It’s Abboud time!

Originally posted 2010-01-15 13:39:40. Republished by Blog Post Promoter

What, this old thing?

A year and a half ago I reported on designer Joseph Abboud’s attempt to sell his trademark “designer label” name to JA Apparel Corp., then count to three and go right back into competition with the company — using his own name.  The Southern District of New York granted JA Apparel’s motion for a preliminary injunction, which I smarmily celebrated in that post.

What I didn’t tell you (because I didn’t know — even now I can’t find a link reporting this fact) was that, on appeal, the Second Circuit vacated that decision and remanded it back to the District Court on the ground that the agreement was, in fact, “ambiguous.”  I regret the omission.

But at least now we have resolution [Ha! -- well, okay -- of a sort, anyway -- RDC].  On remand, per The Trademark Blog, here’s the District Court ruling for this season, featuring far more subtle styling:

Following remand, the parties submitted hefty briefs, containing their proposed findings of fact and conclusions of law with respect to those issues raised by the Second Circuit, namely, any extrinsic evidence of the parties’ intent regarding the sale of Abboud’ s name, and whether Abboud’ s proposed advertisements for his new clothing line, containing his name, constitute trademark fair use. . . .

[T]he Court concludes:

  1. In the June 16, 2000 Purchase and Sale Agreement, Abboud did not sell, and JA Apparel did not purchase, the exclusive right to use the “Joseph Abboud” name commercially. Rather, Abboud sold, and JA Apparel purchased, the “Joseph Abboud” name as a trademark and related intellectual property (which can include brand names or commercial names);
  2. Abboud’ s proposed uses of his name in connection with his new ‘jaz” line, as shown in Defendants1 Exhibits 187 and 188, and Plaintiff’s Exhibit 43, would qualify as fair use under Section 33(b) (4) of the Lanham Act, 15 U.S.C. § 1115(b) (4), provided Abboud includes a disclaimer of any affiliation with JA Apparel and products sold under the Joseph Abboud trademarks on Defendants1 Exhibits 187 and 188 or any similar ads. Such disclaimer shall be no smaller than the accompanying text in which Abboud uses his name;
  3. Abboud’s proposed uses of his name in connection with his new ‘jaz” line, as shown in Plaintiff’s Exhibit 42, would constitute trademark infringement under Section 32 (1) of the Lanham Act, 15 U.S.C. § 1114(1), not otherwise insulated by the fair use defense, and thus, a breach of the June 16, 2000 Purchase and Sale Agreement;
  4. Plaintiff’s claims for (a) dilution, unfair competition, and false designation of origin under Sections 43(a) & (c) of the Lanham Act, 15 U.S.C. §§ 1125(a) (1) & (c) (I), N.Y. Gen. Bus. Law  §§ 360-61, and the common law, and (b) false and deceptive trade practices under N.Y. Gen. Bus. Law §§ 349-50, are hereby dismissed; and

Yes, I know.  Without reading the decision–also quite hefty–you don’t know what to make of all that in terms of legal analysis and, it seems, precedent, though it does appear to be a good decision for fair use.  More analysis will come (maybe even here).  But at least one excerpt, part of the section addressing the “ambuigities” problem and discussing the “rule against surplusage,” is pretty interesting.

That rule basically says if you have a list of three things, each one must mean something, because otherwise why would you list them separately?  First the District Court quotes from Circuit Judge Sacks’ concurrence, in which the latter recognizes the “belts and suspenders” approach corporate lawyers take to drafting:

[T]he rule [against surplusage] should nonetheless be applied with a grain or two of salt when examining a list of words having similar or even overlapping meaning in a commercial agreement. Such an itemization of terms may reflect an intent to occupy a field of meaning, not to separate it into differentiated parts. Indeed, this is a common–perhaps all-too-familiar–technique used in drafting agreements, commercial and otherwise. With this technique, words are used more like the brush strokes of a house painter than of those of a portrait painter–each intended principally to ensure that the surface is covered, not to convey a separate piece of information.

That’s the prettiest description of boilerplate I’ve ever read!  Thence it is an easy skip down the runway to this conclusion by the trial court:

In memorializing their intent, the parties included what amounted to a laundry list of words that fell under the more general penumbra of “trademarks” and related intellectual property (which can include, e.g., brand names or commercial names). That the word ‘names” could bear a broader meaning, including one’s personal name, cannot overcome the dearth of extrinsic evidence in support of JA Apparel’s interpretation of the Agreement. Thus, it is more reasonable to conclude that the word names was intended to mean something similar to the other assets sold in section 1.1 (a) (A) of the Agreement–such as “brand names” or ‘\commercial names”–and not the exclusive right to all commercial use of Abboud’s personal name. This is consistent with the language of section l.l(a) (C), in which Abboud sold to JA Apparel the right to use and apply for new marks containing Abboud’s personal name.

Because the Court concludes that Abboud did not sell the exclusive right to use his personal name commercially, the Court must continue with an analysis of JA Apparel’s trademark claims.

That’s certainly very different!   Again, it’s a big decision, but a look at the terms of the new permanent injunction is intriguing in its own right, and suggests rewarding weekend reading for all:

It is hereby ORDERED that Abboud is permanently enjoined from the following conduct:
  1. Abboud may not use his name – either personally, through Houndstooth, or through any other entity with which he is affiliated – as a trademark, service mark, trade name or brand name ;
  2. Abboud may not use his name in any manner on ‘jaz” clothes, labels, hang-tags, or product packaging;
  3. Abboud may not use his name in promotional and advertising materials, unless his name is used descriptively, in the context of a complete sentence or descriptive phrase, and it must be no larger or more distinct than the surrounding words in that sentence or phrase;
  4. Abboud must prominently display his trademark ‘jaz” (or any other trademark) on any ad containing his personal name as discussed above; and
  5. Should Abboud use his name as proposed in Defendants’ Exhibit 187 and 188 or anything similar, he must include a disclaimer of any affiliation with JA Apparel and products sold under the Joseph Abboud trademarks. Such disclaimer shall be no smaller than the accompanying text in which Abboud uses his name.
  6. Defendants counterclaims for (a) right of publicity, false designation of origin and false advertising under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), (b) right of publicity under N.Y. Civil Rights Law § 50-51, (c) false and deceptive trade practices under N.Y. Gen. Bus. Law § 349, and (d) unfair competition under the common law, are hereby dismissed.

Yup:  It’s a lot easier to write a smarmy blog post than a hefty brief, a hefty decision, or a second hefty decision.

But I don’t feel too bad.  After all, it turns out to be no small thing either to write a contract governing a $65.5 million acquisition of a nationally-famous line of designer clothes!

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Author:Ron Coleman

I write this blog.

3 Responses to “It’s Abboud time!”

  1. Paul Keating
    January 17, 2010 at 12:40 pm #

    The drafting attorneys of the buyer definitely missed a crucial point. I was always taught that such agreements should not only convey the mark at issue and all good will BUT should also include negative covenants that they will not use the words comprising the mark for any commercial purpose.

    • January 18, 2010 at 8:38 am #

      It does seem from the facts that there was a bit of back-of-the-envelope and cocktail-napkin negotiation here. But you would think the attorneys had the last clear chance before closing to get this right, no matter how obstreperous the clients may have been, on a deal of this size.

Trackbacks/Pingbacks

  1. Meg Langley Grainger - January 17, 2010

    It’s Abboud time! – Discussion from the District Court on how Abboud can use his name http://ow.ly/XlW8 RT @RonColeman

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