In a recent development, the 11th Circuit court upheld a U.S. District Court’s finding that proves to be a significant lesson to corporations and law firms worldwide. The case in question was that of Blue Mountain Holdings v. Bliss Nutraceuticals. The court found that Lighthouse Enterprises had set forth a naked license to Blue Mountain, which incorporated the trademark under inspection. This immediately raises the question of what legal professionals can do to evade bearing the risks associated with naked licenses.
A naked license occurs when a trademark owner authorizes a third party to use a trademark without exerting appropriate quality control over the goods or services sold under the mark. This lack of quality oversight can lead to various adverse legal connotations, including the possible abandonment of the trademark.
Scott Hervey and Eric Caligiuri, experts in this legal field, convened to discuss this pivotal case, offering their insights into how businesses can best manage their approach towards licensing agreements. Their insights, packed with practical tactics and real-world examples, were shared in an episode of their podcast The Briefing.
One of their key suggestions was to ensure regular audits of licensed products or services. Trademark owners should make it a common practice to review products and services sold under their marks to make sure they meet predetermined standards. This step alone could significantly reduce the likelihood and the subsequent risks of a naked license enforcement.
Another way to avoid risk, as offered by the experts, would be to ensure defined and firm quality standards in the licensing contract itself. This can be accomplished by having explicit quality guidelines in the licensing agreement that both parties must adhere to.
It’s abundantly clear why we need to stay vigilant with trademark licensing agreements. This case underlies the significance of proper management and control over licenses, ultimately helping businesses to secure their brands, avoid unnecessary legal disputes, and protect their reputation.
For more information and insights about the Blue Mountain Holdings v. Bliss Nutraceuticals case and managing the risks of a naked license, check out Scott Hervey and Eric Caligiuri’s episode of The Briefing.