Court Opinion

ID: 4018189
Source: CourtListenerOpinion
Date Created: 2016-07-22 17:01:04.729133+00
Date Added: 2024-06-11T07:44:56.814514
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 RUSSELL ROAD FOOD AND                             No. 14-16096
 BEVERAGE, LLC, a Nevada limited
 liability company,                                  D.C. No.
           Plaintiff-Counter-Defendant-           2:12-cv-01514-
                              Appellee,             LRH-GWF

                     v.
                                                     OPINION
 FRANK SPENCER, an individual;
 CRAZY HORSE CONSULTING, INC., an
 Ohio corporation,
     Defendants-Counter-Claimants-
                        Appellants.

        Appeal from the United States District Court
                 for the District of Nevada
         Larry R. Hicks, District Judge, Presiding

                    Submitted May 12, 2016*
                    San Francisco, California

                       Filed July 22, 2016

  *
    The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2      RUSSELL ROAD FOOD & BEVERAGE V. SPENCER

      Before: John T. Noonan, Kim McLane Wardlaw,
           and Richard A. Paez, Circuit Judges.

                   Opinion by Judge Wardlaw

                           SUMMARY**

                             Trademark

    Affirming the district court’s summary judgment, the
panel held that the plaintiff was the assignee of a valid
trademark co-existence agreement entered into with the
former owner of the registered mark “Crazy Horse” and
therefore had the right to use the mark.

                             COUNSEL

Kaleb D. Anderson; Lipson, Neilson, Cole, Seltzer, Garin,
P.C., Las Vegas, Nevada; Harold M. Schwarz, III; Stark &
Knoll Co., LPA, Akron, Ohio; for Defendants-Appellants.

Bruno Tarabichi, Owens Tarabichi LLP, San Jose, California;
for Plaintiff-Appellee.

  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
       RUSSELL ROAD FOOD & BEVERAGE V. SPENCER                       3

                             OPINION

WARDLAW, Circuit Judge:

    Once associated with a legendary Native American
leader, “Crazy Horse” is now a registered trademark for
“entertainment services, namely, exotic dance performances.”
We must decide whether Russell Road’s use of the mark
“Crazy Horse III” for its Las Vegas strip club infringes
defendants Frank Spencer and Crazy Horse Consulting’s
rights to the trademark “Crazy Horse.” The district court
granted summary judgment to Russell Road, holding that it
has the right to use the mark because it is the assignee of a
valid trademark co-existence agreement entered into with the
former owner of the registered Crazy Horse mark. We agree,
and therefore affirm the entry of summary judgment in favor
of Russell Road.

                                  I.

    The mark “Crazy Horse” has been associated with adult
entertainment since Alain Bernardin opened the celebrated
Crazy Horse Saloon off the Champs-Elysees in 1951. And it
has been associated with heated trademark disputes since
Bernardin sued a London imitator in 1967. See Bernardin v.
Pavilion Properties, 19 R.P.C. 581 (1967).1 In the United
States, individuals and corporations have used the “Crazy
Horse” brand for motorcycle gear, whiskey, rifles, and, of
course, strip and exotic dance clubs. Since at least the 1970s,

 1
    The historical record does not explain why Bernardin chose the name
of the Native American leader for his Saloon. See Bernardin, 19 R.P.C.
at 852.
4     RUSSELL ROAD FOOD & BEVERAGE V. SPENCER

Crazy Horse nightclubs have opened everywhere from
Anchorage, Alaska to Pompano Beach, Florida.

    This case concerns the nature of the right to the
trademark, as distinguished from the trademark owners’
assignment of the right to peaceably use the mark; here, a
“trademark co-existence agreement.” Although the parties’
interactions and arrangements are byzantine, ultimately the
parties’ respective rights are clear.

    In January 2006, Carl Reid, a longtime owner of strip
clubs in the Carolinas, successfully registered the marks
“Crazy Horse” and “Pure Gold’s Crazy Horse” for
“entertainment services, namely, exotic dance performances”
with the United States Patent and Trademark Office
(“USPTO”). Years later, Russell Road attempted to register
the mark “Crazy Horse III Gentlemen’s Club at the
Playground” for its strip club in Las Vegas, while Frank
Spencer attempted to register the “Crazy Horse” mark for his
chain of strip clubs in Ohio. The USPTO refused each of
these applications under 15 U.S.C. § 1052(d) because it found
a likelihood of confusion with Reid’s previously registered
marks. Each party then pursued alternative means to obtain
the rights to use the mark “Crazy Horse.”

A. Russell Road’s Claim to the Crazy Horse Name

    Russell Road’s claim to rightful use of the Crazy Horse
mark derives from the assignment of a trademark co-
existence agreement between Reid and Crazy Horse Too A
Gentlemen’s Club, a Nevada corporation owned by John
Salvador. In September 2007, Crazy Horse Too attempted to
register that name as a mark for its Las Vegas strip club.
Crazy Horse Too’s application, like those filed by Russell
      RUSSELL ROAD FOOD & BEVERAGE V. SPENCER              5

Road and Spencer, was refused based on the likelihood of
confusion with Reid’s previously registered marks. Crazy
Horse Too next initiated cancellation proceedings to
invalidate Reid’s “Crazy Horse” and “Pure Gold’s Crazy
Horse” marks. In July 2009, the USPTO’s Trademark Trial
and Appeal Board (“TTAB”) notified Reid of the cancellation
petitions and ordered Reid to respond. When Reid failed to
respond, the TTAB issued a default notice.

    Before the TTAB issued default judgments, however,
Reid and Salvador, acting on behalf of Crazy Horse Too,
settled the dispute through a trademark co-existence
agreement. Under this agreement, Crazy Horse Too promised
to withdraw the cancellation petitions and “agree[d] not to
oppose, petition to cancel, or otherwise interfere with Mr.
Reid’s use and registration of Crazy Horse and Pure Gold’s
Crazy Horse.” In return, Reid consented to Crazy Horse
Too’s “use and registration” of “any mark that includes the
phrase Crazy Horse provided the mark does not contain the
phrase Pure Gold’s.”

    Salvador dissolved the Crazy Horse Too corporation in
April 2011. No longer making use of the Crazy Horse name,
Salvador assigned his rights under the trademark co-existence
agreement to Russell Road on August 16, 2012. Russell
Road paid $2,500 for the assignment.

B. Spencer’s Claim to the Crazy Horse Name

    In August 2010, Spencer formed Crazy Horse Consulting,
Inc. (“CHC”) to expand the Crazy Horse brand through
licensing and franchising. In December of that year, Reid
assigned his Crazy Horse trademark rights to CHC. The
6       RUSSELL ROAD FOOD & BEVERAGE V. SPENCER

USPTO recorded the assignment on January 11, 2011.2 To
date, that trademark registration remains live. See Crazy
Horse, Registration No. 3044028.

C. The Dispute Between Russell Road and Spencer

    In late 2011, Spencer learned that Russell Road was
operating a Las Vegas strip club named Crazy Horse III.
Spencer notified Russell Road that its club’s name infringed
his trademark rights and forwarded an application to license
the use of the mark. Instead of licensing the mark from
Spencer, Russell Road entered into an assignment agreement
with Salvador, acting on behalf of Crazy Horse Too, whereby
Crazy Horse Too assigned Russell Road its rights under the
September 2009 trademark co-existence agreement.

    Having secured the rights granted under the co-existence
agreement, Russell Road instituted this action, seeking a
declaratory judgment that its use of the Crazy Horse name
does not infringe Spencer and CHC’s trademark. The district
court granted Russell Road’s motion for summary judgment,
holding that Russell Road’s use of the Crazy Horse name
does not infringe Spencer and CHC’s trademark because the
trademark co-existence agreement between Reid and Crazy
Horse Too was valid, lawfully assigned to Russell Road, and
binding on Spencer and CHC. Spencer and CHC timely
appealed.

    2
    Around the same time, Reid assigned the Pure Gold’s Crazy Horse
trademark registration to JAT Investments, LLC (“JAT”), a company he
managed. Spencer, CHC, and JAT later entered into a trademark co-
existence agreement under which JAT consented to Spencer’s use and
registration of the Crazy Horse mark, and Spencer and CHC consented to
JAT’s use and registration of the Pure Gold’s Crazy Horse mark.
      RUSSELL ROAD FOOD & BEVERAGE V. SPENCER                 7

                              II.

    We review de novo the grant of summary judgment.
Millennium Labs., Inc. v. Ameritox, Ltd., 817 F.3d 1123, 1129
(9th Cir. 2016). Viewing the evidence in the light most
favorable to the nonmoving party and drawing all reasonable
inferences in its favor, we must determine whether there is a
genuine dispute as to any material fact. Id.; Fed. R. Civ. P.
56(a).

                              III.

     It is beyond dispute that a trademark owner may assign
his trademark. See 15 U.S.C. § 1060(a)(1) (“A registered
mark . . . shall be assignable . . .”); see also Electro Source,
LLC v. Brandess-Kalt-Aetna Grp., Inc., 458 F.3d 931, 941
(9th Cir. 2006) (“Indeed, it is not unusual for a troubled or
failing business to sell and assign its trademark . . . .”);
Restatement (Third) of Unfair Competition § 34 (1995) (“The
owner of a trademark . . . may transfer ownership of the
designation to another through an assignment.”). When a
trademark is assigned, “the assignee steps into the shoes of
the assignor.” ICEE Distribs., Inc. v. J&J Snack Foods
Corp., 325 F.3d 586, 593 (5th Cir. 2003) (citation omitted);
see also Carnival Brand Seafood Co. v. Carnival Brands,
Inc., 187 F.3d 1307, 1310 (11th Cir. 1999); Premier Dental
Prods. Co. v. Darby Dental Supply Co., 794 F.2d 850, 853
(3d Cir. 1986). The assignee therefore “acquires not only all
the rights and priorities of the assignor, but also any burdens
and limitations on use that were incumbent on the assignor.”
ICEE, 325 F.3d at 593 (quoting J. Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition § 18:15
(4th ed. 2002)); see also Sun-Maid Raisin Growers of Cal. v.
Cal. Packing Corp., 273 F.2d 282, 284 (9th Cir. 1959) (“The
8     RUSSELL ROAD FOOD & BEVERAGE V. SPENCER

assignment of the trademark did not in and of itself cause all
rights under the contract and injunction to vanish magically
as in a puff of smoke.”); Waukesha Hygeia Mineral Springs
Co. v. Hygeia Sparkling Distilled Water Co., 63 F. 438, 442
(7th Cir. 1894) (“No larger claim can be maintained than was
possessed by the source of title, and the right is subject to the
same equities, abandonment, or estoppel which could be
asserted against the vendor.”).

    It is also beyond dispute that trademark co-existence
agreements are enforceable. See Sun-Maid, 273 F.2d at
283–84 (affirming an injunction enforcing an agreement to
limit the use of the Sun-Maid mark to raisins and raisin
products); see also Am. Eagle Outfitters v. Lyle & Scott Ltd.,
584 F.3d 575, 579, 586 (3d Cir. 2009) (holding that the
parties’ agreement to consent to the registration of each
other’s eagle marks was a binding contract); Bongrain Int’l
(Am.) Corp. v. Delice de France, Inc., 811 F.2d 1479,
1484–85 (Fed. Cir. 1987) (assigning “great weight” to the
parties’ trademark co-existence agreement, “which would
give both of them the advantages of registration”); Waukesha
Hygeia, 63 F. at 441 (enforcing an agreement that “fixes and
defines the existing trademark of each” party—one to the
Hygeia mark in connection with distilled water, and the other
in connection with natural mineral or spring water). And, like
other contracts, trademark co-existence agreements are
typically assignable. See Britton v. Co-op Banking Grp.,
4 F.3d 742, 746 (9th Cir. 1993) (citing Restatement (Second)
of Contracts, § 317(1) (1981)) (discussing the standard for
proving a valid assignment of rights).

    Here, there is no genuine dispute of material fact as to the
validity of the trademark co-existence agreement between
Reid and Crazy Horse Too, or as to the validity of the
       RUSSELL ROAD FOOD & BEVERAGE V. SPENCER                              9

assignment of rights from Crazy Horse Too to Russell Road.3
Under applicable state law, “a contractual right is assignable
unless assignment materially changes the terms of the
contract or the contract expressly precludes assignment.”
Easton Bus. Opp. v. Town Exec. Suites, 230 P.3d 827, 830
(Nev. 2010). Neither exception applies here: The terms of
the trademark co-existence agreement did not materially
change upon assignment. Russell Road obtained only the
rights that Crazy Horse Too had possessed, while Spencer,
CHC, and Crazy Horse Too retained the duties not to oppose
each other’s use of the Crazy Horse mark, to take reasonable
steps to reduce the likelihood of confusion, and so on.
Likewise, the agreement expressly provides that it “shall be
binding upon and shall inure to the benefit of the parties
hereto, their respective successors, assigns and licensees.”

    Spencer and CHC’s other challenges to Russell Road’s
assignment are similarly unavailing. First, the uncontroverted
record evidence is that Russell Road paid $2,500 to Crazy
Horse Too in consideration for the assignment. Next, Crazy
Horse Too’s failure to use the mark, even if proven, did not
invalidate the trademark co-existence agreement. The
agreement did not require Crazy Horse Too to use the mark,

 3
   Spencer and CHC argue that the district court abused its discretion by
denying their request for additional discovery. But defendants failed to
“identify by affidavit the specific facts that further discovery would reveal,
and explain why those facts would preclude summary judgment,” as
required to obtain more time for discovery under Federal Rule of Civil
Procedure 56(d). Tatum v. City & County of San Francisco, 441 F.3d
1090, 1100 (9th Cir. 2006) (discussing former Rule 56(f), which is now
Rule 56(d)).       Instead, they sought “all documents” and “all
communications” to “investigate the validity of the Consent Agreement
and Assignment Agreement.” The district court properly denied that
broad request.
10    RUSSELL ROAD FOOD & BEVERAGE V. SPENCER

and the doctrine of trademark abandonment does not apply.
See generally 15 U.S.C. § 1115(b); Electro Source, 458 F.3d
at 935.       Finally, Spencer and CHC’s remaining
arguments—that the trademark co-existence agreement is an
executory contract that cannot be assigned without the
consent of both parties, and that Russell Road breached the
agreement—were not raised before the district court and are
therefore waived. See Armstrong v. Brown, 768 F.3d 975,
981 (9th Cir. 2014).

                            IV.

    Because Russell Road obtained a valid assignment of an
enforceable trademark co-existence agreement, its use of the
Crazy Horse name did not infringe Spencer and CHC’s
registered trademark. Therefore, the district court properly
granted summary judgment in favor of Russell Road.

     AFFIRMED.