The owner of a trademark has not only a right to license the use of his trademark to others, but also a concurrent duty to exercise control and supervision over the licensee's use of the mark. Failure to exercise such control and supervision for a significant period of time may estop the trademark owner from challenging the use of the mark and business which the licensee has developed during the period of such unsupervised use.
In 1945, a couple, who were plaintiff California corporation’s predecessors in interest, devised a trademark for “Sheila Shine”, a polish product which they manufactured and sold in several states. In 1955, the couple gave a partnership the exclusive right to manufacture and sell the polish in Florida. The partnership and its successor, defendant Florida corporation, expanded sales of the polish throughout most of the United States. Plaintiff sued defendant for unfair competition based on common law trademark infringement. The trial court awarded each party exclusive use of name, "Sheila Shine," within separate territories with right to enjoin others from use. The court awarded no damages and assessed plaintiff costs in connection with a violation of the court's order. Plaintiff and defendant appealed. The court affirmed the trial court’s judgment.
Was plaintiff California corporation estopped from challenging defendant Florida corporation’s use of plaintiff’s trademark because of the lack of supervision, direction, and control by plaintiff’s predecessor in interest over defendant’s use of the mark?
The 1955 transaction at the least constituted a license for the partnership to market the polish in Florida. Failure by plaintiff California corporation’s predecessors in interest to exercise any supervision or control over the activities of the partnership or defendant Florida corporation, estopped plaintiff from challenging the business which defendant had built up under the mark “Sheila Shine”.