Property, intangible

a blog about ownership of intellectual property rights and its licensing

“Not So Fast” Coda

I generally write about intangible property, but I hope you’ll forgive me if I write about one piece of tangible property. Many years ago I wrote about a lawsuit over ownership of the intellectual property rights in the car “Eleanor” from the movie “Gone in 60 Seconds” and in “Remake Eleanor” from the 2000 movie remake. The dispute was between Denise Halicki, widow of the owner of the rights in the original film, and Carroll Shelby who had created the Remake Eleanor. In 2004 Shelby registered the trademark ELEANOR for “vehicles, namely, automobiles, engines for automobiles, and structural parts for automobiles” and licensed the trademark for reproductions of Remake Eleanor. Halicki sued Shelby in 2004 and in 2009 the case settled, with Shelby assigning the trademark to Denise Halicki.

But, it turns out, it was much more complicated than that. In 2007 Halicki formed Eleanor Licensing. As of November 1, 2007, Eleanor Licensing granted Classic Recreations a license to manufacture and sell restored Fastback Ford Mustangs to replicate the appearance of the two Eleanors. Eleanor Licensing disclosed the dispute with Shelby in the license agreement with Classic:

Shelby Matter. Licensor has advised Licensee that Licensor and related parties are currently involved in litigation with Carroll Shelby, Unique Performance, Steve Sanderson and related entities (collectively ‘Shelby’) with respect to the alleged infringement by Shelby of certain intellectual property rights relating to the Eleanor vehicle from the ‘Gone in 60 Seconds’ films.

As part of the licensing agreement, Eleanor Licensing was to be given some of the replicas. Eleanor Licensing received one, Eleanor No. 1, but wasn’t given the title, even after inquiring.

In December 2008, while the Halicki suit was pending against Shelby, Shelby sued Classic. Both suits were settled at the same time, but nevertheless Classic terminated the licensing agreement, saying “As a result of the settlement of the lawsuit brought by Carroll Shelby, et al. against Denice Shakarian Halicki, et al., and other facts, it is clear that Eleanor Licensing LLC did not have the rights it claimed to have had relative to the automobiles that were manufactured by Classic under the terms of the Agreement … .” Classic Recreations offered to settle its claims against Eleanor Licensing for $640,000 and return of the sample Eleanor. Eleanor Licensing didn’t return the car (or, presumably, pay $640,000), replying that the claim was frivolous and threatening Classic with an action for malicious prosecution if Classic filed.

Fast forward to May, 2014, five years later, when the owner of Classic obtained an order of replevin to have Eleanor No. 1 seized from the showroom of a new replica maker. When the dispute over the ownership of the vehicle was discovered, the car was released to Eleanor Licensing with a stipulation (of what, the opinion doesn’t say).

So Eleanor Licensing finally sued Classic to recover title to Eleanor No. 1. This opinion affirms the district court’s holding the Eleanor Licensing owns the car and ordering Classic to turn the title over.

Classic claimed that the license agreement wasn’t supported by consideration, claiming that Shelby’s December 2009 assignment to Halicki confirmed that Eleanor Licensing could not convey a license to use the trademark at the time of the agreement, November 2007. Not so:

Classic’s argument is doubly flawed. First, Halicki testified concerning her late husband’s commercial exploitation of the “Eleanor” and “Gone in 60 Seconds” marks following the release of the first film, as well as the marketing activities surrounding and subsequent to the release of the 2000 remake. The trial court found this evidence established Eleanor Licensing and Halicki’s ownership of rights in the “Eleanor” trademark (that is, a common law trademark) sufficient to authorize the license for use of the mark by Classic. That finding is amply supported by substantial evidence.

Second, evidence at trial, as well as the license agreement itself, demonstrated that Classic was fully aware of Shelby’s 2004 federal trademark registration of “Eleanor” and the litigation initiated by Halicki concerning its validity. In fact, trial testimony disclosed that Leone, on behalf of Eleanor Licensing, had advised the Engels to investigate ownership of the intellectual property covered by the license agreement before completing the transaction, which they did. In addition, Eleanor Licensing warranted that it had the right to enter into the license agreement and agreed to defend Classic in any third-party infringement action brought against it for its use of the intellectual property being licensed. Thus, even if ownership of the “Eleanor” trademark was legitimately disputed by Shelby, Eleanor Licensing and Halicki provided sufficient consideration to Classic by giving Classic what it bargained for, licensing the rights they had (which included their undisputed copyright interests in “Eleanor” and “Gone in 60 Seconds,” as well as their trademark rights) and agreeing to protect Classic from infringement claims. There was no failure of consideration.

However, the contract-based claims were barred by the statute of limitations, since the suit was filed more that four years after Classic’s demand letter for return of the car. But all was not lost; Eleanor Licensing had also pled a statutory claim for recovery of specific personal property. There was a three-year limitations period for this cause of action and Classic had filed suit only a few months after the action for replevin. The claim to quiet title on the vehicle was not time-barred either: while Eleanor Licensing was aware that Classic disputed ownership, “the general rule in quiet title actions (usually articulated in cases involving real property, not personal property) is that the statute of limitations ‘does not run against one in possession of land.’ … Here, following Classic’s demand letter of November 20, 2009 and Eleanor Licensing’s rejection of Classic’s claims as ‘frivolous,’ Classic took no action to assert any claim or right to possession of Eleanor No. 1 until May and June 2014. It was those events in 2014 that triggered the limitations period for the quiet title action.”

Maybe it’s all over now.

Eleanor Licensing LLC v. Classic recreations LLC, Nos. B275429, B279238 (App. Ct. Cal. March 21, 2018).
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