Property, intangible

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You Need to Schedule Worthless Trademarks

Thanco Products and Imports, Inc. v. Kontos is a case that intrigues me. It’s an adversarial proceeding in a bankruptcy, not having to do with who owns the trademarks exactly, but what happens when one lies about it.

In 2006 and 2007 Debtor George Kontos filed six trademark applications that ultimately registered, for GREEK AMERICAN PRINCESS, GOT OUZO?, GREEK BY MARRIAGE, GREEK TIME, WHAT HAPPENS AT THE GREEK FESTIVAL … STAYS AT THE GREEK FESTIVAL,* and OFFICIAL MEMBER GREEK MAFIA. The were all registered for apparel and Kontos had a business selling T-shirts at festivals run by Greek Orthodox Churches.

Plaintiff Thanco Products also sold shirts at the same venues displaying “got ouzo?”, and so petitioned to cancel Kontos’ registration at the PTO. The dispute ultimately ended up in federal court in the Southern District of Texas, Kontos defaulted, the registration for GOT OUZO? was cancelled, and Kontos was ordered to pay Thanco $30,843 in treble damages. Thanco then brought proceedings in North Carolina, where Kontos lived, to collect on the judgment. In response, Kontos filed a Chapter 7 bankruptcy but didn’t list the remaining five registrations as assets. Thanco Products filed an adversarial action claiming that Kontos should be denied discharge of his bankruptcy under §727(a)(4)(A) because he made a false statement about ownership of the trademarks.

Kontos had a very fluid tale about why he didn’t make a false statement on his petition. First, he claimed at the 341 meeting of creditors on March 2, 2012 that he had sold them in October, 2009 to a Greek company called BGA Hellas, but he didn’t know who they were. Oh wait, when testifying in June, 2012 Kontos remembered that BGA Hellas was owned by Kick Yiannakopoulos, who was like a father to him. But Kontos hadn’t seen Yiannakopoulos since 2009 or early 2010. Oh wait, when testifying at the trial on October, 2013, Kontos remembered that he had gone to Greece in December of 2011 (a mere three months before the 341 meeting) and learned Yiannakopoulos had died. At that time, he found Yiannakopoulos’ daughter and had the daughter assign the trademarks to Kontos’ mother’s company, Buy Greek Art. There’s much more detail in the decision,** but, as you can imagine, none of that sat too well with the court:

The court is satisfied that the foregoing testimony by the defendant regarding alleged transfers to and from a purported entity named BGA Hellas is untrue and that the purported transfers are a fabrication created by the defendant to hide and shield the trademarks from creditors.

And, thus satisfied, the court denied Kontos’ discharge of the bankruptcy.

As entertaining as the story is, what intrigues me is why Thanco took it this far. I’m not a bankruptcy lawyer, so I could be missing something simple. Is Thanco’s next step to try to generate some income through selling the trademarks? But that seems like a fool’s errand to me: the registrations are for banal phrases that were printed on T-shirts. They likely wouldn’t have stood up to challenge (as Kontos’ GOT OUZO registration didn’t withstand Thanco Products’ challenge) before the bankruptcy. Now, given their history, they are entirely worthless, or certainly not worth whatever Thanco paid in attorney’s fees to bring the adversarial action, much less the $30,000 award in the Texas action.

Or was the strategy simply to avoid the discharge and the failure to list the trademarks just the vehicle for the attack? Konstos listed these assets in his bankruptcy: “a small checking account balance, an Ipod, CDs, DVDs, personal pictures, clothing, shoes, a pistol and a malpractice claim against his attorney in the Texas Proceeding.” It doesn’t look like Kontos is going to be in any shape to pay $30,000 anytime soon. Or was forcing him to acknowledge ownership of the trademarks a way to force an income stream to him based on royalties from the sales of goods currently being sold at his mother’s site***

Anyone have any ideas?

In re Kontos, No. 12–50156C–7W (Bankr. M.D.N.C. Jan. 13, 2014).

*You can guess what ultimately happened to this one. Yup, the Las Vegas Convention and Visitors Authority petitioned to cancel the registration and it was ultimately assigned to the Convention Authority.

**This is one of my favorites: “In most instances the defendant was unable or unwilling to provide any information concerning BGA Hellas, disclaiming any familiarity with the company. Yet, when the defendant was asked whether the ‘BGA’ in BGA Hellas stood for ‘Buy Greek Art’ (a name tied to the defendant) the defendant was quick to respond that it stood for ‘Being Greek Always’ despite his avowed lack of familiarity with the company.”

***I wonder was the Las Vegas Convention and Visitors Authority thinks about the sale of the “What Happens at the Greek Festival … Stays at the Greek Festival” shirt on the site.

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