With debt ceiling and budget talks reaching fever pitch, did you know that even the Presidential seal, the Great Seal of the United States, and other similar official marks are up for sale?
Well, kind of—and because of that “kind of,” now they’re the subjects of a lawsuit.
Capstone S.G., a California company, has sued the Secret Service Uniformed Division Benefit Fund c/o White House Gift Shop, claiming that when it bought the rights to put the Great Seal of the United States and the seals of the President, Vice President, White House, and Air Force One on various products, they were never informed that before they could go to print and sell the items, the White House would have to approve.
Indeed, the complaint (PDF) alleges that Capstone was “repeatedly” guaranteed that “the Fund had the right to grant . . . the exclusive license to use the seals the Fund was licensing, and that the licenses would be valid and enforceable.”
Relying on this information, the complaint claims, Capstone sought out investors and began product development. Two years into the four-year contract, however, Capstone received a cease-and-desist letter telling the company to stop using the seals because White House counsel did not approve. White House approval may be necessary here because the defendant in this case is associated not directly with the White House, but rather with the White House Gift Shop, and therefore the defendant’s acts in entering this contract may not be imputable to the White House or the government itself. In other words, unless defendants actually own all rights to the seals in question, they may not be able to license unfettered use of those seals.
Capstone alleges that it was never given any indication that the company would have to secure approval from another entity in order to use the seals.
The complaint alleges breach of contract, breach of implied covenant of good faith and fair dealing, breach of warranty, fraud, negligent misrepresentation, and violations of consumer laws, and seeks compensatory and punitive damages as well as attorney’s fees.
Whether Capstone will prevail remains to be seen, but this remains a great lesson for anyone looking to license a mark—make absolutely sure that whoever is selling the right to use a mark has the exclusive right to do so in order to avoid this type of issue later.