Half-naked licensing

Kelly v. Thomas Aaron Billiards, Inc., 2007 WL 1826887 (D. Md.)

Plaintiff is a member of Liberty Group, an association of billiard table retailers, and owns a trademark in LIBERTY BILLIARDS. Defendant TAB makes and sells billiard tables under its own name and private labels. In 2004, TAB orally agreed with Liberty Group to make LIBERTY BILLIARDS tables for sale only to members of the Liberty Group. TAB made several hundred such tables. In 2005, TAB’s president wrote to Kelly explaining that Liberty Group members weren’t buying enough tables to make the agreement profitable for TAB, and asked that members commit to buying 10-15 tables per month. Kelly never responded, and TAB then sold the remaining tables to non-Liberty Group retailers.

In its defense, TAB argued that it was selling genuine goods and therefore could not infringe. Unauthorized retailers have been held to infringe when they sell goods bearing a mark that don’t meet the trademark owner’s quality standards. But here, the court found, Kelly engaged in no post-manufacturing quality control. (Kelly encouraged retailers to follow up with customers to ensure satisfaction and address warranty issues, but the court found this too general to establish the existence of meaningful post-manufacture quality control procedures.) Thus, the tables were genuine goods. (Was Kelly’s testimony about quality control procedures used to select manufacturers like TAB enough to avoid a finding of abandonment?)

There was conflicting testimony over whether the tables still had the LIBERTY BILLIARDS mark when they arrived at retailers, but no conflicting testimony over this fact: the nameplates bearing the mark were removed before they were sold to the public. As a result, the court found that Kelly’s trademark infringement claim couldn’t succeed, because the only alleged confusion was of the public, not of the retailers.