Opinion ID: 1189884
Heading Depth: 1
Heading Rank: 7

Heading: Of Trademark Law

Text: The trial court relied heavily on the 1980 escrow agreement, which it read in the context of what it understood to be applicable principles of trademark law. It reasoned that if Stani had not been given the right to continue using Topps formulas after April 1996, the 1980 escrow agreement would amount to nothing more than a transfer of the Topps trademarks in gross, and in that way would violate the laws of trademark. Topps, 454 F.Supp.2d at 102. The court concluded the parties must not have intended to contract with each other in such a manner. Id. We think this reasoning flawed in several respects. First, the district court assumed the laws of trademark applicable to this transfer prohibited assignments in gross. In so doing it looked to U.S. trademark law for the principle that a trademark is simply a symbol of goodwill and cannot be sold or assigned apart from the goodwill it symbolizes. Id. at 102 (citing Marshak v. Green, 746 F.2d 927, 929 (2d Cir.1984) (citing Lanham Act § 10, 15 U.S.C. § 1060)). An assignment in gross is a purported transfer of a trademark divorced from its goodwill, and it is generally deemed invalid under U.S. law. See Marshak, 746 F.2d at 929. But in the case at hand the 1980 escrow agreement dealt with trademarks in Argentina, not in the United States. Although the escrow agreement includes a choice-of-law clause pointing to New York law, the question is not whether or how to enforce this agreement, but rather what was the actual effect, in Argentina, of the purported transfer that the agreement memorialized. The principle of territoriality is fundamental to trademark law. A trademark has a separate legal existence under each country's laws, and trademark rights exist in each country solely according to that nation's laws. See, e.g., ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2d Cir.2007); Person's Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir.1990). As a consequence, whether or not the transfer memorialized in the escrow agreement ultimately left Stani with the right to trademarks in Argentina depends on Argentinian law. This is a significant matter in this litigation because there has been no briefing on the relevant Argentinian law, much less any notification, under Federal Rule of Civil Procedure 44.1, that foreign law would be at issue. Although we decline to rule definitively on this issue under these circumstances, we note that Argentinian trademark law (like that of many countries) appears to permit assignments in gross. See 1 Trademarks Throughout the World § 9:21 (5th ed.2007); Susan Barbieri Montgomery & Richard J. Taylor, Key Issues in Worldwide Trademark Transfers: Law & Practice 1, 5-6 (2005); Ernesto O'Farrell & Iris V. Quadrio, Argentina in id. at AR-1, AR-11; Mark A. Greenfield, Goodwill As a Factor in Trademark Assignments: A Comparative Study, 60 Trademark Rep. 173, 181-81 (1970). Second, even were the court's ruling correct that the applicable law prohibited assignments in gross, it is not evident the transfer at issue required a concomitant transfer of Topps chewing gum formulas to avoid qualifying as such an assignment. The goodwill requirement in U.S. law does not mean the assignee's products must be identical to those of the assignor. Instead, they need only be substantially similar such that consumers would not be deceived or harmed. Marshak, 746 F.2d at 930. Stani's own pleadings and the statements of one of its experts strongly suggest a substantially similar product could be produced without using the Topps formulas. At the very least, this question of fact could not be resolved in Stani's favor on Stani's motion for summary judgment. Third, even if applicable law prohibited assignments in gross and even if the transfer here would have qualified as such without a concomitant transfer of Topps formulas, there still is insufficient proof, for summary judgment purposes, that the parties intended to give Stani the right to these formulas. It could well have been that the parties were attempting an assignment in gross despite the law. In fact it appears businesses take this risk frequently. See Irene Calboli, Trademark Assignment With Goodwill: A Concept Whose Time Has Gone, 57 Fla. L.Rev. 771, 774 (2005); Nathan Isaacs, Traffic in Trade-Symbols, 44 Harv. L.Rev. 1210, 1210-21 (1931). And, to the extent the parties were looking to U.S. law when they negotiated the escrow agreement, they may well have relied on the then-recent trend toward a more flexible definition of the goodwill necessary to avoid the prohibition against assignments in gross. See Calboli, supra, at 791 ([B]y the beginning of the 1970s, most courts ... started to declare assignments valid as long as sufficient continuity or substantial similarity, rather than identity, existed between the marked goods.); Stephen L. Carter, The Trouble With Trademark, 99 Yale L.J. 759, 785-87 (1990) (criticizing this trend). As with the other issues involved in the district court's trademark analysis, this question of the parties' intent was a subject not suitably resolved on summary judgment.