7 January 2021TrademarksMuireann Bolger

Fed Circ panel backs US Army TM win in fashion dispute

A fashion brand has failed to persuade a panel at the US Court of Appeals for the Federal Circuit that the US Army owes it compensation after refusing the use of its marks as licensed trademarks on clothing.

Authentic Apparel Group told the three-judge panel yesterday, January 6, that the Army had breached a trademark licensing agreement by denying it the right to fully exploit its trademarks, including by failing to approve advertising featuring Authentic’s spokesperson, Dwayne “The Rock” Johnson. Consequently, it argued that the Army owed it royalties to compensate for the merchandise it was unable to sell.

In June 2007, the US Army and the clothing brand signed a licensing agreement for the design, manufacture, and sale of goods bearing various Army-owned trademarks, which was followed by a second agreement three years later.

In January 2015, Authentic filed a complaint at the US Court of Federal Claims, alleging that the Army breached the second licence agreement by denying it the right to use Army trademarks on all of its “goods, its website and its advertising generally”.

Authentic further claimed the Army breached the agreement by refusing to permit Authentic to “truthfully” advertise its relationship with the Army’s Morale, Welfare and Recreation Fund.

Finally, it alleged that the Army violated its duty of good faith and fair dealing by preventing Authentic from both obtaining financing for a footwear line and reselling womenswear garments.

In response, the US government countered that the Army had acted within its rights to approve or disapprove of products and advertising materials, an argument upheld by the US Court of Federal Claims in 2019.

In this decision, the court held that Authentic failed to demonstrate that the Army acted unreasonably in rejecting apparel or advertising and that the licensing agreement expressly gave the Army broad discretion to approve or reject both Authentic’s proposed use of the trademarks and the advertising of items bearing those marks.

This week, the Federal Circuit’s panel expressed scepticism that this decision could be reversed, insisting that the Army had acted within its rights to refuse the use of the trademarks.

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