ICEE licensee denied relief under Federal Trademark Dilution Act

In ICEE Distributors Inc v J&J Snack Foods Inc, the US Court of Appeals for the Fifth Circuit has held that an exclusive licensee of a trademark has no standing to sue under the Federal Trademark Dilution Act because it is not the owner of the mark.

ICEE of America Inc (IOA), owner of the ICEE mark, had granted ICEE Distributors (Distributors) an exclusive licence to use the mark in specific geographic areas to sell a frozen soft drink in a tube. When J&J Snack Foods began selling ICEE tubes to Wal-Mart stores located in Distributors' exclusive territories, Distributors sued J&J, Wal-Mart and IOA for trademark infringement, dilution and breach of Distributors' licence agreement.

The Fifth Circuit affirmed a district court's decision to grant a permanent injunction prohibiting J&J and Wal-Mart from distributing ICEE tubes. Although the appellate court found that Distributors has no standing to sue under the Federal Trademark Dilution Act because it is not the owner of the ICEE mark, it held that the injunction was still sustainable on the grounds of breach of contract. IOA's grant of a licence to J&J to sell ICEE tubes breached the terms of IOA's exclusive licence agreement with Distributors, and the district court's entry of an injunction against the defendants was proper in view of the irreparable harm arising from Wal-Mart's continued distribution of ICEE tubes in violation of Distributors' contractual rights.

Virginia R Richard, Winston & Strawn, New York