Posted on 25 September 2004.
Senators Larry E. Craig (ID) and Dick Durbin (IL) introduced S.2796 as a bill to clarify that service marks, collective marks, and certification marks are entitled to the same protections, rights, and privileges of trademarks. The bill makes simple amendments to the Lanham Act to accomplish its goal (see text of the bill here (.pdf)).
The bill is designed to specifically address the decision of the Second Circuit Court of Appeals in Idaho Potato Commission v. M&M Produce Farm and Sales (.pdf) (335 F.3d 130, 2d Cir. 2003). In Idaho Potato Commission, the court interpreted the Lanham Act as requiring that certification marks be treated differently than trademarks with respect to “no challenge” provisions in license agreements. Under an agreement that includes a “no challenge” provision, the licensee acknowledges and agrees not to challenge the validity of the mark.
Many courts have upheld “no challenge” provisions in trademark license agreements and dismissed validity challenges brought by the licensee. Patent license agreements, however, are treated very differently. In Lear v. Adkins (395 U.S. 653, 1969), the Supreme Court explicitly overruled precedent establishing licensee estoppel. In Lear, the Court acknowledged that, considering the preclusive effect of patents, it is desirable to encourage challenges to the validity of a patent. The Court stated that “[l]icensees may often be the only individuals with enough economic incentive to challenge the patentability of an inventor’s discovery.”
In Idaho Potato Commission, the Second Circuit Court of Appeals ruled that “no challenge” provisions in license agreements for certification marks are governed by Lear, reasoning that the policy considerations underlying certification marks is more analagous to patent policy than trademark policy.
The bill is designed to remove this newly-established distinction between certification and other types of marks.
According to remarks by Mr. Craig, S.2796 is designed to make it clear that all types of marks protected by the Lanham Act are to be accorded the same rights and protections except as specifically provided by statute. In remarks made on the record regarding the background and intent of the bill, Mr. Craig stated that:
It is important to remove any perceived distinction between certification marks and collective marks as compared to trademarks, except as expressly provided otherwise by statute…..Licenses governing certification marks, and the provisions contained in such licenses, should be treated no less favorably than licenses for trademarks and other marks. “No challenge” provisions, and other non-quality related provisions in certification mark licenses or agreements are to be accorded the same respect and treatment, and are to be the [sic] subject to the same principles of equity, as like provisions in trademark licenses and agreements.
The bill has been referred to the Committee on the Judiciary.
UPDATE October 7, 2004: S.2796 passed the Senate by unanimous consent on October 6, 2004. The companion bill, H.R.5194, has been referred to the House Committee on the Judiciary.
UPDATE February 10, 2005: Bill reintroduced in 109th Congress as H.R. 784.