American Eagle Logo Dispute Heads to Jury

(CN) - The 3rd Circuit punted a trademark dispute between American Eagle and British sportswear company Lyle & Scott over their similar eagle logos. The court said a jury should interpret the ambiguous terms of a "co-existence agreement" the parties reached in London more than three years ago.

In 2005, the managing director of the British sportswear maker alerted American Eagle's CEO that his company's eagle logo was confusingly similar to Lyle & Scott's "birdie" trademark.

Representatives from both parties, including American Eagle's in-house attorney, Kimberly Strohm, met in London in 2006 to negotiate a solution.

They drew up a list of concessions, in which the companies agreed to keep using their own logos, so long as American Eagle paid Lyle & Scott $1 million plus legal fees and withdrew its objection to the British company's U.S. trademark registration.

The agreement also stipulated that American Eagle could register its marks "for goods and services throughout the world."

Two weeks later, Dennis Hall, the corporate development director for Lyle & Scott's parent company, sent Strohm a revised draft of the London agreement that barred American Eagle from trading outside the United States.

He suggested that American Eagle change the colors and embroidery of its logos and pay a 5 percent royalty fee on sales in countries where Lyle & Scott had established its marks.

Strohm promptly rejected Hall's proposal. "[Y]ou are now attempting to dramatically and materially change the terms of the London agreement," she told Hall in an email. "Indeed, your proposal virtually emasculates it."

American Eagle sued to enforce the deal struck in London.

The district court ruled in its favor, saying no reasonable juror could find the London agreement ambiguous.

The Philadelphia-based appeals court agreed that the London deal was an enforceable contract, but found some of its terms ambiguous.

"Accordingly, we remand so that a jury may interpret the contract's more ambiguous terms," Judge Fuentes wrote.

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