The Kardashian sisters are well-known (some say notorious) media personalities and businesswomen.
Their extensive business activities often result in legal disputes. And where there are disputes, often interesting and important legal decisions are produced.
A recent Eleventh Circuit decision, Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc. (2019) involved a suit in which the Kardashians were accused of trademark infringement. They and their company successfully moved to dismiss the case because the plaintiff – a licensee of the asserted trademark – lacked standing to bring a trademark infringement claim.
Key to the Eleventh Circuit’s holding was that the license provided that the owner retained all rights, including the right to enforce the mark against infringers. The licensee’s only remedy was to complain to the trademark owner and be compensated for any infringement damages.
This arrangement meant that only the trademark owner had standing to sue for trademark infringement.
The lesson for trademark owners and licensees is that, in drafting license agreements. they should carefully consider who will have both the right and responsibility to enforce the mark, and what happens if one party fails to enforce.
For those accused of infringement, the lesson is to carefully consider whether the plaintiff even has a basis to sue.
The mark KROMA is registered for cosmetics products to By Lee Tillet, Inc. (“Tillett”).
Tillett entered into a license agreement with Kroma Makeup EU (“Kroma EU”), whereby the licensee would have the right to use the mark in Europe, while Tillett retained both ownership of the mark and the right to use the mark in the U.S. The license agreement provided that Tillett would have both the right and responsibility to enforce the mark against infringers. Tillett had a contractual obligation to enforce the mark, and if it failed to do so, would be liable to Kroma EU for damages.
The Kardashian sisters were the celebrity endorsers for a line of cosmetics sold under the KHROMA mark.
Tillett and the Kardashians litigated an infringement action in California, which eventually settled. But Kroma EU received nothing from the proceeds. So, it filed contract claims against Tillett, and infringement claims against the Kardashians and their company, seeking damages.
Section 43(a) of the Lanham Act provides for causes of action for infringement and unfair competition by “any person who believes that he or she is likely to be damaged” by the acts of infringements.
Despite that very broad language, courts have insisted that trademark plaintiffs have a real legal interest in the mark. In the case of licensees, the Eleventh Circuit held that the allocation of both ownership and enforcement rights under the license agreement governs whether there is standing to assert a Lanham Act claim:
The plain language of the [license] 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.
For parties involved in licensing arrangements, the Kroma decision highlights the importance of determining who has responsibility for enforcement. Licensees like Kroma EU are often at the mercy of the trademark owner, and this decision only reinforces that situation. While Kroma EU did have a breach of contract claim against the licensor, proving that can often be a difficult endeavor.
For parties accused of infringement by a licensee, it is critical to check the terms of the license to ascertain whether the licensee even has standing to enforce the trademark.