UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

JOHN C. FLOOD OF VIRGINIA, INC., et ) 

at., ) 

) 

Plaintiff/Counter-Defendants, ) 

) 

v. ) Civil Case No. 06-1311 (RJL) 

) 

JOHN C. FLOOD, INC., et at., ) 

) 

Defendants/Counter-Plaintiffs. ) 

s~ 

MEMORANDUM OPINION 

(March~, 2010) [#60 and 65] 

This case involves two sister companies in the plumbing business that are, in effect, 

fighting over their "inheritance." They both claim exclusive rights to two trademarksJOHN C. FLOOD and its abbreviated form FLOOD. The plaintiff John C. Flood of 

Virginia, Inc. ("Virginia Flood") brought this suit against the defendants John C. Flood, 

Inc., which does business as John C. Flood of DC, Inc., as well as other individuals and 

corporate entities (collectively, "1996 Flood"). 1 Virginia Flood alleges four causes of 

action: (1) trademark infringement in violation of 15 U.S.C. § 1114(1) (Count 1), (2) unfair 

competition in violation of 15 U.S.c. § 1125(a) (Count 2), (3) common law service mark 

infringement and unfair competition (Count 3), and (4) declaration of Virginia Flood's 

priority over all defendants and its right to register the trademarks (Count 4). (CompI. [# 1] 

at 9-11; Am. CompI. [#28] at 13-18). 1996 Flood responded by bringing a number of 

I The additional defendants include lC. Flood, Inc., J.C. Flood Company, John C. 

Flood of DC, JCF Inc., John Doe Companies 1 and 2, Mark Crooks, Mel Davis, Robert 

Smiley, and Joanna Smiley. (Am. CompI. [#28] at 2-3). 
counterclaims against Virginia Flood and other parties (collectively, "Virginia Flood,,).2 

The counterclaims include: (1) false designation of origin, source, or sponsorship in 

violation of 15 U.S.C. § 1125(a) (Count 1); (2) cancellation of Virginia Flood's registration 

of the disputed trademarks (Count 2-4); (3) declaration of 1996 Flood's priority over 

Virginia Flood (Count 5); and (4) common law service mark infringement and unfair 

competition (Count 6). (Countercl. [#9] at 25-33). Now before the Court is Virginia 

Flood's Motion for Summary Judgment [#60] and 1996 Flood's Renewed Motion for Partial 

Summary Judgment [#65]. Unlike Virginia Flood, which has moved for judgment on all 

claims and counterclaims, 1996 Flood moves only for judgment on Virginia Flood's claims 

and for declaratory judgment as to its counterclaim for priority over Virginia Flood. 1996 

Flood leaves its remaining counterclaims for future disposition. Having considered the 

pleadings and the record in this case, I have concluded that Virginia Flood, as the licensee of 

the FLOOD marks, is estopped from now claiming ownership of those marks. Accordingly, 

for the reasons set forth below, Virginia Flood's Motion for Summary Judgment is DENIED 

and 1996 Flood's Motion for Partial Summary Judgment is GRANTED. 

BACKGROUND 

In 1984, defendants Mark Crooks and Mel Davis incorporated in Maryland a 

business by the name of John C. Flood, Inc. ("1984 Flood"). (Countercl. [#9],-r 11). This 

business provided plumbing, heating, and air conditioning services to customers in 

Maryland, the District of Columbia, and Virginia. (ld.,-r,-r 11-12; Davis Dep. [#63-6] at 81). 

2 The other parties include John C. Flood, Inc. (a Virginia corporation), John C. Flood 

Contractors, Inc., Clinton Haislip, and James L. Seltzer, Jr. (Countercl. [#9] at 1). 

2 
1984 Flood traded under the service marks JOHN C. FLOOD and FLOOD (or variations 

thereof). (Davis Decl. [#37-2] ~~ 3-5, 10-11). 

Four years later, to further expand their operations in Virginia, Crooks and Davis 

incorporated another business under the name John C. Flood of Virginia, Inc. ("Virginia 

Flood"). (Id. ~ 6). Crooks and Davis invited Clinton Haislip and James Seltzer, who then 

were employees of 1984 Flood, (Seltzer Decl. [#63-11] ~ 5), to join Virginia Flood as noncontrolling shareholders. (Davis Decl. [#37 -2] ~ 7). Haislip and Seltzer initially owned 

49% of the stock, while Crooks and Davis owned 51 %, (Davis Dep. [#63-6] at 83), but 

eventually, Crooks and Davis gave Haislip and Seltzer an additional 1 % share in the 

company, making Crooks and Davis equal owners with Haislip and Seltzer, (id. at 83-84, 

94). Because Haislip and Seltzer lacked the technical expertise to run the business by 

themselves at the outset, Crooks and Davis regularly helped with the technical aspects of the 

business, maintained the books and records, and appointed a manager to oversee day-to-day 

operations. (Id. at 58-60). 

There is no dispute that Virginia Flood had permission-that is, a license-to use the 

marks JOHN C. FLOOD and FLOOD without the modifier "of Virginia." The parties 

disagree, however, about the nature and scope of that license. In his declaration, Seltzer 

testified that Crooks and Davis made a verbal agreement to allow Virginia Flood to use the 

marks on, among other things, its service trucks, contracts, invoices, and telephone book 

advertisements. (Seltzer Decl. [#63-11] ~ 6). In exchange, Virginia Flood paid Crooks and 

Davis a weekly sum. (Id.). Davis testified, however, that Virginia Flood was allowed to use 

the marks JOHN C. FLOOD or FLOOD only until it replaced the service trucks that already 

3 
bore the marks and until it replaced old advertising spots with new ones. (Davis Dep. [#63-

6] at 57, 60-61). In any event, neither party disputes that Virginia Flood, whether or not it 

had authority to do so, has used the disputed marks continuously since it was formed in 

1989. (See id. at 91; Seltzer Decl. [#63-11] ~ 7). 

In June 1991, 1984 Flood and its principals, Crooks and Davis, filed for bankruptcy 

reorganization under Chapter 11 of the Bankruptcy Code. (Countercl. [#9] ~ 15). Sometime 

after filing for bankruptcy, Crooks and Davis discontinued their involvement in Virginia 

Flood. (Davis Dep. [#63-6] at 26-27). They resigned as officers of the company in July 

1991. (Haislip Decl. [#41-1] ~ 7). Nearly two years later, in March 1993, the bankruptcy 

court appointed a trustee over 1984 Flood, and in September of that year, the bankruptcy 

court converted the case to Chapter 7 liquidation. (Countercl. [#9] ~ 15). Until the trustee 

was appointed, Crooks and Davis continued to operate 1984 Flood and to trade under the 

marks JOHN C. FLOOD and FLOOD. (Davis Decl. [#37-2] ~ 11). Once the trustee took 

control of 1984 Flood, however, Crooks and Davis shut down operations, turned the keys 

over to the trustee, and disconnected all the phones. (Davis Dep. [#63-6] at 104-06). At 

that point, 1984 Flood no longer generated any revenue. (Jd. at 105-06). Crooks and Davis 

also stopped monitoring Virginia Flood, (id. at 99), and relinquished its books, (id. at 96). 

In 1995, the trustee sold the 50% interest in Virginia Flood owned by Crooks and Davis to 

Haislip and Seltzer. (Countercl. [#9] ~ 17; Rinn Decl. [#37-3] at 234-35; Defs.' Resp. and 

Counterstatement to Virginia Flood Parties' Statement of Undisputed Material Facts [#73] ~ 

30). 

4 
Even though Crooks and Davis no longer operated 1984 Flood after the trustee 

assumed control of the company, they nevertheless carried on their plumbing, heating, and 

air conditioning business. (Davis Decl. [#37-2] ~ 12). Together with Robert and Joanna 

Smiley, Davis's son-in-law and daughter, both Crooks and Davis did business through 

various corporations known as J.C.F., Inc., J.C. Flood, John C. Flood of DC, Inc., and John 

C. Flood of MD, Inc. (collectively, "new Flood entities"). (Id.). These entities used the 

marks JOHN C. FLOOD and FLOOD, as well as other assets belonging to 1984 Flood. 

(Id.; Rinn Decl. [#37-3] ~~ 5-6). To preserve those assets, the trustee commenced an 

adversary proceeding in the bankruptcy court in May 1995. (Rinn Decl. [#37-3] ~~ 5-6). 

The trustee sought to enjoin the new Flood entities from misappropriating the assets of 1984 

Flood, including its service marks. (Id. ~ 6). The trustee also requested that the bankruptcy 

court appoint a receiver to take control of 1984 Flood's assets and to preserve them for the 

creditors of the bankruptcy estate. (Id.). In June 1995, the bankruptcy court entered a 

consent order for a preliminary injunction against the new Flood entities and for the 

temporary appointment of a receiver with the authority to take charge of the new Flood 

entities and their assets, including the JOHN C. FLOOD and FLOOD trade names. (Id. ~ 

10). The bankruptcy court renewed the receiver's authority in August 1995, (id. ~ 12), and 

the following month, the court entered a consent order making the receivership and the 

injunction permanent, (id. ~ 16). 

In October 1995, the trustee proposed that the assets and stock of the new Flood 

entities held in receivership, along with the trade names JOHN C. FLOOD, INC. and 

FLOOC, INC., be sold to Crooks, Davis, and the Smileys. (Id. ~ 18). Haislip and Seltzer, 

5 
as creditors of the bankruptcy estate, filed an objection to the proposed sale on the ground 

that Crooks, Davis, and the Smileys had unlawfully diverted and concealed estate assets to 

the detriment of creditors. (Id. ~ 20). Haislip and Seltzer also offered a bid of their own to 

purchase only the trade names and telephone numbers of 1984 Flood. (Id. ~ 21 & 

Attachment B-12 ~~ 9-10). In response to Haislip's and Seltzer's objections, both Crooks 

and Davis withdrew, leaving only the Smileys, who chose to increase their bid. (Id. ~ 22). 

After evaluating the competing bids, as well as Haislip's and SeIter's objections, the 

bankruptcy court approved the sale of the assets and stock of the new Flood entities, as well 

as the trade names of John C. Flood, Inc. and Flood, Inc., to the Smileys. (Id. ~ 22 & 

Attachment B-13). Several months later, in February 1996, the Smileys incorporated a 

business in Maryland under the name John C. Flood, Inc. ("1996 Flood"). (Pl.'s Mot. for 

Summ. J., Ex. B [#63-2]). Later the same month, the trustee executed a bill of sale 

conveying the stock of the new Flood entities and the trade names of John C. Flood, Inc. and 

Flood, Inc. to the Smileys pursuant to the proposal approved by the bankruptcy court. (Id., 

Ex. A [#63-1]). 

Like Virginia Flood, 1996 Flood operates in the metropolitan Washington, D.C. area 

and uses the marks JOHN C. FLOOD and FLOOD. (Countercl. [#9] ~ 53). Because the 

two companies compete for the same customers, their use of the same or similar trade names 

has-not surprisingly-caused confusion in the marketplace. (Id.; Davis Dep. [#63-6] at 

131-32). In an effort to secure its right to the disputed marks, Virginia Flood sought and 

eventually obtained in 2000 two trademark registrations from the U.S. Patent and 

Trademark Office ("USPTO")-one for the word JOHN C. FLOOD and another for a logo 

6 
incorporating the mark JOHN C. FLOOD. (Virginia Flood Parties' Statement of 

Undisputed Material Facts [#61] ~~ 41-42). Nearly five years later, 1996 Flood commenced 

an action before the Trademark Trial and Appeal Board ("TTAB") of the USPTO, seeking 

to cancel the registrations. (Countercl. [#9] ~ 44). In July 2006, more than a year into the 

TT AB action, Virginia Flood brought this trademark infringement suit, (see id. ~ 48), in 

which both parties claim exclusive rights to the trademarks JOHN C. FLOOD and its 

abbreviated version FLOOD. 

DISCUSSION 

This case comes before the Court on Virginia Flood's Motion for Summary 

Judgment and 1996 Flood's Motion for Partial Summary Judgment. Summary judgment is 

warranted where the evidence shows "that there is no genuine issue as to any material fact 

and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). 

Here, there is no meaningful dispute as to any fact that bears on the Court's disposition of 

the case. As a result, the question is simply which party is entitled to prevail as a matter of 

law. For reasons discussed more thoroughly below, the Court believes that 1996 Flood, as 

the successor-in-interest to the licensor of the disputed marks, is entitled to prevail because 

Virginia Flood, the licensee, is barred by the equitable doctrine of licensee estoppel from 

asserting claims of priority over and above the licensor. 

The threshold issue in any trademark infringement case is whether the plaintiff can 

show "that it owns a valid trademark." Globalaw Ltd. v. Carmon & Carmon Law Office, 

452 F. Supp. 2d 1,26 (D.D.C. 2006) (internal quotation marks omitted). The same 

requirement applies to statutory and common law claims of infringement as well as statutory 

7 
and common law claims of unfair competition. See, e.g., Info. Superhighway, Inc. v. Talk 

Am., Inc., 395 F. Supp. 2d 44, 56 (S.D.N.Y. 2005) ("The elements necessary to prevail on 

common law causes of action for trademark infringement and unfair competition mirror 

Lanham Act claims."); Am. Ass 'nfor Advancement of Sci. v. Hearst Corp., 498 F. Supp. 

244,262 (D.D.C. 1980) ("Where [the mark] is not inherently distinctive, the essential 

elements are the same for either a trademark infringement or unfair competition action."). 

Obviously, a plaintiff cannot claim infringement, or unfair competition, if it cannot 

rightfully establish ownership of the disputed marks. 

Virginia Flood offers two theories to support its claim of ownership over the FLOOD 

marks. First, Virginia Flood contends, quite simply, that it has "priority." In other words, it 

owns the marks by virtue of having used them first. "In the ordinary case of parties 

competing under the same mark in the same market, it is correct to say that prior 

appropriation settles the initial question of ownership, and that the service mark rights of the 

senior user trump those of the junior user." Globalaw, 452 F. Supp. 2d at 27. Because 

Virginia Flood has used the FLOOD marks continuously since its formation in 1989, 

whereas 1996 Flood did not begin using them until its incorporation in 1996, Virginia Flood 

contends that it has priority over 1996 Flood and thus an exclusive right to use the marks. 3 

3 Virginia Flood also contends that the two registrations it obtained from the USPTO 

in 2000 establish a presumption that it has an exclusive right to the marks. Although a 

registration is "prima facie evidence of the validity ... of the registrant's ownership of the 

mark, and of the registrant's exclusive right to use the registered mark," 15 U.S.c. § 

1115(a), that presumption runs only to the date on which the registrant filed its trademark 

application. See id. § 1 057( c) ("Contingent on the registration of a mark ... , the filing of 

the application to register such mark shall constitute constructive use of the mark, conferring 

a right of priority .... "). In this case, Virginia Flood filed its application to register the 

FLOOD marks in 1999, (Am. Compi. [#28] ~~ 39-40), three years after 1996 Flood began 

8 
This theory is unconvincing, however, because it conveniently disregards how 1996 

Flood came to use the marks. 1996 Flood did not obtain the marks surreptitiously. To the 

contrary, it purchased the marks from the trustee of the bankruptcy estate, who in tum had 

obtained the marks when 1984 Flood, the original owner of the FLOOD marks, entered into 

Chapter 7 bankruptcy. (See Pl.'s Mot. for Summ. J., Ex. A [#63-1]). There is no reason to 

believe-and Virginia Flood certainly offers none-that a company's priority of ownership 

over its trademark ceases merely because the company goes bankrupt. The company's 

trademark and associated goodwill are valuable assets that become part of the bankruptcy 

estate and can be validly sold, assigned, or transferred by the estate. See, e.g., McKay v. 

Mad Murphy's, Inc., 899 F. SUpp. 872, 878 (D. Conn. 1995) ("A trustee in bankruptcy has 

the power to sell the trademarks and accompanying good will of the bankrupt .... "); 

Johanna Farms, Inc. v. Citrus Bowl, Inc., 468 F. SUpp. 866, 874 (E.D.N.Y. 1978) ("[U]pon 

the bankruptcy of the trademark owner, the trademark together with the goodwill it 

symbolizes becomes vested in the Trustee in Bankruptcy, and may be sold by him as an 

asset of the estate." (internal citation omitted)); Merry Hull & Co. v. Hi-Line Co., 243 F. 

Supp. 45, 52 (S.D.N.Y. 1965) (holding that the "defendant obtained good title to the mark 

through [the defendant's] purchase at the bankruptcy sale"). Because 1996 Flood acquired 

the FLOOD marks from the bankruptcy estate, it is the successor-in-interest of 1984 Flood, 

the original owner of the marks. Therefore, the fact that Virginia Flood can demonstrate 

using the marks, (id. ,-r 57). Because the registrations are later in time, they cannot establish 

Virginia Flood's priority over 1996 Flood. In any event, the presumption claimed by 

Virginia Flood is not conclusive. It may be overcome by "any legal or equitable defense or 

defect ... which might have been asserted ifsuch mark had not been registered." 15 U.S.C. 

§1115(a). 

9 
continuous use prior to 1996 Flood's acquisition of the marks does not necessarily entitle 

Virginia Flood to priority over 1996 Flood. 

Of course, a trustee can lose ownership or priority over trademarks that are within the 

bankruptcy estate. Even though a trademark and its associated goodwill may survive the 

temporary cessation of business activities during the course of a bankruptcy, the trustee may 

nevertheless, "by his actions or inaction[,] effect the demise" of the trademark or trade 

name. Hough Mfg. Corp. v. Va. Metal Indus., Inc., 453 F. Supp. 496, 500 (E.D. Va. 1978) 

(citing Merry Hull & Co., 243 F. Supp. at 50). This principle is the basis for Virginia 

Flood's second theory of ownership. According to Virginia Flood, 1996 Flood did not 

acquire the FLOOD marks from the bankruptcy estate because the estate had already 

abandoned ownership of the marks through naked licensing. 4 Simply put, the trustee had 

nothing to sell. Because the bankruptcy estate abandoned the FLOOD marks, Virginia 

Flood claims that it now has priority ownership by virtue of its continuous use of the marks 

since 1989. 

Abandonment by naked licensing occurs when a trademark owner licenses its 

trademark but fails "to exercise appropriate control and supervision over its licensees." 

Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1075 (5th Cir. 1997); see also 

Boersma v. Executive Travel Club, Inc., 256 F. Supp. 289, 290 (D.D.C. 1966) (stating that 

4 The only theory of abandonment raised by Virginia Flood in its Motion for 

Summary Judgment is naked licensing. All other theories, even if alluded to in the 

Complaint, are therefore waived. See Grenier v. Cyanamid Plastics, Inc., 70 F.3d 667,678 

(1 st Cir. 1995) ("Even an issue raised in the complaint but ignored at summary judgment 

may be deemed waived."); Head Start Family Educ. Program, Inc. v. Coop. Educ. Servo 

Agency 11,46 F.3d 629, 635 (7th Cir. 1995) (holding that an argument not raised by a party 

in its motion for summary judgment is waived). 

10 
"the owner of a registered mark may license its use to others so long as such agreements are 

not merely naked license agreements"). The licensor, however, need not micromanage the 

licensee. To the contrary, "[r]etention of a trademark requires only minimal quality 

control." Ky. Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368, 387 (5th 

Cir. 1977). Because naked licensing is treated as an unintentional abandonment of the 

trademark, "which triggers the loss of trademark rights against the world, anyone attempting 

to show such abandonment via naked licensing faces a stringent burden of proof." Creative 

Gifts, Inc. v. UFO, 235 F.3d 540, 548 (lOth Cir. 2000); see also Exxon Corp., 109 F.3d at 

1075-76. The rationale for abandonment by naked licensing is rather straightforward: "If a 

trademark owner allows licensees to depart from its quality standards, the public will be 

misled, and the trademark will cease to have utility as an informational device. A trademark 

owner who allows this to occur loses its right to use the mark." Ky. Fried Chicken, 549 F.2d 

at 387. 

Typically, naked licensing is used as a shield by the licensee against infringement 

claims brought by the licensor. See Exxon Corp., 109 F .3d at 1078 ("The naked licensing 

defense has traditionally been used in the context of infringement claims brought by the 

trademark owner .... "). Here, however, the licensee is using naked licensing as a sword to 

pry ownership rights from the licensor. Indeed, Virginia Flood does not contend that the 

oral agreement made by Crooks and Davis to allow Virginia Flood to use the FLOOD marks 

was a naked license. Instead, it contends that the arrangement became a naked license in 

September 1993, at the latest, when Crooks and Davis, and then the trustee, ceased 

monitoring Virginia Flood's operations. From that point forward, says Virginia Flood, the 

11 
licensor exercised absolutely no control over the quality of services performed by Virginia 

Flood under the FLOOD trade name. 

Whatever the merits of this naked licensing argument, Virginia Flood is in no 

position to make it. Virginia Flood's status as the licensee bars it from using the naked 

licensing doctrine as a weapon to pry ownership of the FLOOD marks from 1996 Flood, the 

successor-in-interest of the licensor 1984 Flood. "The licensee is estopped from claiming 

any rights against the licensor which are inconsistent with the terms of the license. . .. He is 

estopped from contesting the validity of the mark, ... or challenging the license agreement 

as void or against public policy, e.g., because it granted a naked license." Creative Gifts, 

235 F.3d at 548 (internal quotation marks omitted).5 

By entering into the license agreement, the licensee recognizes the licensor's 

ownership of the mark and by implication, covenants not to challenge the 

licensor's rights. This implied covenant also estops the licensee from 

claiming that the licensor abandoned his rights by failing to exercise adequate 

quality control during the terms of the license. 

Westco Group, Inc. v. K.B. & Assocs., Inc., 128 F. Supp. 2d 1082, 1089 (N.D. Ohio 2001) 

(internal quotation marks and emphasis omitted). Indeed, '''[t]he case for estoppel is 

strongest when the licensee's challenge rests on its own conduct under the license, such as .. 

. a claim of abandonment based on inadequate supervision of the licensee by the licensor. '" 

5 See also Pro!'l Golfers Ass 'n of Am. v. Bankers Life & Cas. Co., 514 F.2d 665,671 

(5th Cir. 1975) (noting that "a licensee is estopped to contest the validity of the licensor's 

title during the course of the licensing arrangement"); Heaton Distrib. Co. v. Union Tank 

Car Co., 387 F.2d 477,482 (8th Cir. 1967) ("Even in the absence of any proviso in the 

contract not to contest the validity of the trademark or trade name, we think that the dealer, 

in recognizing the manufacturer as the owner of the trademark or trade name under the 

terms of the agreement, would be estopped to claim otherwise. "); E. G.L. Gem Lab Ltd. v. 

Gem Quality Inst., Inc., 90 F. Supp. 2d 277, 292 (S.D.N.Y. 2000) (holding that the licensee 

"is precluded from contending that the [marks] are invalid by virtue of his acceptance of a 

sublicense to use them"). 

12 
Id. (quoting Restatement (Third) of Unfair Competition § 33 (1995) (emphasis omitted)). 

The reason is clear: "[A] licensee claiming that its own license is a naked license essentially 

seeks to benefit from its own misfeasance." Id. To make out a claim of naked licensing, the 

licensee must show that the quality of its goods or services suffered due to the lack of 

supervision by the licensor. "[B]y relying on its own ability to offer inferior or nonuniform 

goods and services under the trademark or trade name, the licensee seeks to free itself of the 

constraints imposed by the licensor's ownership of the trademark or trade name." Id. A 

naked licensing claim is particularly self-serving (and contrary to the consuming public's 

interests) when used, as it is here, as a sword against the licensor. 

The Court recognizes, of course, that licensee estoppel is an equitable defense. "[T]he 

doctrine is not subject to rigid application. Instead, a court considering the doctrine's 

application remains free to consider the particular circumstances of the case, including the 

nature of the licensee's claim." Id. at 1090 (internal quotation marks and alterations 

omitted). Here, the equities weigh in favor of applying licensee estoppel. 

First, as I have already mentioned, Virginia Flood seeks to employ the naked 

licensing doctrine, not as a defense to 1996 Flood's infringement claims, but as an offensive 

claim to transfer ownership of the marks from the licensor to the licensee based solely on the 

licensee's allegations that it is not adequately supervised. The equitable considerations that 

justify licensee estoppel are partiCUlarly relevant in this case given that Virginia Flood is the 

only licensee. Had Virginia Flood pointed to other licensees the quality of whose services 

had also declined due to inadequate control by 1996 Flood and its predecessors, the scales 

might have tipped against licensee estoppel. "The case for applying the licensee estoppel 

13 
doctrine is weak when the licensee asserts a lack of control by the licensor over other users." 

Id. (internal quotation marks omitted and emphasis added). That is because a licensee loses 

the value of its licensed trademark "[ w ]hen a licensor fails to control the quality of goods or 

services sold by other licensees." Id. Unfortunately for Virginia Flood, that is not the case 

here. As the only licensee, Virginia Flood has complete control over the value of its license. 

So long as it provides quality services on par with the licensor's services, the value of the 

license will not diminish. Virginia Flood cannot claim that the license is void and that it now 

has exclusive rights to the FLOOD marks because it has failed to maintain the quality of 

services that customers have come to expect from the FLOOD name. The point of licensee 

estoppel is to foreclose the sort of claim, like the one here, where the licensee blames the 

licensor for the licensee's own failure to preserve the value of the license, and it is 

particularly warranted where the claim is raised offensively to deprive the licensor of its 

ownership of the licensed trademark. 

Second, although Virginia Flood's principals could have asserted their claim of 

ownership over the FLOOD marks when the trustee proposed in October 1995 to sell the 

marks to the Smileys, (Rinn Decl. [#37-3],-r 18-19), they did not do so. Instead, Haislip and 

Seltzer challenged the sale, not on the basis that they owned the marks by virtue of naked 

licensing, but on the basis that Crooks, Davis, and the Smileys had unlawfully diverted and 

concealed estate assets to the detriment of creditors. (See id. ,-r 20 & Attachment B-12). 

They even offered a bid to purchase the marks. (I d. ,-r 21 & Attachment B-12 ,-r,-r 9-10). To 

say the least, it is curious that Haislip and Seltzer offered to pay for the very marks that they 

now claim to have owned since September 1993, at the latest, when Crooks and Davis, and 

14 
then the trustee, ceased exercising control over Virginia Flood. It is even more curious that 

Haislip and Seltzer failed to even mention their claim of ownership at that time. As such, 

Virginia Flood's utter failure to assert its ownership rights when afforded an obvious 

opportunity to do so weighs decisively in favor of applying licensee estoppel to its claims 

here. 6 

CONCLUSION 

Because 1996 Flood is the successor-in-interest of 1984 Flood, the original owner of 

the FLOOD marks, and because Virginia Flood is barred by the doctrine of licensee 

estoppel from asserting its naked licensing claim to obtain priority over the marks, 1996 

Flood is entitled to summary judgment on all of Virginia Flood's claims. For the same 

reasons, it is also entitled to summary judgment on Count 5 of its Counterclaim for a 

declaration of its priority over Virginia Flood and of its exclusive right to use and register 

the marks JOHN C. FLOOD and FLOOD. 7 Accordingly, Count 5 of 1996 Flood's 

6 Virginia Flood contends that 1996 Flood cannot seek equitable relief because it has 

"unclean hands." (Virginia Flood Parties' Reply to Defs.' Opp'n to PIs.' Mot. for Summ. J. 

[#74] at 16). Virginia Flood points specifically to evidence that Crooks, Davis, and the 

Smileys misappropriated assets from the bankruptcy estate. (Jd. at 17). Although it is true 

that their unauthorized use of estate assets prompted the trustee to seek and obtain 

appointment of a receiver, it is not altogether clear why that should foreclose 1996 Flood 

from obtaining equitable relief now that it has purchased the marks from the trustee. That 

the trustee decided to sell the marks to 1996 Flood, even over the same objections now 

raised by Virginia Flood, weighs heavily against Virginia Flood's unclean hands argument. 

7 Because 1996 Flood requested relief only on Count 5 of its Counterclaim, the Court 

reserves judgment as to the remaining counts. The Court notes, however, that even though 

licensee estoppel forecloses Virginia Flood from using naked licensing as a sword, it does 

not necessarily foreclose Virginia Flood from asserting naked licensing as an estoppel 

defense against 1996 Flood's infringement and unfair competition counterclaims. See 

Exxon Corp., 109 FJd at 1076 n.7 (noting that a licensee in a purported naked license may 

"invoke the naked licensing defense as a form of estoppel"); Sheila's Shine Prods., Inc. v. 

Sheila Shine, Inc., 486 F.2d 114, 124 (5th Cir. 1973) ("Failure to exercise such control and 

15 
Renewed Motion for Partial Summary Judgment is GRANTED and Virginia Flood's 

Motion for Summary Judgment is DENIED. An Order consistent with this Memorandum 

Opinion is attached herewith. 

, 

~ United States District Judge 

supervision for a significant period of time may estop the trademark owner from challenging 

the use of the mark and business which the licensee has developed during the period of such 

unsupervised use."). A word to the wise is sufficient. 

16