By Jody Coultas, J.D.
European distributor of Kroma beauty products lacked standing to assert rights in the U.S.
Kroma Makeup EU, LLC, a trademark licensee, lacked standing to assert trademark infringement claims against the Kardashian sisters and a U.S. beauty product seller, according to the U.S. Court of Appeals in Atlanta. Following a suit filed by the owner of the KROMA mark against the Kardashians and a beauty product manufacturer for infringement, Kroma also filed suit for infringement. Kroma was the licensee of the KROMA marks in the European market, and it alleged that the sales of allegedly infringing beauty products infringed its rights. A district court held that because Kroma EU was not the owner of the trademark at issue and did not have the right to sue infringers under the licensing agreement, it could not bring claims against the Kardashians or any other alleged infringer. The Eleventh Circuit agreed with that conclusion based on the plain language of the licensing agreement and affirmed the lower court’s decision (Kroma Makeup EU, LLC v. Boldface Licensing & Branding, Inc., April 1, 2019, Goldberg, R.).
By Lee Tillett, Inc. ("Tillet"), registered and owns the exclusive rights to use the KROMA mark in the U.S. In October 2012. Tillett granted an exclusive license to Kroma EU to import, sell, and distribute KROMA products in Europe, and to use the KROMA mark. Tillett guaranteed that it owned the KROMA mark and would hold Kroma EU harmless from any judgments against Tillett based on the mark. Tillett retained the right to use the KROMA mark in the United States.
The Kardashian sisters endorsed a cosmetic line called "Khroma Beauty," sold and manufactured by Boldface Licensing & Branding, Inc. The Kardashians claimed they had no knowledge of the KROMA trademark until an entertainment news website published an article about the Kardashians’ potential infringement. Boldface had sought to register the KHROMA or KARDASHIAN KHROMA mark, but registration was denied because of likelihood of confusion with the previously registered KROMA mark.
In 2013, Boldface sought a declaratory judgment that Boldface did not infringe the KROMA trademark. Tillett counterclaimed for trademark infringement, and added the Kardashians as counterclaim defendants. The court granted Tillett’s motion for a preliminary injunction. Boldface then rebranded the product line to "Kardashian Beauty" and the parties settled.
Thereafter, Kroma EU filed the infringement case at issue against Boldface and the Kardashians for distributing "Khroma" branded cosmetics in Europe, and brought a promissory estoppel claim against Tillett. The district court held that under Florida law, a foreign licensee could not state a claim for promissory estoppel against its licensor, but Kroma EU was able to proceed against Tillett under a breach of contract theory.
The Orlando, Florida, district court found that Kroma EU lacked standing to sue for trademark infringement and did not reach the Kardashians’ claim preclusion argument. Kroma EU lacked contractual authority, and thus standing, to pursue Lanham Act claims against infringers in its own capacity. Kroma EU’s claim against Tillett was stayed pending arbitration, and the district court failed to enter a default judgment as to Boldface, which was served with process but had never appeared. Following a Rule 54(b) judgment as to the claims against the Kardashians and final judgment entered in favor of the Kardashians, Kroma EU appealed.
Because Kroma EU lacked standing to assert trademark infringement claims based on the licensing agreement with Tillett, the appellate court affirmed the district court ruling. At issue was whether the licensing agreement between Tillett and Kroma EU gave Kroma EU sufficient "rights in the name" to sue under the Lanham Act. The court answered that question in the negative. License agreements between two parties can limit a licensee’s ability to bring a Lanham Act claim. The parties did not dispute that the issue of whether Kroma’s interests fell within the zone of interest protected by the Lanham Act was governed by the license agreement between Kroma and Tillett. The plain language of the agreement demonstrated the parties’ intent for Tillett to retain all ownership and enforcement rights. Also, the agreement only vested Kroma EU with the obligation to "inform [Tillett] of any illegal use of the trademark," prompting Tillett to file suit against the infringer and compensate Kroma for any losses related to infringement. Kroma EU did not have standing to assert its rights in the mark in this proceeding.
The case is No. 17-14211.
Attorneys: Elizabeth Lee Beck (Beck & Lee, PA) for Kroma Makeup EU, LLC. Michael Joseph Kump (Kinsella Weitzman Iser Kump & Aldisert, LLP) for Boldface Licensing + Branding, Inc. Kirsten Demay Blum (Stovash Case & Tingley, PA) for By Lee Tillett, Inc.
Companies: Kroma Makeup EU, LLC; Boldface Licensing + Branding, Inc.; By Lee Tillett, Inc.
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