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Dow Chemical Company v. Mahlum12/31/1998
the liability claims brought by the Mahlums. In 1975, Dow Corning and Dow Chemical memorialized an agreement in which Dow Chemical licensed the "Dow" trademark to Dow Corning. The agreement recited that Dow Chemical had established a valuable reputation under its corporate name "Dow." The agreement confirmed and ratified Dow Corning's use of the Dow mark, so that the valuable reputation established in the name Dow would be passed on to Dow Corning. The agreement also provided as follows:
"The products manufactured, distributed and sold or any services rendered under The Corporate Title [Dow Corning Corporation] , The Trade Name [Dow Corning] , The Design Trademark [double rectangle], or other trademarks containing, consisting of or comprising "DOW CORNING" shall be of a nature and quality that is acceptable to Dow [Chemical] Company and shall not damage or reflect adversely on the reputation or goodwill associated with the name and mark "DOW". When requested, [Dow Corning] shall at reasonable times and places submit specimens of its products to Dow [Chemical] Company and shall permit inspection of [Dow Corning's] premises at reasonable times . . . to examine the quality of such products."
The agreement stated that Dow Chemical and Corning had "controlled" the operations and the quality of goods and services of Dow Corning since that company's inception in 1943. Id. Dow Chemical thus maintained the authority to approve products using the Dow Corning mark. Dow Chemical could also require that Dow Corning terminate all use of the name Dow or any product not approved by Dow Chemical.
The Mahlums argued at trial and on appeal that the agreement demonstrated that Dow Chemical controlled the operations of Dow Corning and that Dow Chemical had the right to inspect and approve Dow Corning's breast implants. Dow Chemical argued that the agreement has little significance and that the language regarding control was required under the Lanham Trademark Act of 1946, 15 U.S.C. § 1051. According to Dow Chemical, there is no evidence that Dow Chemical exercised any control under this agreement regarding Dow Corning's breast implants. The head of Dow Corning's breast implant business testified that Dow Chemical never exercised any control over Dow Corning's breast implant business, and that he never knew of the agreement's existence.
One of the leading authorities on trademarks states that " icensing a mark without adequate control over the quality of goods or services sold under the mark by the licensee may cause the mark to lose its significance as a symbol of equal quality -- hence, abandonment." J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 17:6, at 17-6 (4th ed. 1998) (McCarthy). "Today, trademark licensing is permitted so long as the licensor maintains adequate control over the nature and quality of goods and services sold under the mark by the licensee." Id. , § 18:42, at 18-66. The licensor thus has a duty to control the quality of the goods and services sold under the mark; if it fails to do so, it may forfeit its right to the mark. See id. , §§ 18: 66 -68; Dawn Donut Co. v. Hart's Food Stores, Inc. , 267 F. 2d 358 (2d Cir. 1959).
In this case, no significance should attach to the agreement as evidence of Dow Chemical's "control" of Dow Corning, or evidence of conspiracy or concert of action to make misrepresentations to consumers of Dow Corning's breast implants. The "control" language was almost certainly placed in the agreement to protect Dow's right to the name "Dow" when associated with the "Dow Corning" mark. There is no evidence that Dow Chemical exercised any control or even inspected Dow Corning's breast implants under this agreement.
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