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Supreme Court of Nevada exempts trademark licensors from strict products liability

5/14/25

By: James V. Lovett

In a 5-2 decision issued on May 1, 2025, the Supreme Court of Nevada weighed in on whether a trademark licensor could be held liable under a strict products liability theory when it did not design, manufacture or distribute the product. In Hernandez v. The Home Depot, Inc., the plaintiff purchased a nail gun designed and manufactured by The Home Depot and sold under the RIGID trademark, which The Home Depot licensed from Ridge Tool Company (“Ridge”). Ridge did not design, manufacture or deliberate the product, and only licensed the name. When plaintiff was allegedly injured by the nail gun, he sued each entity connected to the product, including Ridge. Ridge moved for summary judgment based, among other things, upon a lack of applicability of strict products liability for a simple trademark licensor. The federal court reserved ruling on the strict products liability claim and certified it for the Supreme Court of Nevada.  

The Supreme Court of Nevada addressed the intersection of tort and intellectual property law in reaching its decision in this case. The plaintiff (and associated policy groups) argued that the Restatement (Second) of Torts should apply under the theory that when a licensor allows its mark to be applied to a product, it convinces the consumer of the quality of the good. Accordingly, under plaintiff’s argument, policy considerations should prevent licensors from profiting from the commercial value of their trademarks on defective goods while avoiding liability on the same products. Ridge (and its associated policy group) argued that the Restatement (Third) of Torts should govern the determination, which states that strict products liability is limited to those parties who substantially participate in the design, manufacture or distribution of the defective product.  

The Supreme Court of Nevada agreed with Ridge, noting that the Restatement (Third) aligned most closely with the policy considerations underlying strict products liability law in Nevada. The Court noted that the purpose of strict products liability “demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market.” With this in mind, the Court reasoned that imposing strict liability on trademark licensors, who do not make, design or distribute the good does not accomplish this goal – the licensor’s only involvement is granting permission for the use of its mark. Indeed, the Nevada opinion cited other courts that noted that the loss caused by a defective product “should be borne by those who create the risk of harm … and who are in a position to eliminate the unsafe character of the product and prevent the loss” and determined that strict liability was inapplicable where there was no significant participation in the chain of commerce. The Court noted that where a party’s role is limited to simply granting permission for use of a trade name or mark, there is typically no ability to reduce or eliminate any hazards in a product in which it did not have a hand in the design, manufacture or distribution.  

For licensors, this decision allows more certainty in the potential liabilities being assumed when entering into a licensing agreement. This decision will allow the further development of brands without the worry of factors beyond the licensor’s control and the potential for being pulled into needless litigation based on the actions and omissions of others. For attorneys, this decision underscores the importance of fully understanding a client’s actual role in the development of a product, as well as the limitations of strict products liability claims.  

If you have questions regarding the Hernandez case, licensing agreements or potential strict products liability claims, please contact James Lovett at james.lovett@fmglaw.com or any of the intellectual property or products liability attorneys practicing at FMG. 

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