I’m in pretty deep in a jury trial — no, not an IP case; more like an IT case, only one conducted under a tent and with three rings and thrills and chills for children of all ages — this week, so blogging’s been lighter than light. And regular LOC readers know what that tack means: It’s ripoff time!
This is first for STL: a tax case.
In Blistex Bracken v. City of Seattle, the City imposed a business and occupation (B & O) tax on the licensor of the BLISTEX, BLISTIK and BLIST-FZE trademarks it owns for lip balm and skin care products to Blistex, Inc., an Illinois corporation. Blistex Bracken (BBLP), a Washington limited partnership, objected to the City’s tax on the royalties it received from its licensee. The City assessed $80,406.28 in unpaid B & O taxes plus interest and penalties, for a total of $131,439.84.
BBLP paid the tax and filed an action for a refund in superior court. The court sided in favor of BBLP on summary judgment and ordered the City to pay the refund. The City appealed.
The question on appeal was whether a sufficient nexus existed between BBLP’s activities and the City to justify assessment of the tax under the Due Process Clause of Washington’s Constitution.
On Sept. 21, the Washington Court of Appeals noted that licensee Blistex, not licensor BBLP, develops, manufacturers, markets, licenses, and sells products using the trademarks, and generates the royalty income. The court found the record showed minimal activities that BBLP engaged in relating to owning, managing, and maintaining the trademarks. This led the court to conclude the City lacked the nexus it needed to collect the tax.
Oh, and… you were wondering about the post title? Let’s avoid the whole tacky subject. I myself barely passed it in law school. And the IRS and its like … well, better not to say anything at all, right?