Licensors Beware: Substantial Participation in Design, Manufacture and/or Distribution of Licensee’s Product May Impose Liability Under Apparent Manufacturers Doctrine (AMD)

Background In a service-based economy, many industrial and consumer products are manufactured and sold through trademark licensing arrangements. Under these types of contractual agreements, the owner of the trademark licenses its brand name or mark to another company in exchange for a licensing fee. The authorized user of the trademark then has a contractual right to manufacture and sell the goods bearing the trademark. However, in some circumstances, the mere act of licensing the trademark…