## Facts

- First Interstate Bancorp operated banks using “First Interstate” marks and registered “First Interstate Banks” in California (1980) and federally (1984–1986).
- Stenquist operated a real-estate brokerage under the name “First Interstate Realty,” claiming continuous use beginning in 1981 and lack of knowledge of Bancorp’s prior use.
- In 1988, Stenquist entered a written agreement licensing another broker (Carson) to use “First Interstate Realty.”
- The license required only that Carson be a broker “in good standing,” contained no meaningful quality-control or supervision terms, and emphasized that the parties remained separate entities.
- After granting the license, Stenquist did not monitor, inspect, or supervise Carson’s use of the mark.
- Bancorp sued Stenquist for trademark infringement; Stenquist counterclaimed, asserting his own rights in “First Interstate Realty.”
- Bancorp moved for partial summary judgment that Stenquist had abandoned any trademark rights through naked licensing.

## Issues

1. Whether Stenquist’s licensing of “First Interstate Realty” to Carson without adequate quality control constituted naked licensing.
2. Whether such naked licensing amounted to abandonment of any trademark rights Stenquist otherwise possessed in “First Interstate Realty,” warranting partial summary judgment.

## Decision

- The court granted Bancorp’s motion for partial summary judgment on abandonment.
- The court held that Stenquist’s license to Carson, combined with the absence of contractual quality-control provisions and the absence of actual supervision, was naked licensing.
- The court ruled that naked licensing is inherently deceptive to consumers and constitutes abandonment of trademark rights.
- As a result, Stenquist could not rely on “First Interstate Realty” trademark rights to support his counterclaim or to assert priority against Bancorp.

## Legal Principles

- A trademark owner who licenses a mark without controlling the quality of the goods or services offered under the mark engages in naked licensing, which constitutes abandonment of trademark rights.
- The licensor must take reasonable steps to prevent misuse of the mark by licensees; the central inquiry is whether the licensor sufficiently policed and inspected the licensee’s operations to assure consistent quality.
- Abandonment is a forfeiture; the party asserting abandonment bears a high burden of proof, but summary judgment is proper when undisputed facts show a lack of meaningful quality control in the licensing relationship.

## Conclusion

The court held that Stenquist’s uncontrolled licensing of “First Interstate Realty” to an independent broker, with no meaningful quality-control terms and no actual supervision, amounted to naked licensing and abandonment, justifying partial summary judgment on the abandonment issue.


First Interstate Bancorp v. Stenquist, 16 U.S.P.Q.2d 1704 (N.D. Cal. 1990)