FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FREECYCLESUNNYVALE, a California
unincorporated association,
Plaintiff-counter-defendant- No. 08-16382
Appellee,
v. D.C. No.
4:06-cv-00324-CW
THE FREECYCLE NETWORK, OPINION
Defendant-counter-claimant-
Appellant.
Appeal from the United States District Court
for the Northern District of California
Claudia A. Wilken, District Judge, Presiding
Argued and Submitted
August 10, 2010—San Francisco, California
Filed November 24, 2010
Before: Susan P. Graber, Consuelo M. Callahan, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge Callahan
18807
18810 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
COUNSEL
Eric B. Evans (argued), Ian N. Feinberg, Donald M. Falk,
John J. Fitzgerald IV of Mayer Brown LLP, for plaintiff-
counter-defendant-appellee FreecycleSunnvale.
Lisa Kobialka (argued), Paul D. Clement, Paul Andre, Meg-
han Ashley Wharton, and Amy Sun of King & Spalding LLP,
for defendant-counter-claimant-appellant The Freecycle Net-
work.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18811
OPINION
CALLAHAN, Circuit Judge:
FreecycleSunnyvale (“FS”) is a member group of The Free-
cycle Network (“TFN”), an organization devoted to facilitat-
ing the recycling of goods. FS filed a declaratory action
against TFN arising from a trademark licensing dispute, alleg-
ing noninfringement of TFN’s trademarks and tortious inter-
ference with FS’s business relations. FS moved for partial
summary judgment on the issue of whether its naked licensing
defense to trademark infringement allowed it to avoid a find-
ing of infringement as a matter of law.1 TFN argued that it
had established adequate quality control standards over its
licensees’ services and use of the trademarks to avoid a find-
ing of naked licensing and abandonment of its trademarks.
The district court granted summary judgment to FS. We hold
that TFN (1) did not retain express contractual control over
FS’s quality control measures, (2) did not have actual controls
over FS’s quality control measures, and (3) was unreasonable
in relying on FS’s quality control measures. Because we find
that TFN engaged in naked licensing and thereby abandoned
its trademarks, we affirm.
1
Naked licensing occurs when a licensor does not exercise adequate
quality control over its licensee’s use of a licensed trademark such that the
trademark may no longer represent the quality of the product or service the
consumer has come to expect. See Barcamerica Int’l USA Trust v. Tyfield
Importers, Inc., 289 F.3d 589, 595-96 (9th Cir. 2002). By not enforcing
the terms of the trademark’s use, the licensor may forfeit his rights to
enforce the exclusive nature of the trademark. The key question is there-
fore whether TFN produced any evidence to raise a material fact issue as
to whether it: (1) retained contractual rights to control the quality of the
use of its trademark; (2) actually controlled the quality of the trademark’s
use; or (3) reasonably relied on FS to maintain the quality. Barcamerica,
289 F.3d at 596-98 (upholding trademarks where a licensor is familiar
with the licensee and reasonably relies on the licensee’s own quality con-
trol efforts).
18812 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
I
A
In March 2003, Deron Beal (“Beal”) founded TFN, an
umbrella non-profit Arizona corporation dedicated to “free-
cycling.” The term “freecycling” combines the words “free”
and “recycling” and refers to the practice of giving an
unwanted item to a stranger so that it can continue to be used
for its intended purpose, rather than disposing of it.2 As prac-
ticed by TFN, freecycling is primarily a local activity con-
ducted by means of internet groups, which are created by
volunteers through online service providers like Yahoo!
Groups and Google Groups.3 Although not required to do so,
most TFN member groups use Yahoo! Groups as a forum for
members to coordinate their freecycling activities. TFN also
maintains its own website, www.freecycle.org, which pro-
vides a directory of member groups as well as resources for
volunteers to create new groups. The website also includes a
section devoted to etiquette guidelines.
TFN asserts that it maintains a “Freecycle Ethos”—a demo-
cratic leadership structure, in which decisions are made
through a process of surveys and discussions among volunteer
moderators. Local volunteer moderators are responsible for
enforcing TFN’s rules and policies, but the moderators have
flexibility in enforcement depending on the moderators’
assessment of their local communities.
2
Beal did not coin the word “freecycle” and TFN is not the first organi-
zation to promote freecycling.
3
In general, online discussion groups such as Yahoo! Groups and
Google Groups allow individuals with a shared common interest to com-
municate by means of posting messages to the particular group’s online
forum. Such groups may be subject to terms and conditions of the service
provider. In addition, discussion groups often have volunteer group mod-
erators who monitor the discussions, and each group may adopt and
enforce rules and regulations (e.g., discussion etiquette) separate from
whatever terms the online service provider imposes.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18813
Since May 2003, TFN has been using three trademarks,
FREECYCLE, THE FREECYCLE NETWORK, and a logo
(collectively “the trademarks”) to identify TFN’s services and
to identify member groups’ affiliation with TFN. Federal reg-
istration of the trademarks is currently pending in the United
States, but the trademarks have been registered in other coun-
tries. TFN permits member groups to use the trademarks.
When TFN first started, Beal personally regulated the use of
the trademarks but, as TFN has grown, it has relied on local
moderators to regulate member groups’ use of the trademarks.
Lisanne Abraham (“Abraham”) founded FS on October 7,
2003, in Sunnyvale, California, without TFN’s knowledge or
involvement. She established the group by entering into a ser-
vice contract with Yahoo! Groups and becoming the group’s
moderator. Upon establishing FS, Abraham adapted etiquette
guidelines and instructions for how to use FS from either
TFN’s or one of TFN’s member group’s website. On October
7, 2003, Abraham emailed Beal directly asking for a logo for
FS, and they spoke over the phone within days of the email
communication. After the phone conversation, Beal emailed
Abraham on October 9, 2003, stating: “You can get the neu-
tral logo from www.freecycle.org, just don’t use it for com-
mercial purposes or you [sic] maybe Mark or Albert can help
you to do your own fancy schmancy logo!”4 This email is the
only record of a direct communication between FS and TFN
regarding the use of any of the trademarks.
Between October 7, 2003, and October 9, 2003, FS was
added to TFN’s list of online freecycling groups displayed on
TFN’s website. Then, on October 9, 2003, Abraham received
an email from Beal addressed to nineteen moderators of new
freecycle Yahoo! Groups which, among other things, wel-
comed them to TFN. The email did not discuss or include any
4
Mark Messinger is the moderator for the Olympia, Washington, freecy-
cle group. He helped Abraham fashion a unique freecycle logo for Sunny-
vale. Albert Kaufman apparently introduced Abraham to freecycling.
18814 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
restrictions or guidance on the use of TFN’s trademarks. On
October 13, 2003, Abraham received another email from
TFN, this time an invitation to join the “freecyclemodsquad”
Yahoo! Group (“modsquad group”), an informal discussion
forum exclusively for the moderators of freecycle Yahoo!
Groups to share ideas.
Before 2004, TFN had only a few suggested guidelines in
the etiquette section of its website, including a “Keep it Free”
rule. Then, on January 4, 2004, Beal sent an email to the mod-
squad group, asking whether TFN should also limit listed
items to those that were legal. Ultimately, Beal proposed the
adoption of a “Keep it Free, Legal & Appropriate for All
Ages” rule and asked “that all moderators vote on whether
they feel this is the one rule that should apply to ALL local
groups or not.” Between January 4 and January 11, 2004, a
majority of the modsquad group voted to require all local
groups to adopt the rule and, on January 11, Beal informed
the group that “I’m glad to say . . . we now have one true
guiding principle.” Although the moderators adopted the
“Keep it Free, Legal & Appropriate for All Ages” rule, fol-
lowing its adoption, they frequently discussed what the actual
meaning of the rule was and, ultimately, its definition and
enforcement varied from group to group.
Although the underlying reason is not evident from the
record or the parties’ briefs, on November 1 and November
14, 2005, TFN sent emails to FS ordering the group to cease
and desist using the Freecycle name and logo and threatening
to have Yahoo! terminate FS’s Yahoo! Group if FS did not
comply. On November 5, FS emailed Yahoo! and disputed
TFN’s ability to forbid the use of the trademarks by informing
Yahoo! of the license that TFN allegedly had granted FS in
October 2003 (i.e., Beal’s October 9, 2003 email authorizing
Abraham to use the logo). On November 21, Yahoo! termi-
nated the FS Yahoo! Group at TFN’s request, after receiving
a claim from TFN that FS was infringing on TFN’s trademark
rights.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18815
B
On January 18, 2006, FS filed a declaratory judgment
action against TFN in the U.S. District Court for the Northern
District of California, alleging noninfringement of TFN’s
trademarks and tortious interference with FS’s business rela-
tions. TFN brought counterclaims for trademark infringement
and unfair competition under the Lanham Act and California
Business and Professions Code section 17200.
FS then moved for summary judgment on the issue of
whether its naked licensing defense to trademark infringement
allowed it to avoid a finding of infringement as a matter of
law. FS argued that TFN had abandoned its trademarks
because it engaged in naked licensing when it granted FS the
right to use the trademarks without either (1) the right to con-
trol or (2) the exercise of actual control over FS’s activities.
On March 13, 2008, the district court granted summary judg-
ment in favor of FS, holding that TFN engaged in naked
licensing and therefore abandoned its rights to the trademarks.
The parties stipulated to dismiss the remaining claims, and
final judgment was entered on May 20, 2008. TFN thereafter
timely filed its appeal.
II
We review de novo a grant of partial summary judgment.
Lawrence v. Dep’t of Interior, 525 F.3d 916, 920 (9th Cir.),
cert denied, 129 S. Ct. 305 (2008). “The appellate court must
determine, viewing the evidence in the light most favorable to
the nonmoving party, whether the district court correctly
applied the relevant substantive law and whether there are any
genuine issues of material fact.” Balint v. Carson City, 180
F.3d 1047, 1050 (9th. Cir. 1999) (citation omitted). A dispute
about a material fact is genuine “if the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
18816 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
In ruling on a motion for summary judgment, our inquiry
“necessarily implicates the substantive evidentiary standard of
proof that would apply at the trial on the merits.” Id. at 252.
We have held that the proponent of a naked license theory of
trademark abandonment must meet a “stringent standard of
proof.” Barcamerica, 289 F.3d at 596 (internal quotation
marks omitted); see also Prudential Ins. Co. of Am. v. Gibral-
tar Fin. Corp. of Cal., 694 F.2d 1150, 1156 (9th Cir. 1982)
(“Abandonment of a trademark, being in the nature of forfei-
ture, must be strictly proved.”); Edwin K. Williams & Co. v.
Edwin K. Williams & Co.- E., 542 F.2d 1053, 1059 (9th. Cir.
1976) (“[A] person who asserts insufficient control [of a
trademark] must meet a high burden of proof.”).
We have yet to determine, however, whether this high stan-
dard of proof requires “clear and convincing” evidence or a
“preponderance of the evidence.” See Electro Source, LLC v.
Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 935 n.2 (9th
Cir. 2006) (reserving the issue of the standard of proof to
show trademark abandonment, but noting that at least one dis-
trict court in the Ninth Circuit had required “clear and con-
vincing” evidence). Indeed, in Grocery Outlet Inc. v.
Albertson’s Inc., 497 F.3d 949, 952-54 (9th Cir. 2007) (per
curiam), Judges Wallace and McKeown disagreed in separate
concurrences as to which standard applies. Judge Wallace
advocated the clear and convincing standard, while Judge
McKeown argued that the preponderance of the evidence
standard applied. Id.
A review of our sister circuits’ decisions reveals that only
two circuits have considered which standard to apply, with
one reserving the issue and the other adopting a preponder-
ance of the evidence standard. See Cumulus Media, Inc. v.
Clear Channel Commcn’s, Inc., 304 F.3d 1167, 1175 n.12
(11th Cir. 2002) (declining to address the meaning of “strict
burden” because the outcome of the case would be the same
with either standard of proof); Cerveceria Centroamericana,
S.A. v. Cerveceria India, Inc., 892 F.2d 1021, 1024 (Fed. Cir.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18817
1989) (adopting the preponderance of the evidence standard).
Most published lower court decisions that have reached this
issue appear to have interpreted the “strictly proven” standard
to require “clear and convincing” evidence of naked licensing.
See 3 J. Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition § 17:12 n.2 (4th ed. 2010).5
Here, we need not decide which standard of proof applies
because, even applying the higher standard of proof—clear
and convincing—and viewing the evidence in the light most
favorable to TFN as the non-moving party, FS has demon-
strated that TFN engaged in naked licensing and consequently
abandoned the trademarks.
III
An introduction to “naked licensing” of trademarks is in
order, as this issue has seldom arisen in this circuit or in our
sister circuits. Our only discussion of this subject is in Bar-
camerica, 289 F.3d at 598 (holding that Barcamerica, a vint-
ner, engaged in naked licensing and abandoned its trademark
by failing to retain or otherwise exercise adequate quality
control over the trademark it had licensed to another com-
pany), and that decision informs and guides our discussion
here.
5
Citing, inter alia, Mathy v. Republic Metalware Co., 35 App. D.C. 151,
1910 WL 20792 at *3, (1910) (“Abandonment being in the nature of a for-
feiture, it is incumbent upon the person alleging it to prove by clear and
convincing evidence that the right claimed has been relinquished.”); Dial-
A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F. Supp. 1339,
1355 (E.D.N.Y. 1994) (“[A]n affirmative defense alleging a break in
plaintiff’s chain of priority under the doctrine of abandonment must be
proven by clear and convincing evidence.”); EH Yacht, LLC v. Egg Har-
bor, LLC, 84 F. Supp. 2d 556, 564-65 (D.N.J. 2000) (noting that the
majority of courts have held that the “strictly proven” standard requires
proof by clear and convincing evidence.); accord Cash Processing Servs.
v. Ambient Entm’t, 418 F. Supp. 2d 1227, 1232 (D. Nev. 2006).
18818 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
[1] As a general matter, trademark owners have a duty to
control the quality of their trademarks. McCarthy § 18:48. “It
is well-established that ‘[a] trademark owner may grant a
license and remain protected provided quality control of the
goods and services sold under the trademark by the licensee
is maintained.’ ” Barcamerica, 289 F.3d at 595-96 (quoting
Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 489 (5th Cir.
1992)).
[2] “Naked licensing” occurs when the licensor “fails to
exercise adequate quality control over the licensee.” Id. at
596. Naked licensing may result in the trademark’s ceasing to
function as a symbol of quality and a controlled source. Id.
(citing McCarthy § 18:48). We have previously declared that
naked licensing is “inherently deceptive and constitutes aban-
donment of any rights to the trademark by the licensor.” Id.
at 598. “Consequently, 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.’ ” Id. at 596 (quoting Moore, 960 F.2d at
489).
A
At issue here is whether there is clear and convincing evi-
dence, viewed in the light most favorable to TFN, that TFN
allowed FS to use the trademarks with so few restrictions as
to compel a finding that TFN engaged in naked licensing and
abandoned the trademarks. TFN contends that disputed issues
of material fact remain as to whether TFN’s quality control
standards, during the relevant time period, were sufficient.
Although TFN concedes that it did not have an express
license agreement, it alleges that a reasonable jury could find
that it had adequate quality control measures in place when
FS was authorized to use the trademarks, making summary
judgment inappropriate.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18819
1
[3] When deciding summary judgment on claims of naked
licensing, we first determine whether the license contained an
express contractual right to inspect and supervise the licens-
ee’s operations. See Barcamerica, 289 F.3d at 596. The
absence of an agreement with provisions restricting or moni-
toring the quality of goods or services produced under a trade-
mark supports a finding of naked licensing. Id. at 597; see
also Stanfield v. Osborne Indus., Inc., 52 F.3d 867, 871 (10th
Cir. 1995) (granting summary judgment where license agree-
ment lacked right to inspect or supervise licensee’s operations
and gave the licensee sole discretion to design the trademark).
[4] TFN concedes that it did not have an express license
agreement with FS regarding FS’s use of the trademarks.
Without an express license agreement, TFN necessarily lacks
express contractual rights to inspect and supervise FS. How-
ever, TFN argues that the October 9, 2003 email, in which
Beal advised Abraham that: “You can get the neutral logo
from www.freecycle.org, just don’t use it for commercial pur-
poses . . . .”, reflects an implied license. Emphasis added.
[5] Even assuming that Beal’s emailed admonition to
Abraham not to use the trademarks for commercial purposes
constitutes an implied licensing agreement, it contained no
express contractual right to inspect or supervise FS’s services
and no ability to terminate FS’s license if FS used the trade-
marks for commercial purposes. See Barcamerica, 289 F.3d
at 597 (determining that a license agreement lacking similar
controls was insufficient). We therefore hold that, by TFN’s
own admission, there is no disputed issue of material fact as
to whether TFN maintained an express contractual right to
control quality.
2
[6] TFN next contends that, despite its lack of an express
contractual right to control quality, a material issue of fact
18820 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
remains as to whether TFN maintained actual control over its
member groups’ services and use of the trademarks when FS
was granted use of the trademarks in October 2003. “The lack
of an express contract right to inspect and supervise a licens-
ee’s operations is not conclusive evidence of lack of control.”
Barcamerica, 289 F.3d at 596. However, where courts have
excused the lack of a contractual right to control quality, they
have still required that the licensor demonstrate actual control
through inspection or supervision. See, e.g., Stanfield, 52 F.3d
at 871 (“The absence of an express contractual right of control
does not necessarily result in abandonment of a mark, as long
as the licensor in fact exercised sufficient control over its
licensee.”).
TFN asserts that it exercised actual control over the trade-
marks because it had several quality control standards in
place, specifically: (1) the “Keep it Free, Legal, and Appropri-
ate for all Ages” standard and TFN’s incorporation of the
Yahoo! Groups’ service terms; (2) the non-commercial ser-
vices requirement (expressed in Beal’s October 9, 2003
email); (3) the etiquette guidelines listed on TFN’s website;
and (4) TFN’s “Freecycle Ethos” which, TFN contends,
establishes policies and procedures for member groups, even
if local member groups are permitted flexibility in how to
apply those policies and procedures. In addition, TFN cites
Birthright v. Birthright, Inc., 827 F. Supp. 1114 (D.N.J. 1993)
for the principle that loosely organized non-profits like TFN
and FS that share “the common goals of a public service orga-
nization” are subject to less stringent quality control require-
ments.
[7] First, we disagree with TFN’s contentions that the
“Keep it Free, Legal, and Appropriate for all Ages” standard
and its incorporation of the Yahoo! Groups’ service terms
constituted actual controls over its member groups.6 The
6
Notably, Beal did not propose, and the modsquad did not adopt, this
standard until January 2004, more than three months after Abraham
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18821
undisputed evidence showed that TFN’s licensees were not
required to adopt the “Keep it Free, Legal, and Appropriate
for all Ages” standard, nor was it uniformly applied or inter-
preted by the local groups. Similarly, FS was not required to
use Yahoo! Groups and was not asked to agree to the Yahoo!
Groups’ service terms as a condition of using TFN’s trade-
marks. Moreover, the Yahoo! Groups’ service terms, which
regulate generic online activity like sending spam messages
and prohibiting harassment, cannot be considered quality con-
trols over TFN’s member groups’ services and use of the
trademarks. The service terms apply to every Yahoo! Group,
and do not control the quality of the freecycling services that
TFN’s member groups provide. Thus, the “Keep it Free,
Legal and Appropriate for All Ages” standard and the Yahoo!
Groups’ service terms were not quality controls over FS’s use
of the trademarks.
[8] Second, we conclude that TFN’s non-commercial
requirement says nothing about the quality of the services
provided by member groups and therefore does not establish
a control requiring member groups to maintain consistent
quality. Thus, it is not an actual control in the trademark con-
text. Third, because member groups may freely adopt and
adapt TFN’s listed rules of etiquette and because of the volun-
tary and amorphous nature of these rules, they cannot be con-
sidered an actual control. For example, FS modified the
etiquette that was listed on TFN’s website and TFN never
required FS to conform to TFN’s rules of etiquette. Fourth,
TFN admits that a central premise of its “Freecycle Ethos” is
local enforcement with local variation. By definition, this
founded FS in October 2003. The only standard listed in TFN’s etiquette
section on its website in 2003 was “Keep it Free,” but there was no
requirement that member groups adopt this standard. Similarly, TFN’s
incorporation of the Yahoo! Groups’ service terms was not done until after
FS was given use of the trademarks in October 2003. Because we hold that
TFN did not exercise actual control no matter what time period is consid-
ered, we do not address whether actual supervision would be sufficient if
it starts at some point after the granting of a license to use a trademark.
18822 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
standard does not maintain consistency across member
groups, so it is not an actual control.
Even assuming that TFN’s asserted quality control stan-
dards actually relate to the quality of its member groups’ ser-
vices, they were not adequate quality controls because they
were not enforced and were not effective in maintaining the
consistency of the trademarks. Indeed, TFN’s alleged quality
controls fall short of the supervision and control deemed inad-
equate in other cases in which summary judgment on naked
licensing has been granted to the licensee. See, e.g., Bar-
camerica, 289 F.3d at 596-97 (finding no express contractual
right to inspect and supervise the use of the marks coupled
with licensor’s infrequent wine tastings and unconfirmed reli-
ance on the winemaker’s expertise was inadequate evidence
of quality controls to survive summary judgment); Stanfield,
52 F.3d at 871 (granting summary judgment to the licensee
where the license agreement lacked a right to inspect or super-
vise licensee’s operations, and alleged actual controls were
that the licensor examined one swine heating pad, looked at
other pet pads, and occasionally reviewed promotional materi-
als and advertising).
[9] Moreover, even if we were inclined to accept the prem-
ise allegedly set forth in Birthright, that loosely organized
non-profits that share common goals are subject to less strin-
gent quality control requirements for trademark purposes, the
result would be the same. In Birthright, the court held that the
license was not naked because the licensor “monitored and
controlled” its licensees’ use of the trademarks. 827 F. Supp.
at 1139-40; see also Barcamerica, 289 F.3d at 596 (holding
that a licensor may overcome the lack of a formal agreement
if it exercises actual control over its licensees). Here, TFN
exercised no actual control over its licensees, so even under
a less stringent standard, TFN has not raised a material issue
of fact as to whether it exercised actual control over FS’s use
of the trademarks. See Barcamerica, 289 F.3d at 598.
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18823
3
[10] TFN contends that even if it did not exercise actual
control, it justifiably relied on its member groups’ quality
control measures. Although “courts have upheld licensing
agreements where the licensor is familiar with and relies upon
the licensee’s own efforts to control quality,” Barcamerica,
289 F.3d at 596 (internal quotation marks and brackets omit-
ted), we, like the other circuits that have considered this issue,
have required that the licensor and licensee be involved in a
“close working relationship” to establish adequate quality
control in the absence of a formal agreement, id. at 597;
accord Stanfield, 52 F.3d at 872; Taco Cabana Int’l, Inc. v.
Two Pesos, Inc., 932 F.2d 1113, 1121 (5th Cir. 1991). In Bar-
camerica, we cited four examples of “close working relation-
ships” that would allow the licensor to rely on the licensee’s
own quality control: (1) a close working relationship for eight
years; (2) a licensor who manufactured ninety percent of the
components sold by a licensee and with whom it had a ten
year association and knew of the licensee’s expertise; (3) sib-
lings who were former business partners and enjoyed a
seventeen-year business relationship; and (4) a licensor with
a close working relationship with the licensee’s employees,
and the pertinent agreement provided that the license would
terminate if certain employees ceased to be affiliated with the
licensee. 289 F.3d at 597.
[11] Here, TFN and FS did not enjoy the type of close
working relationship that would permit TFN to rely on FS’s
quality control measures. TFN had no long term relationship
with Abraham or the FS group. In fact, the October 9, 2003
email between Beal and Abraham, which mentions using the
TFN logo, was the parties’ first and only written communica-
tion about the trademarks prior to TFN’s requests to stop
using them in November 2006. In addition, TFN had no expe-
rience with FS that might have supported its alleged confi-
dence in FS’s quality control measures. Thus, even considered
in a light most favorable to TFN, no evidence showed the type
18824 FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK
of close working relationship necessary to overcome TFN’s
lack of quality controls over FS. See id.
[12] Furthermore, we have held that, while reliance on a
licensee’s own quality control efforts is a relevant factor, such
reliance is not alone sufficient to show that a naked license
has not been granted.7 See Transgo, Inc. v. Ajac Transmission
Parts Corp., 768 F.2d 1001, 1017-18 (9th Cir. 1985) (noting
that, although the licensor had worked closely with the
licensee for ten years, the licensor did not rely solely on his
confidence in the licensee, but exercised additional control by,
inter alia, periodically inspecting those goods and was con-
sulted regarding any changes in the product). Because sole
reliance on a licensee’s own control quality efforts is not
enough to overcome a finding of naked licensing without
other indicia of control, see id. at 1017-18, and because TFN
lacked a close working relationship with FS and failed to
show any other indicia of actual control, we conclude that
TFN could not rely solely on FS’s own quality control efforts.
B
TFN’s three remaining arguments also fail to raise a mate-
rial issue of fact that precludes a grant summary of judgment
for FS. First, TFN asserts that it should be subject to a lesser
level of quality control standard because its services are not
dangerous to the public and the public expects local variation
in services so the probability of deception is low. We have
stated that the “standard of quality control and the degree of
7
Other circuits have also relied on the licensor’s confidence in the
licensee only where there were additional indicia of control. See, e.g.,
Stanfield, 52 F.3d at 872 (holding summary judgment for the licensee
appropriate where no special relationship between the parties existed and
no evidence of actual control over the licensee existed); Land O’ Lakes
Creameries, Inc. v. Oconomowoc Canning Co., 330 F.2d 667 (7th Cir.
1964) (upholding trademark where licensor’s name appeared on trademark
product label, and product was sold under license for forty years without
complaints about quality).
FREECYCLESUNNYVALE v. THE FREECYCLE NETWORK 18825
necessary inspection and policing by the licensor will vary.”
Barcamerica, 289 F.3d at 598. The licensor need only exer-
cise “control sufficient to meet the reasonable expectations of
customers.” McCarthy, § 18:55. However, because TFN did
not establish any quality control requirements for its member
groups, we do not need to decide what efforts to oversee a
licensee’s performance might meet a low standard of quality
control.
TFN’s remaining two arguments—(1) that FS must show
both naked licensing and a loss of trademark significance, and
(2) that FS is estopped from supporting its naked licensing
defense with evidence that demonstrates that TFN did not
adequately control the services offered by FS when using the
trademarks—are both raised for the first time on appeal, so
we decline to reach them. See United States v. Robertson, 52
F.3d 789, 791 (9th Cir. 1994) (“Issues not presented to the
district court cannot generally be raised for the first time on
appeal.”).
IV
[13] We determine, viewing the record in the light most
favorable to TFN, that TFN (1) did not retain express contrac-
tual control over FS’s quality control measures, (2) did not
have actual control over FS’s quality control measures, and
(3) was unreasonable in relying on FS’s quality control mea-
sures. Therefore, we conclude that TFN engaged in naked
licensing and consequently abandoned the trademarks. The
district court’s grant of summary judgment in favor of FS and
against TFN is AFFIRMED.