Property, intangible

a blog about ownership of intellectual property rights and its licensing

A Routine Trademark Ownership Dispute

The case about the ownership of the LIGHT STAR TRAVEL trademark is almost blissfully routine. It simply boiled down to whether one entity acquired ownership of another – if so, the alleged acquiror owned the trademark, if not, the original owner retained ownership.

It looks like the parties are acting without the advice of counsel, or they could have saved themselves a lot of money. There was no dispute that the defendant, Light Star Travel Agency, Inc. (LSTAI) was the first to use the below trademark, starting in 1993:

LSTAI and plaintiff US Gates International, LLC (UGI) were both in the travel agency business – in particular brokering hotel accommodations, car rentals and airline tickets for Hajj and Umrah travel, that is, pilgrimage travel by Muslims to Mecca and Medina.  Travel visas from Saudi Arabia are required.

A quick interlude with the cast of characters here:

Taha Alashi is the sole owner and managing member of UGI.
Fawaz Mushtaha incorporated LSTAI in 1993 and operated it until 2004. He went to Saudi Arabia in 2004.
Musab Mushtaha is his son. He started working with LSTAI in 2007.
Abdellah is Musab Mushtaha’s mother and Vice President of LSTAI.
Abdelilah is a friend of Fawaz Mushtaha and Treasurer of LSTAI.

LSTAI was inactive between 2004 and 2006.  In 2006 and 2007, Alashi and Musab Mushtaha had negotiations regarding transferring LSTAI to UGI. Alashi had LSTAI reinstated with the Virginia State Corporation Commission and became President of LSTAI. UGI started using the disputed mark on its website and other materials. 

Also in 2007, Musab Mushtaha and Alashi filled out a form with the International Airline Travel Agent Network (IATA) saying that Alashi was now the 100% owner of LSTAI, 50% of the stock received from Fawaz Mushtaha and 25% received from each of Abdelellah and Musab Mushtaha.  Musab Mushtaha didn’t own 25% of the company and also didn’t have the authority to transfer the stock to Alashi. 

Eventually a dispute arose, Alashi was removed as President in April, 2008, and Musab Mushtaha became President. Around the same time, unbeknownst to the Mushtahas, Alashi filed a trademark application in the name of UGI for the mark with the USPTO (which issued on June 23, 2009).  In July, 2008, Asashi, Fawaz Mushtaha and Abdelilah entered into an agreement with the following language (typos in original):

Musab (light Star Travel Agency Inc.), will provide U.S. GATES INT’L (Taha [Alashi]) and Mohammed Abdelilah with 200 Hajj packages at the agreed cost between the parties selling cost. No VISA charges shall be added to the 200 packages. . . . Any Hajj packages or Visa provided by Light Star Travel Agency Inc., to his throughout the rest of the country, Taha and Mohammed would not acquire any benefits from it unless they have been involved in it. . . .  Light Star Travel Agency Inc. has the right to choose the organizer for the hajj business or add extra company to its organizer permit without permition from Taha Alashi or any representative of us gates and will cover all the expenses.

US GATES INT’L LLC–d/b/a Light Star Travel and Taha will not be held responsible for any penalty, charge, damage, taxes, liabilities or lawsuit held against Light Star Travel Agency Inc, U.S. Gates Taha, Mohammed will be responsible for their own packages only. . . .  We U.S. GATES INT’L LLC– D/B/A Light Star Travel has separate entity than Light Star Travel Agency Inc,

In 2009 there was a dispute about the travel visas.  Musab Mushtaha, Alashi and Abdelilah met with the Saudi Arabian Embassy to settle the matter.  Abdelilah testified that before the meeting, Alashi said that he never owned LSTAI.  At the meeting with the Embassy staff, Alashi said that LSTAI was not his company.  As a result of the meeting, the right to the visas was given to LSTAI.

Since UGI and LSTAI were both using the mark for the same services, UGI ultimately sued LSTAI on various claims under the Lanham Act.  LSTAI counterclaimed on a similar assortment of claims and for cancellation of the registration.

Those are the facts relied on by the district court in a bench trial. No one contested that the mark was valid and there was likelihood of confusion since both entities were using the same mark.  Rather

though this case is one for trademark infringement, the dispute, at bottom, is one over the transfer of a business, specifically a Virginia corporation. Both parties concede that they each use the identical mark in commerce–what they contest is ownership.

Defined that way, it really wasn’t hard.  Despite the inaccurate statements made to IATA, Alashi never actually owned any stock.  Under Virginia law, there must be a plan for a share exchange and the plan has to be adopted by the board of directors and approved by the shareholders. That clearly didn’t happen.  The July, 2008 agreement also didn’t operate to transfer stock; the agreement was merely a business arrangement for the allocation of travel packages and visas.  The agreement also acknowledged that UGI and LSTAI were two distinct entities, a situation that Alashi confirmed was the case both to Abdelilah before the meeting at the embassy and to an embassy official.  Once the court decided that UGI wasn’t the true owner of the mark, it was clear that the trademark infringement was by UGI, not LSTAI. The evidentiary value of the trademark registration was quickly and correctly disposed of and LSTAI’s common law properly invoked and evaluated.  UGI wound up as the one enjoined and the court ordered the cancellation of the registration.

US Gates Int’l, LLC v Light Star Travel Agency, Inc., No. 1:10cv32 (E.D. Va. Nov. 8, 2010).

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