From Licensee to Liability: Misusing Trade Marks After Agreements End
When business relationships end, so do the rights that came with them, including intellectual property, such as trade mark use under license. A recent high-profile case involving Tammy Taylor Nails Inc. illustrates a critical legal point: once a trademark license or distribution agreement is terminated, continued use of the brand is not just unauthorised, it can also be trade mark infringement.
Why Up-to-Date Licensing Matters
Licensing agreements are not necessarily forever. Whether you're distributing a product, operating a franchise, or opening a branded store, your right to use a brand name hinges on an active agreement and in line with the terms set out in the agreement. Once that contract expires or is terminated, continuing to use the trade marked brand is illegal.
Many businesses mistakenly believe that previous authorisation creates a lasting right, but it does not legally without consent.
The Tammy Taylor Case: A Cautionary Tale
Tammy Taylor Nails Inc., a California-based beauty brand, had long-standing licensing and distribution arrangements with Melany and Peet Viljoen, granting them rights to operate under the "Tammy Taylor" brand in Africa and Australia. However, those agreements were formally terminated in 2022.
Instead of ceasing use of the trade mark, the Viljoens:
- Continued using the "Tammy Taylor" name for salons.
- Launched "Tammy Taylor Global Franchising", selling unauthorised franchises.
- Displayed a Times Square billboard using the Tammy Taylor brand.
- Operated an infringing website and social media promoting the unauthorised brand.
- Allegedly sold lower-quality products under the Tammy Taylor name.
Despite being legally ordered to stop using the mark in 2024, the Viljoens continued infringing on the trade mark, prompting Tammy Taylor Nails Inc. to file a lawsuit in the U.S. federal court.
Key Legal Takeaways
1. Trade Mark Use Is Not Perpetual
Trade mark licenses are often time-limited and include terms for termination. It is not uncommon for businesses relationships to come to an end for whatever reason. Once the agreement ends, so does the right to use the brand involving a licence of a trade mark. Continuing use is not only a breach of contract, it constitutes trade mark infringement and potentially counterfeiting activity if the products are not authentic.
2. Brand Reputation Is Legally Protected
Trade mark owners have a legal duty to maintain control over their brand. Allowing unauthorised use, even by former partners, can damage consumer trust and brand value. Courts are increasingly willing to grant injunctions, statutory damages, and even cancel infringing trade marks to protect rightful owners.
3. International Infringement Still Has Consequences
Even if the infringing conduct happens abroad (as in South Africa), courts in the U.S. can assert jurisdiction, especially when the defendants:
- Enter contracts with U.S. companies,
- Target U.S. consumers (e.g., through advertising or online sales),
- Register trademarks in the U.S., or
- Sell counterfeit goods that enter the U.S. market.
4. "Using the Name" Can Trigger Liability
Calling a salon, franchise, or business by the trade marked name without authorisation, even if you once had permission to do so by a licence agreement, is a legal violation. The issue isn't just the product, but the branding, signage, advertising, and web domains associated with the mark and the possible damage to the reputation of an established brand.
The Verdict (So Far)
The US District Court of California granted default judgment against the Viljoens, ruling they had:
- Breached contracts by continuing to use of the Tammy Taylor name.
- Infringed trade marks and committed wilful counterfeiting.
- Violated the Lanham Act by falsely claiming origin and ownership.
- Filed a fraudulent U.S. trade mark application.
The court awarded $4 million in statutory damages, cancelled the infringing U.S. trade mark, and issued a permanent injunction requiring all use of “Tammy Taylor” to stop.
Bottom Line for Businesses
If you're operating under a brand name through a licensing or distribution agreement, stay vigilant:
- Know the terms and duration of your agreement.
- Cease all use of trade marks upon termination.
- Avoid assumptions that past rights carry forward indefinitely.
- Seek legal advice before continuing operations using a licensed brand.
Trade mark rights are perpetual provided they are renewed and in use. However, as a licensee, continuing to use a brand without current authorisation can get you in troubled waters financially.
Need help navigating trademark licensing or infringement disputes?
Our IP attorneys advise both licensors and licensees on how to protect brand integrity and minimise legal risk. Contact us today at ip21 for a free initial consultation with one of our specialist trade mark attorneys at info@ip21.com or through our website.
Written by Shreya Baskar, Work Experience Student, and Cheryl Payne, Senior Trade Mark Associate, for ip21
August 2025