When a trademark, patent, copyright, or other right is the subject of a nonexclusive license, we often think about what sort of restrictions the property right owner should place on the licensee. These restrictions are aimed at allowing only specific uses of a trademark, patent, cor copyright that the licensor allows, so that the licensor can prevent some uses for various reasons - it might think other uses are harmful to the company, confusing to the public, or it just may not want its product or brand presented in a certain way. These are restrictions that are typically negotiated before a final license is written. However, there may be very good reasons for the licensee to place reciprocal restrictions on the licensor.
Two commercials illustrate one issue that potential licensees should think about with respect to other "competing" nonexclusive licensees. The first commercial is for Sensa, a dieting compound that you sprinkle onto food and drinks before consuming them. This commercial adopts the song "Shake Shake Shake, Shake Shake Shake, Shake Your Booty" and replaces it "Booty" with "Sensa." And the second commercial is for Dole - this one replaces "Booty" with "Smoothie." These two commercials aired in the first half of 2012, often on the same channels and television shows.
The two products advertised in these commercials are not identical, but they are closely related. A diet sprinkle mix (whatever that is?) and a smoothie drink are close enough that there could be some confusion among commercial viewers. The consuming public would likely consider, or assume, that food and weight loss products, especially when the weight loss product is one to be consumed, to be similar enough that a distinction between the two would not be made. Lack of a distinction in services is one factor weighing toward a confusing similarity between two trademarks, but trademark infringement isn't the issue here. Instead, there is probably a devaluing of each commercial provider's brand and message. The dueling use of the song creates a connection between the two commercials, likely one that is unintended and unwanted by the two companies. Trademark licenses should consider possible future exploitation of the property right by competing licensees, and how that exploitation could affect their use. Would a clause in one of the licensee's agreements limiting the licensor's ability to let competitors - or players in a similar industry - use the property be valuable to the licensee? Perhaps the licensor could have extracted a higher premium if it had restricted its ability to grant non-exclusive licenses.
Tom Galvani is patent and trademark attorney practicing in Phoenix, Arizona. His firm, Galvani Legal LLC, provides patent, trademark, copyright and internet law solutions for independent inventors, entrepreneurs and growing companies. For more information, such as the firm's explanatory article How to Pick a Trademark and the video How to Patent and Protect an Invention, please visit the site at http://www.galvanilegal.com.
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