former TM owner states valid damages claim against licensee of current TM owner that drove it out of business via infringement

Wagner Zip-Change, Inc. v. Tubelitedenco, No. 23 C 05077, 2026 WL 673148 (N.D. Ill. Mar. 10, 2026)

Wild facts! Wagner was until 2021 in the business of selling sign lettering products, including its trademarked Jewelite Trim (also known as “trim cap”), “a plastic molding that adds dimension to cut-out sign letters.” It obtained an exclusive license to use the mark in 1987. It contracted with a third party, Vidon, for manufacture, and sold its products to distributors, which then sold them to sign companies and other end users. Defendants were among the largest distributors.

Vidon allegedly began manufacturing a knock-off version of Jewelite Trim. Tubelite then allegedly entered into a distribution agreement with Vidon. Tubelite allegedly (1) made false and misleading statements that Vidon’s knock-off trim cap was “the original trim cap,” that Vidon was just a “different name” for Jewelite, and that the product was “the exact same”; (2) used the Jewelite mark in connection with the sale and promotion of the Vidon trim product; and (3) filled at least several hundred customer orders for “Jewelite,” “Wagner Jewelite,” and “Wagner” trim cap with the Vidon product. Tubelite’s conduct allegedly “contributed greatly” to driving Wagner out of business, resulting in at least $4.5 million in lost sales. Wagner ultimately gave up its rights in the Jewelite mark, which was then assigned to Vidon.

Wagner sued Tubelite for violations of the Lanham Act and state law claims for unfair competition and tortious interference with prospective economic advantage.

Under these circumstances, the court rejected Tubelite’s argument that, though its use of the mark was confusing, Wagner couldn’t sue because (1) it’s not the current user of the mark and (2) Vidon is the mark’s current owner.

Wagner was suing for damages, not an injunction. Violation of its past rights gave it a cause of action. Cases requiring use for trademark rights “simply stand for the proposition that a plaintiff claiming infringement must show that it had rights in the mark when the alleged infringement took place.” It was enough that “Wagner had enforceable rights in the mark when Tubelite used it to sell Vidon’s products.”

For statutory standing, a plaintiff must (1) “allege an injury to a commercial interest in reputation or sales” that (2) “flow[s] directly from” the defendant’s violation of the statute. “Wagner easily satisfies that test, alleging (1) a commercial injury (loss of millions in sales) that (2) directly resulted from Tubelite’s misleading use of the Jewelite mark.” Nothing in Lexmark required a plaintiff to show current rights in the mark or likelihood of a future injury. “Nor would that requirement make much sense. Consider the consequences: defendants who appropriate another party’s mark so successfully as to actually drive that party out of business—as Tubelite is alleged to have done here—would effectively be immune from suit under the Lanham Act. That would be an exceedingly odd result.” Indeed, Lexmark itself commented that “a competitor who is forced out of business by a defendant’s false advertising generally will be able to sue for its losses.”

Tubelite also unsuccessfully argued that Wagner’s false association claim fails because Vidon, as the Jewelite mark’s current owner of record, has an incontestable right to use the mark. Incontestability had nothing to do with the issue here. Vidon acquired the mark after the alleged misuse of the mark took place. [Maybe Vidon has such a right, but it didn’t have such a right.] “Second, Tubelite—not Vidon—is the defendant in this action, and it has presented no legal authority to suggest that it can assert Vidon’s rights in its own defense.” Anyway, there were lots of exceptions to incontestability.

Sometimes dumb arguments make for bad explanations that omit nuance, but sometimes they lead courts to articulate the reasons for the rules, and that’s nice.