April 11, 2021

Volume XI, Number 101

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Vested Rights Clause Restores Trademark to Original Applicant

Addressing the issue of trademark ownership under since-terminated development and commercialization agreements, the US Court of Appeals for the Third Circuit reversed in part and affirmed in part, finding that under a “vested rights” clause, there was no transfer of a trademark under a later assets purchase agreement, and the original applicant remained the rightful owner of the trademark. Sköld v. Galderma Laboratories L.P., Case Nos. 17-3148, -3231 (3d Cir. Feb. 28, 2019) (Jordan, J).

Sköld invented a proprietary drug-delivery system for skincare products that he called “Restoraderm.” He began searching for a development partner and, in 2001, signed a letter of intent with CollaGenex for the co-development of skincare product. This letter stated that “[a]ll trade marks associated with the drug delivery system; the proposed intellectual property; products deriving therefrom and products marketed or to be marketed by CollaGenex and/or any commercial partner of CollaGenex anywhere in the world shall be applied for and registered in the name of CollaGenex and be the exclusive property of CollaGenex.” Shortly thereafter, in 2002, the parties signed a Co-Operation, Development and Licensing Agreement, which further stated that “[a]ll trade marks applied for or registered (including ‘Restoraderm’) shall be in the sole name of CollaGenex and be the exclusive property of CollaGenex during the Term and thereafter.” Importantly, this 2002 agreement also included a clause stating that vested rights would survive the termination of the agreement.

Following execution of the 2002 agreement, CollaGenex filed an application to register the RESTORADERM trademark with the US Patent and Trademark Office. Two years later, the parties entered into an Asset Purchase and Product Development Agreement, which replaced the 2002 agreement, but, unlike the 2002 agreement, did not explicitly address trademarks. In 2008, Galderma bought CollaGenex and shortly thereafter terminated the 2004 agreement with Sköld. Galderma ceased use of Sköld’s technology but continued to market certain products under the RESTORADERM mark. Sköld requested that Galderma return certain assets, including the RESTORADERM trademark, and after Galderma refused, Sköld sued for trademark infringement, unfair competition, false advertising, breach of contract, unfair competition and unfair enrichment.

Galderma moved for summary judgment, arguing that Sköld did not own the RESTORADERM trademark and therefore all of his claims must fail. The district court denied summary judgment, finding that the 2004 agreement voided any rights Galderma might have had in the mark under the 2002 agreement, and allowed the case to proceed to trial to determine ownership of the mark under certain provisions in the 2004 agreement. At trial, the jury decided that Sköld owned the mark and that he had proven unjust enrichment, but had failed to prove infringement, unfair competition, false advertising and breach of contract. Both parties appealed.

On appeal, the Third Circuit held that Galderma was the rightful owner of the RESTORADERM mark, stating that “the 2002 Agreement unambiguously provided for the transfer of the mark to Galderma’s predecessor in interest, CollaGenex.” Moreover, CollaGenex’s rights in the RESTORADERM trademark vested when the mark achieved registration, and, therefore, given the 2002 agreement’s survivorship clause for vested rights, CollaGenex (now Galderma) was the rightful owner: “Even assuming that the 2004 Agreement completely superseded the 2002 Agreement, it did nothing to disturb those vested rights. The ownership issue should not have gone to the jury.”

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© 2021 McDermott Will & EmeryNational Law Review, Volume IX, Number 116
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TRENDING LEGAL ANALYSIS

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About this Author

Eleanor (Ellie) B. Atkins, Trademark, Copyright Attorney, McDermott Will Law Firm
Associate

Eleanor (Ellie) B. Atkins focuses her practice on trademark, copyright, sweepstakes and promotions, and false advertising matters.

Ellie is experienced in client counsel, strategy and legal research, including portfolio management and the selection, clearance, prosecution, registration and enforcement of trademarks. Additionally, she has assisted with district court litigation as well as actions before the Trademark Trial and Appeal Board, including drafting complaints, discovery requests and briefs in support of various motions.

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202-756-8392
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