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The Perils of Naked Licensing

By Christopher P. Bussert
February 28, 2011

Naked licensing occurs when a trademark owner fails to exercise sufficient quality control over a licensee's use of a licensed trademark. When naked licensing is found, the subject trademark is deemed to have lost its ability to represent the quality of products or services consumers have come to expect. Cases involving true naked licensing issues are relatively rare. Those that include significant analysis are rarer still. A recent Ninth Circuit decision involving a not-for-profit entity dedicated to “freecycling” (i.e., a recycling practice of finding new uses for unwanted items) serves as a reminder to trademark owners about the pitfalls of failing to exercise sufficient quality control over licensees. See Freecyclesunnyvale v. The Freecycle Network, 626 F. 3d 509 (9th Cir. 2010).

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