The Naked Licensing Doctrine Exposed: How Courts Interpret the Lanham Act to Require Licensors to Police Their Licensees & Why This Requirement Conflicts With Modern Licensing Realities & The Goals of Trademark Law
This Comment discusses the naked licensing doctrine, under which trademark owners may lose their trademark protection through failing to exercise control over their licensees. Even though the Lanham Act holds that abandonment of trademark rights is only appropriate when a trademark has lost its significance, courts have held that a trademark owner may abandon its rights through naked licensing when it breaches its affirmative duty to police its licensees. In other words, these courts find abandonment even when there is no evidence that the quality of the goods and services sold under the trademark has declined. This Comment argues that this focus on control formalities conflicts with trademark law's goal of reducing consumer search costs, does not further trademark law's goal of encouraging the production of high quality goods and the provision of high quality services, and is no longer necessary because changes in trademark licensing and consumer behavior have reduced the risk of trademark- related consumer deception. In its search for a better standard, this Comment compares naked licensing with genericide, which is another way for a trademark owner to abandon its rights through an act of omission. Courts evaluate whether a trademark owner has abandoned its rights through genericide by using a loss of distinctiveness standard; arguably, courts should use the same standard for evaluating whether a trademark owner has abandoned its rights through naked licensing. However, courts should not use the loss of distinctiveness standard alone because naked licensing harms consumers more than genericide. A consumer deception standard also finds support in the Lanham Act; however, courts should not focus on consumer deception alone because it is an imprecise and unrealistic standard. Instead, courts should find trademark abandonment through naked licensing when a trademark deceives consumers more than it reduces consumer search costs.