In Stanfield v. Osborne Industries Inc., the Court of Appeals for the Tenth Circuit held that the plaintiff's licensing of its trademarks to the defendant, without any provision for, or actual exercise of, quality control, constituted an abandonment of the plaintiff's rights in its marks.

In the early 1970's, plaintiff Stanfield developed certain allegedly novel agricultural products, which he then agreed to permit defendant Osborne Industries to manufacture and distribute in exchange for a royalty. In addition, the parties entered into a purported "license agreement", pursuant to which Osborne made a one-time payment of $75.00 in exchange for the right to design and create trademarks for its products using the name "Stanfield" and to use such marks for a period of fifteen years, all at its "sole discretion". The parties' business relationship soured a few years later, and they subsequently engaged in protracted litigation concerning the defendant's payment of royalties. When the term of the license agreement expired in 1991, Stanfield commenced the subject litigation to enjoin Osborne's continued use of the STANFIELD marks.

In affirming the lower court's grant of summary judgment in favor of the defendant, the Court of Appeals concluded that the license agreement was, in fact, a "naked", or uncontrolled, license and held that the plaintiff had, therefore, abandoned its rights in the STANFIELD marks. In arriving at such conclusion, the court noted that, while not dispositive, the agreement made no provision for the plaintiff to exercise control over the quality of the defendant's products bearing the STANFIELD marks.

More importantly, it was clear that the plaintiff had never exercised actual control over the use of the marks, particularly after the parties' business relationship ended in the mid-1970's. Given the parties' adversarial relationship since that time, the court rejected the plaintiff's contention that it reasonably relied on its alleged licensee to exercise quality control. Distinguishing a number of cases wherein a licensor had been permitted to rely on its licensee's exercise of quality control, the court pointed out that, in those cases, there was some "special relationship" between the parties, such as a "close, long-term working relationship". In the subject case, in contrast, the court noted that the parties had ceased doing business together many years earlier and had been adversaries in virtually constant litigation since that time.