Property, intangible

a blog about ownership of intellectual property rights and its licensing

Who Will Win – Doctrine or Pragmatism?

Some cases make you wonder and UFA Holdings, Inc. v. Performance Acquisition Group Company is one of them.  It’s newly filed in Oregon, as reported by local news channel

The first “G.I. Joe’s” store opened in 1947 and ultimately grew to a chain of 27 stores.  As told in the plaintiff’s memorandum in support of its brief for preliminary injunction, G.I. Joe’s filed for bankruptcy in May, 2009.  Plaintiff UFA Holdings acquired the G.I. Joe trademarks at auction in July, 2009.  As these things have to go or lawyers wouldn’t be employed, four former executives of G.I. Joe’s subsequently opened a small, new store in a strip mall in January 2010.  They used the same name, the same slogan (“Seize the Weekend”), and had the same stuff in the store. And they did it after having been told by UFA Holdings that it objected.

So what were they thinking?  You can see for yourself that the assignment of the trademarks is pretty clear. The transferred “Assets” are defined as “all of the trademarks, trade names, domain names and service marks (including logos) and related [i]ntellectual [p]roperty rights therein, and all goodwill associated.”  The last page of the Asset Purchase Agreement schedules the trademarks and domain names.  The defendants filed their own trademark applications for G.I. Joe’s only a few months after the assets were transferred, but the applications were refused registration as likely to be confused with the assigned registrations.

One news article says the the executives “contend that because they have been using the name at the storefront since January, they would prevail in court.”  This seems to be coupled with the theory that the bankrupt store abandoned the name “G.I. Joe” in favor of using “Joe’s,” as can be seen in the defendant’s petition to cancel the original “G.I. Joe’s” registrations.  But an abandonment theory seems like quite an uphill battle: abandonment is difficult to prove; the registrations have not lapsed; the plaintiff claims a long period of use of both marks; even under the facts most favorable to defendants there was not three years of non-use; and courts disfavor stripping bankrupt estates of trademark assets on abandonment theories.  Here, plaintiff further alleges that the four defendants are responsible for representing in the bankruptcy that the trademarks were valid:

PAGC’s petitions to cancel contradicted the representations by G.I. Joe’s, Inc. – under the direction of the Individual Defendants – that G.I. Joe’s, Inc. legally owned the Assets, including the G.I. Joe’s Marks; that it had a right to sell the Assets, including the G.I. Joe’s Marks; and that the Assets, including the G.I. Joe’s Marks, had good and marketable title.

And what about likelihood of confusion?  Even if the original “G.I. Joe’s” is abandoned, the new use is junior to, and (one would think) likely to be confused with, the “Joe’s” mark that no one is claiming was abandoned.

The owner of the original store had sold it to an investment company, Gryphon Investors, in January 2007.  The four individual defendants blame Gryphon Investors for the bankruptcy – “This thing was built up over 57 years and was taken down by outsiders in two years.”  But while they may believe, and perhaps were, screwed throughout the sale to Gryphon and the ultimate bankruptcy, I just don’t see a court letting unhappy former executives subvert the systematic transfer of assets in bankruptcy. 

But the case is only starting and there are two sides to every story.  It could be interesting to see how far this goes.

UFA Holdings, Inc. v. Performance Acquisition Group Company, Civ. No. 10-639 ST (D. Or. June 7, 2010).

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