What Happens When a Distributor and Manufacturer Can’t Agree on Trademark Ownership?
Intellectual property issues can quickly become murky territory. When issues become disputes, it falls to the court system to help fill in the gaps often left by contractual language. Because of this, courts have developed two tests to determine ownership of an unregistered trademark that exists between a manufacturer and distributor when an agreement cannot be met.
The “first use test” and the “McCarthy test” are the two most common tests. The McCarthy test is arguably the more used out of the two. In this test, a dispute where a manufacturer and an exclusive distributor worked together in order to sell the product from its conception involves circumstances in which the presumption is that the manufacturer of the product owns the trademark. It is then up to the distributor to rebuttal that claim.
Under this test, there are six major factors that determine if such a rebuttal can be successful:
- Which party originally invested the product.
- Which part first made it into goods sold.
- Which party’s name appeared on the packaging and promotional items.
- Which party had control over both the nature and quality of the goods that have the mark.
- Which party was seen as the brand of the mark in the eye of the consumer. For instant, which party received complaints about defects and reimbursed or fixed the issue with consumers.
- Which party paid for the advertising and promotion of the product.
While the manufacturer often is awarded the trademark, a good case can be made with these elements. For instance, if the manufacturer made the product but every consumer knows it by the name of the distributor and that distributor fields complaints, gives replacements, pays for all advertising, and has control over the quality of the goods, there is a chance they could be awarded the trademark despite not using it first.
Under the “first use test,” it is a lot more cut and dry. Whichever party used the mark first is the one who owns it. However, a distributor could still have a case under this test. If a manufacturer simply created a product but the distributor was the first to actually use the product, it could be argued that they have more right to the product.
If you are facing issues with a trademark or other copyright issue, contact our attorneys at Bochetto & Lentz today. We will look over your case and help figure out your best defense to getting rights to your product.