Strange trademark things going on — or perhaps nothing going on at all — with Charriol

I don’t know much about fine jewelry.  But a person looking at retail jewelry online during this, the season of discounting, pointed out to me last night that there seemed to be something very strange going on concerning nomenclature for jewelry pieces being offered on various store websites.  It seemed to have to do with pieces made by Charriol. Or was it, rather, Alor?  Or, A’lor?

The Trademark Blog:  "Mandatory Zut Alors Pun Here"
The Trademark Blog: “Mandatory Zut Alors Pun Here”

Being the kind of people we were, we assumed it “must be some trademark thingy,” and I, for one called it a night.

The jewelry-window-shopping person, however, was intrigued, and journeyed to the Charriol website, and found a URL that went http://www.charriol.com/legal.  And this is what it said:

Dear Partners,

Many of our trusted CHARRIOL dealers have recently experienced a marketing campaign by CHARRIOL’s longtime licensee/distributor, A’lor International Ltd., aimed at persuading you that CHARRIOL’s internationally famous cable design and products were returning to their original ‘A’lor roots’ or that CHARRIOL was changing its name to ALOR.  Some of you have been informed that ALOR cable jewelry was replacing CHARRIOL cable jewelry, and that CHARRIOL was either exiting the market or being ‘rebranded’ as ALOR.  Others have been persuaded to abandon their CHARRIOL displays or to replace well-displayed CHARRIOL jewelry with ALOR collections.

CHARRIOL and A’lor have tested their recent disputes in court and CHARRIOL maintains that A’lor, as the licensee of CHARRIOL, has a contractual obligation not to distribute its current lines of identical jewelry to CHARRIOL jewelry under the ALOR name.  And a federal court has recently agreed, because on April 10, 2014, the United States District Court for the Southern District of California ruled that A’lor is barred from infringing CHARRIOL cable trademarks by selling ALOR jewelry that uses such cable.  A’lor is similarly barred from using CHARRIOL trademarks, including cable, distributing or selling products with the cable design, advertising that A’lor was or is being ‘rebranded’ or merged with CHARRIOL, and other similar commercial activities which have caused great confusion in the jewelry and luxury goods marketplace.

The federal court on April 10 issued an injunction against A’lor which provides specifically:

1.         Until further order of the Court, Defendant A’lor International Limited, its partners, officers, directors, employees, agents, and representatives and all persons, firms and corporations in active concert or participation with any of them, are enjoined from:

            a.         Infringing, distributing or otherwise using without PCI’s authorization PCI’s trademarks that are subject to the Jewelry Agreement, including PCI’s cable nautical rope design and metallic nautical rope design, and any jewelry designs bearing the CHARRIOL name or marks, by manufacturing or causing to be manufactured, importing or causing to be imported, reproducing or causing to be reproduced, distributing or causing to be distributed, advertising or causing to be advertised, or offering for sale or selling, any infringing jewelry or other merchandise bearing the PCI or CHARRIOL trademarks, or any confusingly similar mark;

             b.         Using, displaying or reproducing PCI’s trademarks, including the cable nautical rope design and metallic nautical rope design, or any designs, drawings, artwork or text that use or incorporate the PCI or CHARRIOL trademarks, in connection with the distribution, promotion, advertising, offering for sale or sale of any ALOR brand products, including through postings on A’lor’s websites and in any other advertising or promotional material for ALOR brand jewelry;

             c.         Promoting or holding itself or ALOR out to members of the public as a replacement or successor to PCI or the CHARRIOL brand; suggesting that PCI or CHARRIOL have “merged with” or been “re-branded” as ALOR; promoting, selling, giving away, or otherwise distributing CHARRIOL jewelry under the “ALOR” name, or under any trade name other than CHARRIOL; or otherwise suggesting that PCI endorses or is otherwise affiliated with the ALOR brand.

A copy of the decision is annexed so that you understand exactly what the federal court ruled in favor of CHARRIOL and against A’lor.  While CHARRIOL and A’lor tried to settle their continuing differences, the injunction is active and remains in place.  A’lor may still contact you with its view of cable in the marketplace, but it is important to understand that no matter what you are informed, cable’s home remains with CHARRIOL.

We want you to understand this important court decision and to caution against carrying, displaying or selling ALOR products which infringe upon CHARRIOL’S cable trademarks and intellectual property.  To do so could expose your company to legal risk of a lawsuit and damages (including legal fees and costs).

We care about our business and yours and look forward to renewing ties with you. Most importantly, we wish for a long and successful business relationship together. By successfully protecting CHARRIOL’S rights through the courts, we have ensured the continued success of the brand.

Charriol is working on a continuity plan which you will learn about in the coming weeks, a plan which returns CHARRIOL products to the market.  In the meantime, if you would like additional information from a CHARRIOL representative about new packaging, products, and specifics of the legal ruling among other issues, please contact:  . . .

We look forward to seeing CHARRIOL and original CHARRIOLcable jewelry and products in dealers and retailers everywhere.

Sincerely,

Philippe Charriol, Founder of Philippe Charriol International LTD

Hoo boy.  How did we miss this?  Marty Schwimmer didn’t; he reported on the first newsworthy development, the denial of a TRO to Charriol, way back in June of 2013.  Then National Jeweler reported on the story in February of 2014:

As the lawsuit makes its way through the court system, Alor is moving forward with a re-branding, of sorts. In an announcement issued Feb. 17, Alor said it was “making a bold decision in 2014, returning to its roots” by reverting to its parent company brand name.

Established in 1979, Alor designed, created and manufactured stainless steel cable, 18-karat gold and diamond jewelry sold as “Alor.” In 1992, the company began its relationship with PCI and “re-branded” as Charriol.

In an interview with National Jeweler Wednesday, Alor declined to comment on the litigation. Regarding the ending of their relationship with PCI, Jack Zemer, who co-founded Alor with wife Sandy in 1979, only said that, “We wanted to stay on our core values and we didn’t see that their direction is lined up with our direction.”

Over the next few months, retailers in the U.S., Canada and the Caribbean that carry Charriol will just sell through their existing inventory while Alor begins the process of providing them with Alor jewelry–which is already being sold in more than two dozen independents in Australia–as well as Alor-branded packaging, support materials and displays.

The Alor jewelry will join the company’s line of self-branded Swiss watches, which it debuted at Couture in 2013.

The transition with existing retailers is scheduled to take place through April, while the brand’s official re-launch is set for the Couture show in Las Vegas.

That decision (again, here’s a link) and the legal issues that the filing seemed to implicate (such as licensee estoppel) seemed like something to blog about, so I set about to do just that.

Then something very odd happened:  The web page at that URL, which I was able to read this morning, disappeared:

Charriol Legal

This appeared after several hours when, in fact, the entire Charriol website was down.  Note that the site linked to by the Trademark Blog’s 2013 post, formerly found at  http://www.charriolusa.com/, is also now “no longer available.”

These things — my waking up to this interesting lawsuit and preparing to blog about it, and the site going down — are obviously not related.  The Charriol blog, which is evidently hosted elsewhere, does not seem to have had this issue.  (Nothing clarifies matters at the Alor.com website, by the way.)

What’s going on?  I know even less now than I thought I did this morning.  But by far the most interesting aspect of the letter from the M. Charriol quoted above is this part:

While CHARRIOL and A’lor tried to settle their continuing differences, the injunction is active and remains in place.  A’lor may still contact you with its view of cable in the marketplace, but it is important to understand that no matter what you are informed, cable’s home remains with CHARRIOL.

We want you to understand this important court decision and to caution against carrying, displaying or selling ALOR products which infringe upon CHARRIOL’S cable trademarks and intellectual property.  To do so could expose your company to legal risk of a lawsuit and damages (including legal fees and costs).

We care about our business and yours and look forward to renewing ties with you. Most importantly, we wish for a long and successful business relationship together. By successfully protecting CHARRIOL’S rights through the courts, we have ensured the continued success of the brand.

“Cable trademarks”?  “View of cable in the marketplace?”  This isn’t another post about Aereo, is it?

No.  Here, from the preliminary injunction decision, is the stuff:

The[] contractual terms make it clear that A’lor is not permitted to sell jewelry that closely resembles jewelry it designed and sold under the CHARRIOL name, even after the Agreement is terminated. A’lor contends, however, that the Agreement covers only word marks, not design marks, because Schedule A contains only word marks and the Agreement otherwise only refers to “cable” in a generic sense. The Court disagrees. As seen previously, Section 1.1 does not limit the covered trademarks to those identified in Schedule A . . .

[T]he fact that other provisions of the Agreement arguably reference “cable” in a generic sense does not negate section 1.1’s clear language regarding the scope of PCI’s [i.e. Charriol’s] trademarks covered by the Agreement. Additionally, by A’lor’s own previous assertion it received a license from PCI to use more than PCI’s word marks. Indeed, on May 29, 2012, A’lor represented to the United States District Court for the Central District of California that “A’lor is the owner and/or exclusive licensee of trade dress and trademark rights in the appearance and aesthetics of its nautical cable motif jewelry, as reflected in [A’lor’s jewelry designs].” [A’lor v. Tappers Fine Jewelry Am. Compl. ¶ 32, Case No. 12cv2215.] A’lor’s present claim that the Licensing Agreement covered only word marks appears to contradict its allegation in the Tappers litigation. . . .

The evidence demonstrates that A’lor has begun selling exact copies of jewelry formerly sold under the CHARRIOL name. In simple terms, what was CHARRIOL yesterday is ALOR today. This sudden reversal seriously threatens the market for CHARRIOL jewelry within the United States. For many years, PCI’s sole avenue to U.S. consumers has been through the distributor channels forged by A’lor. A’lor has now usurped these channels, leaving PCI on the outside of the market looking in. Moreover, the Court is not convinced that PCI may simply commission a new distributor to avoid the harm of losing their market share to A’lor. Accordingly, absent an injunction, PCI’s presence within the U.S. jewelry market will undoubtedly dwindle, and may altogether disappear. This risk presents something that monetary damages would be insufficient to remedy. Indeed, it is extraordinarily difficult, if not impossible, to quantify this potential harm in dollars. Thus, the Court finds that absent a preliminary injunction, PCI will suffer irreparable harm.

So, yes:  Charriol got an injunction, and it’s all about knockoffs of specific jewelry names and, oddly enough, trademark “designs” in the jewelry, such as this, found in the order:

Cable Nautical Rope Design Trademark

That’s a trademark?

Of course not.

And that’s the point, kind of.  So, when M. Charriol asserts that this dispute is “all about cable” — i.e., who has proprietary rights in cable-type jewelry designs — he is (or he was — that page is, evidently, still gone) making an argument which as a matter of trademark law doesn’t even hang by a thread, much less a cable.  And that is what you’d think Alor would have argued.  And you’d be right.  But remember when I said there as probably something about licensee estoppel going on here?

Yup.  But, maybe, nope!  Back to the opinion:

The parties had a 20-year professional relationship which has come to an abrupt and unfortunate end. It is no surprise then, that the market is generally confused about the state of their relationship. For purposes of this motion, the Court focuses its attention squarely on whether A’lor’s act of selling exact replicas of the CHARRIOL jewelry under the ALOR name constitutes grounds for a preliminary injunction.

PCI contends that A’lor’s new jewelry line infringes upon its cable design mark. A’lor argues that, while the cable design mark is registered, PCI has no protectible interest in the mark because it is generic. In turn, PCI responds that A’lor is contractually and legally estopped from challenging the validity of the mark. Section 9.5 of the parties’ agreement provides that: “[A’lor] hereby expressly covenants that it will not contest the validity of the Trademarks, their registration or ownership.” [Licensing Agreement § 9.5.] Moreover, PCI contends that A’lor is barred by the doctrine of licensee estoppel from bringing adverse claims that challenge PCI’s rights to the cable design mark.

It is a “long settled principle of law that a licensee . . . of a trademark or trade name may not set up any adverse claim . . . against its licensor.” Pac. Supply Coop. v. Farmers Union Cent. Exch., Inc., 318 F.2d 894, 908 (9th Cir. 1963); see also Prof’l Golfers Ass’n of Am. v. Bankers Life & Cas. Co., 514 F.2d 665, 671 (5th Cir. 1975) (“[A] licensee is estopped to contest the validity of the licensor’s title during the course of the licensing arrangement . . . . The licensee has, by virtue of the agreement, recognized the holder’s ownership.”) “The theory underlying the licensee estoppel doctrine is that a licensee should not be permitted to enjoy the benefits afforded by the license agreement while simultaneously urging that the trademark which forms the basis of the agreement is void.” John C. Flood of Virginia, Inc. v. John C. Flood, Inc., 642 F.3d 1105, 1111 (D.C. Cir. 2011).

However, licensee estoppel only applies for the duration of the license. See Donald F. Duncan, Inc. v. Royal Tops Mfg. Co., 343 F.2d 655, 658 (7th Cir. 1965) (“[A]n estoppel by a licensee to deny the validity of licensor’s trademark expires with the license.”). And A’lor, on February 3, 2014, sent a letter to PCI purportedly terminating the Licensing Agreement. Thus, it appears that the estoppel doctrines raised by PCI may not be successful. . . .

Because the Court finds an injunction is appropriate under grounds not reliant on the validity of PCI’s cable design mark, the Court need not address the merits of A’lor’s motion. In the end, the Court declines to enter an injunction on the basis of PCI’s likelihood of success on its trademark infringement claim.  . . .

[In contrast,] These contractual terms make it clear that A’lor is not permitted to sell jewelry that closely resembles jewelry it designed and sold under the CHARRIOL name, even after the Agreement is terminated.

That’s the story, then.  The contract clause giveth back what the termination of the license giveth away — and a good thing, too, since that ain’t no trademark there, with all due respect to the fine people of the USPTO examining corps.

Indeed, we must always remind our clients, both before, during and after entering into contracts with intellectual components, that they may, by virtue of signing on the dotted line, be acknowledging or ceding rights or the ability to assert or defend against rights concerning that intellectual property that substantively reshape how IP normally works with respect to the client and that IP.

According to PACER, this litigation is still going strong.  There have been, as far as I can tell, no substantive rulings.  Nothing in the recent docket suggests a reason for the change to the Charriol website; discovery has recently been extended into next year and, apparently, a good time is being had by all — probably not least online and other jewelry shoppers.  I’ll get back to you on that.

Ron Coleman

I write this blog.

2 Replies to “Strange trademark things going on — or perhaps nothing going on at all — with Charriol

Comments are closed.