Monday, May 19, 2008

Chewing Gum Trademark Suit Sent Back to District Court [United States]

A nearly decade-long dispute over the use of formulas for Bazooka bubble gum and other products made by Topps Co. is headed back to a district court following a decision by a federal appeals court.

The 2nd U.S. Circuit Court of Appeals reversed Southern District of New York Judge Charles Haight, finding that he erred in granting summary judgment to Cadbury Stani S.A.I.C. over rights to the formulas in parts of South America.

The decision in The Topps Co. Inc. v. Cadbury Stani, 06-5316-cv. was made by 2nd Circuit Judges Richard Cardamone and Rosemary Pooler and, sitting by designation, Southern District Judge John Keenan. Cardamone wrote for the panel in finding that the case was not ripe for summary judgment.

Topps began licensing the rights to make, sell and distribute Bazooka and other Topps brands in Argentina, Bolivia, Chile, Paraguay and Uruguay to Cadbury Stani in 1957. In exchange for royalties on Stani's sales, the company promised to share "the know-how, formulae, processes and techniques used by Topps."

In 1976, Topps and Stani reached a new agreement that called for the continued sharing of "manufacturing technology, marketing concepts and techniques, administrative and consultive assistance and trademark use" in exchange for license fees. Under this agreement, Stani would be able to sell "licensed products utilizing Topps technology."

The companies reached an amended license agreement with nearly identical language in 1980, at the same time signing an escrow agreement that called for the holding in escrow of stock certificates in an entity called Verco Holding Corp. until 1996, when they would be transferred to Stani's owner.

Stani agreed to pay $100,000 to Topps in exchange for the transfer under the agreement, which stated in the preamble that "Topps has transferred legal title to the registration in Argentina of the trademarks 'Bazooka', 'Topps' and other trademarks to the Verco Holding Corp."

The license agreement expired in 1996. Topps filed suit in 1999, claiming Stani continued to use its chewing gum formulas and that it had transferred those formulas and other Topps technology to its parent company, Cadbury. Topps claimed this was a violation of the 1980 licensing agreement.

Haight found that Stani retained the right to use the formulas after the expiration of the agreement in 1996. He granted Cadbury Stani summary judgment after finding Stani had not misappropriated trade secrets and had not breached the contract.

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