Opinion ID: 456012
Heading Depth: 3
Heading Rank: 3

Heading: Abandonment of Trademark

Text: 78 Ajac contends that even if Transgo at one time had trademark rights in Shift Kit, those rights have been abandoned due to Transgo's failure to exercise control over the use of the name. Specifically, Ajac points to Transgo's decision to grant an oral license to Winters Performance Products to use Shift Kit for products over which Transgo did not exercise quality control. The jury expressly found that Transgo exercised supervision and control adequate to ensure the quality of those products in permitting Winters Performance to use the name Shift Kit on products. 79 A trade name licensor must maintain control over the quality of the finished product or service to guarantee to the public that the goods or services are of the same, pre-license quality. Siegel v. Chicken Delight, Inc., 448 F.2d 43, 51 (9th Cir.1971), cert. denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972). Because a finding of insufficient control essentially works a forfeiture, a person who asserts insufficient control must meet a high burden of proof. Edwin K. Williams & Co., Inc. v. Edwin K. Williams & Co.-East, 542 F.2d 1053, 1059 (9th Cir.1976), cert. denied, 433 U.S. 908, 97 S.Ct. 2973, 53 L.Ed.2d 1092 (1977). 80 Transgo entered into an oral agreement whereby Winters was permitted to use Transgo's trade name, Shift Kit, for products sold by Winters under its own label. In approving Winters' use of Shift Kit, Younger instructed Winters to put TM after the term and explained to him that he felt it was a trademark name. 81 At least 90% of the components sold by Winters Performance Products were manufactured by Transgo. On these products, Transgo utilized its own quality control procedures at its plant. Younger cautioned Winters that, if Winters chose to use his own parts, he [Younger] wanted to know about it. Winters made minor part adjustments on certain Transgo kits after conferring with Younger. Winters designed one product which he called the 350 Shift Kit. The 350 Shift Kit was made from a prototype furnished by Younger. Winters worked with Younger throughout its development. While Younger never directly inspected or tested the final product, he did upon occasion test individual parts of the kit. Due to his association with Winters for over ten years and his respect for his ability and expertise, Younger felt he could rely on Winters to maintain high standards by performing his own quality control. Younger believed that Winters was second only to Younger himself in overall knowledge and ability in product development for this market. 82 Younger's confidence in Winters' ability and integrity was backed by the fact that Transgo never received any complaints from the field about parts produced by Winters Performance Products. See Syntex Laboratories, Inc. v. Norwich Pharmacal Co., 315 F.Supp. 45, 56 (S.D.N.Y.1970) (inspection by a licensor during period of negotiations leading up to agreement constitutes adequate control, particularly where parties are previously familiar with each other's expertise), aff'd, 437 F.2d 566 (2d Cir.1971). 1 83 The purpose of the Lanham Act ... is to ensure the integrity of registered trademarks, not to create a federal law of agency. Oberlin v. Marlin American Corp., 596 F.2d 1322, 1327 (7th Cir.1979). The scope of a licensor's duty of supervision of a licensee who has been granted use of a trademark must be commensurate with this limited goal. Id. 84 It is readily apparent from these facts that Transgo did not fail to provide adequate supervision of its licensee. There is substantial evidence to support the jury's determination that the appellants did not meet their burden of proving abandonment.