Hard Rock Café Sues Hard Rock Hotel & Casino

On September 21, 2010, Hard Rock Cafe International (USA), Inc. (“HRCI”) filed a lawsuit in the U.S. District Court for the Southern District of New York against various defendants that use the “Hard Rock” trademark, most notably the group of companies which own and/or operate the Hard Rock Hotel & Casino in Las Vegas, Nevada (the “Defendants”). See Hard Rock Cafe International (USA), Inc. v. Hard Rock Hotel Holdings, LLC et al, Case No. 10-cv-07244 (S.D.N.Y. Filed September 21, 2010). A copy of the complaint can be downloaded here (HT: Steve Green). The Las Vegas Sun has an article on the lawsuit here (see also Courthousenews.com and Las Vegas Review Journal).

HRCI filed the action “in order to protect the enormous goodwill in its world-renowned trademarks from being systematically diminished, devalued and damaged by the wrongful conduct of Defendants.” HRCI claims that the Defendants are using the “Hard Rock” trademarks in a manner that has intentionally, materially breached the terms of a 1996 license agreement entered into with HRCI’s predecessor-in-interest and violates HRCI’s trademark rights to such marks.

More specifically, HRCI claims that the Defendants’ actions at the Hard Rock Hotel/Casino have caused HRCI’s marks to “become associated with objectionable and offensive conduct that is at odds with the brand imagery of the HARD ROCK trademarks” and “failed to use their best efforts to protect the goodwill associated with” HRCI’s trademarks.

The complaint spends several pages going through the history of the Hard Rock Café and the creation of the worldwide successful HARD ROCK brand by original founders Peter Morton and Isaac Tigrett.

Then, in 1990, The Rank Group, Plc (“Rank”), HRCI’s predecessor-in-interest, acquired all of Tigrett’s interests in the business then operated under the HARD ROCK Marks at that time. In June 1996, Rank entered into a transaction with Morton whereby Morton sold to Rank his interests in the business then conducted under the HARD ROCK Marks, with the exception of ownership of the Hard Rock Hotel & Casino in Las Vegas and the option to develop other properties using the HARD ROCK HOTEL and HARD ROCK CASINO marks in certain geographic areas.

According to the complaint, Rank acquired all right, title and interest to all HARD ROCK marks registered and used around the world and Morton received a license from Rank (through a Rank IP licensing special purpose entity, Rank Licensing, Inc.) to use the HARD ROCK HOTEL and HARD ROCK CASINO marks on a limited basis and subject to a number of conditions. Rank Licensing later assigned all right, title and interest in the HARD ROCK Marks to HRCI. (Note: The few assignment records reviewed regarding the some HARD ROCK registrations did not show this precise chain of title – see, e.g., here and here).

The complaint next asserts that in February 2007, as part of a buyout of Peter Morton’s interests in the Hard Rock Hotel/Casino business, Morton assigned the rights granted to and obligations imposed on him by the 1996 License Agreement to one of the Defendants, HRHH IP, LLC. And since that time, HRHH IP, LLC and Hard Rock Hotel Holdings, LLC have been licensees of HRCI under the 1996 License Agreement (and apparently represented to third party sublicensees that they are licensees under such agreement).

After detailing various sections of the License Agreement regarding use of the marks and protecting the goodwill, the complaint then gets into the juicy details which give rise to the dispute.

(looks like harmless, innocent fun)

In November 2008, a reality television program titled “Rehab: Party at the Hard Rock Hotel” (“Rehab”) began airing throughout the United States. Rehab supposedly depicts events occurring during pool parties held on Sundays at the Hard Rock Hotel & Casino in Las Vegas. [I use the word “supposedly” because does anybody really believe that “reality” shows actually depict reality anymore – as opposed to carefully calculated and constructed entertainment programs designed to appear as if they depict reality?]

According to the complaint, the behavior depicted in Rehab is “entirely at odds with the brand image of the HARD ROCK Marks.” Specifically,

Rehab portrays the Las Vegas HARD ROCK HOTEL & CASINO, a property operated under trademarks owned and licensed by HRCI, as a destination that revels in drunken debauchery, acts of vandalism, sexual harassment, violence, criminality and a host of other behavior that most members of the general consuming public of the United States who regularly frequent or are potential patrons of HRCI’s HARD ROCK CAFE restaurants and other properties operated under the HARD ROCK Marks would find unseemly and objectionable.

[Comment: Isn’t the "Hard Rock" brand image one that is associated closely with rock and roll music, which itself is associated with the image of sex, drugs, and rock and roll – sounds like the behavior depicted complements the brand imagery of the HARD ROCK marks quite nicely].

The complaint also maintains that the Rehab show portrays the staff of the Las Vegas Hard Rock Hotel & Casino as “unprofessional, incompetent, and/or physically and emotionally abusive to hotel guests and other staff.” [ed. – have you seen how rowdy and obnoxious some guests get while living it up in “Vegas”?] Of course, HRCI claims that it “prides itself on offering guests at its HARD ROCK CAFE restaurants and other properties operated under the HARD ROCK Marks dining and entertainment experiences that are pleasurable, fun and consistent with the democratic free spirit of rock music.” [Comment: I think the people engaging in the debauchery at the Rehab pool party were certainly having an entertainment experience that was pleasurable, fun and consistent with the democratic free spirit of rock music – and those watching the show from their homes would surely switch places if they could.]

HRCI then references some highly publicized arrests that occurred in September 2009 at the Rehab pool party where eight patrons were arrested for engaging in acts of solicitation of prostitution and drug distribution (Las Vegas Sun article here) – alleging that Defendants “allowed” the Rehab pool parties to become associated with criminal activity.

The complaint then quotes various communications from members of the public expressly various negatives comments about the Hard Rock Hotel/Casino after viewing the Rehab television show, including communications by members of the public who believe HRCI is responsible for the conduct depicted in the show.

HRCI received assurances from Defendants that the “negative associations” created by the show would be addressed, HRCI alleges that the third season of Rehab “depict the same offensive and depraved conduct portrayed in the first two seasons.” [ed. – does this type of language make anybody else want to check out this show now?]

HRCI maintains that this is harming the reputation and goodwill of the HARD ROCK Marks in violation of the 1996 License Agreement (which requires Defendants to use best efforts to maintain the goodwill of the HARD ROCK Marks). HRCI further maintains that by allowing the Rehab TV show to be aired – and causing the HARD ROCK Marks to become associated with “unsavory, offensive conduct that the majority of the American consuming public finds to be objectionable” [ed.—And yet, the ratings have been high enough to bring it back for a third season so people are watching!] – are intentionally damaging such goodwill.

HRCI also argues that Defendants breached a provision of the 1996 License Agreement by using the mark “HARD ROCK HOTEL” in the title of the Rehab show without HRCI authorization.

HRCI next argues that Defendants have begun branding certain facilities at the Las Vegas property using the acronym HRH (e.g., HRH Tower, HRH Beach Club, HRH Beach Club Bar & Grill) and even branding the property itself as the HRH HARD ROCK HOTEL & CASINO – with the HRH acronym being more prominent than the HARD ROCK HOTEL & CASINO trademark – in an attempt to create a sub-brand of the Hard Rock Marks over which Defendants can claim possesses independent goodwill and capable of being used independently of HRCI (HRCI does have one trademark registration for HRH for clothing items). HRCI maintains that such actions violate the 1996 License Agreement because Defendants are using a mark which is likely to cause confusion with and dilute the distinctive quality of the HARD ROCK Marks.

HRCI’s next focus is on Defendant’s sublicensing of the HARD ROCK HOTEL and HARD ROCK CASINO trademarks to the Cherokee Nation Enterprises, which operates a Hard Rock Hotel & Casino in Tulsa, Oklahoma, and to Pueblo of Isleta Indian tribe which operates a Hard Rock Hotel & Casino in Albuquerque, New Mexico.

Without getting much into specifics, HRCI alleges that the way the HARD ROCK Marks are being used at the Tulsa property are “inconsistent with the brand image HRCI has cultivated over many years” – citing on that “the range of services, character of the establishment and the experience offered to customers is incompatible with consumer expectations for goods and services branded with the HARD ROCK Marks.” [Comment: Are they not offering debaucherous pool parties?]. HRCI cites to some signage that is supposedly not the type of use allowed under the 1996 License Agreement and also mentions the use of the HARD ROCK HOTEL & CASINO mark in the restaurant name “Toby Keith’s I Love This Bar & Grill” where the HARD ROCK mark is subordinate (again, in violation of the provisions in 1996 License Agreement requiring the HARD ROCK Marks to be depicted more prominently, requiring HRCI consent, and requiring HRCI to have copies of all sublicense agreements made between Defendants and third party sublicensees).

HRCI maintains that Defendants have failed in their obligations to ensure that, for its sublicensees, the HARD ROCK Marks are used in a manner that is consistent with the reputation and goodwill of the HARD ROCK Marks. Similar allegations are made regarding Defendants sublicensing at the Albuquerque property.

HRCI’s final focus is the registration by the Defendants of numerous Internet domain names containing variations of the HARD ROCK Marks, including cherokeehardrockhotel.com, hrhpokeronline.com and hardrockroyalty.com, in violation of provisions of the 1996 License Agreement preventing the registration of domain names containing any HARD ROCK Marks.

HRCI’s causes of actions are for breach of contract, declaratory judgment regarding the enforceability of the 1996 License Agreement in light of Defendants’ intentional breaches, federal and state trademark dilution, registered and common law trademark infringement, and federal and common law unfair competition.

Egg Works Left With Egg On Its Face After Court Denies Preliminary Injunction Against Egg World

(I doubt they are smiling today)

The owners of the Las Vegas breakfast restaurants The Egg & I and Egg Works got egg on their face when a federal court denied their motion for preliminary injunction against a competing Las Vegas restaurant named Egg World.

Back in June, Bradley Burdsall, along with his two companies Egg Works, Inc. and Egg Works 2, LLC (collectively “Egg Works”), brought a trademark infringement lawsuit against Egg World, LLC, and two of its principals, Gabrijel Krstanovic, and Dejan Debeljak (collectively “Egg World”). See Egg Works, Inc. et al v. Egg World LLC et al, Case No. 10-cv-01013 (D. Nev.). A copy of the complaint can be downloaded here. The Las Vegas Sun ran an article about the dispute back when the suit was filed.

Probably figuring that upstart Egg World would not have the financial resources to devote towards legal fees, Egg Works came out guns blazing filing a Motion for Temporary Restraining (which was quickly denied) followed by a Motion for Preliminary Injunction – along with what can only be described as a litany of declarations from purportedly confused consumers that Egg Works submitted in support of its argument for trademark infringement of its registered mark EGG WORKS and for why an injunction should be issued immediately against Egg World while the lawsuit is pending.

An evidentiary hearing was held and on September 14, 2010, District court Judge Lloyd George denied Egg Works motion for preliminary injunction on the basis that Egg Works had not shown a likelihood of success on the merits of its trademark infringement claims. A copy of the court's order can be viewed here.

Analyzing the likelihood of confusion between Egg Works and Egg World, the court went though each of the Sleekcraft factors.

Regarding “strength of the mark,” the court rejected Egg Work’s unsupported assertion that the mark does not directly convey any feature or characteristic of its services to consumers and concluded that the mark was “descriptive” and “not entitled to protection absent a showing of secondary meaning” (an issue which Egg Works had not expressly addressed). As such, the court stated that “the descriptive nature of the mark indicates that this factor is likely to weigh in favor of defendants.” [Comment: Not sure how this reconciles with the fact that the PTO did register the EGG WORKS service mark, albeit with a disclaimer for the word EGG. Nonetheless, the court’s comments still reflect that Egg Works’ mark is not as strong as Egg Works would have this court believe].

The court next turned its attention to the factor of actual confusion, which even the court acknowledges “[f]rom the outset, Egg Works has relied heavily on its argument of actual confusion” and how Egg Works submitted “numerous declarations of consumers” and even called consumers as its first three witnesses. The court then provides a good background legal discussion, citing the Ninth Circuit’s recent decision in Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., ___ F.3d ___ , Case No. 08-56291 (9th Cir. Aug. 19, 2010), into the often overlooked, but important distinction between relevant confusion and non-relevant confusion.

Regarding Egg Works' evidence of actual confusion in the form of customer declarations, the court found that “the evidence presented by Egg Works reveals that a substantial number of consumers expressed a non-relevant confusion; confusion that resulted from something other than Egg World’s mark.”

The court noted several declarations from consumers mentioning that they were looking for the “Egg & I” restaurant and got confused when they saw Egg World. The court dismissed each of these declaration as express non-relevant confusion: “While the court agrees that these consumers are expressing confusion, their statements also establish that they are expressing a non-relevant confusion. Although the plaintiffs brought this action and motion to protect Egg Works’ mark, and though none of the above quoted declarants were subjected to cross-examination, each expressed confusion concerning the Egg & I. As Egg Works acknowledged and argued, this matter does not concern the Egg & I.”

The court recognized that the evidence “strongly indicates that the source of the consumers’ non-relevant confusion is the close affiliation between the Egg & I and Egg Works.” Other declarations from consumers supported customer recognition of this affiliation – consumers expressing a belief that Egg World was part of the Egg & I and Egg Works affiliated restaurants.

The court then eloquently explained how this particular type of consumer confusion is not relevant confusion for purposes of determining if Egg World infringes Egg Works:

While each of these declarants reveal their knowledge of the relationship between the Egg & I and Egg Works, they also reveal that this relationship is the source of their confusion. Each of the declarants quantify the relationship between the Egg & I and Egg Works as being a chain or group of restaurants. Each states a confusion whether Egg World was owned by or part of the Egg & I and Egg Works chain or group of restaurants. Based upon this belief, these consumers express a non-relevant confusion that Egg World was being opened as part of the chain or group of restaurants that includes Egg Works and Egg & I. Stated otherwise, the plaintiffs’ marketing successfully informed their consumers that they operated three breakfast and lunch restaurants under two dissimilar names that included the word “egg.” The consumers, so educated, submitted declarations expressing confusion whether the plaintiffs opened (or were opening) a fourth breakfast and lunch restaurant using a third name that included the word “egg.”

(emphasis added). [Comment: It’s statements like these that restores my faith in an impartial court’s ability to cut through all of the legal arguments propounded by attorneys on both sides and ascertain the truth – and then articulate that truth so brilliantly, eloquently, and concisely]. And with those words, the court essentially knocked away all of Egg Works evidence of actual confusion and found that Egg Works was not likely to succeed in showing that this factor weighed in their favor.

Regarding “similarity of the mark,” on the one hand, the court recognized that Egg Works disclaimed the word “EGG” in their trademark registration. The court, noting how one consumer in their declaration equated “egg” to the Egg & I restaurant (which is not Egg Works mark at issue, stated that:

The consumer’s reliance upon the disclaimed “egg” in relation to an entity that is not before the court suggests that little weight can be given to the similarity caused by the fact that both “Egg Works” and “Egg World” begin with the descriptive word “egg.”

The court also found “Egg World” and “Egg Works” are dissimilar in meaning and definition. Nonetheless, the court, mindful that similarities are given greater weight than differences, concluded that Egg Works is as likely to succeed as it is likely to fail in showing that this factor weighed in its favor – and accordingly, found this factor to neither favor Egg Works or Egg World.

On “relatedness of the services,” this favored Egg Works because both operate breakfast/lunch restaurants. Regarding “intent in selecting the mark,” the court rejected Egg Works purported evidence that the Defendants chose the Egg World mark after seeing Egg Works. The court also commented that “the conceptual strength of both ‘Egg Works’ and ‘Egg World’ strongly indicates that both are descriptive rather than suggestive.” The court found that this factor did not favor either side.

The court gave no weight to the “similarity of marketing channels” since the “only overlap of any significance identified by Egg Works is that both restaurants use exterior signs” and since the nearest Egg Works restaurant is located more than four miles from Egg World, such “marketing channel” “does little to suggest that confusion is likely to result from defendant’s use of its mark.”

The court found the factor of “likelihood of expansion into other markets” to be neutral based on the presented evidence – which thus favors the defendants (since its Egg Works burden to prove that the factors are in its favor in a motion for preliminary injunction).

Regarding the “degree of care likely to be exercised by consumers,” the court found that the evidence of this factor was “equivocal” because on the one hand, some Egg Works consumers “exercised so little care that they were initially confused by seeing the word egg on Egg World’s sign”, yet the evidence also indicated that the “actual confusion was caused by plaintiffs’ operation of three restaurants using two names.” [Hmm, one wonders why Mr. Burdsall has maintained the one “Egg & I” location rather than rebranding it as Egg Works in order to create a uniform brand? After all, wouldn't this also avoid confusion with the Ft. Collins, Colorado-based The Egg & I franchise chain which owns a trademark registration for the mark THE EGG & I?]

Based on its balancing of the Sleekcraft factors, the court concluded that Egg Works was not likely to succeed on the merits of showing a likelihood of confusion caused by the Defendant’s use of Egg World.

[Full Disclosure: The law firm I work for does represent one of the Defendants in some legal matters, but did not represent any of the Defendants in this case.]

Dairy Queen Denied Preliminary Injunction Against Blizz Frozen Yogurt

In late July, there was a flurry (pun intended) of new reports (here and here) on the trademark dispute between American Dairy Queen Corp. (“DQ”), the company behind the ice cream chain Dairy Queen and its popular BLIZZARD ice cream treat, and a California yogurt company named Yogubliz Inc., which obtained a trademark registration for the mark BLIZZBERRY and sought to register the mark Blizz Frozen Yogurt. Morris Turek, a trademark attorney who blogs at www.yourtrademarkattorney.com/blog/, has a detailed post on the dispute here.

The lawsuit actually originated back on May 17, 2010, soon after Yogubliz received a cease and desist letter from DQ regarding Yogubliz’s use of BLIZZBERRY and BLIZZ FROZEN YOGURT. Yogubliz filed the action in the United States District Court for the Central District of California seeking a declaratory judgment that its BLIZZBERRY and BLIZZ FROZEN YOGURT marks did not infringe DQ’s BLIZZARD marks. See Yogubliz Inc. v. American Dairy Queen Corp., Case No. 10-cv-03677 (C.D. Cal.). DQ subsequently filed counterclaims for trademark infringement as well as cancellation of Yogubliz’s BLIZZBERRY trademark registration. Yogubliz’s complaint and DQ’s Answer and Counterclaims can be viewed here.

DQ also initiated two proceedings with the Trademark Trial and Appeal Board -- an opposition against Yogubliz’s pending trademark application for BLIZZ FROZEN YOGURT (see American Dairy Queen Corporation v. Yogubliz, Inc., Opposition No. 91195789) and a cancellation proceeding against Yogubliz’s trademark registration for BLIZZBERRY (see American Dairy Queen Corporation v. Yogubliz, Inc., Cancellation No. 92052818).

In the federal court litigation, DQ subsequently filed a motion for preliminary injunction. Reuters reported yesterday that the federal court denied DQ its motion for a preliminary injunction on the basis that DQ failed to show a likelihood of success on the merits of any of its claims. See Yogubliz Inc. v. American Dairy Queen Corp., Case No. 10-cv-03677 (C.D. Cal. September 3, 2010). A copy of the court’s order denying DQ’s Motion for Preliminary Injunction can be viewed here.

The primary Sleekcraft factors where DQ apparently lost its argument on likelihood of confusion were similarity of the marks, relatedness of the goods, and marketing channels.

With respect to “similarity of the mark,” the court stated as follows:

[T]he Blizz Frozen Yogurt and Blizzard marks are relatively dissimilar. When considered as they appear on their respective products, the marks share nothing in common besides the spelling of the initial syllable. The font, color, and surrounding graphics of the two marks is different. The word Blizzard in Dairy Queen’s mark presented in all caps, in blue, using a straight lined font. It is topped with a depiction of snow, and backed by a red band that reads “THE ORIGINAL ONLY AVAILABLE AT DQ.” In contrast, Yogubliz’s frozen yogurt cups read “Blizz Frozen Yogurt.” The word Blizz is emphasized, appearing in pink, capitalized but not in all caps, using a stylized wavy line font. A pink and purple spiral appears next to the word Blizz on the cup. Even emphasizing similarities over differences, little connects the two marks as they appear on their respective products.
. . . [DQ] correspondingly devotes the bulk of its argument to the similarities between the words Blizz and Blizzard. Blizz and Blizzard do sound alike in that blizz is the initial syllable of the word blizzard. However, it is not clear that the word blizz, encountered independently, brings to mind the word blizzard. There is no indication that blizz is an abbreviation of blizzard in common usage. Dairy Queen’s contention that blizz has no meaning other than as an abbreviation of blizzard is unavailing. It could just as easily be associated with the word bliss. Further, products often are marketed under names that are nonsense or invented words. Thus, like Pez, Pringles, or a host of other brand names, it is unclear that Blizz has any independent meaning aside from the product it is attached to. Therefore, this critical factor weighs against Dairy Queen’s case.

As for relatedness of the goods, the court found that soft serve ice cream and frozen yogurt, while similar in that they “serve the same overall purpose for a consumer (a sweet treat),” they are not complementary goods and not closely related especially “given the health and taste differences between the two.” While the court recognized that similar marks can still cause confusion even when products are not closely related, the court found this factor to tip in favor of Yogubliz, but not dispositive.

As for the marketing channels used, while the court acknowledged that both products reach consumers through retail outlets,

the products are not marketed at a common retail location. Blizzards are sold at Dairy Queen restaurants, while Blizz Frozen Yogurt is sold through Yogubliz’s frozen yogurt shops. There is little possibility that a consumer could mistakenly seek a Blizzard in walking into a Blizz Frozen Yogurt or Blizzberry store if the consumer was aware that the Blizzard is a Dairy Queen product. There is also a distinction between the two retail locations where the products are available. While Dairy Queen operates fast food restaurants where Blizzards are offered alongside hamburgers, french fries and other food, the Yogubliz stores sell only desserts.

In response to DQ argument’s that a consumer might still think that Dairy Queen owned or sponsored Yogubliz’s shops, the court stated the following:

It is unclear, however, what would cause a consumer to believe that the stores operated by Yogubliz were owned by or affiliated with the Dairy Queen stores. There is some similarity, however weak, between the marks of Dairy Queen and Yogubliz’s respective products. But, there is no similarity alleged between the name or overall appearance of a Dairy Queen Restaurant and a Blizz Frozen Yogurt store. The argument for affiliation would thus turn on the idea that Blizzard is such an iconic brand that a store bearing some weak similarity to the name of that product would be assumed by customers to have some affiliation with the Dairy Queen company. This argument is strained, and cannot be accepted without supporting evidence. Overall, this factor weighs against Dairy Queen.

The court also rebuffed DQ’s trademark dilution claim on the grounds that the BLIZZ FROZEN YOGURT mark is not “nearly identical” to DQ’s BLIZZARD mark.

Having found no likelihood of success on the merits of any of DQ’s claims, the court denied DQ’s motion for preliminary injunction.

Of course, the court’s denial of a motion for preliminary injunction, while signaling to DQ that its case might be weak, does not bring this dispute to an end. It merely means that DQ failed to present sufficient evidence at this early stage that it would ultimately success on its claims such that it was entitled to a preliminary injunction at this early stage of the litigation.

Whether DQ will continue the fight after suffering this initial defeat is anybody’s guess. In the end, like most David and Goliath litigations, it may come down to how long can the relatively small Yogubliz do battle with the behemoth DQ (which is owned by Warren Buffett’s Berkshire Hathaway Inc.) – and how important this particular battle is to both sides.

And is anybody else out there surprised that Pinkberry, well known for its aggressive stance against any frozen yogurt store using any type of mark ending in “berry” (see prior blog post here) never went after Yogubliz's use of BLIZZBERRY?

District Court Dismisses Tiffany’s Final Claim Against eBay

Tiffany & Co.’s last chance at any kind of legal claim against eBay, Inc. in the long-running contributory trademark infringement lawsuit between the parties arising from the alleged sale of counterfeit Tiffany goods on eBay’s auction website came to an end today when District Court Judge Richard Sullivan concluded that there was “insufficient evidence” to support the false advertising claim that remained after the Second Circuit Court of Appeals in April of this year affirmed (decision here) most of the District Court’s earlier decision (previously blogged here) in favor of eBay. See Tiffany (NJ) Inc. and Tiffany and Company v. eBay, Inc., Case, No. 04-cv-04607 (S.D.N.Y. September 13, 2010). A copy of the court’s order can be viewed here. New stories on the decision from Reuters, Bloomberg, and WSJ. For blog posts on the Second Circuit’s April 2010 decision dismissing nearly all of Tiffany’s claims, see Ron Coleman and Eric Goldman.

GroupOn Sues Australian Companies for Trademark Infringement

Groupon, Inc. (“Groupon-US”), the Illinois-based company which specializes in offering daily group discounts and coupons for various goods and services to subscribing members of its website http://www.groupon.com/, filed suit in the U.S. District Court for the Northern District of Illinois against two Australian companies, Groupon Pty. Ltd. (“Groupon-Australia”) and Scoopon Pty., Ltd. (“Scoopon”), that are also in the business of offering “group coupon” services in Australia. See Groupon, Inc. v. Groupon Pty. Ltd. et al, Case No. 10-cv-05634 (N.D. Ill. Filed September 3, 2010). A copy of the complaint (without exhibits) can be downloaded here.

Groupon-US has a registration for the mark GROUPON (registered September 22, 2009) in connection with “promoting the goods and services of others by providing a website featuring coupons, rebates, price-comparison information, product reviews, links to the retail websites of others, and discount information.” Groupon-US also obtained a Community Trade Mark registration for the GROUPON mark (claiming priority to its March 13, 2009 U.S. application filing date). See CTM Reg. No. 008226508. Unfortunately for Groupon-US, the company did not have the foresight to also file an application to register the mark in Australia within the six month window of opportunity to claim priority to its U.S. trademark application. Groupon-US claims to operate in over 200 cities nationwide and in 29 countries throughout the world (although the complaint does not state whether or not Australia is one of those 29 countries where it offers its services).

The main crux of the current complaint is the fact that Scoopon, through the website http://www.scoopon.com.au/, offers the same type of daily discount/coupon services as Groupon-US using the similar mark SCOOPON (the complaint neglects to mention that Scoopon’s services appear to be currently limited to offerings in eight different Australian cities). Of course, what Groupon-US is probably more upset about is the fact that Groupon-Australia also registered the domain name http://www.groupon.com.au/, which currently displays a “Coming Soon” page “from the people behind Scoopon.” Causing Groupon-US further grief is the fact that on March 18, 2010, Scoopon filed an application with IP Australia (Australia’s version of the U.S. Patent and Trademark Office) to register the mark GROUPON (No. 1351539). Five days later, Groupon-US filed its own application with IP Australia to register the GROUPON mark (No. 1352123) and in July, Groupon filed an opposition against Scoopon’s application.

Groupon-US’s causes of action are for federal trademark infringement, unfair competition, and dilution, deceptive trade practices under Illinois law, and common law trademark infringement. Groupon-US also obtained two copyright registrations for its website -- VAu1-012-452 (registered February 18, 2010) and VAu1-015-272 (registered March 11, 2010). These copyright registrations also form the basis of a copyright infringement cause of action by Groupon-US which alleges that Scoopon’s website infringes Groupon-US’s copyrighted website.

The first thing that comes to mind when seeing Groupon-US’s attempt to have the scope of its trademark rights spread beyond the borders of the United States (and Europe) is the “terrioritality” principle articulated eloquently by the Second Circuit Court of Appeals in ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2nd Cir. 2007):

The principle of territoriality is basic to American trademark law. See American Circuit Breaker Corp. v. Or. Breakers, Inc., 406 F.3d 577, 581 (9th Cir. 2005); Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 714 (3d Cir. 2004); Buti v. Impressa Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir. 1998); Person's Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir. 1990). As our colleague, Judge Leval, has explained, this principle recognizes that

a trademark has a separate legal existence under each country's laws, and that its proper lawful function is not necessarily to specify the origin or manufacture of a good (although it may incidentally do that), but rather to symbolize the domestic goodwill of the domestic markholder so that the consuming public may rely with an expectation of consistency on the domestic reputation earned for the mark by its owner, and the owner of the mark may be confident that his goodwill and reputation (the value of the mark) will not be injured through use of the mark by others in domestic commerce.

Osawa & Co. v. B & H Photo, 589 F. Supp. 1163, 1171-72 (S.D.N.Y. 1984).

Precisely because a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to ensure that its rights to that mark are recognized in any country in which it seeks to assert them.

(footnote omitted); see also my prior blog post discussing the exceptions to the “terrioritality” principle.

Of course, in the instant lawsuit, however, Groupon-US is not claiming trademark rights in Australia (although that is probably the subject of the pending opposition). Rather, Groupon-US argues that the Defendants use of SCOOPON in Australia (and the registration of the groupon.com.au domain name) infringes Groupon-US’s U.S. trademark rights. The basis for such claims are reflected in the allegations set forth by Groupon-US to claim jurisdiction over these foreign defendants within the State of Illinois:

• [Scoopon] is doing business in this district, and defendant has promoted discounted goods and services of others on their website, and provided services allowing consumers to purchase coupons, in connection with marks confusingly similar to Groupon's mark, in this district. Further, defendants are foreign corporations, being incorporated in Australia, and provide an Internet website with a substantial effect on United States commerce, and a substantial effect on commerce in this district. [Comment—how exactly does the use of SCOOPON by an Australian company in connection with offering group coupons for goods and services in Australia have a substantial effect on United States commerce and specifically on commerce in Illinois?]


• Defendant Groupon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at www.groupon.com.au. which states that the website is "from the people behind Scoopon". [Comment—since when did a “Coming Soon” sign equate to regular and systematic engagement in business?]


• Defendant Scoopon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at http://www.scoopon.com.au/. [Comment—how many citizens of Illinois are going to be interested in coupons for goods and services offered by businesses which are located thousands of miles away?]

While Scoopon may have an interactive website accessible by Illinois residents, there is no indication that Scoopon directed its services at Illinois residents (none of the cities served by Scoopon are in Illinois, or even in the United States) or knew that its services would cause any harm to Groupon-US (assuming that Groupon-US had no presence in Australia – other than its own internet presence – before Scoopon began using the SCOOPON Mark or registered the groupon.com.au domain name).

So would an Illinois court’s exercise of personal jurisdiction over these Australian companies comport with the principles of “fair play and substantial justice” (especially given that Groupon-US is already engaged in a battle over the GROUPON name in Australia and could just as easily pursue a civil action against the Defendants in Australia)? We shall see.

The Convoluted and Complicated History of the TROPICANA Hotel/Casino Trademark

Tropicana Las Vegas

Last year, I wrote about the Nevada lawsuit involving a dispute about use of the name Tropicana in connection with the famed Tropicana Resort & Casino in Las Vegas (link here). Pamela Chestek – well known for her many blog posts regarding convoluted assignments and related transactions with respect to intellectual property – provided her own unique insights into the matter around the same time (link here).

What started out as a simple declaratory judgment action by the new owners of the Tropicana Las Vegas regarding their long-time right to use the name Tropicana in connection with the hotel/casino located at the intersection of Las Vegas Blvd. and Tropicana Avenue has recently expanded into a fight over actual ownership of the TROPICANA trademark. While the Las Vegas Sun published an succinct article last week (link here) regarding the lawsuit filed in Delaware Bankruptcy Court by a group of companies lead by Carl Icahn's Tropicana Entertainment Inc. (a copy of the complaint can be downloaded here), the actual factual circumstances giving rise to the instant dispute regarding ownership of the TROPICANA mark are interesting enough (and so amazingly convoluted) that I felt a more detailed discussion of the facts underlying the ownership dispute was merited – if anything to provide another illustration of how trademark rights are handled in the course of multiple large scale corporate transactions (including bankruptcy proceedings) and how certain things can (and indeed do) fall through the cracks.

The Tropicana’s Early Years
The story begins back in 1957 when the Tropicana hotel and casino first opened in Las Vegas (the “Tropicana Las Vegas”). The Tropicana Las Vegas was originally operated by a company named Hotel Conquistador, Inc. (“Conquistador”) on land that was owned by the Jaffe Family (“Jaffe Group”). Under the terms of a 1972 lease agreement between Conquistador and the Jaffe Group, Conquistador was required to transfer to the Jaffe Group whatever right it had, if any, in the “Tropicana” name after the termination of the lease.

Later, in 1977, the Jaffe Group formed a partnership with Edward and Fred Doumani (the “Doumanis”) named Tropicana Enterprises which succeeded the Jaffe Group as the lessor in the lease agreement with Conquistador. On June 26, 1979, a company named Hotel Ramada of Nevada, a subsidiary of Ramada Inns, Inc., acquired from Conquistador the land lease of the Tropicana Las Vegas and the right to use the “Tropicana” name. Then on July 25, 1979, the Doumanis sold their 50% interest in Tropicana Enterprises to Adamar of Nevada Inc. (“Adamar of Nevada”), also a subsidiary of Ramada Inns, Inc.

So at this stage, you have Ramada Inns, Inc. owning 100% of the company which operates the Tropicana Las Vegas and owning 100% of a company which owns a 50% interest in a partnership which is the lessor on the land lease for the Tropicana Las Vegas. The Delaware court filing even includes the following handy chart to illustrate the corporate relationship:

The Tropicana Trade Name Agreement
In September 1980, Tropicana Enterprises entered into the so-called 1980 Trade Name Agreement with Ramada Inns, Inc., the Jaffe Group, Hotel Ramada of Nevada, and Adamar of New Jersey, Inc (another wholly owned subsidiary of Ramada Inns, Inc.). This agreement authorized Ramada Inns, Inc. to file federal trademark registrations in its name for the “TROPICANA” mark, but also required that proof of such registrations be provided to the Jaffe Group. Ramada Inns, Inc. did subsequently register several trademarks with the U.S. Patent and Trademark Office including, among others, the mark TROP and TROPICANA (the “Tropicana Trademarks”).

Here is where the situation starts to gets messy. The 1980 Trade Name Agreement also included a reversionary interest (also sometimes referred to herein as the “contingent assignment right”) that upon the termination of Tropicana Enterprises land lease, Ramada “shall immediately cease to use the name TROPICANA and all of their interest in said name shall become the property of Enterprises, and they shall promptly execute and deliver to Enterprises such instruments as Enterprises may reasonably require; assigning and transferring to Enterprises all of their said right, title, and interest in such name, together with the good will of the business symbolized by such name . . . .”

In a subsequent 1984 lease between Tropicana Enterprises (as lessor) and Hotel Ramada of Nevada (as lessee), a separate reversionary interest clause provided that: “Lessee shall upon termination of this Lease for any reason whatsoever, immediately cease to use such name and all interest of Lessee in said name shall become the property of the Lessor, and Lessee shall if requested so to do by Lessor, execute and deliver to Lessor such instruments as Lessor may reasonably require, assigning to Lessor any right, title, and interest Lessee has in such name.”

The Tropicana Spinoff
In 1989, Ramada, Inc. (formerly named Ramada Inns, Inc.) decided to spin off its gaming assets and properties into a newly formed subsidiary, Aztar Corporation (“Aztar”). As part of the spinoff, on December 20, 1989, Aztar, Ramada Inc., Hotel Ramada of Nevada, Adamar of New Jersey, Inc., Tropicana Enterprises, the Jaffe Group, and a company named TROP C.C. entered into a Trade Name Agreement Assignment, Guaranty, and Agreement (the “1989 Agreement”) whereby all of the Ramada parties’ rights under the 1980 Trade Name Agreement were assigned to Aztar and Ramada was obligated to transfer to Aztar all of Ramada’s trademark registrations with respect to the “Tropicana” name (which Ramada subsequently did).

So as of January 2002, Aztar was the owner of the company which operated the Tropicana Las Vegas, Hotel Ramada of Nevada, and owned 100% of the company, Adamar of Nevada, which owned 50% of the partnership interests in Tropicana Enterprises, the lessor of the Tropicana Las Vegas land lease and the holder of the aforementioned reversionary interest. Again, the Delaware court filing includes a handy chart to illustrate the corporate relationship at this stage:

The Tropicana Consolidation by Aztar
The situation then becomes a little more convoluted. According to the Delaware complaint, on February 1, 2002, Aztar caused Adamar of Nevada to purchase the Jaffe Group’s 50% interest in Tropicana Enterprises, thereby causing Aztar to become the “beneficial owner” of the equity interests in Tropicana Enterprises.

As described in the Delaware complaint, Aztar’s purchase of the remaining 50% interest held by the Jaffe Group rendered the reversionary interest right that Tropicana Enterprises had in the Tropicana trademark meaningless “because the grantor and grantee of the contingent assignment right were now one entity under common ownership and management” for the first time since the opening of Tropicana Las Vegas in 1957. Stated differently, when “the Jaffe Group had an interest in Tropicana Enterprises, there was a reason for the Jaffe Group to have some ability to prevent Aztar from using the Tropicana name elsewhere (either in competition or in ways that might dilute the value of the brand) if Aztar were no longer operating the Tropicana Las Vegas.” But since Aztar’s purchase of the Jaffe Group’s 50% interest in Tropicana Enterprises “brought the lessor and the lessee under common ownership under the Aztar umbrella, . . . there was no longer any reason for the contingent assignment right to continue.”

However, even the corporate chart provided in the Delaware complaint shows that what apparently really happened is that the Jaffe Group’s 50% partnership interest in Tropicana Enterprises was divided and transferred to two newly formed companies, Tropicana Real Estate Co., LLC (acquiring a 40% interest in Tropicana Enterprises) and Tropicana Development Co., LLC (acquiring the remaining 10% interest in Tropicana Enterprises). Both of these new companies were wholly owned by Hotel Ramada of Nevada, which in turn was wholly owned by Aztar.

One other complicating factor was that also in 2002, Tropicana Enterprises and Hotel Ramada of Nevada entered into an amended lease agreement that expressly terminated the prior land lease and contemporaneously effectuated a new land lease; however, the amended lease agreement failed to reference the 1980 Trade Name Agreement or address whether the reversionary provision of the 1980 Trade Name Agreement was terminated. While this new lease effectively triggered the reversion under the 1980 Trade Name Agreement (there was never any express consent to the termination of the reversionary interest obtained from the entities which held the reversionary interest), there was never any demand for the transfer of the rights to the trade name made by the entities which held the reversionary interest.

Nonetheless, the “extinguishment” of the contingent assignment right from the 1980 Trade Name Agreement was expressly mentioned in subsequent SEC filings by Aztar. Later, in 2004, as part of a loan transaction pledging Aztar’s assets as collateral, Aztar entered into an Amended and Restated Trademark and Collateral Agreement with Bank of America (as administrative agent) which represented that Aztar owned the Tropicana Trademarks. As noted in the Delaware complaint, this particular agreement was signed by the all of the signatories to the 1980 Trade Name Agreement, or their successors-in-interest, with the exception of the Jaffe Group.

The Aztar Leveraged Buyout
On May 19, 2006, a company named Wimar Tahoe Corporation purchased Aztar for $2.1 billion – structured so that Aztar became a subsidiary of a newly formed company named Wimar OpCo LLC, which was later renamed Tropicana Entertainment, LLC, and became the holding company for the acquired assets, which based on representations by Aztar in the purchase agreement included the Tropicana Trademarks.

However, the way the Wimar-Aztar purchase was structured is where it starts to get even more convoluted. The $2.1 billion purchase of Aztar was financed through two separate credit facilities – what are generally described as the OpCo Credit Facility (for the so-called OpCo Debtors) and the LandCo Credit Facility (for the so-called LandCo Debtors). The LandCo Debtors were those entities involved in the ownership and operation of the Tropicana Hotel and Casino in Las Vegas, Nevada; and the OpCo Debtors were those entities involved the operation of the Tropicana Casino & Resort Atlantic City in New Jersey, the Tropicana Express in Laughlin, Nevada, and other casinos.

As part of the OpCo Credit Facility transaction (which consisted of a $1.53 billion secured term loan and a $180 million secured revolver), the OpCo Debtors pledged as collateral any and all trademark assets they owned. One of the schedules of trademark assets pledged included Aztar’s ownership of the Tropicana Trademarks, which were to be pledged as security to the OpCo Lenders. On September 12, 2007, Aztar executed a written assignment of its interest in the Tropicana Trademarks to Tropicana Entertainment, LLC, which subsequently pledged such trademarks to the OpCo Lenders under the OpCo Credit Facility. As part of the LandCo Credit Facility, the LandCo Debtors were also required to identify any trademarks owned. None of the LandCo Debtors identified any ownership or contingent interest in the Tropicana Trademarks.

The Delaware complaint argues that the representations made by the relevant parties as part of this financing transaction shows the clear understanding of all parties involved – i.e., that the Tropicana Trademarks were owned unconditionally by Aztar at that time. Moreover, all of the secured financing provided under the credit facilities were loaned in reliance upon the representations made with respect to the Tropicana Trademarks.

The Tropicana Bankruptcy
Of course, like so many companies in the mid-2000s who engaged in large scale secured debt financing only to find themselves unable to make debt payments when the economy tanked in 2008, Tropicana Entertainment, LLC filed for bankruptcy in Delaware Bankruptcy Court on May 5, 2008.

On May 30, 2008, the Court entered a Cash Collateral Order which provided that the Liens acquired by the OpCo Lenders under the OpCo Credit Facility were “valid, binding, perfected, enforceable, first priority liens on the personal and real property described in the” OpCo Credit Facility, which included Tropicana Entertainment, LLC’s ownership interest in the Tropicana Trademarks. Moreover, there was no challenge against the Court’s Order regarding the OpCo Lenders’ liens lodged by any party during the 90 day challenge period.

The court’s Order also stated that no grant of security under the OpCo Credit Facility “shall be stayed, restrained, voidable or recoverable . . . , or subject to any defense, reduction, setoff, recoupment or counterclaim” after the challenge period, that the LandCo and OpCo Debtors waived and released the OpCo agent and OpCo Lenders from any and all claims arising out of the OpCo Credit Facility, including the extent, validity, priority and perfection of liens in the Tropicana Trademarks, and that that any other party-­in­-interest’s claims against the OpCo Credit Facility agent and the OpCo Lenders would be forever relinquished, released and waived after the expiration of the 90 ­day challenge period.

On July 7, 2008, the OpCo and LandCo Debtors each filed separate schedules of their assets and liabilities. Tropicana Entertainment, LLC filed schedules of assets and liabilities that listed the Tropicana Trademarks as assets; the LandCo Debtors’ schedules, on the other hand, did not assert any interest, ownership or otherwise, in the Tropicana Trademarks. The so-called OpCo Exit Facility Lenders (the designated post-bankruptcy lenders to the post-bankruptcy debtors of the OpCo assets) pledged an additional $150 million loan to the OpCo Debtors to help the OpCo Debtors reorganize – a loan based in part on the pledging of the Tropicana Trademarks as security for the loan. In contrast, the LandCo Lenders acquired interests in the $440 million LandCo secured term loan under the LandCo Credit Facility without any reliance on the Tropicana Trademarks as security.

The Tropicana Separation
With insufficient assets available to satisfy the secured obligations under the OpCo Credit Facility and the LandCo Credit Facility [ed.-big surprise], the decision was made to file two separate plans of reorganization -- the LandCo Plan concerned only the Tropicana Las Vegas and the OpCo Plan concerned all of the remaining casino properties which were part of the bankruptcy reorganization. Both plans provided that the respective secured lenders would take equity and management interest in the reorganized OpCo and LandCo debtors and that following bankruptcy, the reorganized OpCo and LandCo entities would operate as separate enterprises. This decision to separate the two companies into distinctive and separate enterprise is what set up the eventual dispute over the rights to the Tropicana name because before bankruptcy, the Tropicana Las Vegas was part of one big happy corporate family and used the Tropicana name without having to pay any royalty; however, post-bankruptcy, Tropicana Las Vegas would be a separate company that the OpCo entities would no longer be able to control with respect to usage of the Tropicana Trademarks and the quality control related thereto.

During negotiations regarding the OpCo and LandCo plans, the OpCo Debtors advised the LandCo Lenders that the Reorganized LandCo Debtors (i.e., the LandCo Debtors after the reorganization) would need to obtain a license from the Reorganized OpCo Debtors to use the Tropicana Trademarks after the plans became effective. Understandably, the LandCo Lenders – in particular Onex Corporation, the largest secured lender under the LandCo Credit Facility – rejected the idea of paying any license fees for use of the Tropicana Trademarks and countered with a request to use the Tropicana Trademarks for free, in perpetuity, and without control of such use of the trademarks by the Reorganized OpCo Debtors – an idea that the OpCo Debtors rejected.

In order to allow the reorganizations to move forward, the parties agreed to postpone the dispute over a royalty payment for the Tropicana Trademarks. The Delaware complaint describes the understanding of the parties as one which recognized “that the OpCo Debtors owned the Tropicana Trademarks but that the LandCo Debtors may or may not have had a right to use the Tropicana Trademarks, and if so, could they use it without paying a royalty” but which said nothing about ownership or which challenged the Court’s original order.

On May 5, 2009, the Delaware Court issued its Confirmation Order for the OpCo Plan, which went into effect on March 8, 2010. The Order approved the OpCo Exit Facility and held that the OpCo Exit Facility Lender liens were “valid, binding, perfected and enforceable liens and security interests in the real and personal property described in the OpCo Exit Facility and its attendant documents” and that such liens “shall not be subject to avoidance, recharacterization, recovery, subordination, attack, offset, counterclaim, defense or ‘claim’ . . . of any kind under any Applicable Laws as of the Effective Date.” On May 5, 2009, the Delaware Court also issued its Confirmation Order for the LandCo Plan, which went into effect on July 1, 2009, and did not include any claim to any kind of ownership interest in the Tropicana Trademarks.

The Nevada Tropicana Trademark Lawsuit
On July 20, 2009, two of the Reorganized LandCo Debtors, Tropicana Las Vegas, Inc. and Hotel Ramada of Nevada, LLC (together “Tropicana LV”), filed a lawsuit in Clark County District Court in Las Vegas, Nevada (previously mentioned above) seeking a declaration that they have a right to use the Tropicana Trademarks in connection with the Las Vegas resort and casino property without control by or payment to the OpCo Debtors. See Tropicana Las Vegas, Inc., et al. v. Aztar Corporation, et al., Case No. A09595469­B (Nev. D. Ct., Clark County) (the “Nevada Action”).

In order to allow the Nevada Action to proceed (because the OpCo Plan was not yet effective at the time), the Reorganized LandCo Debtors had to seek permission from the Bankruptcy Court to lift the automatic stay to permit the Nevada Action to proceed. In certain representations to the Bankruptcy Court during motion practice regarding lifting the stay, counsel for the Reorganized LandCo Debtors supposedly stated that Tropicana LV was not challenging “ownership questions” that were “plainly answered” prepetition and that it was merely seeking to preserve longstanding rights concerning the use of the Tropicana name without a royalty through “a declaration that Tropicana Las Vegas may continue to operate the Tropicana under the Tropicana name without interference by OpCo or payment to them. . . . Just a straightforward request to preserve what we view as our pre­existing right to operate as we’ve always done.” The Bankruptcy Court lifted the stay and allowed the Nevada Action to proceed.

The Nevada Action was was subsequently removed to federal court. However, as part of a motion to remand the case back to Nevada state court, Tropicana LV argued that they were not challenging ownership of the Tropicana Trademarks, but rather seeking a declaration under Nevada Revised Statute 30.100 that they have a right to use the name that has been associated with that particular hotel/casino in Las Vegas since 1957 based on Nevada state law contract principles and estoppel.

Adding fuel to the dispute, on November 18, 2009 – four months after the LandCo Plan’s Effective Date – certain LandCo Debtors filed supplemental schedules of assets and executory contracts, in particular, a property interest in the “name ‘Tropicana’ and the goodwill of the business symbolized by and associated with the name ‘Tropicana’” was listed as an asset and the 1980 Trade Name Agreement was listed as an executory contract.

But the apparent final straw was that on January 8, 2010, Tropicana LV moved for summary judgment in the Nevada Action and requested a declaration that Tropicana LV owned the Tropicana Trademarks. The district court in the Nevada Action denied Tropicana LV’s motion for summary judgment finding genuine issues of material fact regarding the Reorganized OpCo Debtors’ status of a bona fide purchase for value which would be a defense to the Tropicana LV’s new claims for damages arising from the use of the Tropicana Trademarks over which Tropicana LV now claimed ownership.

The Delaware Bankruptcy Lawsuit

Nonetheless, Carl Icahan’s Tropicana Entertainment, Inc. (along with other related companies having interests in the OpCo assets), believing that Tropicana LV’s request for a declaration of ownership from the Nevada Court constituted an improper modification of the Bankruptcy Court’s approved reorganization plans, decided to move the matter back to Delaware Bankruptcy Court with the filing of the most recent lawsuit which seeks various claims for relief to stop the Reorganized LandCo Debtors’ efforts to now claim ownership to the Tropicana Trademarks despite all of the Bankruptcy Court’s Orders. In particular, the Delaware Complaint seeks a declaratory judgment that the Tropicana Trademarks were part of the OpCo Debtors’ assets, a declaratory judgment that the supplement schedules provided by the LandCo Debtors are void, a declaratory judgment that the Nevada Action violated the automatic stay by raising trademark ownership issues in the Nevada Action before the OpCo Plan effective date, a finding that the Reorganized LandCo Debtors’ are in contempt of the court’s Confirmation Order based on the assertions made in the Nevada Action regarding ownership of the Tropicana Trademarks, injunctive relief pursuant to the OpCo Plan and bankruptcy law., a claim for unjust enrichment, and a claim for declaratory relief that, regardless of who owns the Tropicana Trademarks, and the Exit Facility Agent has a valid and perfected security interest in the Tropicana Trademarks for the benefit of the OpCo Exit Facility Lenders.

The Nevada Action will likely be stayed pending a determination by the Delaware Court of the status of the conditional assignment right/reversionary interest that appears to have been long forgotten by all of the relevant parties and yet never formally terminated (nor was there any demand for transfer).

While Tropicana LV’s claim of ownership to the Tropicana Trademarks by virtue of this conditional assignment right/reversionary interest is an interesting one, this latest attempt to lay claim to the ownership rights is more likely just a means for Tropicana LV to bolster its bargaining position in order to get the relief that it ultimately wants – basically, the ability to continue to use the name Tropicana for the Tropicana Las Vegas without having to pay a license fee. Of course, the fact that Tropicana LV might actually be able to stake a claim of ownership over assets that had an appraised value of approximately $200 million in 2007 could also have something to do with it.

The Material Girl’s Battle For MATERIAL GIRL

The trademark lawsuit story du jour was the complaint filed by L.A. Triumph, Inc. (“LA Triumph”) against Madonna and her company, Material Girl Brand, LLC, over the trademark MATERIAL GIRL in connection with clothing. See L.A. Triumph, Inc. v. Material Girl Brand, LLC et al, Case No. 10-cv-6195 (C.D. Cal. Filed August 19, 2010). Complaint can be viewed here (via Courthousenews). Multiple news outlets, blogs and gossip sources ran stories about the suit today (ABC News, Fox News, Huffington Post, RadarOnline, and TMZ)

In short, the complaint alleges that a California company named OC Mercantile Corporation started selling a line of MATERIAL GIRL clothes in 1997 – and even registered the name as a trademark with the California Secretary of State that same year (Reg. No. 102808 for women’s apparel). In 2003, LA Triumph became the successor-in-interest to OC Mercantile and purportedly has continued using the mark in connection with the sale of clothing items to the present day and claims that its clothing line has received national exposure. [Interestingly, LA Triumph does not appear to have any online presence where it sells its clothing goods – Google search results only came back with the published stories about this lawsuit. Of course, LA Triumph might argue that MGB’s recent nationwide marketing blitz have overwhelmed LA Triumph’s use of the mark – so called, reversed confusion.]

The complaint goes on to state that sometime in 2010, LA Triumph became aware that the Defendants were going to start selling a line of young women’s clothing using the MATERIAL GIRL mark. The website promoting Madonna’s brand is found at http://www.materialgirlcollection.com/ (as opposed to the website promoting LA Triumph’s clothing which is found . . . umm, anybody have any idea where LA Triumph’s MATERIAL GIRL clothing is promoted online? The closest I could come – based on the fact that L.A. Triumph, Inc. does business in California under the name MedGear – is a website http://www.medgear.com/ which sells clothing for hospital and medical industry workers, but I did not see anything using the mark MATERIAL GIRL.)

LA Triumph also alleges that MGB improperly filed to register the mark MATERIAL GIRL with the United State Patent and Trademark Office (“USPTO”). Interestingly, MGB’s current application (the one cited in the case) was not the first application in line to register the mark MATERIAL GIRL. On May 11, 2009, Audigier Brand Management Group, LLC filed a trademark application for MATERIAL GIRL (covering 7 different classes of goods including clothing). The USPTO initially refused registration in a non-final office action dated August 13, 2009, but only because the description needed some clarification and not based on a Section 2(d) likelihood of confusion refusal.

Subsequently, the Audigier application was assigned to MGB on December 1, 2009. And within days of this assignment, MGB then filed its own intent-to-use application for the mark MATERIAL GIRL (for 4 classes of goods including clothing) on December 4, 2009. This explains why MGB did not file a timely response to the PTO’s office action in the “Audigier” application, which went abandoned on March 26, 2010.

So why, you ask, would MGB file a new intent-to-use application for MATERIAL GIRL when Audigier’s earlier filed MATERIAL GIRL application had already been assigned to MGB? Most likely because the Audigier application was an intent-to-use application and MGB was not really the successor to any kind of ongoing and existing business by Audigier to which the applied-for mark pertained. Under §10 of the Trademark Act (15 U.S.C. § 1060), an application filed under §1(b) (intent-to-use) may not be assigned before a statement of use has been filed except to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing. See 15 U.S.C. §1060(a)(1). The law is quite clear that the assignment of a §1(b) application to an entity that is not the successor to the applicant’s business, before filing an allegation of use, renders the application and any resulting registration void. See The Clorox Co. v. Chem. Bank, 40 USPQ2d 1098 (TTAB 1996). By MGB filing a brand new application, MGB could start fresh without having to be concerned about any resulting registration being deemed void on the basis of improper assignment of a §1(b) application.

Of course, once MGB’s own application was published for opposition on July 20, 2010, LA Triumph timely filed an opposition – filed the same day that LA Triumph’s district court lawsuit was filed. See L.A. Triumph, Inc. v. Material Girl Brand, LLC, Opposition No. 91196172 (T.T.A.B. Filed August 19, 2010). [As a sidenote, another party, Rwachsberg Holdings Inc., filed an Extension of Time to oppose registration of MGB’s mark. Rwachsberg owns the mark MATERIAL GIRLS for cosmetic products and nutritional food products. ]

But the real question is this – why didn’t either OC Mercantile or even LA Triumph seek to register the mark MATERIAL GIRL in connection with clothing with the USPTO?

While one could speculate that neither company bothered to register because they weren’t actively using the mark on clothing and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned, another very likely answer was that the mark could not have been registered by either company with the USPTO because there was already an existing trademark registration for the identical mark for the identical goods. A Canadian company name Les Ventes Universelles S.H. Inc. had a trademark registration for MATERIAL GIRL in connection with clothing (registered July 8, 1997) based on the company’s foreign registration of the same mark (dating back to May 1990). The company filed the necessary Section 8 Declaration of Use at the 5 year mark, but did not renew the mark by the 10 year renewal deadline and the mark was canceled April 12, 2008.

So the natural follow-up question is this – why didn’t LA Triumph run out right away and seek to file a federal trademark application to register the mark once Les Ventes’ registration was canceled – during the window between April 12, 2008 and May 11, 2009 (when Audigier filed its first application)? Again, perhaps it was because LA Triumph was not really actively using the mark in connection with clothing, and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned – but again that would be just pure speculation. [Did I neglect to mention that according to the California Secretary of State’s records the state registration for MATERIAL GIRL expired August 9, 2007?]

So where can I buy LA Triumph’s MATERIAL GIRL clothing again?