IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 02-30039
ICEE DISTRIBUTORS, INC.,
Plaintiff-Appellee,
versus
J&J SNACK FOODS CORP., WAL-MART STORES, INC.,
and ICEE OF AMERICA, INC.,
Defendants-Appellants.
Appeals from the United States District Court
For the Western District of Louisiana
March 21, 2003
Before JOLLY, HIGGINBOTHAM, and MAGILL, Circuit Judges.*
HIGGINBOTHAM, Circuit Judge:
These appeals concern a disagreement between two ICEE
distributors as to whether one, J&J Snack Foods, can distribute
frozen ICEE squeeze-up tubes of various flavors in the same
territory that the other, ICEE Distributors, distributes ICEEs in
a cup. After a jury trial, the district court entered a permanent
injunction barring J&J and Wal-Mart Stores, which sold J&J’s
squeeze-up tubes within the territory, from continuing to
*
Judge of the Eighth Circuit, sitting by designation.
1
distribute the tubes. We affirm.
I
In the 1960s, the John E. Mitchell Company (“Mitchell
Company”) developed the ICEE, a semi-frozen beverage consisting of
carbonated water and syrup mixed together that stands up when
poured into a cup. Through its subsidiary, ICEEQUIP, the Mitchell
Company owned the trademark rights to the ICEE name on products
such as the cups for holding the frozen carbonated beverage, the
machines for making the beverage, and the beverage itself.
ICEEQUIP entered into several trademark licensing agreements with
ICEE distributors in different parts of the country. The
plaintiff-appellee, ICEE Distributors, Inc. (“Distributors”), by
virtue of its purchase of several regional distributorships that
had each entered into these licensing agreements, is a party to
these identically-worded agreements for its various distribution
territories, which include most of Louisiana and Arkansas, and
parts of Texas, Missouri, Alabama, and Georgia.
In the 1980s, the Mitchell Company went out of business. In
response, the regional licensees, including Distributors and The
ICEE Company, a subsidiary of J&J, formed ICEE of America (“IOA”).
Upon execution of an assignment agreement, IOA acquired the
ownership rights and interests in the trademarks previously held by
ICEEQUIP. Both Distributors and The ICEE Company own stock in IOA,
with The ICEE Company being the largest shareholder and
2
Distributors the second largest.
In 1999, J&J began manufacturing frozen squeeze-up tubes under
the name “ICEE” on a nationwide basis. Appellant Wal-Mart sold
these tubes in its Sam’s Club stores. Although J&J requested
permission from Distributors to sell the tubes in its territory,
Distributors refused. J&J sold the tubes in Distributors’
territory nonetheless. Distributors filed this suit in May 1999
against J&J and Wal-Mart for trademark infringement and dilution.
After the case was filed, J&J attempted unsuccessfully to
register with the U.S. Patent and Trademark Office a trademark for
the use of the ICEE name on the tubes. The PTO rejected the
application on the basis that the proposed trademark would likely
be confused with IOA’s trademarks on the ICEE beverage, cups, and
beverage machine. J&J then assigned the trademark application to
IOA, which successfully registered the trademark. IOA’s president,
Dan Fachner, who was also the president of J&J’s subsidiary The
ICEE Company, then granted J&J a license to use the trademark in
areas including Distributors’ territory.1
After execution of the licensing agreement between IOA and
J&J, Distributors added IOA as a defendant, alleging that IOA, as
the assignee of the trademarks previously held by ICEEQUIP, was
1
A central issue at trial was whether Fachner executed this
license with the consent of the board of directors. Certain
directors and attendees at the 1999 meeting said that the board
only voted to register the tube trademark and allow J&J to sell the
tubes within its own territories; others testified that the board
voted to allow J&J to sell the tubes nationally.
3
bound to the licensing agreements with Distributors, and had
breached those contracts by entering into the squeeze tube
agreement with J&J. The district court granted summary judgment in
the defendants’ favor on the trademark infringement claim, but held
a trial on the trademark dilution and breach of contract claims,
bifurcating the liability and damages stages. After the liability
stage of the trial, the jury found J&J and Wal-Mart liable for
willful trademark dilution and IOA liable for breach of contract.
Based on the jury verdict, the trial court subsequently
entered a permanent injunction against J&J and Wal-Mart forbidding
the sale of squeeze tubes within Distributors’ territory.
Defendants appeal the injunction pursuant to 28 U.S.C. § 1292.2
II
A
IOA first objects that the verdict against it for breach of
contract cannot serve as a basis for the permanent injunction
because the district court improperly asserted jurisdiction over
IOA. Accepting the magistrate judge’s recommendation, the district
court denied IOA’s motion to dismiss for lack of personal
jurisdiction. In its motion, IOA, a Texas corporation with its
principal place of business in California, claimed that it was not
2
28 U.S.C. § 1292(a)(1) (“[T]he courts of appeals shall have
jurisdiction of appeals from: (1) Interlocutory orders of the
district courts of the United States ... granting, continuing,
modifying, refusing or dissolving injunctions, or refusing to
dissolve or modify injunctions ....”).
4
subject to personal jurisdiction in Louisiana because it had never
engaged in business in the state, had never owned or occupied any
property in the state, had never employed any person who worked or
lived in the state, had never earned, generated, or received any
income in or from the state, and had never entered into or acquired
an interest in any contract or license to be performed in the
state.
In response, Distributors argued, inter alia, that the
Mitchell Company’s assignment of trademark rights to IOA resulted
in IOA becoming a party to the license agreements between
Distributors and ICEEQUIP, which were to be performed in part in
Louisiana.
The magistrate judge concluded that although the
jurisdictional issue was “admittedly close,” Distributors put forth
a prima facie case for jurisdiction because of the license
agreements between Distributors and IOA. It explained, “[i]t is
entirely reasonable for the person who grants another party an
exclusive territory to expect to be haled into court in that
territory should it breach its promise.” However, it stated that
“to prevail at trial on the jurisdictional issue,” Distributors
“will have to produce substantially more evidence (and legal
authority) than it has shown on this motion.”
On appeal, Distributors reurges that IOA is subject to
specific jurisdiction because ICEEQUIP’s assignment of its
5
trademark rights to IOA meant that IOA became a party to the
exclusive licensing agreements ICEEQUIP had executed with its
regional distributors. This lawsuit arises from IOA’s breach of
these agreements, which occurred when IOA granted a license to J&J
to sell push-up tubes in Distributors’s territory, including
Louisiana. Thus, Distributors argues that IOA should have
reasonably anticipated being haled into court in Louisiana for
intruding upon Distributors’ exclusive territory there.
B
“Whether in personam jurisdiction can be exercised over a
defendant is a question of law subject to de novo review by this
court.”3 In determining whether to exercise jurisdiction over a
nonresident defendant, we must look to the restrictions of the
state long-arm statute and the Due Process Clause.4 In Louisiana,
this becomes a unitary inquiry, because the state long-arm statute
extends jurisdiction over nonresidents to the extent allowed by
federal due process.5 Extension of jurisdiction over IOA satisfies
due process if IOA had sufficient minimum contacts with the forum
state so that extension of jurisdiction over it comports with
3
Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 652
(5th Cir. 2002).
4
Id.
5
Id.
6
“traditional notions of fair play and substantial justice.”6
A court may exercise specific, as opposed to general,
jurisdiction over a nonresident defendant if “the lawsuit arises
from or relates to the defendant’s contact with the forum state.”7
A defendant’s singular act can be a sufficient basis for
jurisdiction “if that act gives rise to the claim being asserted,”
so long as the defendant “reasonably anticipate[s] being haled into
court” in the forum state.8
Because Distributors prevailed in the district court, we must
review the complaint and any factual disputes in favor of the
exercise of personal jurisdiction, and “all reasonable inferences
from the facts thus established are drawn in favor of the
prevailing plaintiff. However, the facts thus arrived at must be
sufficient to affirmatively show personal jurisdiction.”9
Contracting with a resident of the forum state does not alone
6
Id. at 652 n.17 (internal quotation marks omitted).
7
Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 871 (5th
Cir. 2000) (internal quotation marks omitted).
8
Id. at 872 (internal quotation marks omitted).
9
Felch v. Transportes Lar-Mex SA De CV, 92 F.3d 320, 327 (5th
Cir. 1996); see also id. at 326 n.16 (“[T]o the extent of any
actual conflicts in the evidence, we resolve these in favor of [the
plaintiff], as we do also any choice of reasonable inferences to be
drawn from the evidence; we likewise credit the nonconclusional
factual allegations of the complaint to the extent those are not
controverted by any of the evidence; however, the facts thus
arrived at must be sufficient to affirmatively show personal
jurisdiction where, as here, that has been properly challenged.”).
7
support the exercise of jurisdiction over the defendant.10 “Instead
we look to the factors of prior negotiations, contemplated future
consequences, terms of the contract, and the parties’ actual course
of dealing to determine whether [IOA] purposefully established
minimum contacts with the forum.”11
The textbook case of Burger King Corp v. Rudzewicz12 dealt with
a contractual relationship similar to that between IOA and
Distributors. The plaintiff, Burger King, sued a franchisee,
Rudzewicz, for breach of the franchise agreement’s payment
provision and for trademark infringement; the allegations stemmed
from Rudzewicz’s failure to pay required monthly amounts to Burger
King and his continued use of the Burger King trademarks at his
restaurant after termination of the franchise.13 Burger King filed
suit in Florida, the location of its headquarters, even though
Rudzewicz’s franchise was in Michigan.14 Rudzewicz argued that he
was not subject to personal jurisdiction in Florida because his
restaurant was located in Michigan and he had never even visited
Florida.15
10
Colwell Realty Inv., Inc. v. Triple T Inns of Ariz., Inc.,
785 F.2d 1330, 1334 (5th Cir. 1986).
11
Stuart v. Spademan, 772 F.2d 1185, 1193 (5th Cir. 1985).
12
471 U.S. 462 (1985).
13
Id. at 468-69.
14
Id. at 466.
15
Id. at 479.
8
The Court found otherwise, concluding that “this franchise
dispute grew directly out of ‘a contract which had a substantial
connection with that State.’”16 Rudzewicz had “eschew[ed] the
option of operating an independent local enterprise,” and instead
deliberately “‘reached out beyond’ Michigan and negotiated with a
Florida corporation for the purchase of a long-term franchise and
the manifold benefits that would derive from affiliation with a
nationwide organization.”17 It found that “[i]n light of
Rudzewicz’[s] voluntary acceptance of the long-term and exacting
regulation of his business from Burger King’s Miami headquarters,
the ‘quality and nature’ of his relationship to the company in
Florida can in no sense be viewed as ‘random,’ ‘fortuitous,’ and
‘attenuated.’”18 Furthermore, the defendant’s default on the
required payments and illegal use of Burger King’s trademarks
“caused foreseeable injuries to the corporation in Florida” and
therefore “it was, at the very least, presumptively reasonable for
Rudzewicz to be called to account there for such injuries.”19
Similarly, IOA’s predecessor, ICEEQUIP, and Distributors were
parties to agreements granting Distributors an exclusive license
over a region that included most of Louisiana, and ICEEQUIP
16
Id.
17
Id. at 479-80.
18
Id. at 480.
19
Id.
9
accepted a long-term relationship that contemplated its oversight
of Distributors’ actions in that territory: under the contract,
ICEEQUIP had the right to inspect locations there and to test the
equipment to ensure that ICEE quality standards were met. It also
undertook the responsibility to use its best efforts to maintain in
force the trademarks for the Distributors’s continued use in the
specified territories.20
IOA’s connection to the state of Louisiana thus cannot be
viewed as random or fortuitous. IOA’s predecessor to the contract,
ICEEQUIP, chose the geographic territory to be controlled by the
exclusive licenses to which Distributors is now a party, and
ICEEQUIP bargained for certain regulatory powers in regard to that
20
The contracts provide:
4. LICENSEE agrees (a) to maintain the standards of
quality for the various goods to which the trademarks
relate, as set forth in Appendix 4 attached hereto; (b)
at all times to use its best efforts toward the meeting
of said standards of quality; (c) on reasonable notice
from ICEEQUIP, to allow a qualified representative of
ICEEQUIP to make periodic inspections and tests during
normal business hours at machine locations to insure that
said quality standards are being met. In the event
ICEEQUIP notifies LICENSEE that said quality standards
have not been met and provides specific data and facts in
support thereof, LICENSEE shall have sixty (60) days
either to correct such failure or to discontinue use of
Trademarks at any such location.
5. ICEEQUIP agrees, at its expense, to use its best
efforts to maintain in force the various Trademarks,
which maintenance shall include, but not be limited to,
the timely filing of Affidavits of Use and Applications
for Renewals, and further agrees to use its best efforts
to obtain trademark registrations on the pending
trademark applications listed in Appendix 1....
10
area. Moreover, IOA’s contracting with J&J, which gave J&J a
license that overlapped geographically with Distributors’, “caused
foreseeable injuries” to Distributors within its territory, and it
is therefore reasonable for IOA to be called to account there for
such injuries.
IOA briefly argues that it is not a party to the license
agreements with Distributors. It explains that although IOA
maintains the registration of the ICEE marks, it did not merge with
or expressly assume the liabilities or obligations of the Mitchell
Company or its affiliates such as ICEEQUIP. However, it admits
that it executed an assignment agreement which gave it the
ownership rights to the trademarks previously held by ICEEQUIP.
IOA could only acquire the rights held by the Mitchell Company at
the time of the acquisition, which were those rights reserved by
the Mitchell Company and its affiliates in the license agreements.
“[F]ollowing a proper assignment [of a trademark], the assignee
steps into the shoes of the assignor.”21 In other words,
21
Premier Dental Prods. Co. v. Darby Dental Supply Co., 794
F.2d 850, 853 (3d Cir. 1986); see also Westco Group, Inc. v. K.B.
& Assocs., Inc., 128 F. Supp. 2d 1082, 1087 (N.D. Ohio 2001)
(“Defendant K.B. & Associates says th[e] integration clause in the
1995 Agreement does not set aside the 1989 Agreement. K.B. &
Associates says the 1995 Agreement only supersedes previous
agreements ‘between the parties [t]hereto.’ Because Plaintiff
Westco was not a named party in the 1989 Agreement, K.B. &
Associates says the 1995 Agreement has no effect on the 1989
Agreement. This argument does not persuade. In 1993, Jer-Wil, the
named party in the 1989 Agreement, assigned its rights in the
Mattress Warehouse trademark and trade name to Plaintiff Westco.
At that point, Westco stepped into the shoes of Jer-Wil for
11
[I]f the assignment is valid, and the assignee carries on
use of the mark as it was in the past, a continuity of
the mark and its good will is preserved .... Such an
assignee, by following in the footsteps of the assignor,
acquires not only all the rights and priorities of the
assignor, but also any burdens and limitations on use
that were incumbent on the assignor.22
Therefore, IOA was bound by the same contractual terms relating to
the trademarks as ICEEQUIP had been during its term of ownership.
IOA is a party to the license agreement with Distributors and
through the agreement established sufficient minimum contacts with
Louisiana.
This being so, we must also consider whether the “fairness”
prong of the jurisdictional inquiry is met.23 Here, we consider the
burden upon the nonresident defendant, the forum state’s interest
in the litigation, the plaintiff’s interest in securing relief in
that forum, “the interstate judicial system’s interest in obtaining
the most efficient resolution of controversies,” and “the shared
interest of the several States in furthering fundamental
substantive social policies.”24 IOA has pointed to none of these
purposes of the 1989 Agreement.”).
22
J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION §
18:15 (4th ed. 2002); see also SEIGRUN D. KANE, TRADEMARK LAW: A
PRACTITIONER’S GUIDE § 20:1 (3d ed. 2001) (“A trademark assignment is
a transfer of ownership. The trademark owner (assignor) gives up
all rights to the mark. Those rights are acquired by the assignee,
who stands in the shoes of the assignor.”).
23
Felch v. Transportes Lar-Mex SA de CV, 92 F.3d 320, 324 (5th
Cir. 1996).
24
Id. at 324 n.9.
12
factors as militating against exercising jurisdiction over it in
this case. In fact, several factors weigh in favor of
jurisdiction. Louisiana has an interest in the litigation because
it concerns which entity has the right to utilize the push-up tube
trademark in the state. Distributors, which counts Louisiana as a
major part of its territory, has a similarly strong interest in
pursuing this suit there. Furthermore, as a matter of judicial
economy, the best place for resolution of the issues presented is
in this suit, where claims against the three allegedly offending
parties – IOA, J&J, and Wal-Mart – can be resolved together in a
court located in the disputed territory. We hold that conferring
jurisdiction over IOA does not offend traditional notions of fair
play and substantial justice in this case.
III
IOA urges that even if it was subject to the district court’s
jurisdiction, the trial court nevertheless erred in entering the
injunction based on the jury’s breach of contract finding because
IOA did not breach the license agreements with Distributors. We
review the district court’s grant or denial of a permanent
injunction for abuse of discretion.25 The trial court abuses its
discretion if it “(1) relies on clearly erroneous factual findings
when deciding to grant or deny the permanent injunction, (2) relies
25
Peaches Entm’t Corp. v. Entm’t Repertoire Assoc., 62 F.3d
690, 693 (5th Cir. 1995).
13
on erroneous conclusions of law when deciding to grant or deny the
permanent injunction, or (3) misapplies the factual or legal
conclusions when fashioning its injunctive relief.”26 The district
court here did not make any express findings of fact or conclusions
of law supporting the injunction, as required by Federal Rule of
Civil Procedure 65(d). “While a court’s failure to do so does not
require that the injunction be reversed or vacated, particularly
when there is a jury verdict on which an injunction [is based], the
absence of findings does require some conjecture on our part.”27
It calls on us to “‘examin[e] the record to determine if ...
sufficient evidence supports the issuance of injunctive relief.’”28
IOA argues that the license agreement with Distributors does
not cover the trademark on the push-up tubes, but only those
trademarks on the beverage, beverage machine, and cups. Because of
the limited nature of the agreement with Distributors, IOA could
not have breached that contract by entering into the licensing
agreement with J&J for use of the trademark on the push-up tubes.
IOA cites language from the contract providing that the licensor
agrees “to grant no other licenses under the Trademarks in the
Marketing Area.” The agreement defines “Trademarks” as the federal
26
Id.
27
Professional Ass’n of College Educators, TSTA/NEA v. El Paso
County, 730 F.2d 258, 273 (5th Cir. 1984).
28
Id. (quoting Sampson v. Murray, 415 U.S. 61, 86 n. 58 (1974)).
14
trademark registrations and applications for registration listed in
its appendix 1, which include trademarks, trademark registrations,
and applications for the FCB, FCB machine, and cups, but not for
push-up tubes.
Distributors responds by singling out the contract’s statement
that Distributors received “a license under the Trademarks and
under any registrations which may issue to ICEEQUIP relating to the
Trademarks.” It argues that this contractual language implies that
it received the rights not only to the trademarks, registrations,
and applications listed in appendix 1 of the license agreement, but
also to any other registrations “relating to the Trademarks” that
may be issued in the future, such as an ICEE trademark on push-up
tubes.
Although IOA argues on appeal that the breach of contract
issue should not have been submitted to the jury because the
contract unambiguously shows that the push-up tube license falls
outside of the contract with Distributors, we find the contract is
ambiguous.29 Although in its appendix 1 it lists all of the
trademark registrations and applications that compose the term
29
See Martin Exploration Co. v. Amoco Prod. Co., 637 So. 2d
1202, 1205 (La. App. 1st Cir. 1994) (“Whether a contract is
ambiguous or not is a question of law.”). Appellants assert in a
footnote that the district court should have applied Texas, not
Louisiana, contract law to this dispute, because some of the
license agreements at issue were executed in Texas. Because
appellants have not shown that they raised this issue below, it is
waived. Tandy Brands, Inc. v. Harper, 760 F.2d 648, 653 (5th Cir.
1985).
15
“Trademark” as used in the agreement, the document also appears to
provide that other registrations outside of those listed in
appendix 1, but “related to” them, are affected. Thus, the court
properly submitted this issue of fact to the jury for resolution.30
IOA put forth the argument at trial that the phrase “related
to the Trademarks” meant only those marks used with ICEE in a cup.
It asserted that this was so because the contract only provided
quality-control standards for ICEE in a cup, not for any other type
of ICEE product, such as ICEE in a tube. IOA alternatively asserts
now on appeal that “any registrations which may issue ... relating
to the Trademarks” meant only the registration that would issue if
the PTO accepted the pending application listed in appendix 1, and
successful renewal applications for the already-registered marks in
appendix 1.
However, this argument overlooks the fact that the term
“Trademark,” as used in the contract, already encompasses every
item in appendix 1, including the registration application listed
there. The contract’s provision that “ICEEQUIP hereby grants to
LICENSEE a license under the Trademarks” is therefore sufficient to
include a grant of a license under the trademark application and
renewals of the previously registered marks, especially when
combined with the provision in the following sentence that “[t]he
30
See Total Minatome Corp. v. Union Tex. Prods. Corp., 766 So.
2d 685, 690 (La. App. 2d Cir. 2000) (“[W]hen a contract is
determined to be ambiguous, an issue of material fact exists....”).
16
license granted hereunder shall be for the life of the Trademarks
[i.e., those items listed in appendix 1] and their registrations.”
Read this way, “registrations which may issue ... relating to the
Trademarks” would be a superfluous term, because the applications
listed in appendix 1 and its potential registrations, as well as
any registration renewals, are covered by the immediately preceding
contractual provision. This suggests that the phrase “and under
any registrations ... relating to the Trademarks” may refer to
registrations distinct from the list in appendix 1.
The record fully supports the jury and district court’s
apparent finding that the contract gave Distributors a right to
marks obtained in the future related to the ICEE business.31 First,
the evidence suggests that in these contracts ICEEQUIP granted
regional licenses for every ICEE trademark in its possession, which
indicates its intent to license all ICEE marks. Additionally, IOA
appears to have continued the practice of allowing regional
distributors to use all of the ICEE marks. For instance, in 1995
IOA obtained a registration for use of the name “ICEE” on several
types of promotional items, such as beach bags, bicycles, pens,
coolers, towels, t-shirts, and toys. IOA’s president, Dan Fachner,
31
See id. (“[W]hen the terms of a written contract are
susceptible to more than one interpretation, or where there is
uncertainty or ambiguity as to its provisions, or the intent of the
parties cannot be ascertained from the language employed, extrinsic
evidence is admissible to clarify ambiguity or to show the parties’
intent.... A doubtful provision must be interpreted in light of the
nature of the contract, equity, usages, [and] the conduct of the
parties before and after the formation of the contract....”).
17
admitted that IOA allows all of its regional distributors to use
the mark on these promotional items. This practice suggests that
neither IOA nor its regional distributors believed they needed any
other licensing agreement to confer exclusive licensing rights on
them for use of this mark.
Furthermore, the actions of J&J at the time it was developing
the concept of the ICEE push-up tubes demonstrate that it
implicitly acknowledged that the regional distributors had a “right
of first refusal” for the use of ICEE marks in their respective
territories. At trial, J&J emphasized that it offered the
distributors the opportunity to sell the tubes in their regions.
It also had Fachner send out a letter requesting permission from
these distributors for J&J to sell the tubes in their territories.32
This also implies that the custom, as memorialized in the license
agreements, was that distributors had the rights to use all ICEE
marks in their regions.
This evidence supports the jury’s and the district court’s
implicit factual finding that the license agreements between
32
The letter provides in part:
.... J&J Snack Foods will begin selling the ICEE tubes
this year .... This means that there is an opportunity
that some grocery chains may be selling the product
regionally including the territory you operate in. We
all agree that this can be an excellent way to continue
to promote and to strengthen the over all [sic] value and
equity of the ICEE brand.
Please acknowledge your understanding of this by
signing below. If you have any questions, please call.
18
ICEEQUIP and Distributors encompassed not only the registrations
and applications listed in appendix 1, but also all other ICEE
marks.
Nor are we persuaded by IOA’s contention that the verdict did
not support an injunction.33 We find no error in the district
court’s implicit finding that Distributors would suffer irreparable
harm should J&J and Wal-Mart continue distributing the tubes in
Distributors’ area in violation of Distributors’ contractual rights
to the tube trademark.34 Although Distributors could potentially
prove past lost profits enabling it to recover some measure of
damages, it would be considerably more difficult for it to prove
the amount of damages owed from J&J and Wal-Mart’s future sale of
33
J&J and Wal-Mart do not argue that the injunction, based on
IOA’s breach of contract, is unenforceable as to them under Federal
Rule of Civil Procedure 65(d), which provides that an injunction is
only binding upon the party against whom the claim is asserted and
“their officers, agents, servants, employees, and attorneys, and
upon those persons in active concert or participation with them who
receive actual notice of the order by personal service or
otherwise.” Therefore, this argument is waived. Tandy Brands,
Inc. v. Harper, 760 F.2d 648, 653 (5th Cir. 1985).
34
Univ. of Tex. v. Camenisch, 451 U.S. 390, 392 (1981)
(reasoning that “a federal district court [should] consider four
factors when deciding whether to grant a preliminary injunction:
whether the plaintiff will be irreparably harmed if the injunction
does not issue; whether the defendant will be harmed if the
injunction does issue; whether the public interest will be served
by the injunction; and whether the plaintiff is likely to prevail
on the merits”); Amoco Prod. Co. v. Village of Gambell, 480 U.S.
531, 546 n.12 (1987) (“The standard for a preliminary injunction is
essentially the same as for a permanent injunction with the
exception that the plaintiff must show a likelihood of success on
the merits rather than actual success.”).
19
the tubes.
IV
A
The district court rested the injunction on the jury’s
findings regarding both breach of contract and trademark dilution.
J&J and Wal-Mart urge that the trademark dilution would not support
injunctive relief because IOA, rather than Distributors, owns the
ICEE trademarks and therefore Distributors could not sue under the
Federal Trademark Dilution Act. The purpose of the Act is “to
protect trademarks from unauthorized users who ‘attempt to trade
upon the goodwill and established renown of such marks.’”35 To that
end, the Act provides that
[t]he owner of a famous mark shall be entitled, subject
to the principles of equity and upon such terms as the
court deems reasonable, to an injunction against another
person’s commercial use in commerce of a mark or trade
name, if such use begins after the mark has become famous
and causes dilution of the distinctive quality of the
mark ....36
Appellants assert that since the federal trademark registrations
show that IOA owns the trademarks, Distributors has no standing to
sue under the Act.
Distributors counters that the jury weighed the evidence and
found that Distributors owned the ICEE trademarks with respect to
35
Ringling Brothers-Barnum & Bailey Combined Shows, Inc. v.
B.E. Combined Shows, Inc., 937 F. Supp. 204, 208 (S.D.N.Y. 1996).
36
15 U.S.C. § 1125(c) (emphasis added).
20
its distribution territory; that while the trademark registrations’
listing of IOA as the owner is prima facie evidence of IOA’s
ownership rights,37 its agreements with IOA, granting Distributors
an exclusive license to use the trademarks in its territory,
constitute an assignment of rights, not a license. It points to
language in Quabaug Rubber Co. v. Fabiano Shoe Co., in which the
First Circuit explained,
[some courts] have permitted trademark infringement suits
to be maintained by exclusive distributors and sellers of
trademarked goods, i. e., “exclusive licensees” who had
a right by agreement with the owner of the trademark to
exclude even him from selling in their territory.38
It further relies upon the principle that “[e]ven though a contract
states that it is a ‘license,’ a court will not be governed by
form, and the contract will be upheld as an assignment of trademark
rights if that is its actual legal effect.”39
Distributors points to its exclusive right to use the
trademarks in its territory, its license for the life of the
trademarks, its exclusive right to sue for trademark infringement
37
See 15 U.S.C. § 1057(b) (“A certificate of registration of
a mark upon the principal register provided by this chapter shall
be prima facie evidence of ... the registrant's ownership of the
mark, and of the registrant's exclusive right to use the registered
mark in commerce on or in connection with the goods or services
specified in the certificate ....”).
38
Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154, 159
(1st Cir. 1977); see also id. at 159 n.8 (“an exclusive licensee is
an assignee”).
39
J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION §
18:5 (4th ed. 2002).
21
in its territory, and its unconditional right to transfer or assign
its rights in the trademarks.
Appellants reply that under the contract IOA retained
ownership rights to the trademarks; that the agreement expressly
states that the licensor is the owner of the marks and that
Distributors is not granted ownership of the marks, but a “license
... to use” the trademarks in connection with the “terms,
conditions and limitations” of the agreement. They also point out
that the contract provides that IOA, as owner, can exercise
continuing control over the marks by requiring Distributors to
maintain quality control standards and by mandating that
Distributors either correct violations of such standards within a
certain period of time or cease using the mark at the location of
the violation. The argument continues that the contractual
provision requiring Distributors to promptly notify IOA of
infringements and aid IOA in investigating infringements
demonstrates that IOA is the actual owner of the marks. That the
contract also designates IOA as the party who must maintain the
trademarks by filing affidavits of use and applications for renewal
is, in appellants’ view, also determinative of the ownership issue.
Finally, appellants explain that the contract provided that
Distributors’ license payments were to be categorized for tax
purposes as payments for the licensing – not the sale – of the
trademarks, which indicates the contracting parties’ intent was to
22
create an exclusive license, not an assignment.40
B
"[A] license to use a mark ... is a transfer of limited
rights, less than the whole interest which might have been
transferred."41 As one court has explained,
One of the ways that the law extends the benefits of
trademarks and protects incentives to develop them is by
allowing trademark owners to license the use of their
marks to distributors and franchisees. Such licensing
allows more information to be conveyed to more consumers
without the licensor having to risk losing title to its
mark.42
It would be antithetical to the basic principles of trademark law
to extend to a licensee the rights of an assignee without caution,
since deeming a licensee an assignee would allow the assignee to
hold the registered trademark owner liable under trademark law,
rather than simply under contract law, for diluting the mark by
utilizing a similar trademark in the assignee’s area.
Although “a truly exclusive licensee, one who has the right
40
The contract provided that Distributors’ payments “for the
license rights granted hereunder” are payments “as defined under
Section 1253(a) of the United States Internal Revenue Code.” That
section distinguishes sales from licenses: “A transfer of a ...
trademark ... shall not be treated as a sale or exchange of a
capital asset if the transferor retains any significant power,
right, or continuing interest with respect to the subject matter of
the ... trademark ....”
41
Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1076
(5th Cir. 1997).
42
TMT North America, Inc. v. Magic Touch GmbH, 124 F.3d 876,
882 (7th Cir. 1997) (emphasis added).
23
even to exclude his licensor from using the mark” might be
considered an assignee since no right to use the mark is reserved
to the licensor, an agreement that sets forth “many duties and
rights between the parties that are inconsistent with an
assignment, such as geographic limitations on the licensee’s
territory, does not constitute an assignment.”43 The contract at
issue here does not explicitly exclude IOA itself from using the
marks in Distributors’ territory.44 Moreover, the agreements with
Distributors contain strict geographic limitations, and reserves to
ICEEQUIP certain rights indicative of ownership, such as IOA’s
ability to monitor the quality control of Distributors’ product and
its responsibility to renew the trademark registrations. Taken
together, the contractual provisions cited by appellants convince
us that the contract is an exclusive license arrangement only, with
ultimate control and ownership of the trademarks resting with IOA.
This conclusion is borne out by the testimony of one of IOA’s
other regional distributors. As part of its case-in-chief,
Distributors called Nate Parish, owner of Middle Tennessee ICEE,
Inc. He testified that IOA “is the holder of the ‘ICEE’ trademark,
43
Finance Inv. Co. (Bermuda) Ltd. v. Geberit AG, 165 F.3d 526,
532 (7th Cir. 1998).
44
Although the contract provides that Distributors may sue a
party using the Trademarks in its area “who claims any rights from
ICEEQUIP,” it does not specifically prohibit ICEEQUIP itself from
using the marks in Distributors’ region.
24
the look, the block letters, and it’s their job to police the
trademark in respects to, I guess I’d say the entire country.”
Parish further explained that at the 1999 IOA board of directors
meeting, he made a motion to allow J&J to make the ICEE squeeze
tubes and distribute the tubes in J&J’s own territory, not
nationally. In explaining why a motion was necessary to allow J&J
to distribute the tubes even in its own area, the witness stated,
“If I was to produce an ICEE cup with the Tennessee Titans, the
bear with the Tennessee Titans uniform on, I have to get permission
from Icee of America for that to take place.”
This exchange between Distributors and their own witness
indicates that IOA must give specific permission for regional
distributors to either use a trademarked term such as “ICEE” on a
different product or alter a trademark. IOA’s powers of oversight
are inconsistent with the notion that each regional distributor
owns the trademarks in their respective territories.45 Instead, as
an umbrella organization for all of the distributors, IOA serves
the purpose of “policing the trademarks” within each distributors’
individual region to assure that the marks are not being used in an
undesirable fashion.
45
Along these lines, appellants persuasively argue that
ICEEQUIP executed identical exclusive licensing agreements with
several regional distributors, and it would be illogical to hold
that these many agreements create a “patchwork of trademark
owners,” because “[s]uch divided national ownership would
jeopardize the goodwill associated with the [t]rademarks, create
customer confusion, and diminish the trademarks’ value of
indicating a single source and quality of ICEE [products].”
25
In conclusion, this evidence indicates that the district court
clearly erred in determining that Distributors, not IOA, was the
owner of the ICEE registrations. Because Distributors is not the
owner of the marks, but merely an exclusive licensee, it has no
standing to sue under the Dilution Act, and the district court
abused its discretion in basing its injunction in part on the
jury’s verdict on the dilution claim.46 However, we will not
reverse the trial court’s grant of injunction because it is
independently sustainable as a proper remedy for the breach of
contract.
AFFIRMED.
46
We note that, although the licensing contracts between
Distributors and IOA give Distributors the power to bring trademark
infringement actions in its territory, they do not provide that
Distributors may bring trademark dilution claims in its area.
26