Property, intangible

a blog about ownership of intellectual property rights and its licensing

The Mongols Have Their Colors Back (For Real)

The whole Mongols trademark seizure case is a little confusing, so this story is put together from a few different decisions in two different cases.  Two marks, the MONGOLS word mark for “association services, namely, promoting the interests of persons interested in the recreation of riding motorcycles” and the “Image Mark

for “jackets and t-shirts” were registered in January 2005 and April, 2006 to the unincorporated association Mongols Nation, on applications signed by then-President Ruben Cavazos.  On March 26, 2008 Cavazos created Shotgun Productions, LLC, which was solely in his control, and assigned the marks to it. He claimed the Mongols leadership was aware of the assignment, but the subsequent president said the assignment was without the knowledge or authorization of the Mongols Nation.  Thus, on October 14, 2008, Mongols Nation filed a “corrective assignment” of the marks back to it.

A few days earlier, on October 9, 2008, the government had indicted Ruben Cavazos and 78 other members of the Mongols Nation. Mongols Nation was not indicted. On October 22, 2008 (after the assignment of the marks back to Mongols Nation) the government obtained an ex parte order restraining that sale or transfer of the Mongols trademarks. The government’s proposed order was that the defendants “and those persons in active concert or participation with them” be enjoined from wearing or displaying the Mongols trademarks, but that was stricken by the court before it issued the order. Nevertheless, the defendants themselves were ordered to surrender all their articles with Mongols trademarks.

Mongols Nation then incorporated Mongols Nation Motorcycle Club, Inc. and on January 21, 2009, in disobedience of the restraining order, the trademarks were assigned to the corporation.

Then the second suit starts, a civil one. Ramon Rivera was an unindicted member of the Mongols. He witnessed other unindicted members having their apparel seized, so on March 10, 2009 he filed a civil action seeking a permanent injunction restraining the government from seizing his.  In July 31, 2009, a preliminary injunction was granted in his favor, finding that the government’s seizure of articles bearing the marks was improper.

On June 15, 2010 in the criminal action the court entered a Preliminary Order of Forfeiture of the trademarks. On July 20, 2010, the Mongols Nation Motorcycle Club, Inc., as a third party affected by the forfeiture, filed an ancillary proceeding asking the court to vacate the preliminary order.

On January 1, 2011, in the civil matter the court granted summary judgment in Rivera’s favor. The court held that seizing the items would be a violation of Rivera’s First Amendment rights without adequate justification by the government.

Which brings us to the present decision, where in the criminal matter the court vacates its preliminary order forfeiting the Mongols trademarks. While the decision in the civil matter did not collaterally estop the government from seeking the forfeiture, nevertheless the forfeiture was improper.  Recall that the Mongols Nation was never indicted. The government’s theory was that Cavazos, in transferring the marks to his wholly-owned company Shotgun Productions, was the actual owner of the marks and therefore they were subject to forfeiture.  That was a no-go, however:

The assignment of the marks to Shotgun Productions, an entity under Cavazos’ sole control was invalid. Any right or interest in a trademark must be “appurtenant to an established business or trade in connection with which the mark is employed.” The stated purpose of Shotgun was “promotional and licensing services.” Clearly, Shotgun never used the mark to indicate membership in an organization substantially similar to that of Mongols Nation.

I’m not sure why this is “clearly” so without more information on what activities Shotgun Productions might have engaged in – and even then, the Image Mark was registered for jackets and t-shirts, surely items that can be licensed goods for promotional purposes.  Nevertheless, it is a stretch on the facts to think that Cavazos, rather than the club, owned the trademarks. Thus, “the court regrettably must conclude that . . . property belonging only to the unindicted enterprise is not forfeitable.”  The Mongols have their colors back.

U.S. v. Cavazos
, No. CR 08-1201 (C.D. Calif. Oct. 21, 2008) (Order Restraining Sale of Trademark).
Rivera v. United States, No. 2:09-cv-2435 FMC-VBKx (C.D. Calif. Aug. 3, 2009) (Order Granting Preliminary Injunction).
U.S. v. Cavazos, No. CR 08-1201-1 ODW (C.D. Calif. June 15, 2010) (Preliminary Order of Forfeiture).
Rivera v. United States, No. CV 09-2435 DOC (JCx) (C.D. Calif. Jan. 4, 2011) (Order Granting Summary Judgment).
U.S. v. Cavazos, No. CR08-01201 ODW (C.D. Calif. June 28, 2011) (Final Order Vacating Preliminary Order of Forfeiture).

Prior posts here and here.

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