Mini Maid Servs. Co. v. Maid Brigade Sys., Inc.,
967 F.2d 1516
Procedural History: Defendant appealed the judgment of the United States District Court for the Northern District of Georgia directing a verdict against defendant in plaintiff's trademark infringement action under the Lanham Act, 15 U.S.C.S. Sect. 1114, and awarding damages to plaintiff.
Facts: The parties were competitors in the residential cleaning industry. A franchisee of defendant acquired the assets of a former franchisee of plaintiff, including a telephone book listing bearing plaintiff's trademark. Defendant did not direct its franchisee to cease using the number, so plaintiff filed action alleging trademark infringement under the Lanham Act, 15 U.S.C.S. Sect. 1114. The district court held against defendant, holding that defendant failed to exercise "reasonable diligence" to prevent its franchisee from trademark infringement. The court considered the issue whether a franchisor can be held liable for a single act of trademark infringement allegedly committed by one of its many franchisees. The court concluded that the district court's "reasonable diligence" test for vicarious trademark liability was an incorrect legal standard and vacated the judgment and remanded the case back to the district court.
Holding: Because the district court applied the wrong legal standard for holding a franchisor liable for a franchisee's trademark infringement, the court vacated the district court's judgment directing a verdict against defendant, and remanded the case back to the district court.
Analysis: The law imposes no duty upon a franchisor to diligently prevent the independent acts of trademark infringement committed by a single franchisee. Ordinarily, when a franchisee violates the trademark laws in this manner, the franchisee is responsible for the infringement. The franchisor may not instead be held liable for the franchisee's infringement solely because the franchisor failed to exercise reasonable diligence to prevent the infringement. Although a franchisor may not be held liable for a single franchisee's infringement solely because the franchisor failed to exercise reasonable diligence to prevent the violation, a franchisor can be liable for contributory trademark infringement, even if the franchisor did not itself perform any acts of infringement. Thus, if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the franchisor is contributorily responsible for any harm done as a result of the deceit.
967 F.2d 1516
Procedural History: Defendant appealed the judgment of the United States District Court for the Northern District of Georgia directing a verdict against defendant in plaintiff's trademark infringement action under the Lanham Act, 15 U.S.C.S. Sect. 1114, and awarding damages to plaintiff.
Facts: The parties were competitors in the residential cleaning industry. A franchisee of defendant acquired the assets of a former franchisee of plaintiff, including a telephone book listing bearing plaintiff's trademark. Defendant did not direct its franchisee to cease using the number, so plaintiff filed action alleging trademark infringement under the Lanham Act, 15 U.S.C.S. Sect. 1114. The district court held against defendant, holding that defendant failed to exercise "reasonable diligence" to prevent its franchisee from trademark infringement. The court considered the issue whether a franchisor can be held liable for a single act of trademark infringement allegedly committed by one of its many franchisees. The court concluded that the district court's "reasonable diligence" test for vicarious trademark liability was an incorrect legal standard and vacated the judgment and remanded the case back to the district court.
Holding: Because the district court applied the wrong legal standard for holding a franchisor liable for a franchisee's trademark infringement, the court vacated the district court's judgment directing a verdict against defendant, and remanded the case back to the district court.
Analysis: The law imposes no duty upon a franchisor to diligently prevent the independent acts of trademark infringement committed by a single franchisee. Ordinarily, when a franchisee violates the trademark laws in this manner, the franchisee is responsible for the infringement. The franchisor may not instead be held liable for the franchisee's infringement solely because the franchisor failed to exercise reasonable diligence to prevent the infringement. Although a franchisor may not be held liable for a single franchisee's infringement solely because the franchisor failed to exercise reasonable diligence to prevent the violation, a franchisor can be liable for contributory trademark infringement, even if the franchisor did not itself perform any acts of infringement. Thus, if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the franchisor is contributorily responsible for any harm done as a result of the deceit.