Property, intangible

a blog about ownership of intellectual property rights and its licensing

There’s Always Your First Name

From the caption you can guess the story in MacKenzie-Childs, Ltd. v. Victoria and Richard MacKenzie-Childs: Victoria and Richard MacKenzie-Childs started a business, didn’t have the business anymore, and then there was a dispute over who owned the name.

The MacKenzie-Childs story is a little different from Joseph Abboud but still comes out the same. You remember Joseph Abboud, who sold his name as part of his business for $65 million plus, then, after his non-compete ended, tried to introduce a new line called “jaz: A New Composition by Joseph Abboud.” Ultimately, the court held that Mr. Abboud cannot use his name except nominally in a sentence. I have a hard time finding any sympathy for Joseph Abboud; he was very well compensated for his name. The MacKenzie-Childs have a more sympathetic story, but at the end of the day the result is the same, individuals may no longer use their own name.

The story, as told by the MacKenzie-Childs, is that they started a business in 1983 making ceramic goods. The business started as “Victoria and Richard MacKenzie-Childs, Ltd.” and the business registered a design mark for it in 1989.

In 1995 they dropped “Victoria and Richard” and allowed the registration to lapse. In 1997 the company filed two applications to register this logo:
But the company ran into difficulty in 2000, which is where the sad story starts. It was several million of dollars in debt, so the bank installed a new president, MacDonell Roehm, Jr. He then approached third-party defendant Pleasant Rowland to solicit her investment in the company. Thereafter the bank sold the MacKenzie-Childs debt to Ms. Rowland and she called the loan. The company had to file for bankruptcy, Rowland offered to purchase the MacKenzie-Childs business, and the offer was accepted by Roehm on behalf of the company. Roehm then went to work at the new company.

Rowland offered the defendants $10 million not to compete with their old business, which they rejected. Rowland then called in the MacKenzie-Childs’ personal debt, putting them into bankruptcy, which allowed her to acquire many of the couple’s personal assets also. Ultimately the MacKenzie-Childs started a new business using the mark “Victoria and Richard”; the new MacKenzie-Childs company sued.

A sad story, but that didn’t help the MacKenzie-Childs’ trademark claim. The asset purchase agreement transferred “Intellectual Property,” defined this way:

all intellectual property, including, without limitation, . . . all trademarks, service marks, trade dress, logos, trade names, brand names and corporate names (including, without limitation, the name “MacKenzie-Childs”, and all derivatives thereof), together with all translations, adaptations, derivations, and combinations thereof and including all good will associated therewith, and all applications, registrations, and renewals in connection therewith . . . .

The only struggle for the court was what exactly the transferred marks were. The court previously denied summary judgment in 2008 largely because discovery had not even begun, but in 2010 it was easy going. There was no argument that the two newer marks as shown in the registrations were transferred. Although the court denied summary judgment on the ownership of “Victoria and Richard MacKenzie-Childs” in 2008 for lack of evidence, by 2010 plaintiffs dropped their claim of infringement against defendants’ use of “Victoria and Richard.” The unregistered mark “MacKenzie-Childs” was also in dispute, with defendants claiming there was no such mark despite the APA’s specific mention of it. In 2008 summary judgment was denied pending more discovery; by 2010 there was evidence that “MacKenzie-Childs” was a mark and consequently it was owned by plaintiff. A garbage can filled up with the remaining claims.

You can’t help but think that there is more to the story about how the MacKenzie-Childs lost their company and how culpable they might also have been. But at the end of the day it didn’t matter how it happened, the company was gone and the marks with it.

MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Jan. 9, 2008).
MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Feb. 1, 2010).

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