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Barcamerica Int'l USA Tr. v. Tyfield Imps., Inc. - 289 F.3d 589 (9th Cir. 2002)

Rule:

Where the licensor fails to exercise adequate quality control over the licensee, a court may find that the trademark owner has abandoned the trademark, in which case the owner would be estopped from asserting rights to the trademark. Such abandonment is purely an involuntary forfeiture of trademark rights, for it need not be shown that the trademark owner had any subjective intent to abandon the mark. Accordingly, the proponent of a naked license theory faces a stringent standard of proof.

Facts:

Plaintiff Barcamerica International USA Trust (Barcamerica) traces its rights in the Leonardo Da Vinci mark to a February 14, 1984 registration granted by the United States Patent and Trademark Office (PTO), on an application filed in 1982. 1 On August 7, 1989, the PTO acknowledged the mark's "incontestability." See 15 U.S.C.S. § 1115(b). Barcamerica asserts that it has used the mark continuously since the early 1980s.  In 1989, Defendant Renaissance Vineyards (Renaissance) entered into a second agreement with Barcamerica, which granted Renaissance an exclusive license to use the "Da Vinci" mark in the United States for wine products or alcoholic beverages. Similar to an earlier licensing agreement, the agreement contained no quality control provision.

Defendant Cantine Leonardo Da Vinci Soc. Coop. a.r.l. (Cantine), an entity of Italy, is a wine producer located in Vinci, Italy. Cantine has sold wine products bearing the "Leonardo Da Vinci" tradename since 1972; it selected this name and mark based on the name of its home city, Vinci. Cantine began selling its "Leonardo Da Vinci" wine to importers in the United States in 1979. Since 1996, however, defendant Tyfield Importers, Inc. (Tyfield) has been the exclusive United States importer and distributor of Cantine wine products bearing the "Leonardo Da Vinci" mark. In 1997, Cantine commenced a proceeding in the PTO seeking cancellation of Barcamerica's registration for the mark based on abandonment. Plaintiff Barcamerica responded by filing this action on January 30, 1998, and upon Barcamerica's motion,  the PTO suspended the cancellation proceeding.  Meantime, the district court  made a finding, inter alia, that "there is a serious question as to whether [Barcamerica] will be able to demonstrate a bona fide use of the Leonardo Da Vinci mark in the ordinary course of trade and overcome [the] claim of abandonment." The district court then granted summary judgment in favor of defendants Tyfield and Cantine, concluding that Barcamerica abandoned the mark through naked licensing, and, in any event, the suit was barred by laches because Barcamerica knew several years before filing suit that Tyfield and Cantine were using the mark in connection with the sale of wine. Baramerica appealed.

Issue:

Is a company’s engagement in "naked licensing" of its trademark tantamount to an abandonment of the mark and ultimately its cancellation?

Answer:

Yes

Conclusion:

The Court of Appeals for the Ninth Circuit held that Barmerica, the licensor, engaged in naked licensing because whether Renaissance's, its licensee, wine was objectively good or bad was irrelevant to the naked licensing issue. Baramerica failed to make even a minimal effort by annual sampling of an adequate number of wine bottles to ensure that its licensee's wines bearing its mark were of sufficient quality to retain the mark. The appellate court agreed with the trial court that, because the Baramerica had engaged in naked licensing of its mark, it forfeited its rights to the mark, and that the cancellation of the registration of its mark was appropriate.

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