Opinion ID: 357
Heading Depth: 2
Heading Rank: 1

Heading: Robinson Knife

Text: Robinson is a corporation whose business is the design, manufacture and marketing of kitchen tools such as spoons, soup ladles, spatulas, potato peelers, and cooking thermometers. In the process by which Robinson typically turns an idea into a saleable finished product, someone at Robinson comes up with an idea for a product. Robinson then decides which brand name would be best for that product, and if Robinson does not already have a licensing agreement that would permit it to use that trademark on the proposed product, it tries to negotiate one. Once Robinson has a licensing agreement in hand, it hires an industrial designer to design the product, and the trademark licensor is consulted to make sure that they agree that [the designer's plans] are appropriate for the brand that's involved. Robinson next contracts out the manufacturing, usually to firms in China or Taiwan, and the products are shipped to Robinson in the United States. With the products in hand, Robinson markets them under the previously selected brand name to customers, who are generally large retailers such as Wal-Mart or Target. Robinson's products are functionally the same as its competitors', so it largely relies on trademarks and design to differentiate its products. One particular subset of those trademarks is at issue here: famous trademarks licensed by Robinson from third parties who own the trademarks. [1] Often Robinson makes and sells, at the same time, products that are identical, but only some of which bear the relevant trademarks, while others do not. Robinson does not advertise the Robinson name or feature it prominently on its products' packaging. During the taxable years at issue, Robinson used, inter alia, two well-known licensed trademarks: Pyrex, which is owned by Corning, Inc., and Oneida, which is owned by Oneida Ltd. The owners of these two trademarks have for many years conducted substantial and continuous advertising and marketing activities to develop trademark awareness and goodwill. As a result, it is much easier for Robinson to place a Pyrex or Oneida product at a major retailer than it is to place an otherwise identical house-brand product. In all respects relevant to this case, the Pyrex and Oneida licensing agreements were the same. The agreements gave Robinson the exclusive right to manufacture, distribute, and sell certain types of kitchen tools using the licensed brand names. In return, Robinson agreed to pay each trademark owner a percentage of the net wholesale billing price of the kitchen tools sold under that owner's trademark. [2] Robinson was not required to make any minimum or lump-sum royalty payment, nor did royalties for any kitchen tools accrue at any time before the tools were sold. Thus, Robinson could design and manufacture as many Pyrex or Oneida kitchen tools as it wanted without paying any royalties unless and until Robinson actually sold the products. [3] Robinson did sell a significant volume of Pyrex- and Oneida-branded products, and during the taxable years at issue it paid royalties both to Corning and to Oneida, of $2,184,252 and $1,741,415, respectively.