Singing the Emu Blues: Merger Provision in Contract Clauses and Simple Oversight Cause Loss of Trademark Rights

Valuable intellectual property rights can be lost due to basic contract drafting and mere oversight.

Progressive EMU, Inc. (“Pro Emu”) runs an emu farm in the Birmingham area and sells emu oil from various sources including the slaughter of birds raised on its farm. Nutrition & Fitness, Inc. (“NFI”) manufactures, markets and distributes various health products including products made with emu oil. Emu oil is marketed as a dietary supplement with a wide variety of claims health benefits. Pro Emu sold emu oil to NFI. NFI’s main emu-based product is marketed as “BLUE EMU”.

In 2002 the parties entered into a letter of intent which provided, inter alia, that they would jointly own the BLUE EMU trademark. However, the following year the parties entered into a written Sales Agreement that stated in its merger clause that the Sales Agreement “…supersedes and cancels any and all prior agreements…including without limitation…that Letter of Intent between the parties dated 2002.” Thus, the court held that Pro Emu’s claim to partial ownership of the trademark BLUE EMU is ineffectual because the parties’ letter of intent was superseded by the parties’ subsequent Sales Agreement.

The court also noted that Pro Emu never objected to NFI’s claim of ownership of the BLUE EMU trademark or asserted that it had any type of ownership interests during the parties’ eight year course of performance.

This case is a good reminder that the simple things in a business, long taken for granted, can result in the loss of valuable rights.

The case is Progressive EMU, Inc. v. Nutrition & Fitness, Inc., Civil Action No.: 2:12-CV-01079-WMA in the United States District Court for the Northern District of Alabama, Southern Division and the Order was entered on June 7, 2013 by District Court Judge William M. Acker, Jr.