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Keywords

contractplaintiffdefendantinjunctionmotionwilltrademarkcorporation
contractplaintiffdefendantappealmotionwilltrademark

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Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 847 F.Supp. 18, 33 U.S.P.Q.2d 1961

Facts

In this trademark infringement and unfair competition case, Dial-A-Mattress Operating Corp. brought action against Mattress Madness, Inc. and other defendants for the wrongful use of the name 'Dial-A-Mattress.' The bedding business claimed that it had acquired the rights to the name through a contract with a defunct corporation. The defendants sought reconsideration of a preliminary injunction that prohibited them from using the name in commerce, arguing that their ownership interests were not adequately considered. The court found that the defendants were bound by the contract and that their arguments lacked merit.

Issue

Whether the defendants' motions for reconsideration of the preliminary injunction should be granted.

These arguments are without merit and defendants' motions must be denied.

Rule

An agreement conferring a license to use a trademark for an indefinite time is terminable-at-will by the licensor. The party who succeeds to ownership of a trademark also succeeds to the right to terminate any licenses associated with that trademark. Any preexisting rights of third parties are irrelevant if the original entity has gone out of business without transferring its assets.

Agreement conferring license to use trademark for indefinite time, whether oral, written or by implication, is terminable-at-will by licensor.

Analysis

The court determined that the defendants' claims regarding their ownership interests were immaterial to the case. Since the plaintiff had succeeded to the ownership of the 'Dial-A-Mattress' mark, it also had the right to terminate any licenses previously granted. The court found that the defendants had been given ample notice to cease using the mark, and their arguments for reconsideration were without merit.

Conclusion

The court denied the defendants' motions for reconsideration and for a stay of the preliminary injunction, affirming that the defendants were bound by the terms of the contract.

Accordingly, defendants' motion for reconsideration and defendants' motion for a stay pending appeal are hereby denied.

Who won?

Dial-A-Mattress Operating Corp. prevailed in this case as the court upheld the preliminary injunction against the defendants. The court found that the defendants' arguments regarding ownership interests and licenses were without merit, and that they were bound by the contract terms. The court emphasized that the plaintiff's rights to the trademark were clear and that the defendants had been adequately notified to cease their use of the mark.

In light of this Court's prior ruling that the defendants' effort to avoid the contract is tantamount to fraud upon plaintiff, we find no difficulty in holding all of the defendants to be bound by the terms of the contract as interpreted in this Court's prior decision.

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