Background
Plaintiffs Yi-Sheng Fang and Hechalou International, LLC sued Defendants Johanna Chen and Hechalou US, LLC for trademark infringement. The district court entered a preliminary injunction against the defendants. Defendants appealed, arguing they had superior rights to the marks because they were the first to use them in commerce.
The court’s reasoning
The court reviewed the grant of a preliminary injunction for abuse of discretion. To prevail on a Lanham Act trademark claim, a plaintiff must prove a protectible ownership interest and likely consumer confusion. Ownership requires being the first to actually use the mark in commerce. The court found it undisputed that when defendants first used the marks in March two thousand twenty-four, they were operating under a licensing agreement with the plaintiffs’ parent corporation. The agreement acknowledged the plaintiffs as owners and permitted use only through a limited license. Under federal law, a licensee’s use inures to the benefit of the licensor. Defendants argued the agreement was rescinded in April two thousand twenty-five, rendering it void ab initio. The court held that rescission does not change the fact that the initial use was with permission. Therefore, the defendants’ use inured to the benefit of the plaintiffs, establishing the plaintiffs’ priority.
Because Defendants were operating as licensees when they first used the marks in commerce, their use of the marks inure[d] to the benefit of Plaintiffs.
15 U.S.C. § 1055
What it means going forward
The ruling reinforces that a licensee’s use of a trademark inures to the licensor’s benefit, and subsequent rescission of the license does not retroactively grant ownership rights to the licensee for the period of authorized use.
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