Trademark
Jurisdiction
Conflict of Laws
Distribution Agreement
Licensing Agreement
Standing to Sue
Statutory Standing
Cause of Action
Import in Europe
Motion for a Preliminary Injunction
Promissory Estoppel (under Florida Law)
Appeal from the United States District Court for the Middle
District of Florida.
Our sister courts of appeals have agreed with the general
sentiment that a license agreement between two parties can limit a licensee’s
ability to bring a Lanham Act claim.
Plaintiff-Appellant Kroma Makeup EU, LLC (“Kroma EU”)
appeals the district court’s grant of summary judgment based on its finding
that Kroma EU lacked standing to enforce the KROMA trademark. Because Kroma EU
does not have sufficient rights in the mark to sue under the Lanham Act, we
affirm the judgment of the district court.
Kroma EU is the former European distributor of cosmetics
products using the federally registered mark, KROMA. The owner and registrant
of the mark is By Lee Tillett, Inc. (“Tillett”) and the rights to use the KROMA
mark in the United States rest solely with Tillett. In October 2012, Tillett
granted an exclusive license to Kroma EU to import, sell, and distribute KROMA
products in Europe, and to use the KROMA mark in furtherance of its business.
As part of the licensing agreement, Tillett guaranteed that it owned the KROMA
mark and would hold Kroma EU harmless from any judgments against Tillett based
on the mark. Tillett retained the right to use the KROMA mark in the United
States.
Defendant-Appellees—the Kardashian sisters—were celebrity
endorsers of a cosmetic line called “Khroma Beauty,” sold and manufactured by
Defendant Boldface Licensing & Branding, Inc. (“Boldface”). The Kardashians
claim that they had no personal knowledge of the KROMA trademark until an
entertainment news website, TMZ, published an article about the Kardashians’
potential infringement. However, before the Khroma Beauty line launched,
Boldface had purportedly conducted a trademark search that revealed the
existence of the KROMA mark. The Kardashians claim that they did not receive
this information. Boldface sought to register the KHROMA or KARDASHIAN KHROMA
mark with the U.S. Patent and Trademark Office, but registration was denied
because of likelihood of confusion with the previously registered KROMA mark.
After the Khroma line was released, Boldface sought a
declaratory judgment in California federal court that Boldface did not infringe
the KROMA trademark. There, Tillett filed a trademark infringement
counterclaim, adding the Kardashians as counterclaim defendants. The California
district court granted Tillett’s motion for a preliminary injunction against
Boldface, finding that Tillett had demonstrated a likelihood of success on the
trademark infringement claim. Boldface Licensing + Branding v. By Lee Tillett,
Inc., 940 F. Supp. 2d 1178 (C.D. Cal. 2013). Thereafter, Boldface rebranded the
product line to “Kardashian Beauty” and the parties settled the dispute. Kroma
was not a party to the California action and did not receive a share of the
settlement recovery from Tillett.
Kroma EU subsequently filed this action in the Middle
District of Florida against Boldface and the Kardashians, alleging that
Boldface directly infringed the KROMA trademark under common law trademark
infringement and the Lanham Act by distributing “Khroma” branded cosmetics in
Europe, and that the Kardashians were vicariously liable for Boldface’s
infringement. Kroma EU also brought claims against Tillett, alleging a cause of
action for promissory estoppel. As to the promissory estoppel claim, the
district court held in an earlier order that under Florida law, a foreign
licensee could not state a claim for promissory estoppel against its licensor;
however, Kroma EU was able to proceed against Tillett under a breach of
contract theory. Kroma Makeup EU, Ltd. v. Boldface Licensing + Branding, Inc.,
No. 6:14-cv-1551-ORL, 2015 WL 1708757, at *1 (M.D. Fla. Apr. 15, 2015).
The Kardashians moved for summary judgment arguing that
Kroma EU did not have the requisite standing to bring the infringement action
and that the trademark infringement cause of action was barred by claim
preclusion. Kroma EU also moved for partial summary judgment on the issue of
liability. Earlier in the litigation, Tillett successfully moved to compel
arbitration and Kroma EU’s claim against Tillett remains stayed pending the
arbitration.
The district court granted the Kardashians’ motion. The
court found that Kroma EU lacked standing to sue for trademark infringement and
did not reach the Kardashians’ claim preclusion argument. Relying primarily on
the licensing agreement between Tillett and Kroma EU, the district court held
that the agreement “plainly authorized only Tillett to enforce the trademarks”
and to “protect” the mark “from any attempts of illegal use,” while “Kroma EU’s
sole directive was to inform Tillett of instances of infringement.” Based on
this reading, the district court concluded that these provisions “plainly
authorized only Tillett to enforce the trademarks governed by the License
Agreement.” Therefore, Kroma EU “lacked contractual authority, and hence
standing, to pursue § 1125(a) violations against infringers in its own
capacity.” Based on Kroma EU’s purported lack of standing, the court denied
Kroma EU’s motion for partial summary judgment as moot.
The issue before us is the extent of a licensee’s rights in
a trademark infringement action under Section 43(a) of the Lanham Act. While
the Lanham Act typically evokes questions of standing, as a licensee, Kroma
EU’s rights thereunder rely upon the licensing agreement it entered with
Tillett. We adopt the position taken by the district courts in this
circuit—that a licensee’s right to sue to protect the mark “largely depends on
the rights granted to the licensee in the licensing agreement.” Drew Estate
Holding Co. v. Fantasia Distrib., Inc., 875 F. Supp. 2d 1360, 1366 (S.D. Fla.
2012) (quoting Hako-Med USA, Inc. v. Axiom Worldwide, Inc., No. 8:06-cv-
1790-T-27EAJ, 2006 WL 3755328, at *6 (M.D. Fla. Nov. 15, 2006)). See also Aceto
Corp. v. TherapeuticsMD, Inc., 953 F. Supp. 2d 1269, 1279 (S.D. Fla. 2013) (“Standing
to sue depends largely on the rights granted to the licensee under the
licensing agreement.”).
(…) The statute affords a cause of action to “any person who
believes that he or she is likely to be damaged.” But, despite this broad
language, 1125(a) does not get “such an expansive reading” so as to allow “all
factually injured plaintiffs to recover.” Lexmark Int’l, Inc v. Static Control
Components, Inc., 572 U.S. 118, 129 (2014) (quoting Holmes v. Sec. Inv'r Prot.
Corp., 503 U.S. 258, 266 (1992)). This is especially true where, as here, a
licensing agreement between two parties governs each party’s entitlement to
infringement claims.
The court below focused its attention on whether the license
agreement between Tillett and Kroma EU conferred adequate standing on Kroma EU
to bring a claim under Section 1125(a). But, the question before us is not that
of traditional standing. Indeed, it is “not of standing at all.” City of Miami
v. Bank of Am. Corp., 800 F.3d 1262, 1276 (11th Cir. 2015), vacated on other
grounds, 137 S. Ct. 1296 (2017). Rather, it is whether the statute “grants the
plaintiff the cause of action that he asserts.” Bank of Am. Corp. v. City of
Miami, 137 S. Ct. 1296, 1302 (2017). See also Lexmark, 572 U.S. at 128 n.4.
(“We have on occasion referred to this inquiry as ‘statutory standing’ and
treated it as effectively jurisdictional. That label is an improvement over the
language of ‘prudential standing,’ since it correctly places the focus on the
statute. But it, too, is misleading, since the absence of a valid . . . cause
of action does not implicate subject-matter jurisdiction, i.e., the court’s
statutory or constitutional power to adjudicate the case.” In other words, does
the licensing agreement between Tillett and Kroma EU give Kroma EU, the
licensee, sufficient “rights in the name” to sue under the Lanham Act? Camp
Creek Hosp. Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396, 1412 (11th
Cir. 1998).
The answer is no.
To start, “a statutory cause of action extends only to
plaintiffs whose interests ‘fall within the zone of interest protected by the
law invoked.’” Lexmark, 572 U.S. at 129 (quoting Allen v. Wright, 468 U.S. 737,
751 (1984)). The licensing agreement affords rights and imposes obligations on
the parties relating to the enforcement of any trademark claims. As such, there
is little dispute between the parties that we turn to that agreement to
determine if Kroma’s interests fall within the zone of interest protected by
the Lanham Act. In so doing, we fall back on basic principles of contract
interpretation and “construe the agreement as a whole,” Westport Ins. Corp. v.
Tuskegee Newspapers, Inc., 402 F.3d 1161, 1164 (11th Cir. 2005), careful to afford
the plain language meaning of “each and every word the agreement contains,”
Equity Lifestyle Props., Inc. v. Fla. Mowing & Landscape Serv., Inc., 556
F.3d 1232, 1242 (11th Cir. 2009).
Here, applying the licensing agreement to this inquiry is a
straightforward exercise. The plain language of the agreement demonstrates the
parties’ intent for Tillett to retain all ownership and enforcement rights.
Kroma EU—while it may have other rights under the agreement—does not possess
the ability to assert its rights in the mark in this proceeding.
(U.S. Court of Appeals for the Eleventh Circuit, Kroma
Makeup EU, LLC (a United Kingdom Limited Liability Company), v. Boldface
Licensing + Branding, Inc. (a Nevada Corporation), April 1, 2019, Docket No.
17-14211, Judge Goldberg, Published)
Honorable Richard W. Goldberg, United States Court of
International Trade Judge, sitting by designation.
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