Property, intangible

a blog about ownership of intellectual property rights and its licensing

“I Didn’t Mention It Was Just a License?”

Defendant Smith used the mark “Suncrest” for his hair replacement business “Best Hair Replacement Manufacturers, Inc.” (“BHRM”). Wendy Wan owned First Fashion Hong Kong, a wholesale supplier of hair replacement products. Smith was a customer and a friend of Wan. Smith’s business was going under, so he, Wan, and a third person, Friendy, started a new business, plaintiff First Fashion USA, Inc. Wan and Friendy contributed a substantial amount of inventory and capital. Smith didn’t have any money to contribute, so he contributed the assets of his business. Smith says that he didn’t discuss the ownership of the trademark with Wan and Friendy. Smith ran the new business, which used the “Suncrest” mark extensively.

Smith then did some unsavory things, like stealing from the business, and was eventually ousted. He then reactivated BHRM and resumed using “Suncrest.” Confusion ensued. Wan and Friendy said that the trademark was transferred to the new business; Smith says he only gave an implied license to use the trademark.

The court disposed of the legal standard briefly: “The law presumes that when a business is conveyed, its trade name and good will are also conveyed” unless there is “express evidence to the contrary.” Wan and Friendy contributed cash but Smith didn’t, which meant his contribution was his business, including the trademark. That was Wan and Friendy’s understanding, and Smith admitted he never talked to them about retaining rights in the trademark. Smith is thus preliminarily enjoined from using SUNCREST.

As an aside, who gives control of a business to a person who’s getting out of his own because it’s failing?

First Fashion USA, Inc. v. Best Hair Replacement Manufacturers, Inc., No. 09-60938-CIV, 2009 WL 2252249 (S.D. Fla. July 28, 2009).

© 2009 Pamela Chestek

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