Court Opinion

ID: 4382897
Source: CourtListenerOpinion
Date Created: 2019-04-01 16:00:25.72513+00
Date Added: 2024-06-11T14:50:04.852233
License: Public Domain

Case: 17-14211   Date Filed: 04/01/2019   Page: 1 of 13

                                                                      [PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT
                        ________________________

                              No. 17-14211
                        ________________________

                  D.C. Docket No. 6:14-cv-01551-PGB-GJK

KROMA MAKEUP EU, LLC,
a United Kingdom Limited Liability Company,

                                                       Plaintiff-Appellant,

                                   versus

BOLDFACE LICENSING + BRANDING, INC.,
a Nevada Corporation,
KIMBERLY KARDASHIAN,
a California resident,
KOURTNEY KARDASHIAN,
a California resident,
KHLOE KARDASHIAN,
a California resident,
BY LEE TILLETT, INC.,
a Florida Corporation

                                                       Defendants-Appellee.

                        ________________________

                 Appeal from the United States District Court
                     for the Middle District of Florida
                       ________________________

                               (April 1, 2019)
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Before MARCUS and DUBINA, Circuit Judges, and GOLDBERG, * Judge.

GOLDBERG, Judge:

       Plaintiff-Appellant Kroma Makeup EU, LLC (“Kroma EU”) appeals the

district court’s grant of summary judgment based on its finding that Kroma EU

lacked standing to enforce the KROMA trademark. Because Kroma EU does not

have sufficient rights in the mark to sue under the Lanham Act, we affirm the

judgment of the district court.

                                    BACKGROUND

       Kroma EU is the former European distributor of cosmetics products using the

federally registered mark, KROMA. The owner and registrant of the mark is By Lee

Tillett, Inc. (“Tillett”) and the rights to use the KROMA mark in the United States

rest solely with Tillett. In October 2012, Tillett granted an exclusive license to

Kroma EU to import, sell, and distribute KROMA products in Europe, and to use

the KROMA mark in furtherance of its business. As part of the licensing agreement,

Tillett guaranteed that it owned the KROMA mark and would hold Kroma EU

harmless from any judgments against Tillett based on the mark. Tillett retained the

right to use the KROMA mark in the United States.

*
 Honorable Richard W. Goldberg, United States Court of International Trade Judge, sitting by
designation.
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      Defendant-Appellees—the Kardashian sisters—were celebrity endorsers of a

cosmetic line called “Khroma Beauty,” sold and manufactured by Defendant

Boldface Licensing & Branding, Inc. (“Boldface”). The Kardashians claim that they

had no personal knowledge of the KROMA trademark until an entertainment news

website, TMZ, published an article about the Kardashians’ potential infringement.

However, before the Khroma Beauty line launched, Boldface had purportedly

conducted a trademark search that revealed the existence of the KROMA mark. The

Kardashians claim that they did not receive this information. Boldface sought to

register the KHROMA or KARDASHIAN KHROMA mark with the U.S. Patent

and Trademark Office, but registration was denied because of likelihood of

confusion with the previously registered KROMA mark.

      After the Khroma line was released, Boldface sought a declaratory judgment

in California federal court that Boldface did not infringe the KROMA trademark.

There, Tillett filed a trademark infringement counterclaim, adding the Kardashians

as counterclaim defendants. The California district court granted Tillett’s motion

for a preliminary injunction against Boldface, finding that Tillett had demonstrated

a likelihood of success on the trademark infringement claim. Boldface Licensing +

Branding v. By Lee Tillett, Inc., 940 F. Supp. 2d 1178 (C.D. Cal. 2013). Thereafter,

Boldface rebranded the product line to “Kardashian Beauty” and the parties settled

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the dispute. Kroma was not a party to the California action and did not receive a

share of the settlement recovery from Tillett.

      Kroma EU subsequently filed this action in the Middle District of Florida

against Boldface and the Kardashians, alleging that Boldface directly infringed the

KROMA trademark under common law trademark infringement and the Lanham

Act by distributing “Khroma” branded cosmetics in Europe, and that the

Kardashians were vicariously liable for Boldface’s infringement. Kroma EU also

brought claims against Tillett, alleging a cause of action for promissory estoppel. As

to the promissory estoppel claim, the district court held in an earlier order that under

Florida law, a foreign licensee could not state a claim for promissory estoppel against

its licensor; however, Kroma EU was able to proceed against Tillett under a breach

of contract theory. Kroma Makeup EU, Ltd. v. Boldface Licensing + Branding, Inc.,

No. 6:14-cv-1551-ORL, 2015 WL 1708757, at *1 (M.D. Fla. Apr. 15, 2015).

      The Kardashians moved for summary judgment arguing that Kroma EU did

not have the requisite standing to bring the infringement action and that the

trademark infringement cause of action was barred by claim preclusion. Kroma EU

also moved for partial summary judgment on the issue of liability. Earlier in the

litigation, Tillett successfully moved to compel arbitration and Kroma EU’s claim

against Tillett remains stayed pending the arbitration.

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      The district court granted the Kardashians’ motion. The court found that

Kroma EU lacked standing to sue for trademark infringement and did not reach the

Kardashians’ claim preclusion argument.        Relying primarily on the licensing

agreement between Tillett and Kroma EU, the district court held that the agreement

“plainly authorized only Tillett to enforce the trademarks” and to “protect” the mark

“from any attempts of illegal use,” while “Kroma EU’s sole directive was to inform

Tillett of instances of infringement.” Based on this reading, the district court

concluded that these provisions “plainly authorized only Tillett to enforce the

trademarks governed by the License Agreement.” Therefore, Kroma EU “lack[ed]

contractual authority, and hence standing, to pursue § 1125(a) violations against

infringers in its own capacity.” Based on Kroma EU’s purported lack of standing,

the court denied Kroma EU’s motion for partial summary judgment as moot.

                                 JURISDICTION

      At the time of this appeal, the district court had not yet disposed of all claims

against all parties. Kroma EU’s claim against Tillett had been stayed pending

arbitration, and the district court had failed to enter a default judgment as to

Boldface, which was served with process but had never appeared. Instead of

dismissing the appeal for lack of jurisdiction, however, we gave Kroma EU the

opportunity to request certification of the summary judgment order from the district

court under Rule 54(b). Order, Kroma Makeup EU, LLC v. Boldface Licensing &

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Branding, Inc., et al., No. 17-14211 (11th Cir. Feb. 5, 2019). A Rule 54(b) judgment

has now been entered as to the claims against the Kardashians and final judgment

was entered in favor of the Kardashians. Rule 54(b) Judgment, Kroma Makeup EU,

LLC v. Boldface Licensing & Branding, Inc., et al., 6:14–cv–1551, ECF No. 172

(M.D. Fla. Feb. 21, 2019). The Court, then, maintains jurisdiction over this appeal.

                            STANDARD OF REVIEW

      The district court’s grant of summary judgment is reviewed de novo and we

apply the same legal standards that governed the district court. Johnson v. Bd. of

Regents of Univ. of Ga., 263 F.3d 1234, 1242 (11th Cir. 2001). Summary judgment

is proper when the evidence shows “that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a). When reviewing a grant of summary judgment, we view the evidence in

the light most favorable to the non-moving party and resolve all reasonable doubts

about the facts in favor of the non-movant. Feliciano v. City of Miami Beach, 707
F.3d 1244, 1247 (11th Cir. 2013) (quoting Skop v. City of Atlanta, 485 F.3d 1130,

1143 (11th Cir. 2007)). The district court’s judgment can be affirmed on any ground

supported by the record, regardless of the basis for the initial decision. Parks v. City

of Warner Robins, 43 F.3d 609, 613 (11th Cir. 1995).

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                                     ANALYSIS

      The issue before us is the extent of a licensee’s rights in a trademark

infringement action under Section 43(a) of the Lanham Act. While the Lanham Act

typically evokes questions of standing, as a licensee, Kroma EU’s rights thereunder

rely upon the licensing agreement it entered with Tillett. We adopt the position taken

by the district courts in this circuit—that a licensee’s right to sue to protect the mark

“largely depends on the rights granted to the licensee in the licensing agreement.”

Drew Estate Holding Co. v. Fantasia Distrib., Inc., 875 F. Supp. 2d 1360, 1366 (S.D.

Fla. 2012) (quoting Hako-Med USA, Inc. v. Axiom Worldwide, Inc., No. 8:06-cv-

1790-T-27EAJ, 2006 WL 3755328, at *6 (M.D. Fla. Nov. 15, 2006)). See also Aceto

Corp. v. TherapeuticsMD, Inc., 953 F. Supp. 2d 1269, 1279 (S.D. Fla. 2013)

(“[S]tanding to sue depends largely on the rights granted to the licensee under the

licensing agreement.”).

      Kroma EU disputes the district court’s ruling that it lacks the requisite

standing to bring an infringement claim under the Lanham Act. The Lanham Act

provides a cause of action against “[a]ny person who, on or in connection with any

goods or services, . . . uses in commerce any word, term, name, symbol, or device,

or any combination thereof, . . . [which] is likely to cause confusion . . . as to the

affiliation, connection, or association of such person with another person, or as to

the origin, sponsorship, or approval of his or her goods, services, or commercial

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activities by another person.” 15 U.S.C. § 1125(a)(1). The statute affords a cause

of action to “any person who believes that he or she is likely to be damaged.” Id.

But, despite this broad language, 1125(a) does not get “such an expansive reading”

so as to allow “all factually injured plaintiffs to recover.” Lexmark Int’l, Inc v. Static

Control Components, Inc., 572 U.S. 118, 129 (2014) (quoting Holmes v. Sec. Inv'r

Prot. Corp., 503 U.S. 258, 266 (1992)). This is especially true where, as here, a

licensing agreement between two parties governs each party’s entitlement to

infringement claims.

      The court below focused its attention on whether the license agreement

between Tillett and Kroma EU conferred adequate standing on Kroma EU to bring

a claim under Section 1125(a). But, the question before us is not that of traditional

standing. Indeed, it is “not [of] standing at all.” City of Miami v. Bank of Am. Corp.,

800 F.3d 1262, 1276 (11th Cir. 2015), vacated on other grounds, 137 S. Ct. 1296

(2017). Rather, it is whether the statute “grants the plaintiff the cause of action that

he asserts.” Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1302 (2017). See

also Lexmark, 572 U.S. at 128 n.4. (“We have on occasion referred to this inquiry

as ‘statutory standing’ and treated it as effectively jurisdictional. That label is an

improvement over the language of ‘prudential standing,’ since it correctly places the

focus on the statute. But it, too, is misleading, since the absence of a valid . . . cause

of action does not implicate subject-matter jurisdiction, i.e., the court’s statutory or

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constitutional power to adjudicate the case.” (internal quotation marks and citations

omitted)). In other words, does the licensing agreement between Tillett and Kroma

EU give Kroma EU, the licensee, sufficient “rights in the name” to sue under the

Lanham Act? Camp Creek Hosp. Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d
1396, 1412 (11th Cir. 1998).

      The answer is no.

      To start, “a statutory cause of action extends only to plaintiffs whose interests

‘fall within the zone of interest protected by the law invoked.’” Lexmark, 572 U.S.

at 129 (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). The licensing agreement

affords rights and imposes obligations on the parties relating to the enforcement of

any trademark claims. As such, there is little dispute between the parties that we

turn to that agreement to determine if Kroma’s interests fall within the zone of

interest protected by the Lanham Act. In so doing, we fall back on basic principles

of contract interpretation and “construe the agreement as a whole,” Westport Ins.

Corp. v. Tuskegee Newspapers, Inc., 402 F.3d 1161, 1164 (11th Cir. 2005), careful

to afford the plain language meaning of “each and every word [the agreement]

contains,” Equity Lifestyle Props., Inc. v. Fla. Mowing & Landscape Serv., Inc., 556
F.3d 1232, 1242 (11th Cir. 2009).

      Here, applying the licensing agreement to this inquiry is a straightforward

exercise. The plain language of the agreement demonstrates the parties’ intent for

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Tillett to retain all ownership and enforcement rights. Kroma EU—while it may

have other rights under the agreement—does not possess the ability to assert its

rights in the mark in this proceeding.

      There are two integral provisions of the licensing agreement between Tillett

and Kroma EU as they relate to trademark infringement. First, and in no uncertain

terms, ownership of the mark is reserved to Tillett. Tillett retains the KROMA

trademark as its “exclusive and inalienable property” and “reserves the right to

assign/transfer it to any individual person or legal entity.” Tethered to the ownership

provision, the agreement requires that Tillet “protect [the trademark] properly from

any attempts of illegal use, to the best of his knowledge.” Should any infringement

occur, Tillett would be required to “guarantee[] [Kroma EU] against any claims . . .

concerning [the mark’s] intellectual property rights.” And even if there were any

doubt about the agreement’s terms as they relate to Tillett’s enforcement obligation,

the owner of Tillett, Aglaia Lee Rodriguez, explained in a declaration to the district

court that these provisions were created with the intent to retain Tillett’s enforcement

power over the KROMA mark:

      [M]y Company’s intention was to allow [Kroma EU] to advertise and
      sell our Kroma products in Europe, but at the same time to retain for
      my Company all rights to the KROMA trademark, including the
      exclusive right to protect and enforce the KROMA trademark in any
      infringement actions. I wanted my Company and its lawyers to
      exclusively control the enforcement of the KROMA trademark,

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      because infringement actions and the publicity surrounding them can
      have lasting effects on the trademark.

      The issue boils down to Kroma EU’s rights pursuant to the agreement—and

specifically, if an explicit obligation on Tillett to protect against the mark’s

infringement precludes Kroma EU’s enforcement powers against the same

infringement. Certainly, Kroma EU maintained the exclusive right to use the mark

“for advertising purposes and for the purpose of Goods sale and promotion” in

Europe. But importantly, Section 4.3.2 only vested Kroma EU with the obligation

to “inform [Tillett] of any illegal use of the trademark,” prompting Tillett to file suit

against the infringer—at which point Tillett would be required to compensate

Kroma for its losses resulting from the infringement. These provisions read together

indicate that Tillett alone has the exclusive right to sue for infringement. Otherwise,

as the Kardashians point out, there would have been little need for the agreement to

require Tillett to compensate Kroma EU for any loss from the infringement. And in

concert with the “time-honored maxim of construction, expressio unius est exclusio

alterius, the inclusion of specific things implies the exclusion of those not

mentioned,” Cast Steel Prods., Inc. v. Admiral Ins. Co., 348 F.3d 1298, 1303 (11th

Cir. 2003), these provisions “manifest the [parties’] ability to clearly and precisely

delegate and limit authority” over infringement claims, In re Celotex Corp., 487 F.3d
1320, 1334 (11th Cir. 2007). The licensing agreement—and at its core, Kroma EU’s

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exclusion from any trademark protection rights coupled with Tillett’s explicit

enforcement power—does just that.

      And contrary to Kroma EU’s suggestion that the Kardashians’ interpretation

of the agreement implies that Kroma EU ceded to Tillett “any” or “every last shred”

of Kroma’s “ability to seek legal recourse”—our reading of the licensing agreement

makes no such inference. The agreement—as understood by both parties—obliges

Tillett to indemnify Kroma EU for monetary losses caused by any infringement.

Surely, Tillett’s failure to do so would potentially raise a cogent breach of contract

cause of action. As testament to that available recourse, that is exactly what Kroma

EU did when it brought a breach of contract claim for Tillett’s alleged failure to

compensate Kroma in the California litigation. Kroma EU, then, is not left without

a “shred” of its ability to seek legal recourse based on its rights in the mark.

      Our sister courts of appeals have agreed with the general sentiment that a

license agreement between two parties can limit a licensee’s ability to bring a

Lanham Act claim. For example, in Finance Investments Co. (Bermuda) v. Geberit

AG, 165 F.3d 526 (7th Cir. 1998), the licensee there was permitted to sue on its own

behalf only if the licensor declined to sue after it was notified of the infringement.

Otherwise, per the agreement, the licensee’s sole recourse was to notify the licensor

of any infringing acts. Id. at 532. Thus, “[b]ecause the license [was] the sole source

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giving the plaintiffs any interest in the [] mark,” when the licensee failed to follow

these procedures, it was “strip[ped] . . . of the right to raise a § 43(a) claim.” Id.

      The same can be said for Kroma EU. The licensing agreement plainly

authorized Tillett to file suit against infringers. Kroma EU was limited in its

available recourse: it was assigned limited rights to the KROMA mark and the

agreement clearly delineated its only available recourse regarding trademark

infringement. Therefore, the licensing agreement does not give Kroma EU sufficient

“rights in the name” to sue under the Lanham Act.

      Accordingly, we affirm the judgment of the district court.

      AFFIRMED.

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