Russ Vignali (Senior Counsel-White Plains, NY) and Ellen Bowman (Of Counsel-Las Vegas, NV) represented several clients involved in a product’s design and manufacture in a case involving an allegedly defective nail gun venued in the U.S. District Court, District of Nevada. On behalf of another client – the entity that licensed its well-known trade name to the nail gun’s retailer – Russ and Ellen moved for summary judgment on the grounds that, as a mere “licensor,” the entity was not truly in the nail gun’s chain of distribution and could not therefore be strictly liable for any design or manufacturing defect. The issue was one of first impression for Nevada courts. For that reason, the District Court certified the following question to the Supreme Court of Nevada:

Does Nevada impose strict products liability on an entity whose only involvement with a defective or unreasonably dangerous product is to license its trademark to be used to market the product and where the product and packaging prominently display its trademark?

Russ and Ellen emphasized a modern trend around the country that has protected companies that merely license their trade name but otherwise play no role in the product’s design and development. They cited the importance of product licensing in the modern American economy and the chilling effect that an adverse ruling would have in Nevada, where the gaming industry in particular relies so heavily on licensing and the use of trademarks. After significant briefing on both sides of the issue, including the filing of amicus briefs, the Nevada Supreme Court (in a 5-2 decision issued on May 1^, 2925) answered the certified question in the negative – marking a major victory for trademark owners operating in Nevada who license their trade names but exercise no control over the product’s final design and quality control.

The underlying case will continue against the remaining defendants.