Kroma Makeup EU, LLC v. Boldface Licensing Branding, Inc.

          Appeal from the United States District Court for the Middle District of Florida Docket No. 6:14-cv-01551-PGB-GJK

          Before MARCUS and DUBINA, Circuit Judges, and GOLDBERG, ^[*] Judge.

          GOLDBERG, JUDGE

         Plaintiff-Appellant Kroma Makeup EU, LLC ("Kroma EU") appeals the district court's grant of summary judgment based on its finding that Kroma EU lacked standing to enforce the KROMA trademark. Because Kroma EU does not have sufficient rights in the mark to sue under the Lanham Act, we affirm the judgment of the district court.

         BACKGROUND

         Kroma EU is the former European distributor of cosmetics products using the federally registered mark, KROMA. The owner and registrant of the mark is By Lee Tillett, Inc. ("Tillett") and the rights to use the KROMA mark in the United States rest solely with Tillett. In October 2012, Tillett granted an exclusive license to Kroma EU to import, sell, and distribute KROMA products in Europe, and to use the KROMA mark in furtherance of its business. As part of the licensing agreement, Tillett guaranteed that it owned the KROMA mark and would hold Kroma EU harmless from any judgments against Tillett based on the mark. Tillett retained the right to use the KROMA mark in the United States.

         Defendant-Appellees-the Kardashian sisters-were celebrity endorsers of a cosmetic line called "Khroma Beauty," sold and manufactured by Defendant Boldface Licensing & Branding, Inc. ("Boldface"). The Kardashians claim that they had no personal knowledge of the KROMA trademark until an entertainment news website, TMZ, published an article about the Kardashians' potential infringement. However, before the Khroma Beauty line launched, Boldface had purportedly conducted a trademark search that revealed the existence of the KROMA mark. The Kardashians claim that they did not receive this information. Boldface sought to register the KHROMA or KARDASHIAN KHROMA mark with the U.S. Patent and Trademark Office, but registration was denied because of likelihood of confusion with the previously registered KROMA mark.

         After the Khroma line was released, Boldface sought a declaratory judgment in California federal court that Boldface did not infringe the KROMA trademark. There, Tillett filed a trademark infringement counterclaim, adding the Kardashians as counterclaim defendants. The California district court granted Tillett's motion for a preliminary injunction against Boldface, finding that Tillett had demonstrated a likelihood of success on the trademark infringement claim. Boldface Licensing Branding v. By Lee Tillett, Inc., 940 F.Supp.2d 1178 (C.D. Cal. 2013). Thereafter, Boldface rebranded the product line to "Kardashian Beauty" and the parties settled the dispute. Kroma was not a party to the California action and did not receive a share of the settlement recovery from Tillett.

         Kroma EU subsequently filed this action in the Middle District of Florida against Boldface and the Kardashians, alleging that Boldface directly infringed the KROMA trademark under common law trademark infringement and the Lanham Act by distributing "Khroma" branded cosmetics in Europe, and that the Kardashians were vicariously liable for Boldface's infringement. Kroma EU also brought claims against Tillett, alleging a cause of action for promissory estoppel. As to the promissory estoppel claim, the district court held in an earlier order that under Florida law, a foreign licensee could not state a claim for promissory estoppel against its licensor; however, Kroma EU was able to proceed against Tillett under a breach of contract theory. Kroma Makeup EU, Ltd. v. Boldface Licensing Branding, Inc., No. 6:14-cv-1551-ORL, 2015 WL 1708757, at *1 (M.D. Fla. Apr. 15, 2015).

         The Kardashians moved for summary judgment arguing that Kroma EU did not have the requisite standing to bring the infringement action and that the trademark infringement cause of action was barred by claim preclusion. Kroma EU also moved for partial summary judgment on the issue of liability. Earlier in the litigation, Tillett successfully moved to compel arbitration and Kroma EU's claim against Tillett remains stayed pending the arbitration.

         The district court granted the Kardashians' motion. The court found that Kroma EU lacked standing to sue for trademark infringement and did not reach the Kardashians' claim preclusion argument. Relying primarily on the licensing agreement between Tillett and Kroma EU, the district court held that the agreement "plainly authorized only Tillett to enforce the trademarks" and to "protect" the mark "from any attempts of illegal use," while "Kroma EU's sole directive was to inform Tillett of instances of infringement." Based on this reading, the district court concluded that these provisions "plainly authorized only Tillett to enforce the trademarks governed by the License Agreement." Therefore, Kroma EU "lack[ed] contractual authority, and hence standing, to pursue § 1125(a) violations against infringers in its own capacity." Based on Kroma EU's purported lack of standing, the court denied Kroma EU's motion for partial summary judgment as moot.

         JURISDICTION

         At the time of this appeal, the district court had not yet disposed of all claims against all parties. Kroma EU's claim against Tillett had been stayed pending arbitration, and the district court had failed to enter a default judgment as to Boldface, which was served with process but had never appeared. Instead of dismissing the appeal for lack of jurisdiction, however, we gave Kroma EU the opportunity to request certification of the summary judgment order from the district court under Rule 54(b). Order, Kroma Makeup EU, LLC v. Boldface Licensing & Branding, Inc., et al., No. 17-14211 (11th Cir. Feb. 5, 2019). A Rule 54(b) judgment has now been entered as to the claims against the Kardashians and final judgment was entered in favor of the Kardashians. Rule 54(b) Judgment, Kroma Makeup EU, LLC v. Boldface Licensing & Branding, Inc., et al., 6:14-cv-1551, ECF No. 172 (M.D. Fla. Feb. 21, 2019). The Court, then, maintains jurisdiction over this appeal.

         STANDARD ...