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Any assignment of a trademark and its goodwill (with or without tangibles or intangibles assigned) requires the mark itself be used by the assignee on a product having substantially the same characteristics.
PepsiCo, Inc., a holding company of several subsidiaries including Pepsi Cola Co., a national soft drink bottler, sought an injunction against Grapette-Aristocrat, Inc. and its holding company Grapette Co. (hereinafter referred collectively as Grapette) on the alleged infringement of its trademark "Pepsi." In 1965 Grapette purchased the mark "Peppy" and intended to bottle a soft "pepper" drink with that name. The district court found that the mark "Peppy" was confusingly similar to "Pepsi" and as such would constitute infringement under 15 U.S.C. § 1114 (1964). However, notwithstanding this finding of infringement, the court denied the plaintiff injunctive relief on the ground that it was guilty of laches. PepsiCo appealed the district court's denial of injunctive relief due to laches in an action for trademark infringement. PepsiCo contended that the transfer of the trademark to Grapette was invalid because it was an assignment in "gross" of the trademark name, without the goodwill associated with the name, and therefore Grapette could not stand in the shoes of assignor to assert the defense of laches.
Was the transfer of the trademark to Grapette valid?
The court agreed, finding that Grapette’s intended use of the mark was simply to describe its new pepper beverage and that no intent to adopt or exploit any goodwill, as required by law, from the name and assignor's long association and use of it with a cola syrup, made the transfer void. The court held that the assignment to Grapette was void and that Grapette possessed no standing to raise the equitable defense of laches. The district court's judgment was reversed.