United States: Hear the Band – Trademarks Also Move to the Beat of the "Sublicensing Rule"

The U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s extension of the well-established "sublicensing rule" from copyright and patent law, i.e., that a licensee is not entitled to sublicense the licensed rights to a third party without permission from the licensor, to the area of trademark law and related publicity rights. In so doing, the Ninth Circuit rejected the licensee’s argument that it had independent rights in the mark GLENN MILLER ORCHESTRA based on its ownership of an incontestable trademark registration for the mark (rights that in turn were based on the licensed use). Miller v. Glenn Miller Productions, Inc. Case No. 04-55874 (Ninth Cir. July 19, 2006) (per curiam). However, because of a laches defense, the trademark licensor, the family of big band leader Glenn Miller, were held to be barred from taking legal action against the licensor, Glenn Miller Productions (GMP).

GMP was a longtime licensee of the GLENN MILLER mark. Even though GMP had, for 20 years, been forwarding Miller financial reports which indicated the existence of its sublicenses, Miller took no action until it acquired "actual" knowledge of GMP’s activities. When the Glenn Miller family sued GMP for trademark infringement, and the district court, notwithstanding its ruling that GMP sublicensing activities were improper, dismissed the cause of action as being barred by the doctrine of laches. Both parties appealed. Although the Ninth Circuit affirmed the dismissal of the action on appeal, it still addressed the merits of GMP’s cross-appeal of the district court’s determination that GMP had engaged in unauthorized trademark sublicensing.

GMP argued that it had established its own rights in the mark GLENN MILLER ORCHESTRA, separate and apart from the rights in the GLENN MILLER mark that GMP licensed, because GMP owned a federal registration for the GLENN MILLER ORCHESTRA mark that had become incontestable. In rejecting GMP’s argument, the Ninth Circuit relied on a basic rule of trademark law, that use of a trademark in commerce, and not the existence of a trademark registration, is what creates protectable rights in and ownership of the mark. Accordingly, as long as Glenn Miller’s family (or its licensees) continued to use the GLENN MILLER mark in the marketplace, the Glenn Miller family maintained rights in the mark. Neither GMP’s trademark registration, which was based on a licensed use, nor the incontestable status of the mark it obtained, could adversely affect the family’s rights in the GLENN MILLER mark. Accordingly, GMP, as a licensee, could not sublicense "its" registered mark to third parties without the express permission of the licensor.

A trademark owner can reduce the risk that its licensee will infringe or improperly sublicense the mark(s) at issue by ensuring any license grant is expressly non-transferable and prohibits licensees from adopting or creating any confusingly similar mark(s) or otherwise modifying the licensed mark(s).

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