In 2000, Joseph Abboud sold at least the trademarks for “Joseph Abboud” to his former company, JA Apparel Corp. Others have blogged on the Second Circuit’s reversal of the district court decision that had stopped menswear designer Joseph Abboud from using his own name to promote a new line of clothing he called “Jaz.” You can get the full run down of the legal reasoning in the court of appeals opinion here.
What I wonder is how the lawsuit could have happened in the first place. In the Purchase and Sale Agreement, Abboud assigned to JA Apparel all right, title and interest in:
|(A) The names, trademarks, trade names, service marks, logos, insignias, and designations identified on Schedule 1.1(a)(A), and all trademark registrations and applications therefor, and the goodwill related thereto (collectively the “Trademarks”), together with all causes of action (and the proceeds thereof) in favor of [Abboud and Houndstooth] heretofore accrued or hereafter accruing with respect to any of the Trademarks, and all other Intellectual Property (as hereinafter defined).
. . . .
(C) All rights to use and apply for the registration of new trade names, trademarks, service marks, logos, insignias and designations containing the words “Joseph Abboud,” “designed by Joseph Abboud,” “by Joseph Abboud,” “JOE” or “JA,” or anything similar thereto or derivative thereof, either alone or in conjunction with other words or symbols (collectively, the “New Trademarks”), for any and all products or services.
Essentially, the outcome turns on the meaning of the word “names” in subparagraph (A). Note that the word is missing from subparagraph (C). Schedule 1.1(a)(A) listed only trademark registrations and applications, not common law marks. The district court ruled as a matter of law that the agreement transferred all rights to the name Joseph Abboud, even precluding Abboud from using the name under the trademark fair use doctrine. The court of appeals found instead that the contract was ambiguous, which meant that the fair use defense might apply (HT to Rebecca Tushnet for pointing out the appeals court’s unnecessarily rigorous interpretation of the fair use doctrine), and remanded to the district court.
JA Apparel paid 65.5 million dollars for the Joseph Abboud name, however exclusive the rights will ultimately turn out to be. At the same time, Joseph Abboud also executed a Personal Services Agreement, agreeing to provide ideas to JA Apparel for five years and agreeing not to compete with it for two more years after that. In other words, the parties contemplated the possibility that Abboud would be free to compete as a designer in seven years.
How could there have been any doubt left in the transactional documents about how Joseph Abboud would subsequently be allowed to use his name? How could it not have been addressed explicitly? I can see that perhaps the issue was a deal-breaker, and it was way too big a deal to lose, so the parties just didn’t address it. But then you also know that the point will be litigated in seven years. If delaying the inevitable was the plan, and both sides wanted hooks in the documents to hang their theories, they succeeded well. The appeals court instructed the district court to admit extrinsic evidence to interpret the contract, leaving the situation to an even more uncertain fate.
JA Apparel Corp. v. Abboud, No. 08-3181-CV, — F.3d —-, 2009 WL 1615694 (2d Cir. June 10, 2009).
© 2009 Pamela Chestek