Western Glove Works v. XMH Corp. 1
647 F.3d 690
| 7th Cir. | 2011Background
- XMH sought bankruptcy relief and planned to assign Blue’s assets, including a contract with Western Glove Works, to purchasers Emerisque and SKNL.
- Western objected, arguing the contract was a sublicense of Western’s trademark and not assignable without Western’s consent.
- Bankruptcy court denied the assignment; XMH appealed and sought to renegotiate terms with the purchasers.
- On appeal, Western argued the purchasers waived appeal rights, and the district court substituted the purchasers for XMH.
- The court analyzed whether a trademark license is assignable absent an express clause and whether an implied license could exist.
- The court held that trademark licenses are not assignable without express permission and that the service provisions did not create an implied license.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are trademark licenses assignable without consent absent a clause? | XMH argued licenses may be assigned if allowed by bankruptcy goals. | Western argued licenses require express permission to assign to protect quality. | No; licenses are not assignable absent express permission. |
| Can an implied trademark license arise from a contract’s non-licensing provisions? | XMH contended the ongoing services arrangement could imply a license. | Western contends the agreement clearly distinguishes services from a license and expired the license. | No implied license; the contract does not create an ongoing trademark license. |
| Was the assignment order appealable/final on remand? | XMH and purchasers argued finality principles supported review despite remand. | Western argued the remand order was not final. | Remand order was sufficiently final for appeal; district court could finalize assignment upon remand. |
Key Cases Cited
- United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90 (U.S. 1918) (trademark use and control integrity concerns)
- Eva’s Bridal Ltd. v. Halanick Enterprises, Inc., 639 F.3d 788 (7th Cir. 2011) (naked license concept; control over quality)
- Gorenstein Enterprises, Inc. v. Quality Care-USA, Inc., 874 F.2d 431 (7th Cir. 1989) (quality control as core trademark concern)
- Miller v. Glenn Miller Productions, Inc., 454 F.3d 975 (9th Cir. 2006) (default rule against assignment of trademark licenses)
- In re Midway Airlines, Inc., 6 F.3d 492 (4th Cir. 1993) (bankruptcy assignment principles)
- International Armor & Limousine Co. v. Moloney Coachbuilders, Inc., 272 F.3d 912 (7th Cir. 2001) (suits over trademark licenses are state-law matters)
- Gibraltar, P.R., Inc. v. Otoki Group, Inc., 104 F.3d 616 (4th Cir. 1997) (state-law treatment of license transfers)
- Gaiman v. McFarlane, 360 F.3d 644 (7th Cir. 2004) (copyright-like considerations in licensing (contextual))