The Kardashian sisters were the celebrity endorsers for a cosmetic line previously called “Khroma Beauty” that was created and marketed by Boldface.
By Lee Tillett, Inc. was the owner of a federal U.S. trademark registration for “KROMA” for cosmetics, which was cancelled from the U.S. trademark registry in August of 2018 for failure to file an acceptable declaration under Section 8.
A lawsuit was filed in the U.S. Central District of California regarding the likelihood of confusion between the Khroma and KROMA brands. On March 11, 2013, the California district court issued a preliminary injunction prohibiting Boldface from using the “Khroma” mark. Subsequently, the Kardashian-endorsed brand was renamed "Kardashian Beauty" and a settlement was reached between Tillet, Boldface, and the Kardashians. [L1]
The European distributor of the KROMA cosmetic products, Kroma EU, was not a party to the U.S. lawsuit or the resulting settlement. On September 24, 2014, Kroma EU filed its own lawsuit [L2] in the Middle District of Florida alleging, among other things, trademark infringement as a result of distribution of the Kardashian-endorsed Khroma Beauty line in Europe. The district court granted the Kardashians’ Motion for Summary Judgment, holding that Kroma EU did not have standing, or the right, to file a lawsuit based on Lanham Act.
The district court [L3] explained that the law only allows the owner or exclusive licensee of a trademark to file lawsuits regarding infringement of the mark. The “licensee must have contractual, in addition to statutory standing.” If the owner of the mark retains certain rights under a license agreement, such as responsibility to police a trademark, then courts often find that the agreement is not an exclusive license and that the licensee does not have sufficient rights to file an infringement lawsuit. In this case, even though Kroma EU had an exclusive license to use the Kroma mark in a particular territory, the district court held that the contract language did not give Kroma EU the right to pursue Lanham Act violations against infringers in its own capacity.
On April 1, 2019 [L4] , the 11th Circuit issued an opinion affirming the district court decision that Kroma EU did not have sufficient rights to sue the Kardashians under the U.S. Lanham Act. The 11th Circuit explained that, although the Lanham Act states that it provides a cause of action to “any person who believes he or she is likely to be damaged,” (15 U.S.C. § 1125(a)), this provision “does not get such an expansive reading so as to allow all factually injured plaintiffs to recover.” The Court noted that this is especially true in this particular case because a licensing agreement governed each party’s entitlement to sue on infringement claims.
In this case, the license agreement between Kroma EU and the U.S. trademark owner, By Lee Tillett, explicitly stated that ownership of the trademark was reserved to Tillett, that Tillett retained the KROMA trademark as its “exclusive and inalienable property,” and that it “reserves the right to assign/transfer [the trademark] to any individual person or legal entity.” The agreement also included clauses indicating that Tillett alone had exclusive right to sue for infringement of the KROMA mark and that Tillett was required to indemnify Kroma EU for monetary losses caused by infringement. The 11th Circuit concluded that this licensing agreement did not give Kroma EU sufficient rights in the KROMA mark to sue under the Lanham Act.
This decision is an important reminder of how trademark rights are territorial in nature and that a license agreement should clearly delineate the rights of the trademark owner and licensee.