Lavatec Laundry Tech. v. Lavatec, Inc.

When two related companies claim to be the first user of a trademark there is a rebuttable presumption that the manufacturer owns the trademark.

Opinion (Underhill): Both Lavatec Laundry Technology (LLT), plaintiff, and Lavatec Inc. (New Lavatec), defendant, are engaged in the manufacture, sale, and service of commercial laundry equipment. LLT brought an action for trademark infringement, false designation of origin, unfair trade practices, unfair competition, and tortious interference with contractual relationships and New Lavatech counterclaims for the aforementioned causes of action and for misappropriation of trade secrets. New Lavatech claims that they acquired the trademark through bankruptcy proceedings involving Lavatec Germany’s wholly-owned US subsidiary Lavatec, Inc. (Old Lavatec). The purchase agreement for LLT stated that the company did not have exclusive rights to the trademark, however, Old Lavatech had not filed to register the trademark in the United States until 2010 which was after LLT’s purchase of the company. When Old Lavatech was sold as part of a bankruptcy proceeding, they listed the trademark as an asset. Trademark rights are generally acquired through priority of use, however, when the parties are related the allows the entity that controls the mark to claim benefit and ownership. A related company is any person whose use of the mark is controlled by the owner of the mark with respect to the nature and quality of the foods or services on or in connection with which the mark is used. When the parties are a manufacturer and a distributor, courts will look first to the agreement between the parties regarding trademark rights. In absence of an agreement, the manufacturer is presumed to own the trademark, unless the distributor can establish a superior right of ownership by demonstrating other factors, including control of the quality of the product. The court held that LLT is the owner of the “Lavatec” trademark because New Lavatec did not establish first use and issued a declaratory judgment to that effect.