-24 (1986). 

Summary judgment is proper when the “pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(c). 

A party moving for summary judgment who does not have the ultimate burden of

persuasion at trial, must produce evidence which either negates an essential element of the nonmoving party’s claims or show that the non-moving party does not have enough evidence of an

essential element to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins.

Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). A party who moves for summary

judgment who does bear the burden of proof at trial, must produce evidence that would entitle

him or her to a directed verdict if the evidence went uncontroverted at trial. C.A.R. Transp.

Brokerage Co., Inc. v. Darden, 213 F.3d 474, 480 (9th Cir. 2000). 

Once the moving party meets his or her initial burden, the non-moving party must go

beyond the pleadings and by its own evidence “set forth specific facts showing that there is a

genuine issue for trial.” Fed. R. Civ. P. 56(e). In order to make this showing, the non-moving

party must “identify with reasonable particularity the evidence that precludes summary

judgment.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996). It is not the Court’s task to

“scour the record in search of a genuine issue of triable fact.” Id. (quoting Richards v.

Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995). If the non-moving party fails to make this

showing, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323.

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An issue of fact is “genuine” only if there is sufficient evidence for a reasonable fact

finder to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49

(1986). A fact is “material” if it may affect the outcome of the case. Id. at 248. “In considering

a motion for summary judgment, the court may not weigh the evidence or make credibility

determinations, and is required to draw all inferences in a light most favorable to the nonmoving party.” Freeman v. Arpaio, 125 F.3d 723, 735 (9th Cir. 1997). 

B. Trademark Standing.

First Data contends that Visa, U.S.A. lacks standing to assert its trademark claims under

both Section 32 and 43 of the Lanham Act, for trademark infringement and false designation of

origin and false impression of association, because it is merely a non-exclusive licensee and not

the registrant of the marks at issue. Visa, U.S.A. contends that it has standing to sue on Visa

International’s trademarks because it is a licensee of the VISA Marks, is responsible for

monitoring compliance with the marks in the United States, and is a close corporate affiliate of

Visa International.

Standing is “an essential . . . part of the case-or-controversy requirement of Article III.” 

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Visa, U.S.A. bears the burden of

proving the existence of standing to sue. See, e.g., United States v. Hays, 515 U.S. 737, 743

(1995). The statutory property right in a trademark is not simply the right to make or use the

trademark, but to do so to the exclusion of others. International Society for Krishna

Consciousness of Western Pennsylvania v. Stadium Authority, 479 F. Supp. 792, 797 (W.D. Pa.

1979) (citations omitted). 

C. Standing Under Section 32 of the Lanham Act.

Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), creates a cause of action for a

trademark “registrant” when a defendant uses a registered trademark without consent. Section

32 permits standing to sue for trademark infringement by the registrant of the mark, which, by

statute, includes the legal representatives, predecessors, successors, and assigns of the

registrant. 15 U.S.C. § 1127. Assignment of trademark rights is carefully circumscribed by

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 To the extent Visa, U.S.A. operates as a related company under the Lanham Act of

Visa International, Visa, U.S.A.’s use of the mark must at all times “inure to the benefit of

the registrant.” See 15 U.S.C. §§ 1127, 1055. In fact, Visa, U.S.A.’s own operating

regulations mirror this requirement by providing that each Visa member must agree that “the

use of all Visa-Owned marks must be for the benefit of, and on behalf of, Visa

International.” (Schur Decl. Ex. S (Visa, U.S.A., Inc. Operating Regulations Vol. 1 General

Rules § 1.8.A.1 (May 15, 2004).) Thus, Visa, U.S.A.’s status as a close corporate affiliate to

Visa International only further underscores the trademark ownership rights vested in Visa

International. 

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statute, complete with writing and recording requirements. International Society for Krishna

Consciousness, 479 F. Supp. at 797 (citations omitted). 

Here, Visa, U.S.A. maintains that it has standing to sue First Data on the basis that it is a

licensee of the VISA Marks, it monitors compliance with the marks in the United States, and is

a close corporate affiliate of the registrant, Visa International. (Opp. Br. at 1.) As a matter of

law, such status is insufficient to afford Visa, U.S.A. standing to sue under Section 32. Visa,

U.S.A. cannot maintain standing as a licensee because it does not operate as an exclusive

licensee with sufficient property rights in the mark. Further, its claims of responsibility for

monitoring the mark and its status as a close corporate affiliate with the registrant do not confer

standing under Section 32.2

1. Parties’ Agreements Do Not Confer Visa, U.S.A. Standing as an Exclusive

Licensee With Property Rights.

The determination of whether a licensee has standing to sue under Section 32 largely

depends upon the rights granted to the licensee under the licensing agreement. See, e.g.,

Ultrapure Systems, Inc. v. Ham-let Group, 921 F. Supp. 659, 665 (N.D. Cal. 1996). Standing

may exist where the licensing agreement both grants an exclusive license and grants to the

exclusive licensee a property interest in the trademark, or rights that amount to those of an

assignee. See, e.g., id. at 665-66; accord Restatement (Third) of Unfair Competition § 33 cmt.

d (1995) (licensees are precluded from maintaining an action under Section 32 unless the

transaction can be characterized as an assignment). “Where a licensing agreement does not

grant the licensee a property interest in the mark or otherwise assign to the licensee the

registrant-licensor’s ownership rights, the licensee, even if exclusive, cannot enforce the mark

under [Section 32].” Ultrapure Systems, 921 F. Supp. at 665 (finding property interests were

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transferred to licensee that amounted to an assignment where the contract in fact bestowed

exclusive use of the trademarks and did not set forth any restrictions on the licensee’s ability to

enforce the trademarks).

Where the license is non-exclusive, the licensee does not have standing to bring an

infringement action. See id. (citing Quabang Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154,

159-160 (1st Cir. 1977)); see also Krishna Consciousness, 479 F. Supp. at 797. In addition, the

licensee lacks standing where the provisions in the agreement indicate that the licensor retains

exclusive ownership of the mark or where the licensor retains exclusive rights to enforce the

trademark. Id. (citing DEP Corp. v. Interstate Cigar Co., 622 F.2d 621, 623 (2nd Cir. 1980)). 

Visa, U.S.A., as a non-exclusive licensee without property rights to the VISA Marks,

cannot meet the statutory definition of “registrant” for the purpose of establishing standing to

sue under Section 32. The undisputed evidence establishes that under the operative license

agreement, Visa, U.S.A. is a non-exclusive licensee without significant property rights to the

VISA mark. (See Schur Decl., Ex. N, ¶ 6.) The subsequent modification of the Visa entities’

agreement – whether it be the oral authorization to file suit or the October 2002 letter which

followed – does not change the fact that Visa U.S.A. never retained an exclusive license nor

significant property rights which could legitimately be characterized as an assignment. (See

Declaration of Paul A. Allen in Support of Visa, U.S.A.’s Opposition, Ex. B (October 2002

letter), ¶ 6; Declaration of Guy Rounsaville, ¶¶ 5-6, Ex. A.) 

2. The Parties’ Agreements Do Not Confer Standing on Visa, U.S.A. as a Legal

Representative of Visa International.

Visa, U.S.A. also contends that, even in the absence of an exclusive license, it has

standing to sue First Data as Visa International’s legal representative. A licensee may be

considered a legal representative where the agreements between the parties expressly provide

the licensee with a right and duty to sue on all issues relating to the trademark. See, e.g.,

Silverstar Enterprises, Inc. v. Aday, 537 F. Supp. 236, 240 n.4 (S.D.N.Y. 1982) (status as legal

representative remotely conceivable where licensee was appointed as licensor’s “attorney-infact for preventing and prosecuting any such unauthorized sale or use”); see also Idaho Potato

Comm’n v. Washington Potato Comm’n, 410 F. Supp. 171, 174 (D. Idaho 1975) (legal

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 In fact, as established at oral argument before this Court, the record is undisputed

that Visa International has not relinquished its rights to sue First Data for the same conduct

upon which Visa, U.S.A. maintains its trademark infringement cause of action. Neither

alleged modification of the parties’ license agreement – the oral modification or the later

written ratification – indicate that Visa International could not sue First Data to enforce its

marks. The mere fact that Visa International has not yet actually sued First Data or joined in

this matter is legally inconsequential.

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representative status existed where statute compelled plaintiff to stand in place of registrant and

represent its interests “at any and all times”).

Even assuming the October 2002 letter confers ostensible authorization to file suit in

this matter, or even assuming that it ratifies the previous oral authorization to do the same, there

is no dispute that the 1977 license agreement remains unchanged insofar as Visa International

has continued to protect its own trademark interests in all but two lawsuits for trademark

violations. Further, it is uncontested that Visa International retains rights to protect its marks in

the United States, outside of this litigation. (See, e.g., Declaration of Susan Welch in Support of

First Data’s Reply, Ex. C (Visa International Press Releases).) Visa International has not

relinquished its property or enforcement rights to Visa, U.S.A. Therefore, Visa, U.S.A. cannot

maintain the status of legal representative for the unique purpose of conferring upon itself

standing to sue in this limited circumstance. Just as Visa, U.S.A. does not have standing to sue

as an exclusive licensee because it does not have exclusive property rights to the disputed

marks, it cannot maintain standing to sue as a legal representative because it does not have

exclusive enforcement rights to the disputed marks.3

D. Standing Under Section 43 of the Lanham Act.

Section 43(a) of the Lanham Act, 15 U.S.C. § 1525(a), creates a cause of action for “any

person who believes that he or she is likely to be damaged” by a defendant’s false designations

of origin and misleading representations of fact that are likely to cause confusion as to origin or

sponsorship. 

Although the standing requirements to bring an unfair competition claim under Section

43(a) are less stringent than those required for trademark infringement, the Court finds that

Visa, U.S.A. lacks standing to sue because the license agreement specifically provides that Visa

International retains the sole right to engage in unfair competition proceedings involving the

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VISA Marks. (Schur Decl., Ex. N, ¶ 6.) Thus, the express terms of the contract between Visa,

U.S.A. and Visa International prohibit Visa, U.S.A. from bringing suit in its own capacity. See

Finance Investment Co. (Bermuda) v. Geberit AG, 165 F.3d 526, 532 (9th Cir. 1998) (holding

that a licensee’s standing to sue under Section 43(a) must stem from the license agreement as

the “sole source giving the [licensee] any interest in the mark”); see also Nakajima All Co. v. SL

Ventures, Corp., 2001 WL 641415, *2 (N.D. Ill. June 3, 2001) (unpublished decision holding

that licensee had standing to sue for unfair competition where licensee received permission to

sue, “pursuant to the license agreement between the [licensee and licensor]”) (emphasis added). 

Here, although Visa, U.S.A. contends that it received authorization to sue in this

particular circumstance, the license agreement which operates to confer the trademark rights of

the parties, specifically and expressly forbids the litigation of the VISA marks by Visa, U.S.A. 

There is no mechanism in the license agreement (or the alleged oral authorization which

followed, or its later written ratification) which functions to enable Visa International to pass

along its sole right to sue on to Visa, U.S.A., and there has been no evidence in the record to

suggest that such a transfer of rights was attempted. 

Lastly, because there has not been a complete transfer of the sole rights to litigate, there

has not been a fully executed modification of the original license agreement. To be a valid oral

modification of the written license agreement, the new agreement must be either supported by

consideration or fully performed. See Cal. Civ. Code § 1698. There is no consideration to

support the alleged modification, and the parties have not succeeded in performing a transfer of

the right to sue. The alleged authorization to commence a lawsuit does not actually require

performance from either party and fails to constitute a valid, executed oral agreement. See

Columbia Casualty Co. v. Lewis, 14 Cal. App. 2d 64, 72 (1936) (holding that execution of an

oral agreement, which may be proved for the purpose of altering a previous written contract,

“must consist in doing or suffering of something not required to be done or suffered by terms of

the writing”). Visa, U.S.A. has not introduced any evidence to demonstrate that the oral

authorization to commence this lawsuit was executed by virtue of the doing or suffering of

something not required. Again, the undisputed fact that Visa International could still sue First

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Data over the same conduct at issue in this lawsuit demonstrates that the alleged modification of

the license agreement has not been fully executed. Because the parties’ license agreement –

which is still in full force and from which all trademark rights as between the parties is derived

– reserves to Visa International the sole right to engage in both trademark infringement and

unfair competition proceedings, Visa, U.S.A. lacks standing to sue under the Lanham Action

Section 43(a). See Geberit AG, 165 F.3d at 532.

CONCLUSION

For the foregoing reasons, the Court HEREBY GRANTS First Data’s motion for partial

summary judgment. The Court finds that Visa, U.S.A. lacks standing under both 15 U.S.C. §

1114 for trademark infringement and under 15 U.S.C. § 1525(a) for unfair competition and

those claims are HEREBY DISMISSED.

IT IS SO ORDERED.

Dated: August 16, 2005 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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