T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T A I R S F R A G R A N C E P R O D U C T S , I N C .; e t a l., P l ai n t i ffs - A p p el l ees, v. C L O V E R G I F T S , I N C .; e t a l., D efen d an t s- A p p el l an t s, a nd P AT R I C I A L AU , D e f

e n d a n t. N o. 08- 17385 D . C . N o . 2 : 0 5 -cv -0 0 9 6 0 -R C J-R JJ ME MOR AN DU M *

A I R S F R A G R A N C E P R O D U C T S , I N C .; e t a l., P l ai n t i ffs - A p p el l an t s, v. C L O V E R G I F T S , I N C .; e t a l., D efen d an t s - A p p el l ees, N o. 08- 17386 D . C . N o . 2 : 0 5 -cv -0 0 9 6 0 -R C J-R JJ



# FI LED SEP 17 2010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALST he H onor abl e J a m e s M a xw e l l M oody , U ni t e d S t a t e s D i s tr i c tJ udge ** f orthe D i s tr i c tof

A rka ns a s , s i tt i ng by de s i gna t i on.

P age 2 of 6 a nd P AT R I C I A L AU , D e f

e n d a n t. A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt

f orthe D i s tr i c tof

N e va da R obe r tC l i ve J one s , D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d A pr i l 12, 2010 S a n F r a n c is c o , C a lif

o rn ia B e f or e : S C H R O E D E R a nd N . R . S M I T H , C i r c ui tJ udge s , a nd M O O D Y , S e ni or D i stri ctJudg e. ** S t ephen M ar cus ( M ar cus) and C l ov erG i ft s, Inc. (c ol l ec t i vel y A pp el l ant s) , a n d M in e H a k im ( H a k im ) a n d A ir s F r a g r a n c e P r o d u c ts , I n c . ( A F P ) ( c o lle c tiv e ly A ppe l l e e s ) appe a l the di s tr i c tc our t ’ s de c i s i on t o c a nc e l A i r s F r a gr a nc e f a m i l y of tr a de m arks a nd t o pe rm a ne nt l y e nj oi n the m f r om a s s e r t i ng as upe r i orr i ghtove rthe m ark s.M ar cus, as the pres i dentof A i rs Int ernat i on al , Inc. (A II ), transfe rr ed A i rs F ra grance f

am i l y of tra dem arks t o H aki m w hen A II w as i nsol vent . T here af t er , M ar cus and H aki m w orked i n con ce rtt o u se the m arks cont i nu al l y by usi ng strawP age 3 of 6

pers on s and corporat i on s. A tthe t i m e, A II ’ s c re di t or F i rs tB ank and T rustob t ai ned a def aul tj ud gm entagai nstM ar cus and H aki m for over one m i l l i on do l l ar s. In 2003, H a ki m tr a ns f

e rr e d he rr i ght s t o the m a rks t o C l ove rG i f t s , I nc . w i thouta ny c ons i de r a t i on. T h is c o u r t r e v ie w s th e d is tr ic t c o u r t’s g r a n t o f s u m m a ry ju d g m e n t de no vo . Al l i e d O r th o p e d i c Ap p l i a n c e s I

n c . v . Ty c o H

e a l th Ca r e G r o u

p LP , 592 F . 3d 991, 99 6 (9th C i r. 20 10 ). T he di stri ctcourt ’ s grantof perm anenti nj un ct i on i s r evi ew ed f o rab u s e o f

d is c r e tio n . Se e U

ni te d State s v . Kapp , 56 4 F . 3d 11 03 , 11 09 (9th C i r. 20 09 ). F i nd i ng s of f

ac tar e r evi ew ed for c l ea r e rr or and con clusi on s of l aw ar e r e vi e w e d de no vo . Se e i d. T he s c ope of the i nj unc t i on i s r e vi e w e d f orabus e of d is c r e tio n . See N

. Che y e nne T r i be v . N or ton , 50 3 F . 3d 83 6, 84 2 (9th C i r. 20 07 ). T h e d i stri ctco u rtd i d n o terr i n g ran t i n g su m m ary j u d g m en tag ai n st A p p e lla n ts o n th e irc la im f o rad e c la r a tio n o f

e x c lu s iv e o w n e r s h ip o f th e m a rk s . B e f or e the i rtr a ns f

e rt o H a ki m , i ti s undi s put e d tha tthe m a rks be l onge d t o A I I , not M ar cu s. A n y c laim to cu rr en t o w n er sh ip o f th e m ar k s o n th e b as is o f A II ’s pr e vi ous ow ne r s hi p a nd us e of the m the r e f

or e c oul d onl y be br oughtby A I I , not M a r c u s . Se e U

n ite d S ta te s v . S to n e h ill , 8 3 F .3 d 1 1 5 6 , 1 1 6 0 ( 9 th C ir . 1 9 9 6 ) ; E rl i ch v. G lasner , 4 1 8 F .2 d 2 2 6 , 2 2 8 ( 9 th C ir . 1 9 6 9 ) . C lo v e rG if ts lik e w is e h a s n o c la im t o the m arks. T he as si gn m entof the m arks fr om H aki m t o C l ov erG i ft s w asP age 4 of 6

i n v al i d b ecau se i ti s u n d i sp u t ed th atth ere w as n o co n cu rren ttran sfer o f b u si n ess g o o d w ill, se e MisterD on utof A m . , Inc. v. M

r. D on ut , Inc. , 4 1 8 F .2 d 8 3 8 , 8 4 2 ( 9 th C ir . 1 9 6 9 ) , a n d C lo v e rG if ts d id n o t p r o v id e a n y c o n s id e r a tio n f o rth e m a rk s , se e M ay v . A nde rs on , 11 9 P . 3d 12 54 , 12 57 (N ev. 20 05 ). T he di s tr i c tc our tpr ope r l y gr a nt e d s um m a ry j udgm e nta ga i ns tA ppe l l a nt s on the i rt or tc l a i m s f

orunf a i rc om pe t i t i on a nd de c e pt i ve tr a de pr a c t i c e s thr ough tr a d e m arki n f

r i n g e m e n t , c o n v e r s i o n , a n d m i s ap p r o p r i a t i o n o f tr a d e s e c r e t s . An e s s e n tia l e le m e n t o f

e a c h o f th e s e c la im s is o w n e r s h ip o f th e p r o p e r ty a t is s u e . See K P P erm an ent

M ake- U p, Inc. v. L ast i ngIm

pres si on , Inc. , 4 0 8 F .3 d 5 9 6 , 6 0 2 ( 9 th C i r. 2 0 0 5 ) (“ B efo re i n fri n g em en tcan b e sh o w n , th e trad em arkh o l d er m u st d e m o n s tr a te it o w n s av a lid m a rk , a n d th u s ap r o te c tab le in te r e s t.” ) ; Frant z v . J ohns on , 99 9 P . 2d 35 1, 35 8 & n. 6 (N ev. 20 00 ) ( el em ent s of m i sapp ropri at i on of a tra de se cr eti ncl ud e a cqui si t i on or di sc l osure of the tra de se cr et“ of another” ); W a n tzv . R e d

fie ld , 32 6 P . 2d 41 3, 41 4 (N ev. 19 58 ) ( pl ai nt i ff m ustdem on stra t e a n ow ne r s hi p i nt e r e s ti n pr ope r ty a l l e ge d t o ha ve be e n c onve r t e d t o s t a t e ac aus e of ac t i on for c on vers i on ). T he m arks, do m ai n n am es , and fra grance f orm ul as w er e the pr ope r ty of

A I I , notM a r c us , be f

or e the i rtr a ns f

e rt o H a ki m . O nl y the m a rks w er e i ncl ud ed i n the subsequentas si gn m entfr om H aki m t o C l ov erG i ft s, and that a s s i gnm e ntw a s i nva l i d.P age 5 of 6

T h e d i stri ctco u rtd i d n o terr i n en t eri n g su m m ary j u d g m en tag ai n st A p p e lle e s o n th e irc la im f o rad e c la r a tio n o f

e x c lu s iv e o w n e r s h ip o f th e m a rk s . A ppe l l e e s f

a i l e d t o de m ons tr a t e age nui ne i s s ue of m a t e r i a l f

a c te xi s t e d a s t o the l ac k o f c on si dera t i on for A II ’ s transfe r of the m arks t o H aki m , and the di stri ct c o u r t th e r e f

o r e p r o p e r ly in v a lid a te d th a t tr a n s f e r . See Kre m en v. C oh en , 337 F . 3d 1 0 2 4 , 1 0 2 8 - 2 9 ( 9 th C ir . 2 0 0 3 ) ( c o n s id e r a tio n an e c e s s a ry e le m e n t o f ac o n tr a c t) . F ur the r , A ppe l l e e s di d note s t abl i s h c om m on l a w ow ne r s hi p of the m a rks thr ough th e irc o n tin u o u s u s e b y H a k im a n d A F P . T h e s ta n d a r d te s t o f o w n e r s h ip in tr a d e m arkla w is p r io r ity o f u s e . Se e Se ngoku W

ork s L td. v . R M CI

nt ’ l , L td. , 96 F . 3d 1217, 1219 ( 9th C i r . 1996) . I ti s undi s put e d tha tA I I us e d the A i r s f a m i l y of tra dem arks before H aki m or A F P . T he di stri ctcourtthere fore prop er l y c on cl ud ed th a t A I I h a d as e n io rc la im to th e m a rk s , a n d A p p e lle e s c o u ld n o t b e d e c la r e d th e ir e x c lu s iv e o w n e r . Se e B r ook f i e ld C om m . , I

nc . v . W . C oas t E ntm ’ t C or p. , 174 F . 3d 10 36 , 10 46 (9th C i r. 19 99 ). T h e d is tr ic t c o u r t d id n o t ab u s e its d is c r e tio n b y o r d e r in g th e p a r tie s to w i thdr a w a ny pe ndi ng tr a de m a rk appl i c a t i ons r e l a t i ng t o the A i r s f a m i l y of tr a de m arks a nd t o r e que s tthe e xpr e s s c a nc e l l a t i on of the i rr e gi s tr a t i on of

a ny m a rk s c o v e r e d b y th e A ir s f a m ily o f tr a d e m a rk s . See 15 U . S . C . § 1119 (autho ri zi ng the di stri ctcourtt o “ re ct i fythe [U ni t ed S t at es P at entand T ra dem arkP age 6 of 6

O f f i c e ] r e gi s t e rw i th r e s pe c tt o a ny r e gi s tr a t i ons of a ny pa r ty t o the a c t i on” ) . N or di d the di s tr i c tc our tabus e i t s di s c r e t i on w he n i te nj oi ne d both pa r t i e s f r om a s s e r t i ng r i ght s t o the m a rks s upe r i ort o thos e of a ny othe rpa r ty , be c aus e the s e ni or i nt er es ti n the m arks bel on ged t o A II . T he perm anenti nj un ct i on w as nei ther ov erbroad n or vagu e. AF F I RME D.