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by Andrew Flake

What’s in a name? In the world of garage doors, apparently quite a bit. For this week’s blog, we examine a protracted piece of litigation between two national garage-door companies that itself spawned further litigation. The case is interesting in its own right, for its discussion of IP protection and trademark licensing, but most importantly for your author, it helps us draw out some guiding principles for how we think about settlement.

The background is that after two years of federal court litigation over the use of marks like “Overhead” and “Overhead Door,” national competitors Overhead Door Corporation and Overhead Garage Door (OGD) settled — though as you might imagine, that’s not the end of the story.

Companies with a national profile and national marks will often license, or give permission, to third parties to use the same trademarks. One of those licensees, for Overhead Door, was D.H. Pace Co., to which Overhead Door gave the right to sell products and use the specified “Overhead Door” trademarks. And when they settled their case, Overhead Door and OGD referenced licensees like in two ways, both very broadly.

First, they excluded from their settlement any future conduct: “The Parties expressly acknowledge that this Agreement shall not be binding on … (2) current and future licensees, distributors, and resellers of [Overhead Door Corporation]…”

Second, they excluded from their settlement different conduct: A provision captioned “Potential Distributor Lawsuits” provided that “[Overhead Door Corporation] shall not direct any of its distributors or licensees to take legal action against OGD if the acts of OGD that are the basis for such legal action would not amount to breach of this Agreement. For clarity, this limitation shall not apply to any claims of any [Overhead Door Corporation] distributor or licensee that are based on conduct of OGD that is not the subject of this Agreement.

We can imagine counsel in the mediation room, wanting to be cautious in the scope of their release. Still, the agreement left open a door, and through it, came yet more “Overhead Door” litigation, this time involving Pace.

Pace itself was competing with OGD in cities like Atlanta with OGD, and it clearly had its own gripes with OGD over trademark use. These concerns led Pace to file its own separate complaint here in the Northern District of Georgia against OGD.

The district court determine on motion that Pace’s own written license agreement with Overhead Door — which did not spell out or address whether and to what extent Pace could enforce those trademarks or sue — was a bar to Pace’s claims.

The question on appeal was whether that was correct, whether because the Pace-Overhead Door license agreement was missing that language, Pace did have the ability to sue.

The answer turned in large part on a reading of the Lanham Act. While true that a trademark owner who allows a third-party to use its marks, will often specify whether the licensee has the ability to enforce them, including whether the licensee’s right to do so is limited in any way, is such language required?

Writing for the court, Judge Branch determined it was not. She did not view the absence of this type of enabling language as a bar; nor was Pace’s non-exclusive licensee status, a bar, since Pace had been harmed and was suing under Section 43(a) as a competitor and not as the actual trademark registrant; nor was the carve-out language in the Overhead Door-OGD Settlement Agreement.

The decision is worth reviewing for license-agreement drafters and the lawyers who litigate them, particularly because the licensor-licensee-competitor dynamic is a recurring one in litigation. And next week, with the usual caveat about the clarity of hindsight, we’ll use the case to help think through some settlement and dispute-resolution principles we can ourselves employ.

[The case is D.H. Pace Co. v. OGD Equip. Co., LLC, No. 22-10985 (11th Cir. Aug. 22, 2023).]