Trademark Licensing: Trademark Owners Must Maintain Control and Quality

The Seventh Circuit affirms abandonment of mark as a result of naked licensing:

In the matter of Eva’s Bridal Ltd. v. Halanick Enters., Inc., “Eva’s Bridal”, a bridal shop established in Chicago in 1966 by Eva Sweis, was sold to the defendant for $10, subject to a $75,000 licensing agreement for use of the name and mark “Eva’s Bridal.” After the license agreement expired in 2002, the defendant continued to use the name and mark without paying the $75,000 licensing fee under the expired agreement.  In 2007, the plaintiff, Eva’s Bridal Ltd, filed suit under the Lanham Act, but the case was dismissed because the court ruled that the plaintiff had abandoned the mark by engaging in naked licensing.  Put another way, the plaintiffs allowed the defendant to use the mark without maintaining control and quality of the goods, services or business on which the mark was being used.  On appeal, the Seventh Circuit affirmed the lower court’s decision stating that since the plaintiff did not exercise any control over the defendant’s operation of the shop, be it through licensing or consistent quality, that the plaintiff had lost the right to enforce the mark.