IP: Trademark disputes as an unintended consequence of distribution agreements

Manufacturers can lose their own trademark rights to distributors if contracts are vague

For an unwary manufacturer, entering into a distribution agreement can result in the loss of rights in its own trademarks. Under some circumstances, a distributor can acquire ownership of trademarks in goods it did not manufacture, even if the manufacturer believes it owns the rights.

This situation arises when the parties’ distribution agreement does not address trademark rights.

Some jurisdictions are more willing than others to use these factors in determining which party has rights to a trademark. The 7th Circuit and 3rd Circuit will not use the factors to divest a party of ownership of the trademark, once initial ownership has been established. On the other hand, the Northern District of California has emphasized that an exclusive distributor can acquire trademark rights superior to those of the manufacturer.

How is the trademark problem resolved?

Contributing Author

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Brett Garner

Brett Garner is of counsel at Venable LLP. He has been counseling clients in the online space since the early 2000s and combines his background in...

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Contributing Author

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Melissa McLaughlin

Melissa McLaughlin is a member of Venable's Commercial Litigation group. She has experience defending clients in complex commercial cases and consumer class action litigation. Ms....

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