had been used worked an abandonment. The theory of these cases was that:
"A trade-mark is intended to identify the goods of the owner and to safeguard his good will. The designation if employed by a person other than the one whose business it serves to identify would be misleading. Consequently, 'a right to the use of a trade-mark or a trade-name cannot be transferred in gross.'" American Broadcasting Co. v. Wahl Co., supra, 121 F.2d at page 413.
Other courts were somewhat more liberal and held that a trademark could be licensed separately from the business in connection with which it had been used provided that the licensor retained control over the quality of the goods produced by the licensee. E.I. DuPont de Nemours & Co. v. Celanese Corporation of America, 1948, 167 F.2d 484, 35 C.C.P.A. 1061, 3 A.L.R.2d 1213. But even in the DuPont case the court was careful to point out that naked licensing, viz. the grant of licenses without the retention of control, was invalid.
The Lanham Act clearly carries forward the view of these latter cases that controlled licensing does not work an abandonment of the licensor's registration, while a system of naked licensing does. 15 U.S.C.A. § 1055 provides:
"Where a registered mark or a mark sought to be registered is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant or applicant for registration, and such use shall not affect the validity of such mark or of its registration, provided such mark is not used in such manner as to deceive the public."
And 15 U.S.C.A. § 1127 defines "related company" to mean "any person who legitimately controls or is controlled by the registrant or applicant for registration in respect to the nature and quality of the goods or services in connection with which the mark is used."
Without the requirement of control, the right of a trademark owner to license his mark separately from the business in connection with which it has been used would create the danger that products bearing the same trademark might be of diverse qualities. If the licensor is not compelled to take some reasonable steps to prevent misuses of his trademark in the hands of others the public will be deprived of its most effective protection against misleading uses of a trademark. The public is hardly in a position to uncover deceptive uses of a trademark before they occur and will be at best slow to detect them after they happen. Thus, unless the licensor exercises supervision and control over the operations of its licensees the risk that the public will be unwittingly deceived will be increased and this is precisely what the Act is in part designed to prevent. Clearly the only effective way to protect the public where a trademark is used by licensees is to place on the licensor the affirmative duty of policing in a reasonable manner the activities of his licensees.
Those principles, coupled with the identical treatment of trademarks and trade names in that respect (note Dawn Donut's quotation from American Broadcasting to that effect), also spell the doom of any claim under Section 1125(a) for the asserted infringement of any trade name that has been the subject matter of a naked license. And if no jurisdictional predicate exists for such a claim, then by definition there is no "supplemental jurisdiction" under Section 1367's recent replacement of the pendent jurisdiction concept (for by definition there must be an original-jurisdiction anchor to which the supplemental jurisdiction can attach).
Accordingly GCS's counsel is ordered to file in this Court's chambers on or before March 9, 1992 an explanation of the asserted jurisdictional predicate for its Lanham Act claim. Failing that, or if the explanation does not do the job, this action will have to be dismissed forthwith for lack of subject matter jurisdiction as to Count I and for lack of supplemental jurisdiction as to Count II--though the latter dismissal would obviously be without prejudice to the reassertion of that state-law claim in a state court of competent jurisdiction.
Milton I. Shadur, United States District Judge
Date: February 27, 1992