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Can trademark registrants sue co-owners for infringement?
Breaking up is hard to do — especially when trademark rights are involved. Recently, for the first time, the U.S. Court of Appeals for the Fifth Circuit considered whether a co-owner of a trademark may pursue claims against other owners for unauthorized use of the mark. The court summarized the relevant statutory text and U.S. Supreme Court precedent in reaching its ruling.
Battle of the band
In 1991, the singers Di Reed, Tonya Harris and Joi Marshall formed Jade. The group enjoyed significant success before breaking up in 1995.
During the band’s period of success, the women registered the JADE service mark. The mark was canceled in October 2001. At that time, it was owned by Jade, a partnership that included all three of them.
In 2018, the singers agreed to a reunion tour and collectively applied for joint ownership of the service mark. Registration was issued in June 2019, with the registrants listed as Reed, Marshall and Harris, all in their individual capacities.
The reunion tour never transpired, though. Instead, in 2021, Marshall and Harris entered a work-for-hire contract with a new singer, Myracle Holloway. Despite cease-and-desist letters from Reed, the three performed as Jade at several concerts later that year.
Reed subsequently sued Marshall, Harris and Holloway for several claims under the Lanham Act, the federal trademark law, including trademark infringement and trademark dilution. The trial court dismissed her lawsuit before trial. It found that Reed couldn’t pursue Lanham Act infringement or dilution claims against the two co-owners of the mark or Holloway, who performed as a licensee with their permission. Reed appealed.
The encore
The appellate court began by noting that Reed, Marshall and Harris had entered into joint ownership of the mark, meaning each individual owned a complete interest in it. The question was whether the Lanham Act provides a remedy for disputes among co-owners of a mark. The court concluded that it doesn’t, based primarily on the division between owners and infringers.
The text of the Lanham Act makes the infringement cause of action exclusive to the registrant of the mark and designates the owner as the only proper party to apply for registration of a mark. In addition, the Supreme Court has recognized that registration of a mark enables the owner to sue an infringer under the Lanham Act. Similarly, the statute makes the dilution cause of action exclusive to “an owner” of a mark alleging dilution by “another person.”
The law, the court said, protects two categories of people — consumers who are deceived by knockoff products and owners whose products and services are defrauded — from a third group, imitators who profit from deception. “Co-owners of a mark, who generally have the right to use their marks as they please, fall only on one side of this dividing line,” according to the appellate court. In other words, a co-owner with an equal right to use a mark can’t be an imitator at whom the Lanham Act is targeted.
The court’s reasoning puts it in line with other circuits. All courts that have considered the rights of co-owners in trademark cases have held that federal infringement claims can’t be maintained against co-owners.
The appellate court also rejected Reed’s infringement claims against Holloway. Marshall and Harris, who have complete ownership rights in the mark, had an unencumbered right to use the mark as they chose, including by granting a license to Holloway.
A final note
Although joint ownership is legal, the appellate court noted that it’s disfavored in the law because discord among co-owners can lead to “multiple, fragmented use,” which may result in consumer confusion and deception. Where joint ownership is nonetheless desired, the court said, this case should serve as a “clarion call” that the parties should enter a contractual agreement that outlines their rights in the event they part ways.
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