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BEAR U.S.A., INC. v. KIM

February 24, 1998

BEAR U.S.A., INC., Plaintiff, against WILLIAM KIM, et al., Defendants.


The opinion of the court was delivered by: KAPLAN

 LEWIS A. KAPLAN, District Judge.

 This case is a sequel to Bear U.S.A., Inc. v. A.J. Sheepskin & Leather Co., 909 F. Supp. 896 (S.D.N.Y. 1995) (hereinafter " A.J. Sheepskin "). Bear U.S.A., Inc. ("Bear USA") there obtained a preliminary injunction against infringement of its Bear trademarks, which have been used with conspicuous success on parkas, boots and perhaps other products and then settled the case on advantageous terms. A.J. Sheepskin, however, did not eliminate efforts by competitors to benefit from the good-will generated by plaintiff through the use of trademarks employing the word "Bear" in ways which, plaintiff claims, are deceptive and dishonest. This action concerns one such alleged attempt.

 Facts

 This matter now is before the Court only on plaintiff's motion for partial summary judgment canceling U.S. Trademark Registration No. 1,881,551 on the ground that the owner's allegedly naked licensing of the mark worked an abandonment. In consequence, the Court focuses only on the facts pertinent to disposition of this limited issue without sketching the entire context of this action and its relationship to the previous lawsuit.

 The mark in question is "Bear Mountain," which is owned by Shoe Tree, Inc. ("Shoe Tree"), a Pennsylvania corporation owned by Andrew Crawford and his wife, that operates a retail shoe store. *fn1" It applied for registration of the mark in 1993. Registration followed on February 28, 1995. As far as this record discloses, it used the mark only on boots sold in its store and, with the exception of the license here at issue, never licensed it.

 This Court decided the preliminary injunction motion in A.J. Sheepskin on November 22, 1995. In early March 1996, Shoe Tree entered into an agreement licensing the use of the Bear Mountain mark for footwear and clothing to Dura-Tex, Inc. ("Dura-Tex"), the principal of which is one William Kim. The license agreement provided that Shoe Tree would receive the greater of $ 16,000 per year and 8 percent of the FOB price of footwear and clothing made under the license. The license in hand, Dura-Tex altered the Bear Mountain mark in a manner alleged to render it confusingly similar to Bear USA's marks and applied it to parkas and boots sold in direct competition with Bear USA's products.

 The plaintiff now contends that the arrangement between Shoe Tree and Dura-Tex is a naked license, i.e., a license in which Shoe Tree simply sold the right to use the Bear Mountain name without controlling the nature or quality of the goods to which the mark was to be applied, and that Shoe Tree thus abandoned the mark and rendered cancellation appropriate. It therefore is important to focus quite precisely on the evidence relating to Shoe Tree's control, or lack thereof, over the goods to which its mark has been applied. It is quickly summarized:

 1. The license agreement itself is utterly silent on the point. There is no suggestion that the goods were to be made to Shoe Tree's specifications, that they were to meet any quality standards, that Shoe Tree retained the right to inspect the goods or to insist that they conform to any criteria, or that Shoe Tree had any interest in the goods beyond its right to receive royalties.

 2. The impression conveyed by the license agreement was borne out at the deposition of Mr. Crawford. He testified in relevant part as follows:

 
"Q Did you have an agreement with Mr. Kim that you would exercise some sort of quality control over his products? A I can't quote the licensing agreement verbatim, but I didn't specify that I would have to, you know, okay this or that at the time.
 
"Q And in any event, you never would have been able to, since you had never seen one of his products before December 23, [1996], right? A That's correct." *fn2"
 
* * *
 
"Q Did you have any agreement with him [Kim] about how he was going to have the clothing or boots made having ...

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