US Court affirms decision over using Army's Trademark

US Court affirms decision over using Army's Trademark

The Federal Circuit held that the Army's trademark on proposed product or marketing materials was not at odds with the trademark law and stated that the Authentic does not provide any legal and factual reason to deviate from the plain reading

The United States Court of Appeals for the Federal Circuit affirms the Court of Federal Claim decision granting summary judgment in favor of the US government concerning the non-exclusive trademark license between the Department of Army and an apparel company (Authentic).

The Federal Circuit held that the broad discretion given to the Army, in the license agreement provision, to use the Army's trademark on proposed product or marketing materials was not at odds with the trademark law. The Federal Circuit came upon the finding, on the plain reading of the license agreement, stating that the Authentic does not provide any legal and factual reason to deviate from the plain reading.

In 2010, the Army granted a non-exclusive license to manufacture and sell clothing displaying the Army's trademark to Authentic, in exchange for royalties. The license agreement states, "(Authentic) shall not have any rights against (the Army) for damages or other remedies by reason of (the Army)'s failure or refusal to grant any approval referred to in this Section 5." This agreement also requires the Army's prior approval to selling and distributing any items. The above terms exempt the liability for denying approval of Authentic's product.

It was in 2014 when Authentic refused to pay any royalties and instead filed a complaint in the Claims Court against the Army alleging that the Army breached the contract and denying Authentic the "right to exploit the goodwill associated with the Army's trademarks," denying Authentic's request to advertise its contributions to certain Army recreational programs, and for denying approval of an advertisement featuring Dwayne "The Rock" Johnson.

The Claims Court decided in favor of the Army stating that the exculpatory clause prevented Authentic from recovering damages based on the government's approval or disapproval of Authentic's requests to use the Army's trademarks on proposed products or marketing materials. Aggrieved by this, Authentic appealed.

The Federal Circuit explained that the license agreement stated in no uncertain terms that the Army had 'sole and absolute discretion.' Relying on the Claims Court observation, the Federal Circuit affirms that the exculpatory clause expressly stated that the Authentic did not have the right to bring the cause of action against the army.

The Circuit stated, "Authentic's argument appears to rest on a premise that trademark licenses carry with them special considerations that make them inherently distinguishable from other types of contract... But we see no indication that the Supreme Court's reasoning in Wells Bros. and Wood depended on the underlying subject matter of the contracts at issue, nor do we discern any reason why it would have… Contracting parties, including parties who contract with the government, are generally held to the terms for which they bargained… That principle is equally applicable in this case"

Thus, the CAFC concluded that the license agreement's provision giving the Army broad approval discretion was not at odds with the principles of trademark law. The CAFC noted that Authentic did not present any legal or factual reasons to deviate from a plain reading of the exculpatory clauses; therefore, the exculpatory clauses were valid and the CAFC affirmed the Claims Court's grant of summary judgment.