Ouch! The Wall Street Journal reports:
A federal judge ruled that menswear designer Joseph Abboud, who sold his trademark and later left the company that owns it, can’t use his name to promote a new line he calls “jaz.”
JA Apparel Corp., which owns the Joseph Abboud trademark, sued the designer in federal court in New York last September, alleging trademark infringement and breach of contract over Mr. Abboud’s plan to use his name in marketing his new line. The Wall Street Journal reported last summer that the designer planned to use the tagline “a new composition by designer Joseph Abboud” in marketing materials.
In a 91-page decision, Judge Theodore H. Katz said Mr. Abboud’s use of his name would constitute breach of JA Apparel’s purchase agreement as well as trademark infringement. The judge said Mr. Abboud also violated his noncompete agreement with JA Apparel by working on the new line before the agreement expired, but declined to award damages.
The decision is here. It’s worth taking a look at because just reading the bare-bones fact pattern of it above, this doesn’t look like a hard case. But perhaps the juicy part of it slowed things down — such as how Abboud, not unsurprisingly for those creative types, showed up at JA Apparel after they’d bought his name lock and stock and barrel (more below) along with his clothing line and promptly found himself “unable” to work with the company due to, yup, creative differences. This happened not once but twice, through one change of ownership at the company. Depending on how you count.
The trademark piece centered on the extent to which Abboud was prohibited from publicizing the fact that the was the designer of the new line that was to compete with the one bearing his name — i.e., the name that constituted 100% of the brand equity. Evidently, Abboud was a lot more restricted than he, and his attorney at the time, thought, or claim to have thought. A lot:
Notwithstanding the torrent of claims, counterclaims, motions, briefs, testimony, exhibits, and letters that have been submitted in and to this Court over the past six months, the central and overriding issue in this case is a simple one, which can be stated as follows: by way of the Agreement, did Abboud sell to JA Apparel the exclusive right to use his name in connection with goods and services? If this question is answered in the affirmative, JA Apparel is entitled to a permanent injunction preventing Abboud from using his name in connection with his new “jaz” line, or, in the future, in connection with any other goods and services.
And, yes, the Court answered in the affirmative. Why did he think he was getting $65.5 million? As the Court ultimately ruled, there was nothing ambiguous about the contract. LIKELIHOOD OF CONFUSION® wears some of the stuff. It’s not that great. For $65.5 million you find a new hobby.
Aside from the trademark / contract part, there’s also a non-compete / contract piece that clients and lawyers should take to heart. Abboud, according to the opinion, began in earnest to develop, sub-rosa, a new fashion line while still bound by the terms of his restrictive covenant. He wanted it to open with a bang as soon as he was unrestricted, so he began doing all sorts of forbidden things — such as negotiating licensing agreements and just leaving the signature line for execution right after the end of the restricted period — to make that happen. Not a good move, said Magistrate Judge Katz. Legally speaking.
(Bravo to my first trademark litigation mentor, Tom Smart, Kaye Scholer’s Mr. Trademarks and always a gentleman, who represented JA Apparel!)