Opinion ID: 3022764
Heading Depth: 4
Heading Rank: 2

Heading: When a dealer buys goods from a

Text: manufacturer and applies or has someone else apply the dealer’s own “merchant’s mark” to the goods, the dealer, not the manufacturer, is the owner of such a trademark. If the dealer orders the manufacturer to place the mark on the product prior to delivery, then the manufacturer is acting as a “ licensee” of the dealer. 2 McCarthy on Trademarks § 16:48 (footnotes omitted). The first scenario arises when a manufacturer who already owns a mark enters into an agreement with a distributor to sell the manufacturer’s branded goods. As McCarthy notes, such a relationship may operate under a trademark license or it may 31 not. But such conduct does not, by itself, vest ownership of the mark in the distributor. The second scenario arises when the distributor (or dealer) takes goods from the manufacturer and the dealer puts its own mark on the goods. In that case, the dealer is the owner of the mark, even if the manufacturer affixes the mark to the goods on behalf of the dealer. It is clear that the DOEBLER mark existed long before Hybrids came into existence, so it can hardly be said that Hybrids affixed its “merchant’s mark” to the goods. Unless ownership to the name vested in Hybrids via assignment or abandonment – issues that raise numerous disputed questions of material fact – the mere fact that the parties may have had a manufacturer-distributor relationship does not by itself vest ownership of the mark in Hybrids.15 In disputes between a manufacturer and distributor over ownership of a mark, Professor McCarthy suggests that a court first look to contractual expectations. 2 McCarthy on Trademarks § 16:48. He further suggests that if there is no contractual provision regarding ownership, courts should look at consumer expectations, weighing factors such as the following:
15 Hybrids argues that it was no mere distributor, but it is clear that the nature of the parties’ relationship is yet another disputed question of material fact that precludes summary judgment. 32
sold.
and promotional materials in conjunction with the mark.
and quality of goods on which the mark appeared.
behind the goods, e.g., which party received complaints for defects and made appropriate replacement or refund.
promotion of the trademarked product. Id. (footnotes omitted). We conclude that this approach is inapplicable in cases where initial ownership has already been established and an express assignment is lacking. In TMT North America, Inc. v. Magic Touch GmbH, the Seventh Circuit held that although such factors may be appropriate where initial ownership of a mark is in dispute, once initial ownership is established, a multifactor test would be inappropriate to divest that ownership – a trademark owner may “lose its rights by assignment or by abandonment, but not by some nebulous balancing test.” 124 F.3d 876, 884 n.4 (7th Cir. 1997). We agree. The Lanham Act expressly provides how ownership may be divested through 33 abandonment, see 15 U.S.C. § 1127, and how ownership of registered marks may be divested through assignment, see id. § 1060. To follow a divestive balancing test where initial ownership is already established, and where assignment or abandonment cannot be shown, would flout the Lanham Act by permitting a finding of abandonment under another name, even when abandonment cannot be established under the statute. Considering that abandonment must be “strictly proved,” United States Jaycees, 639 F.2d at 139, we will not permit it to be found under a different name through a balancing test. Moreover, even if we were to apply the contractual/consumer expectations approach, we could not conclude that ownership was divested as a matter of law. Regarding the parties’ contractual expectations, there was no express assignment.16 Even if we turned to consumer 16 The present dispute is thus different from Premier Dental Products Co. v. Darby Dental Supply Co., Inc., 794 F.2d 850 (3d Cir. 1986), where a domestic distributor was expressly assigned a mark by a foreign manufacturer; the distributor (the assignee) then sued a grey marketer. At issue was whether the express assignment from the foreign manufacturer to the domestic distributor was effective. We stated that although ownership “is largely determined by the parties’ agreement,” id. at 854, that under the circumstances of that case, a written agreement was not completely determinative, requiring us to further inquire as to who owned the goodwill, looking to: (1) who engages in control over the quality of goods; or (2) who is perceived by the public as to who stands behind the mark. Id. 34 expectations, those factors would not point towards Hybrids as a matter of law because: (1) Partnership created the mark; (2) Partnership first affixed the mark to goods; (3) Partnership’s name initially appeared on packaging and promotional materials, and later on, Hybrids’ name (and perhaps Partnership on occasion as well); (4) Partnership’s quality control is a disputed issue of material fact; (5) Hybrids may have become the party to whom consumers eventually looked as standing behind the goods but that again appears to be a question of fact; and (6) the parties dispute the nature and significance of any reimbursement by Partnership to Hybrids for marketing expenses. Thus, even if we applied a balancing test, numerous disputes of material fact would prevent it from supporting the grant of summary judgment.17 at 854-55. To the extent that we followed a balancing approach in Premier Dental, that case – which involved an express trademark assignment – is not controlling here, particularly considering that the question of assignment is heavily disputed. 17 It may be that the family name “Doebler” is “primarily merely a surname,” and that the DOEBLER mark and marks incorporating DOEBLER as a formative are descriptive rather than inherently distinctive. Cf. 15 U.S.C. § 1052(e)(4) (such marks not registrable). The parties recognize, however, that even descriptive marks can attain “secondary meaning” and thus attain trademark protection. See Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270, 282-83 (3d Cir. 2001) (“descriptive marks with a demonstrated secondary meaning are entitled to trademark protection”) 35