Addressing the issue of whether the owner of a trademark registered by a corporation that has filed for bankruptcy maintains the right to sue for trademark infringement, the U.S. Court of Appeals for the Sixth Circuit reversed the ruling of the lower court and held that an owner of a mark registered by a corporation that filed for Chapter 7 has the right to sue to for violation of that mark. Guaranty Residential Lending Inc. v. Homestead Mortgage Co., Case Nos. 07-01773-01815 (6th Cir., Sept. 4, 2008) (McKeague, Jr., J.) (unpublished).
Guaranty sued Homestead for intentional misappropriation of its common-law trademark "Homestead Mortgage." The trademark was registered by a third party, Bob Fitzner. Although Guaranty knew of Fitnzer's ownership of the mark because its federal application was rejected on the basis of likelihood of confusion with that registration, the firm nevertheless continued to use the mark.
In March of 2001, Fitzner lost the right to sue or defend the mark in state and federal court in Texas when he failed to pay a franchise fee. Fitzner filed for Chapter 7 and his company, Bob Fitzner, Inc. (BFI), was officially dissolved in 2002. At the time of filing, Fitzner failed to list his beneficial title to the registration as assets of BFI, which included his right to the mark. However, according to Texas law, BFI had a three-year wind-down period during which it would hold title and liquidate assets. In January 2005, one month after Guaranty filed its suit, BFI assigned the mark to Fitzner retroactive to 2002, and Fitzner licensed the mark to Homestead.
In July of 2005, Homestead filed an answer and counter-complaint, adding Fitzner as a counter-plaintiff and sued for misappropriation of his trademark. Guaranty moved to dismiss the counterclaims for lack of standing. The district court granted Guaranty's motion to dismiss, stating that because Fitzner did not schedule his beneficial title to the mark when he filed for bankruptcy, he had no right to sue.
On appeal, the Sixth Circuit applied Texas law to determine capacity to sue. The Court noted that under Texas law, Fitzner retained the right to sue or defend in a suit outside of Texas even after the company's corporate privileges were forfeited. Thus, the Court held that Fitzner gained the capacity to sue based on BFI's transfer to Fitzner of all rights in the mark in Michigan and remanded the case.
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