License Trademarks with Care

License Trademarks with Care

Be very careful if you license your registered trademark to another business; otherwise you may lose your mark. A wine seller learned this lesson the hard way and lost rights in its trademark.

Barcamerica owned a federal trademark registration for the mark LEONARDO DA VINCI when used in connection with wines. In 1988, Barcamerica licensed the mark to another company. The license agreement did not give Barcamerica the right to control the quality of the licensee’s wine that would carry the LEONARDO DA VINCI mark.

For many years, Tyfield sold wine under the trademark LEONARDO DA VINCI without Barcamerica’s permission. Then, Cantine, another wine maker filed an application with the United States Patent and Trademark Office ("USPTO") to register the mark LEONARDO DA VINCI. Cantine asked the USPTO to cancel the Barcamerica registration. In turn, Barcamerica sued Cantine and Tyfield for trademark infringement.

The trial court decided that Barcamerica lost it rights in the LEONARDO DA VINCI mark. Why? Because Barcamerica’s 1988 license of the mark did not permit Barcamerica to control the quality of the wine sold under the mark.

Lesson: Whenever the owner of a registered trademark licenses the mark to another business, the license agreement must provide that the owner of the mark has the right to monitor and control the quality of the licensee’s products that bear the mark. If it does not, the owner may no longer have any protectable right to the trademark.