Opinion ID: 2758605
Heading Depth: 2
Heading Rank: 1

Heading: The Arrangement and the Litigation

Text: The sales distribution agreement was formed so that Derma Pen, LLC and 4EverYoung could sell a micro-needling device. The agreement provided that Derma Pen, LLC would sell the device in the United States; 4EverYoung would sell the device throughout the rest of the world. The parties allocated trademark rights based on the sales territory; thus, Derma Pen, LLC acquired ownership of the trademark rights in the United States. With ownership of the U.S. trademark rights, Derma Pen, LLC promised to register the “DermaPen” trademark with the United States Patent and Trademark Office. Derma Pen, LLC complied with this requirement and began using the trademark for U.S. sales of the microneedling device. 4EverYoung used the trademark rights to sell the device in other countries. The two companies anticipated that one of them might terminate the agreement. Thus, the distribution agreement provided that upon termination, Derma Pen, LLC would offer to sell its trademark rights to 4EverYoung. Eventually, Derma Pen, LLC terminated the agreement. 4EverYoung reacted by attempting to exercise the option to buy Derma Pen, LLC’s trademark rights. With this attempt, 4EverYoung requested access to 3 Derma Pen, LLC’s financial records to determine the value of the trademark. Derma Pen, LLC balked, and no money ever exchanged hands. Nonetheless, 4EverYoung started using the trademark to sell the microneedling device in the United States. Derma Pen, LLC viewed this use as an intrusion into its own territory and sued 4EverYoung and associated entities. 1 The suit involves over fifteen claims, including trademark infringement and unfair competition under the Lanham Act. In the suit, Derma Pen, LLC moved for a preliminary injunction to prevent 4EverYoung from using the trademark in the United States. The district court denied the request, reasoning that Derma Pen, LLC was not likely to prevail on the merits. Derma Pen, LLC appealed, insisting that it is likely to prevail because it continues to own the trademark rights in the United States. We agree with Derma Pen, LLC, concluding that it is likely to prevail. The existing record would likely require findings that ● Derma Pen, LLC owns the U.S. trademark rights until they are sold, and ● no sale has taken place. Thus, Derma Pen, LLC likely remains the owner of the trademark and the district court erred in predicting the outcome. 1 From this point on, we collectively refer to 4EverYoung and its associated entities as “4EverYoung.” For purposes of the appeal, the distinction between 4EverYoung and the associated entities is not material. 4