## Facts

- Cross held federal trademark registrations for distinctive “top” portions of its mechanical pens and pencils, including black and gold tops, and sought registration of a silver-colored conical top.
- In 1965, the original Quill company (“First Quill”) began making mechanical pens and pencils with designs similar to Cross’s products, prompting Cross to sue for trademark infringement and unfair competition.
- The parties resolved that litigation through a 1967 Settlement Agreement permitting First Quill to manufacture and sell certain writing instruments with black, silver, and gold conical tops, subject to a restriction that Quill’s products could not be closer in exterior appearance to Cross’s products than specified exemplar Quill models.
- First Quill later transferred its manufacturing equipment and assigned its rights under the Settlement Agreement to T&T, which then assigned those rights and equipment to its subsidiary (“Second Quill”).
- Second Quill manufactured and sold pens and pencils very similar in appearance to Cross’s products and relied on the Settlement Agreement as authorization for the contested designs.
- Cross pursued registration of a silver-top mark; T&T opposed in the USPTO, but the TTAB ruled for Cross.
- In district court proceedings that followed, Cross counterclaimed to enjoin Second Quill for infringement and unfair competition.
- The district court found Second Quill’s products “almost identical” to Cross’s, but held the Settlement Agreement valid and enforceable and concluded it estopped Cross from asserting infringement and unfair-competition claims against Second Quill and related parties for products within the Agreement’s scope.
- Cross appealed, challenging only the validity and enforceability of the Settlement Agreement and its estoppel effect.

## Issues

1. Whether the 1967 Settlement Agreement was valid and enforceable.
2. Whether the Agreement, as assigned to successor entities, estopped Cross from asserting trademark infringement and unfair-competition claims against products manufactured and sold within the Agreement’s permitted design parameters.

## Decision

- The First Circuit affirmed.
- The court treated the appeal as presenting a single question: the validity and enforceability of the Settlement Agreement and its resulting estoppel effect.
- The Settlement Agreement was enforceable as a compromise of earlier trademark litigation and could define permissible product designs between competitors.
- The Agreement’s benefits and restrictions extended to successors/assignees who acquired First Quill’s rights and equipment.
- Because the Agreement authorized specified designs subject to an exterior-appearance limitation, Cross was estopped from suing for infringement and unfair competition based on those authorized products.

## Legal Principles

- A valid settlement agreement resolving trademark litigation may lawfully allocate future rights to use specified product features and define permissible similarity limits.
- When a trademark owner consents by contract to defined competitive use, it may be contractually estopped from later asserting infringement and unfair-competition claims against uses within the contract’s scope.
- Contractual rights and obligations in such an agreement may bind and benefit successors or assignees where the rights are assigned and the successor operates under the agreement’s terms.
- Courts will enforce trademark coexistence/consent arrangements absent a showing that enforcement is unlawful or contrary to trademark policy.

## Conclusion

The First Circuit upheld enforcement of the parties’ settlement, holding that Cross’s prior contractual consent to specified pen designs—running to First Quill’s successors—barred Cross from pursuing trademark infringement and unfair-competition claims against products made and sold within the agreement’s defined appearance limits.


T & T Mfg. Co. v. A.T. Cross Co., 587 F.2d 533 (1st Cir. 1978)