Background
Ascent Classical Academies, a nonprofit managing charter schools, sued Ascent Classical Academy Charter Schools, Inc., for trademark infringement after their business relationship ended. The dispute centered on a Management Contract that granted the charter schools a license to use Ascent’s trade names and trademarks. The district court had dismissed the case, ruling the contract unambiguously granted the charter schools an unlimited right to use the school names and their permutations after termination, leaving Ascent without a protectable interest.
The court’s reasoning
The Tenth Circuit applied Colorado contract law, which requires courts to enforce unambiguous contracts based on plain meaning but to consider extrinsic evidence when a contract is susceptible to more than one reasonable interpretation. The court analyzed Section Three, Section R, Sentence Five of the Management Contracts, which granted the school the right to use its name as a trade name after termination. The court found two reasonable interpretations: one allowing unlimited use of permutations and another limiting use to the exact full names. Because both interpretations were reasonable, the contract was deemed ambiguous, and its meaning could not be resolved on a motion to dismiss.
What it means going forward
The reversal allows the trademark infringement claims to proceed to discovery and trial, where the court will examine extrinsic evidence to determine the parties’ actual intent regarding the scope of name usage rights after the contract ended.