The US Court of Appeals for the 11th Circuit held that an exclusive foreign licensee lacked standing to sue for trademark infringement in the United States and affirmed the district court’s grant of summary judgment. Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., Case No. 17-14211 (11th Cir. Apr. 1, 2019) (Goldberg, J).
Kroma Makeup EU distributed cosmetics products in Europe under the mark KROMA through an exclusive license from By Lee Tillett, Inc. During the time in which Kroma Makeup EU was a licensee of Tillett, Boldface Licensing + Branding, Inc., launched a cosmetics line called Khroma Beauty. Kim Kardashian, Kourtney Kardashian, and Khloe Kardashian endorsed the Khroma Beauty products. Boldface applied to register the marks KHROMA and KARDASHIAN KHROMA with the US Patent and Trademark Office, but registration was refused because of a likelihood of confusion with Tillett’s KROMA registration. Boldface then sought a declaratory judgment of non-infringement against Tillett in a federal district court, but the matter ultimately settled.
Kroma Makeup EU was not a party to the district court action or to the settlement. Kroma Makeup EU later sued Boldface, the Kardashians and Tillett in a different district court, claiming that Boldface had infringed the KROMA mark under 15 USC §1125(a) by distributing KHROMA cosmetics in Europe and that the Kardashians were vicariously liable for Boldface’s infringement. Kroma Makeup EU also claimed breach of contract against Tillett. The district court granted the Kardashians’ motion for summary judgment, finding that Kroma Makeup EU lacked standing because the license agreement authorized only Tillett to enforce the KROMA mark. In light of its decision, the district court did not address the Kardashians’ claim preclusion arguments based on the earlier litigation. Kroma appealed.
The 11th Circuit affirmed, finding that the license agreement did not grant Kroma Makeup EU “sufficient rights in the name” to sue under the Lanham Act. The Court reached this conclusion based on provisions in the license that affirmed Tillett’s ownership of the mark, required Tillett to enforce its rights in the mark, and guaranteed Kroma Makeup EU against any claims of infringement. Because the license required Kroma Makeup EU to notify Tillett of any infringement (and Tillett would be required to compensate Kroma Makeup EU for any losses resulting from the infringement if Tillett ultimately chose to file suit), the Court concluded that only Tillett had the right to sue for infringement.
Practice Note: The 11th Circuit’s decision appears to be in conflict with the broad standing conferred by 15 USC § 1125(a), which does not require ownership of a mark to bring an infringement claim, and the Supreme Court of the United States’ Lexmark decision, which requires only that a plaintiff be within the “zone of interest” protected by the statute. The license did not expressly remove the standing afforded to Kroma Makeup EU under either the Lanham Act or Lexmark.