RMC Intеrnational Ltd., and its officers Michael Resmo and Joseph Malaga, appeal the district court’s judgment, following a jury trial, in favor of Sengoku Works Ltd. for trademark and trade dress infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127, and breach of contract under California law. RMC had served since 1985 as exclusive United States distributor of kerosene heaters manufactured by Sengoku, a Japanese corporation, and these charges arose in connection with RMC’s decision to market kerosene heaters from another sourсe.
In this opinion we address only the issue of ownership of the Keroheat trademark. All the other issues are disposed of in a separate unpublished disposition.
I
RMC is an importer of portable kerosene heaters. From 1985 to 1994, it imported and sold exclusively heaters manufactured by Sengoku, pursuant to yearly contracts signed by the parties. These contracts included exclusivity provisions, under which Sengoku appointed RMC its exclusive U.S. distributor, and RMC agreed to distribute only Sengoku-manufactured heaters. As part of this arrаngement, Sengoku sold the heaters to an independent trading company, Zenith & Co., who then sold them to RMC. The RMC/Zenith/Sengoku heaters bore the trademark “Keroheat.”
RMC maintains that they had no valid contract with Sengoku for 1994. For the first quarter of 1994, RMC performed as it had for the previous nine years. But in late March Sengoku became aware that RMC was selling heaters to Sengoku’s largest U.S. customer that were manufactured by Woosh-in, and thаt bore the Keroheat trademark and closely resembled Sengoku’s heaters. Sengoku filed suit against RMC for breaching the exclusivity provision of their contract, and for trademark and trade dress infringement.
Sengoku and RMC each claim ownership of the Keroheat trademark. From 1982 to 1985, prior to the Sengoku/RMC agreements, Sengoku heaters bearing the Keroheat mark were sold to a trading company called Imar-flex, and were then sold in the U.S. by C.C.I., a company partially owned by Cort Clark. In 1985, Clark sued Imarflex for breaсh of contract and trademark infringement, claiming that he owned the Keroheat trademark. After the Sengoku/Imarflex/Clark deal ended, Clark then founded RMC, with Michael Resmo and Joseph Malaga. RMC began selling Sengoku heaters under the Keroheat mark in 1985, and obtаined a federal registration of the mark. Clark left RMC in 1992, and now works for Sengoku.
In July 1994 the district court granted Sengoku a preliminary injunction to enjoin RMC from selling the Wooshin heater bearing the Keroheat mark. After a seven day jury trial, the jury found for Sengoku on all claims. The jury awаrded Sengoku only $1.00 in damages on the trademark infringement claim. The district court then ordered the cancellation of RMC’s federal trademark registration for Keroheat, and entered a permanent injunction barring RMC from using the mark. The district court also denied RMC’s рost-trial motions for judgment as a matter of law and for a new trial. This appeal followed.
II
Both parties agree that RMC did distribute heaters bearing the Keroheat trademark that were not manufactured by Sengoku. However, they both claim ownership of the Keroheat trademark, and this issue is central to the finding for Sengoku on trademark infringement.
Challenges to the sufficiency of the evidence and the denial of a motion for judgment notwithstanding the verdict are reviewed de novo to determine if the plaintiffs claims werе supported by substantial evidence. Erickson v. Pierce County, 960 F.2d 801, 804 (9th Cir.), cert. denied,
It is axiomatic in trademark law that the.standard test of ownership is priority of use. To acquire ownership of a trademark it is not enough to have invented the mark first or even to have registered it first; the party claiming ownership must have been the first to actually use the mark in the sale of goods or services. See generally J. Thomas McCarthy, 2 McCarthy on Trademarks and Unfair Competition § 16.03 (3d ed.1996) (hereinafter McCarthy). When proving ownership of a trademark, federal registration of the mark is prima facie evidence that the registrant is the owner of the mark. Lanham Act. § 7(b), 15 U.S.C. § 1057(b); Lanham Act § 33(a), 15 U.S.C. § 1115(a). Therefore, the registrant is granted a presumption of ownership, dating to the filing date of the application for federal registration, and the challenger must overcome this presumption by a preponderance of the evi
Disputes over trademark ownership often arise when the mark is used on goods that are manufactured by one company, but are marketed by another pursuant to an exclusive distributorship agreement. These relationships usually arise in one of two factual situations: either (1) the manufacturer licenses the distributor to use a trademark owned by the manufacturer, or (2) the distributor owns its own mark, sоmetimes called a “private label,” which it affixes to the manufacturer’s product before delivery. In either case, the ownership of the mark turns on which party was the initial owner.
Unfortunately, not every distribution agreement fits clearly into one of these two categories. When disputes arise between a manufacturer and distributor, courts will look first to any agreement between the parties regarding trademark rights. Premier Dental Products v. Darby Dental Supply Co.,
The presumption in favor of the manufacturer is rebuttable, however, and а long-standing line of precedent holds that an exclusive distributor may acquire trademark rights superior to those of the manufacturer. See Menendez v. Holt,
(1) which party invented and first affixed the mark onto the product;
(2) which party’s name appeared with the trademark;
(3) whiсh party maintained the quality and uniformity of the product; and
(4) with which party the public identified the product and to whom purchasers made complaints.
Omega Nutrition,
On appeal (and at trial), Sengoku seemed to argue that once it was established that Sengoku was the manufacturer and RMC was the exclusive distributor, then the issue of trademark ownership is resolved — in other words, if this was a manufaeturer/exelusive distributor relationship, then Sengoku is entitled to the presumption in favor of the manufacturer and has therefore established its ownership of the trademark. This is, however, an oversimplification of the law.
The determinative issuе is not which label is placed upon the relationship, but rather which party can establish priority of owner
While this is a close question, we find that there is substantial evidence in the record to support a finding that Sengoku owned the trademark. Sengoku first affixed the Keroheat mark to its heaters in 1982, at least two years before RMC began distributing Keroheat heaters. RMC’s federal registration of the mark was not acquired until 1992, and RMC claimed it first used the mark in commerce in 1985. Although RMC claims that CCI, the exclusive distributor before RMC, owned the trademark, there is no evidence that ownership was transferred to RMC. Thus, the jury could reasonably have found that Sengoku established prior use.
Furthermore, when considеring the factors that go to trademark ownership, some support Sengoku’s argument, and some support RMC’s. Only RMC’s name appears on the product and packaging, and RMC handles all customer complaints and returns. However, Sengoku exercises contrоl over the product quality and uniformity, and Sengoku apparently first affixed the trademark to its heaters. Also, other dealers in the business testified that they attribute the heaters bearing the Keroheat mark to Sengoku.
In determining whether substantial evidence supports a jury verdict, we cannot simply substitute our judgment for that of the jury. We must consider whether the record contains substantial evidence upon which reasonable minds could base the verdict. In this case, we find that the jury could reasonably have found that Sengoku owned the trademark. Therefore, we affirm the jury’s verdict for Sengoku on trademark infringement.
Ill
RMC also challenges the jury instructions on trademark ownership. RMC claims that the instructions as formulated allowed the jury to find that because Sengoku was a foreign manufacturer it owned the trademark regardless of prior acquisition, and regardless of any other factors that prove ownership.
When evaluating the formulation of jury instructions, we consider the instructions as a whole and review them for an abuse of discretion. Gizoni v. Southwest Marine Inc.,
Second, RMC claims that the instruction сreated an improper presumption, which allowed the jury to find that because Sengoku was the foreign manufacturer of the heaters, it was the owner of the mark, regardless of the evidence to the contrary. RMC correctly points out that the determinative issue on ownership is usually priority of use. See Wrist-Rocket II,
These instructions, taken as a whole, indicate that this presumption may apply here, but also that therе are several other factors to consider as well — such as the origin of the trademark, whether the defendant had federally registered the mark, which party consumers believed to be the source of the goods identified, and which party controlled thе quality and design of the goods. As a result, we find that these instructions, taken as a whole, adequately cover the issues, correctly state the law, and are not misleading. See Fikes v. Cleghorn,
IV
For the foregoing reasons, we hold that the jury’s verdict for Sengoku on trademark infringement is supported by substantial evidence, and is therefore AFFIRMED.