Manufacturer Liability Extended to Trademark Licensor
02/14/2011- Robinson Donovan Case Digest
By Attorney Jeffrey Trapani 
In the case of Lou v. Otis Elevator Company, the Massachusetts Appeals Court addressed an issue of first impression regarding the scope of the "Apparent Manufacturer Doctrine." In doing so, the Court extended the scope of potential liability to include certain nonseller trademark licensors of products "who participates substantially in the design, manufacture, or distribution of the licensee's products."
This doctrine, as originally set forth in Section 400 of the Second Restatement, stated: "One who puts out as his own produce a chattel manufactured by another is subject to the same liability as though he were it manufacturer."
The Appeals Court, however, reviewed the application of Section 400's direct descendant in Section 14 of the Third Restatement, which provides: "One engaged in the business of selling or otherwise distributing products who sells or distributes as its own a product manufactured by another is subject to the same liability as though the seller or distributor were the product's manufacturer." Further, comment d to Section 14 includes the following additional explanation:
Trademark licensors are liable for harm caused by defective products distributed under the licensor's trademark or logo when they participate substantially in the design, manufacture, or distribution of the licensee's products. In these circumstances they are treated as sellers of the products bearing their trademarks.
Otis Elevator objected to the trial judge's instruction on the basis that the instruction impermissibly extended the doctrine. The Appeals Court in this case also reasoned that trademark licensors, like Otis Elevator, would only be held "liable by virtue of its substantial participation in design, manufacture, or distribution of a product is held liable as a result of its own role in placing a dangerous product into the stream of commerce."
This article is a general summary only and does not constitute legal advice.