Case closed for The Commodores: court overturns decision in band member trade mark dispute

Posted: 18/03/2019

Key points

• When asserting trade mark or related rights, check the chain of title in order to ensure that the rights exist and/or have not reverted to a third party.
• When drafting agreements between band members, particular consideration should be given to the termination and post-termination provisions, in the event that a member leaves or a new member joins, as well as the dispute resolution clauses in the event of a disagreement arising between band members.

The General Court (GC) has annulled a Board of Appeal (BoA) decision to uphold an opposition brought by Commodore Entertainment Corp against Fifth Avenue Entertainment LLC’s EU trade mark (EUTM) application for THE COMMODORES in classes 9 and 41, on the basis that the BoA had failed to take into consideration the fact that the underlying partnership agreement concluded between the founder members of the Commodores had expired.

Background

In October 2014, Fifth Avenue Entertainment LLC (authorised to exercise the IP rights of Mr McClary, one of the founders of the band, and the applicant) applied to register an EUTM for THE COMMODORES in classes 9 and 41. In January 2015, Commodore Entertainment Corp (the opponent, authorised to exercise the IP rights of former band members Mr Orange and Mr King) opposed the application under Article 8(4) of Regulation (EC) 207/2009 (now Article 8(4) of Regulation (EU) 2017/1001). The opposition division dismissed the opposition in May 2016 on the basis that the opponent had not satisfactorily substantiated its grounds of opposition.

In its appeal to the BoA, the opponent was able to establish that its opposition was sufficiently clearly based on unregistered UK common-law passing off rights in the COMMODORES name. The BoA annulled the opposition division’s decision and rejected the application pursuant to Article 8(4) of Regulation (EC) 207/2009. After acknowledging that ownership of the goodwill was at the crux of the dispute, it concluded that the goodwill in the business operating under the name THE COMMODORES was owned by the opponent and protectable under UK law, thereby entitling the opponent to prohibit use of the mark applied for under passing off. It based its conclusion on the terms of a general partnership agreement concluded by the band members on 20 March 1978 (the agreement) and a subsequent amendment dated 1 July 1981 (the amendment), under which the band members had assigned their rights to Commodores Entertainment Publishing Corp, a company that subsequently merged with the opponent.

The applicant appealed the BoA decision to the GC on the basis that: (i) the opponent had not accrued goodwill; and (ii) the applicant owned, at the very least, separate goodwill from that of the opponent, allowing it to use the sign in parallel. In doing so, the applicant highlighted that the term of the agreement was limited to seven years. The agreement had therefore expired, and the rights had reverted to the band members.

GC agreement

The GC agreed. It held that the BoA had erred by failing to examine the legal effects resulting from expiry of the agreement, and by failing to acknowledge that the agreement had expired. With goodwill at the crux of the dispute, the BoA had, mistakenly, “omitted to examine whether the applicant was the co-owner of that right and … the impact of such co-ownership in the light of the national law relied on” and overlooked the fact that “in certain circumstances, several persons can simultaneously own separate goodwill in a name, with the result that they are permitted to use that name simultaneously”. The GC annulled the BoA’s decision and held that it was not necessary to examine the other grounds of appeal raised by the applicant.

Return to news headlines