Court Opinion

ID: 9694954
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:01:38.624028+00
Date Added: 2024-06-11T18:20:07.181648
License: Public Domain

*247ANDERSON, J.
(dissenting in part), I dissent from the portion of the opinion affirming the trial court's decision allowing Schraa the right to use the "Leon's" trade name within a twenty-mile radius of the Mur-dock Avenue location. Schraa's right to use the trade name did not derive from a good faith adoption of the trade name by the Oshkosh business, but through the consent of the Milwaukee Leon's. The Milwaukee Leon's had the right to limit its consent to the Murdock Avenue location only. Because the Milwaukee Leon's informed Schraa prior to the purchase that consent was limited to the Murdock Avenue location, Schraa had no right to use the name at other locations.
The majority opinion rejects the Milwaukee Leon's argument that the territorial exception to the first use doctrine is not available to the Oshkosh Leon's. The majority reasons that Anna's adoption of the trade name was in good faith as required by United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 (1918) because "[t]here is nothing in the record to indicate that her possession and use of the Leon's name was anything other than innocent and permitted." Majority opinion at 8.
Contrary to the majority opinion, the general rule established by case law and commentary is that proof of knowledge of the prior user's mark is sufficient to destroy the good faith defense discussed in United Drug. See 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 26.03, at 26-14 to 26-15 (3d ed. 1992).3 McCarthy notes that United Drug *248and Hanover Star Milling Co. v. Metcalf, 240 U.S. 403 (1916), the landmark cases discussing geographically remote use, contain language which could support the argument that more than mere knowledge is required. However, McCarthy recognizes that more recent cases have read good faith very narrowly to protect only those users who have no knowledge of a prior user.
The Oshkosh Leon's cites to no Wisconsin precedent which would lead me to believe that Wisconsin's common law differs from the general rule. In the absence of such controlling precedent, I would follow the general rule and hold that Anna did not adopt the trade name in good faith.
Although Anna could not avail herself of the defense of a good faith adoption in a remote market, the parties agreed that Milwaukee Leon's consented to the use of the trade name. Consent is also a defense to the infringement of a trade name. See Restatement (Third) of Unfair Competition § 29 (Tentative Draft No. 3, 1991). A consent agreement operates to limit the risk of confusion to the purchasing public by controlling how the name is used by one or both of the parties. Id. at cmt. b. By obtaining consent, the new user and successors may use the mark within the scope of the consent. Id. at § 29 & cmt. a. However, this consent may be terminated where the user knows or has reason to know that the other party is no longer willing to permit the particular use. Id. at cmt. d.
There were no findings of fact as to the scope of the original consent agreement between Anna and the Milwaukee Leon's or whether the parties agreed at a later *249time to limit the consent. Nevertheless, the trial court did find that Schraa was "warned in regard to obtaining permission to use the name at other locations prior to opening any other locations." Ronald testified that prior to the sale he informed Schraa that he would not permit anyone to open additional stores using the name "Leon's." Jack also testified that he informed Schraa that Ronald's permission would have to be obtained before opening other businesses using the "Leon's" name.4 Vernon Rodgers, a former business partner of Schraa's, testified that Jack told them they would need permission to open another store under the "Leon's" name. I would hold that these facts indicate that Schraa knew or had reason to know that consent to use the "Leon's" trade name extended to the Mur-dock Avenue location only.5

 Cases cited in support of the majority view include Money Store v. Harriscorp Fin., Inc., 689 F.2d 666, 674 (7th Cir. 1982) (a good faith user is "one who begins using a mark with no knowledge that someone else is already using it"); Weiner King, Inc. v. Wiener King Corp., 615 F.2d 512, 522 n.6 (C.C.P.A. 1980) *248(the appropriation of a mark with knowledge that it is being used by another is not in good faith); Pike v. Ruby Foo's Den, Inc., 232 F.2d 683, 686 (D.C. Cir. 1956) (stating that the federal cases aré "virtually unanimous against a knowing junior user").

 Jack's statement that permission was needed to open additional stores was not based on his interpretation of the consent agreement, but on his belief that registration of the mark precluded anyone else from opening additional stores without the Milwaukee Leon's permission.

 There was also evidence presented by the Milwaukee Leon's which could support the argument that the consent agreement rose to the level of a license between the parties. Because the trial court decided the case on other grounds, there was no determination of whether a license existed. A license entitles a licensee to exploit the trade name owner's goodwill by a use which purchasers would attribute to the trade name owner. Restatement (Third) of Unfair Competition § 29 cmt. b (Tentative Draft No. 3,1991). To constitute a license, the owner must exercise adequate control over the licensee's use. Id. at cmt. b & § 33. Licensing differs from a consent agreement because a consent agreement does not contemplate that the use of the mark by one party will be attributed by the public to the *250other. Id. at § 29 cmt. b. However, a license without adequate control is effective as a consent agreement between the parties. See id. Therefore, the distinction is not necessary to determine the rights of the parties for purposes of this suit. Because the distinction could be important in the future, especially as to third parties, I would note that it is left unresolved whether a license existed between the parties.