Court Opinion

ID: 3180866
Source: CourtListenerOpinion
Date Created: 2016-02-26 21:05:22.985643+00
Date Added: 2024-06-11T14:08:22.949937
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                            FEB 26 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
NINA PARKINSON, an individual,                   No. 14-55028

              Plaintiff - Appellant,             D.C. No. 2:13-cv-07029-R-AJW

 v.
                                                 MEMORANDUM*
ROBANDA INTERNATIONAL, INC., a
California corporation,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     Manuel L. Real, District Judge, Presiding

                      Argued and Submitted February 5, 2016
                               Pasadena, California

Before: REINHARDT, PAEZ, and M. SMITH, Circuit Judges.

      Plaintiff Nina Parkinson brought this case for trademark infringement and

unlawful competition in violation of 15 U.S.C. §§ 1114, 1125 against Defendant

Robanda International, Inc. (“Robanda”). At issue in this appeal is whether

Parkinson has adequately alleged ownership of the trademark associated with a

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
brand of hairbrushes distributed and manufactured by Robanda (the Marilyn

Mark). Although Robanda does not dispute that Parkinson had been formally

assigned the Marilyn Mark by the trademark’s previous owner, Camelot Hair Care

Products, LLC (“Camelot”), it argues that the assignment to Parkinson from

Camelot was an invalid assignment in gross, and that she therefore could not allege

a valid claim for ownership of the trademark. The district court agreed and

dismissed Parkinson’s complaint with prejudice. This appeal followed.

      Trademarks are tangible representations of goodwill that cannot be separated

from that goodwill.1 See 3 McCarthy on Trademarks & Unfair Competition § 18:2

(4th ed. 2015). A trademark assignment that functionally severs the trademark

from its accompanying goodwill is an invalid assignment in gross. Mister Donut

of America, Inc. v. Mr. Donut, Inc., 418 F.2d 838, 842 (9th Cir. 1969).

      This case presents a unique set of circumstances in which the assignment to

Parkinson was part of a three-party agreement. Under this agreement, Camelot

assigned Parkinson the Marilyn Mark, but sold its Marilyn Mark inventory to

Robanda, which allegedly licensed from Parkinson the right to use the Mark for a

      1
         As described by McCarthy on Trademarks and Unfair Competition,
“‘good will’ is an intangible concept that can be defined as a bundle of commercial
expectations that signifies the favorable reputation of a business, product or
service.” 3 McCarthy on Trademarks & Unfair Competition § 18:2 (4th ed. 2015).

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five-year period. Both the purchase agreement between Camelot and Robanda as

well as the license agreement between Parkinson and Robanda state that Robanda

will acquire the trademark after the five-year licensing period. The documents

constituting the three-party agreement, however, are less than clear regarding

whether Robanda or Parkinson initially received the goodwill of the Mark.

Although the purchase agreement between Camelot and Robanda gave Robanda

the Marilyn Mark inventory and business assets, it can be fairly read to state that

Robanda had not purchased the Mark itself or its goodwill. Rather, under Article

1.3 of the contract, Robanda needed to license the trademark for a five-year period

following the close of sale, before it would acquire both the trademark and its

goodwill, apparently from Parkinson. This agreement, however, appears to be

inconsistent with statements in the licensing agreement executed by Parkinson to

the effect that Robanda had purchased the “inventory and goodwill of the Marilyn

brand.”

      Without attempting to construe these agreements or resolve any

inconsistencies at this stage of the proceedings, the district court determined that

the assignment to Parkinson was an invalid assignment in gross because she did

not allege that she ever sold products under the Mark and admitted that Camelot

sold the business assets to Robanda. That cannot, however, be the end of the

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inquiry because we have previously upheld a trademark assignment even when

someone other than the assignee possessed and distributed the business assets

associated with a trademark. E & J Gallo Winery v. Gallo Cattle Co., 967 F.2d
1280, 1290 (9th Cir. 1992). In fact, it is a “well-settled commercial practice” to

engage in what is referred to as an “assignment/license-back” agreement—a

transaction in which Company A assigns a trademark to Company B, but continues

to utilize the trademark under a license with Company B. Id. Such agreements are

valid so long as the transfer “does not disrupt continuity of the products or services

associated with a given mark,” such as when the assignee receives sufficient

information “to continue the lure of the business” that had been established prior to

the assignment. Id. at 1289–90.

      Admittedly, the circumstances in the case before us are different from the

ordinary assignment/license-back agreement because the agreements here involve

three parties instead of only two. Our inquiry, however, should functionally be the

same: did the transaction as a whole “disrupt the continuity of the products or

services associated with a given mark”? Id. at 1290.

      As currently alleged, the complaint fails to show that a disruption did not

occur. Unlike the assignment/license-back agreement that we upheld in Gallo,

Parkinson has not alleged that she was provided with “information ‘sufficient to

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enable [her] to continue the lure of business [Camelot] had been conducting under

the [Marilyn Mark]’” or that she had any related expertise that would allow her to

appropriately maintain the quality of the Mark through her license to Robanda. Id.

at 1289. Without such allegations, it is impossible to conclude—especially in light

of the contradictory statements in the contracts forming this three-party

agreement—that Parkinson received a valid assignment. We agree, therefore, that

the dismissal was not improper.

      We disagree, however, with the district court’s conclusion that Parkinson

should not be given leave to amend because it is not clear to us that amendment

would necessarily be futile. See AE ex rel. Hernandez v. County of Tulare, 666
F.3d 631, 637–38 (9th Cir. 2012). Parkinson may be able to adequately plead

ownership if she explains the circumstances of the three-way agreement and sets

forth factual allegations tending to show that she maintained actual control

sufficient to ensure continuity of the mark consistent with our holding in Gallo.

Accordingly, we reverse the dismissal with prejudice and remand with instructions

for the district court to allow Parkinson to amend the complaint. We reject,

however, Parkinson’s request to have the case reassigned to a different district

judge on remand.

                                          5
      Finally, we decline to reach the alternative ground for dismissal suggested

by Robanda—that the case should be dismissed under Rule 12(b)(7) for failing to

join a necessary party. A Rule 12(b)(7) inquiry is largely a “practical, fact-specific

one,” and we believe that the question is best addressed by the district court in the

first instance. See Dawavendewa v. Salt River Project Agr. Imp. & Power Dist.,

276 F.3d 1150, 1154 (9th Cir. 2002).

      REVERSED IN PART and REMANDED with instructions.

                                           6
                                                                             FILED
Nina Parkinson v Robanda International Inc 14-55028
                                                                              FEB 26 2016
M. SMITH, Circuit Judge, concurring in part and dissenting in part:       MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS

      I concur in the majority’s holding that Parkinson failed to allege a valid

claim for ownership of the trademark. I disagree, however, that the district court

abused its discretion in dismissing Parkinson’s complaint with prejudice.

      Collectively, the licensing agreement and asset purchase agreement attached

to the complaint contain a number of contradictions with Parkinson’s allegations.

When deciding a motion to dismiss under Rule 12(b)(6), we need not “accept as

true allegations that contradict matters properly subject to judicial notice or by

exhibit.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see

United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003); Federal Rule of Civil

Procedure 10(c) (“A copy of a written instrument that is an exhibit to a pleading is

a part of the pleading for all purposes.”). Moreover, we are not obligated to credit

“allegations that are merely conclusory, unwarranted deductions of fact, or

unreasonable inferences.” Sprewell, 266 F.3d at 988. In this case, the

inconsistencies in the transactional documents attached to the complaint are legion,

and the district court did not abuse its discretion in determining that no manner of

amendment could cure such deficiencies.

      First, the licensing agreement—the sole document signed by Parkinson

herself—states that Robanda purchased “the goodwill of the Marilyn brand from
Camelot.” This bold statement is patently inconsistent with the allegations in the

complaint, which claims that the goodwill transferred with the assignment to

Parkinson. Parkinson cannot plausibly amend the complaint to account for this

discrepancy, or retract her own admission that goodwill had transferred. See Reddy

v. Litton Indus., Inc., 912 F.2d 291, 296–97 (9th Cir. 1990) (amendments must

allege “facts consistent with the challenged pleading.”). Nor, as the majority

acknowledges, does the asset purchase agreement offer clarity on this point.

      Equally damning is Parkinson’s admission in the licensing agreement that

she received no consideration for licensing the mark to Robanda. “California courts

have repeatedly refused to enforce gratuitous promises, even if reduced to writing

in the form of an agreement.” Jara v. Suprema Meats, Inc., 121 Cal. App. 4th
1238, 1249 (2004). A significant risk of consumer confusion would ensue if the

assignee had no legally valid means of enforcing the terms of a licensing

agreement. See E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th

Cir. 1992). Nor, it appears, could Parkinson cure this defect without directly

contradicting the admission made in her licensing agreement, a document integral

to her underlying trademark infringement claim.

      Given this morass of inconsistencies, the district acted well within its

discretion in determining that amendment would be futile. Accordingly, I would

                                          2
affirm the district court’s judgment call in this situation.

      I respectfully dissent.

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