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Transfer No Gross Trademark!

Article by Kenneth E. Crowell 10 July 2008 The U.S. Court of Appeals for the Second Circuit overturned a summary judgment in favor of accused trade-secret infringer Cadbury Stani (Stani) after determining that the license in suit was ambiguous and inapposite for determination on summary judgment. The Court also discussed the legal effect of transferring a trademark "in gross," that is, without also transferring the goodwill that the trademark symbolizes. The Topps Co. v. Cadbury Stani S.A.I.C., Case. No. 06-5316, (2nd Cir., May 15, 2008) (Cardamone, J.). Topps licensed its trademarks and trade secrets respecting certain bubblegum brands to Stani in South America. The license was amended to terminate in 1996 and a second agreement was executed providing for transfer of the trademarks to Stani upon termination for $100,000. In 1996 the license expired by its terms, the trademarks were transferred and Stani continued to make and sell the trademarked gums. In 1999 Tops sued for misappropriation of the trade-secret gum ingredient formulas. Stani contended both that it had not used Topps' formulas to make its gum after 1996 and that Topps had transferred the trade secrets along with the trademarks. The district court found that the contracts made no express provision for transfer of trade secrets. Nonetheless the court found for Stani on summary judgment because it decided that the parties must have intended to transfer the trade-secret gum formulas to effectively assign the trademarks since an assignment of the trademarks in gross would have been invalid.

Full post as published by The Trade Secrets Vault on July 10, 2008 (boomark / email).