Chicago Mercantile Exchange Inc. v. ICE Clear US, Inc., No. 18 C 1376, Slip Op. (N.D. Ill. Feb. 1, 2019) (Kennelly, J.).
Judge Kennelly granted defendants’ (collectively “ICE”) Fed. R. Civ. P. 12(b)(6) motion to dismiss and motion to strike paragraphs of the complaint in this Lanham Act and breach of contract case involving plaintiff CME’s SPAN trademarks related to a method of assessing portfolio risk.
The legal principle that a trademark owner may not transfer its duty to supervise and police its marks, does not prevent contractual obligations requiring a licensee to use best efforts to protect the mark’s goodwill and to provide licensor notice of any infringements. But having held that such provisions may exist and be breached, CME did not sufficiently plead a claim for breach. ICE’s naked licensing defense alone did not breach the best efforts or notice provisions. CME would have to plead additional facts showing that ICE failed to use best efforts to protect the marks for CME’s claim to survive. Similarly, ICE’s allegations regarding breach of the notice provision were also insufficient because they relied upon the naked licensing defense. CME did not identify any unregistered use of its marks that ICE knew or reasonably should have known about. And it does not follow from a naked licensing claim that there was necessarily unauthorized use. Naked licensing can result from the trademarkholder’s failure to supervise alone.
The Court also struck the paragraphs related to the naked licensing arguments from CME’s complaint pursuant to Fed. R. Civ. P. 12(f) because they did not state a plausible claim for relief.