Tunnel View – Photo by David Iliff. License: CC-BY-SA 3.0
As the saying goes, possession is nine-tenths of the law. That other tenth can be pretty complicated, depending on what you’re “possessing.” When you’re arguing with an older brother over who “possesses” the remote control, it’s an open and shut case. But what about “possession” of trademarks? Trademarks represent the goodwill associated with a mark and the quality of the products or services sold under the mark. How do you “possess” goodwill?
This tension underlies a recent conflict between the National Park Service and former concessionaire DNC Parks & Resorts at Yosemite, Inc. As you probably guessed, the dispute has something to do with the “former” part of that last sentence. After the Park Service declined to renew the contract, DNC was required to sell its proprietary rights (fixtures, buildings, vehicles, etc.). DNC expected to be compensated for the trademarks associated with its services, such as Badger Pass, Ahwahnee Hotel, Curry Village, Wawona Hotel, and more. DNC valued these trademarks at $51 million. The Park Service disagreed with the valuation and, ultimately, stated that if the trademarks were not available for use, the new concessionaire could simply rename the buildings. After nearly 10 months without obtaining a satisfactory resolution, DNC filed a lawsuit with the U.S. Court of Federal Claims.
DNC’s complaint is not a traditional claim of infringement but instead a breach of contract. DNC claims that the contracts signed among the parties required the new concessionaire to purchase the intellectual property from DNC. Back before the acrimony, DNC entered into a concession contract with the Park Service to provide services in Yosemite National Park. The services include operation of hotels, restaurants, and entertainment services such as the ski area, golf course, and other services.
For more than 20 years, DNC operated the establishments in Yosemite. They maintained the premises, cleaned the hotel rooms, and did all the items one would expect a business to do to build valuable goodwill and reputation associated with a brand. But did DNC possess the trademarks and service marks? Or was it merely a licensee of the Parks Service?
DNC’s contract requires the new concessionaire to purchase physical property, fixtures, and “other property.” DNC argues that intellectual property such as trademarks qualifies as “other property.” On its face, it seems like a relatively weak claim. However, prior to DNC, these services had been provided for more than 100 years by a single company, Yosemite Park & Curry Company (“Curry”). Curry successfully registered a number of marks with the U.S. Patent and Trademark Office. DNC’s original contract required it to purchase “intangible assets” from Curry, and Curry transferred these registrations to DNC after DNC took over operations. On a whole, these facts make DNC’s argument more plausible.
Unsurprisingly, this is not the first dispute of its kind. In 2006, the Ninth Circuit sided with a concessionaire over the State of California in Dept. of Parks and Rec. Bd. of Cal. v. Bazaar Del Mundo, Inc., 448 F.3d 1118 (9th Cir. 2006). More recently, a similar dispute arose between the Park Service and a concessionaire operating at the Grand Canyon. Ultimately, the concessionaire agreed to back down.
Fortunately for the Park Service, Congress has its back with a new law that took effect last December. The law is codified at 54 U.S.C. § 302106 and provides:
Notwithstanding section 43(c) of the Act of July 5, 1946 (known as the Trademark Act of 1946) (15 U.S.C. 1125(c)), buildings and structures on or eligible for inclusion on the National Register (either individually or as part of a historic district), or designated as an individual landmark or as a contributing building in a historic district by a unit of State or local government, may retain the name historically associated with the building or structure.
The provision allows the Park Services to continue to use the names of landmarks and buildings, what convenient timing! But what does “retain the name” mean? Can Park Services merely identify the buildings as their historical names? Or can it do more? Can DNC also use the marks? Could DNC maintain an infringement action if the Parks Service or its licensees do more than simply “retain the name?”
The provision helps, but it doesn’t address the real issue: does DNC own these trademarks? The Park Service exercises some quality control over the services, including the ability to terminate the contract. And it seems likely that public associates the hotel names like Ahwahnee Hotel with the Yosemite National Park, rather than a particular vendor. Does that mean the Park Service is the owner of the marks? Or, because of the inherent connection with Yosemite Park, are the names simply un-ownable when used in connection with services offered within Yosemite Park? Do they instead belong to the public?
It is possible that DNC’s lawsuit may succeed. However, if DNC wins, it may be the last successful concessionaire lawsuit as Congress may choose to further amend Section 302106 to make it even more difficult for concessionaires to bring similar lawsuits in the future.