Under U.S. copyright law, as interpreted by the courts, each co-owner of a work owns an undivided interest in the work and is free to exercise those rights, including the right to license the work, without the permission of the other co-owners. As you can imagine, absent an agreement between co-owners, co-ownership of a copyright can potentially create commercial and artistic chaos. Is it the same for trademarks?
Under U.S. trademark law, a trademark can be owned by a single individual, multiple individuals, or by a legal entity. Trademark ownership imposes upon each co-owner the responsibility to maintain the continuity and quality of the goods or services associated with the mark. But what if a disagreement arises between the co-owners and, without permission of the other co-owners, one of them creates a separate business using the trademark? If the goods or services are the same, consumers may not be confused. But if they are confused? Can the other co-owners sue the renegade co-owner for trademark infringement?
Can Co-Owners Sue Each Other for Trademark Infringement?
In a recent case before the United States Court of Appeals for the Fifth Circuit, Reed vs. Marshall, Harris, and Holloway, the court considered such a case. Reed and two of the three defendants were members of a successful R&B group, Jade, which disbanded in 1995. The group registered the JADE trademark, which was eventually cancelled.
In 2018, pondering a potential reunion, the members filed for a new trademark registration, which was granted in 2019. The owners of the mark were listed as Reed, Marshall, and Harris, individually, with a date of first use in July 1992. The reunion never happened, and in June 2021, Marshall and Harris entered into a work-for-hire contract with a different singer, Myracle Holloway. Then, despite Reed’s cease-and-desist letters, Marshall, Harris, and Holloway performed as Jade at various concerts. In December 2021, Reed sued them for trademark infringement and various other claims under the Lanham Act.
What the Reed v. Marshall Case Reveals About Trademark Law
The district court granted the defendants’ summary judgment motion on grounds that the Lanham Act does not permit a co-owner of a trademark to sue the other co-owners for trademark infringement. Reed appealed to the U.S. Circuit Court of Appeals for the Fifth Circuit, which affirmed the lower court. The Appeals Court wrote that joint ownership of a trademark raises two interrelated problems.
First, a mark is intended to identify only a single commercial source and, second, discord between owners, which results in “multiple, fragmented use,” would result in “consumer confusion and deception.” According to the leading treatise on the matter — McCarthy On Trademarks — the court wrote, joint trademark ownership is disfavored. Because it is disfavored, said the court, co-owners should enter into contractual arrangements so that potential outcomes are clarified should the owners find themselves at loggerheads when their interests diverge. In the Reed case, no such contractual arrangements were made. The Court wrote:
But at bottom, the question before us is simpler: whether the Lanham Act, which is aimed at protecting consumers and mark owners from fraud and deceptive acts, provides an appropriate cause of action to remedy disputes between the co-owners of a trademark. The answer … is “no.”
The Court, applying traditional principles of contract interpretation, held that the Lanham Act only confers the benefit of suing infringers to trademark owners — i.e., registrants — thereby creating a dichotomy between owners and infringers, a dichotomy that is reflected in both Congress’ intent and the caselaw interpreting the Lanham Act. In short, owners can sue infringers but not other owners.
And what about Holloway, the third singer who was not a co-owner of the trademark? Can she be sued? No, says the Reed court. “A valid licensee of one co-owner of a trademark cannot be liable to another co-owner for infringement.”
One might think that because trademark law exists to protect consumers from confusion in the marketplace, surely if a co-owner of the trademark creates confusion, they should be subject to an infringement claim from the other co-owners. Not so if the law doesn’t provide that statutory right. Trademark law can be subtle, so if you have to co-own a trademark, make sure you have the proper agreements in place and seek guidance from a qualified lawyer.
— Adam G. Garson, Esq.
