JA Apparel v. Abboud

JA Apparel maintained that while Abboud was free to compete in the menswear market, he had sold to JA Apparel all rights to use his name in connection with goods and services, and his proposed uses therefore would constitute breach of contract, trademark infringement, and unfair competition. Abboud responded that he had only sold the rights to use his name as a trademark, not for all commercial purposes. Abboud further argued that his proposed use of the “Joseph Abboud” name in advertising was protected as fair use under trademark law.

Abboud I

In Abboud I, the parties agreed that the Agreement was unambiguous. Because the Agreement provided for the sale of “the names” in addition to trademarks, trade names, service marks, logos and designations (including specifically the name Joseph Abboud), JA Apparel contended that Abboud had sold the right to use his name in any commercial manner. Abboud, on the other hand, argued that reference to the term “names” was specifically in reference to the trademarks being conveyed and, therefore, that Abboud had sold only his trademark rights and not all rights to use of the Joseph Abboud name.

After agreeing with the parties that the Agreement was unambiguous, the court sided with JA Apparel and held that Abboud had conveyed all uses of his name for commercial purposes and that the proposed use of Abboud's name in connection with the new “jaz” clothing line would constitute a breach of the Agreement. The court further held that Abboud's proposed use also constituted trademark infringement of JA Apparel's acquired rights. As a result, Abboud was permanently enjoined from using the name Joseph Abboud in any manner “to sell, market, or otherwise promote goods, products, and services to the consuming public.” Id. at 349.

The Second Circuit Decision

Abboud appealed the district court's decision to the Second Circuit. In contrast to the district court, the Second Circuit found the Agreement ambiguous in several key respects and remanded the case for further consideration of extrinsic evidence of the parties' intent specifically as to the use of the term “names” in the Agreement. JA Apparel Corp. v. Abboud, 568 F.3d 390, 398 (2d Cir. 2008). In addition, the Second Circuit instructed the district court specifically to address all trademark issues presented by the parties and, in particular, Abboud's fair use defense. Id. at 402.

Abboud II

Following remand to the district court, the parties submitted briefs containing proposed findings of fact and conclusions of law with respect to issues raised by the Second Circuit. The court articulated the issues for resolution as follows: “(1)
[b]ased on the Agreement's language and taking in account extrinsic evidence on the subject of the parties' intent, did Abboud sell all commercial rights to the use of his name?; and (2) [i]f Abboud only sold right to use his name as a trademark, did his proposed advertisements constitute fair use under the Lanham Act?” Abboud II, 2010 WL 103399 at *4 (S.D.N.Y., Jan. 12, 2010).

After a careful review of the Agreement and, in particular, the communications exchanged by the parties in advance of that Agreement, the court concluded that Abboud did not intend to convey all rights to use his name commercially to JA Apparel. In so holding, the court was influenced by the following:

• None of the pre-Agreement communications between the parties referenced the sale of “names.”
• The term “names” was not introduced until the initial draft of the Agreement, and neither that draft nor the final Agreement indicated that the “name” Joseph Abboud was used in any context other than as a trademark.
• There was no evidence of any negotiations or discussions of the meaning of the term “names” after its inclusion in the Agreement to suggest that a sale of Abboud's name would be included as an asset distinct from trademarks or related intellectual property.
• The fact that Abboud had failed to object to the inclusion of the term “names” in the initial draft or final Agreement did not constitute sufficient evidence of an intent to transfer all commercial rights in his name.
• The parties' use of a “laundry list of words” in the Agreement pertaining to the transfer was viewed by the court as falling under the more general penumbra of trademarks and not the exclusive right to all commercial use of Abboud's personal name.
• The Agreement expressly reserved to Abboud certain rights in his name ( i.e., JA Apparel was required to obtain Abboud's consent to use Joseph Abboud in connection with products other than those specifically mentioned in the Agreement).

After concluding that Abboud had not sold the exclusive rights to the commercial use of his personal name, the court then turned to JA Apparel's trademark infringement claims. At the outset, the court was clearly troubled with Abboud's waffling at trial as to the manner in which he thought he was entitled to use his name under the Agreement. Consequently, the court carefully scrutinized the proposed advertisements Abboud indicated he intended to use in connection with his “jaz” clothing. That review resulted in the court finding that some, but not all, of the ads would constitute trademark infringement and were not otherwise insulated by the fair use defense. The court carefully tailored a permanent injunction to provide clear guidance on what Abboud could and could not do in using his name to advertise his new “jaz” clothing line. The court specifically precluded Abboud from using his name either personally or through an entity as a trademark, service mark, trade name, or brand name or in any other manner on “jaz” clothing or their labels, hang tags, or packaging. On the other hand, the court allowed Abboud to use his name in advertising in a purely descriptive manner in the context of a complete sentence or descriptive phrase (i.e., JAZ IS A NEW LUXURY COLLECTION CREATED BY THE AWARD WINNING DESIGNER JOSEPH ABBOUD) and in typeface no larger or more prominent than the surrounding words in that sentence or phrase, provided that such use was also accompanied by the prominent display of the “jaz” trademark or another trademark. As to certain of Abboud's advertising, the court further required Abboud's inclusion of a disclaimer of any affiliation with JA Apparel products sold under its Joseph Abboud's trademarks.

Two Important Lessons

There are two important lessons to be learned from this case. First, in acquiring family name rights from an individual, care must be taken to ensure that the purchaser and seller reach an express meeting of the minds as to the precise rights being transferred (and any rights that are being retained by the seller). Second, even assuming certain rights are retained, the seller must tread carefully to ensure that its use is not ultimately viewed as being overtly intrusive of the rights conveyed to the purchaser such that confusion in the marketplace is likely to occur.

Christopher P. Bussert is a partner in the Atlanta office of Kilpatrick Stockton LLP, where he focuses his practice on trademark, copyright, unfair competition, and franchise litigation. He can be reached at [email protected].

Cases involving family name disputes have historically presented challenges for courts, as they frequently require balancing competing interests of businesses and individuals. A particularly interesting permutation of such disputes involves well-known individuals who convey certain rights in their family name in a particular field to a third party and then later seek to re-enter the same field. A trio of recent decisions on this subject features the famous clothing designer, Joseph Abboud. JA Apparel Corp. v. Abboud , 591 F. Supp.2d 306 (S.D.N.Y. 2008) (“ Abboud I “); JA Apparel Corp. v. Abboud , 568 F.3d 390 (2d Cir. 2009); JA Apparel v. Abboud, 2010 WL 103399 (S.D.N.Y., Jan. 12, 2010) (“Abboud II“).

At the heart of the dispute was the interpretation of a Purchase and Sale Agreement (“Agreement”) executed on June 16, 2000. In exchange for a substantial payment, Abboud agreed to “sell, convey, transfer, assign and deliver” to JA Apparel “all of [his] right, title and interest in and to ' [t]he names, trademarks, trade names, service marks, logos, insignias and designation identified on Schedule 1.1(a)(A),” which included Joseph Abboud, “and all trademark registrations and applications therefor, and goodwill related thereto.” Abboud I, 591 F. Supp.2d at 306. On July 13, 2000, the same parties entered into a Side Letter pursuant to which Abboud agreed to serve as “Chairman Emeritus” of JA Apparel and provide consulting services relating to the products sold under the foregoing marks. The Side Letter also included a two-year non-competition provision.

Shortly after execution of the Agreement and Side Letter, the parties' relationship began to deteriorate. In the spring of 2005, Abboud informed JA Apparel that he would no longer continue to work with it. In August 2007, after expiration of the non-competition period, JA Apparel learned of Abboud's intentions to use his name in marketing and advertising a new men's clothing line called “jaz.” In particular, Abboud had several proposed ads for the “jaz” clothing line, each of which included the words “Joseph Abboud” in addition to Abboud's new trademark, “jaz.”

JA Apparel maintained that while Abboud was free to compete in the menswear market, he had sold to JA Apparel all rights to use his name in connection with goods and services, and his proposed uses therefore would constitute breach of contract, trademark infringement, and unfair competition. Abboud responded that he had only sold the rights to use his name as a trademark, not for all commercial purposes. Abboud further argued that his proposed use of the “Joseph Abboud” name in advertising was protected as fair use under trademark law.

Abboud I

In Abboud I, the parties agreed that the Agreement was unambiguous. Because the Agreement provided for the sale of “the names” in addition to trademarks, trade names, service marks, logos and designations (including specifically the name Joseph Abboud), JA Apparel contended that Abboud had sold the right to use his name in any commercial manner. Abboud, on the other hand, argued that reference to the term “names” was specifically in reference to the trademarks being conveyed and, therefore, that Abboud had sold only his trademark rights and not all rights to use of the Joseph Abboud name.

After agreeing with the parties that the Agreement was unambiguous, the court sided with JA Apparel and held that Abboud had conveyed all uses of his name for commercial purposes and that the proposed use of Abboud's name in connection with the new “jaz” clothing line would constitute a breach of the Agreement. The court further held that Abboud's proposed use also constituted trademark infringement of JA Apparel's acquired rights. As a result, Abboud was permanently enjoined from using the name Joseph Abboud in any manner “to sell, market, or otherwise promote goods, products, and services to the consuming public.” Id. at 349.

The Second Circuit Decision

Abboud appealed the district court's decision to the Second Circuit. In contrast to the district court, the Second Circuit found the Agreement ambiguous in several key respects and remanded the case for further consideration of extrinsic evidence of the parties' intent specifically as to the use of the term “names” in the Agreement. JA Apparel Corp. v. Abboud , 568 F.3d 390, 398 (2d Cir. 2008). In addition, the Second Circuit instructed the district court specifically to address all trademark issues presented by the parties and, in particular, Abboud's fair use defense. Id. at 402.

Abboud II

Following remand to the district court, the parties submitted briefs containing proposed findings of fact and conclusions of law with respect to issues raised by the Second Circuit. The court articulated the issues for resolution as follows: “(1)
[b]ased on the Agreement's language and taking in account extrinsic evidence on the subject of the parties' intent, did Abboud sell all commercial rights to the use of his name?; and (2) [i]f Abboud only sold right to use his name as a trademark, did his proposed advertisements constitute fair use under the Lanham Act?” Abboud II, 2010 WL 103399 at *4 (S.D.N.Y., Jan. 12, 2010).

After a careful review of the Agreement and, in particular, the communications exchanged by the parties in advance of that Agreement, the court concluded that Abboud did not intend to convey all rights to use his name commercially to JA Apparel. In so holding, the court was influenced by the following:

• None of the pre-Agreement communications between the parties referenced the sale of “names.”
• The term “names” was not introduced until the initial draft of the Agreement, and neither that draft nor the final Agreement indicated that the “name” Joseph Abboud was used in any context other than as a trademark.
• There was no evidence of any negotiations or discussions of the meaning of the term “names” after its inclusion in the Agreement to suggest that a sale of Abboud's name would be included as an asset distinct from trademarks or related intellectual property.
• The fact that Abboud had failed to object to the inclusion of the term “names” in the initial draft or final Agreement did not constitute sufficient evidence of an intent to transfer all commercial rights in his name.
• The parties' use of a “laundry list of words” in the Agreement pertaining to the transfer was viewed by the court as falling under the more general penumbra of trademarks and not the exclusive right to all commercial use of Abboud's personal name.
• The Agreement expressly reserved to Abboud certain rights in his name ( i.e., JA Apparel was required to obtain Abboud's consent to use Joseph Abboud in connection with products other than those specifically mentioned in the Agreement).

After concluding that Abboud had not sold the exclusive rights to the commercial use of his personal name, the court then turned to JA Apparel's trademark infringement claims. At the outset, the court was clearly troubled with Abboud's waffling at trial as to the manner in which he thought he was entitled to use his name under the Agreement. Consequently, the court carefully scrutinized the proposed advertisements Abboud indicated he intended to use in connection with his “jaz” clothing. That review resulted in the court finding that some, but not all, of the ads would constitute trademark infringement and were not otherwise insulated by the fair use defense. The court carefully tailored a permanent injunction to provide clear guidance on what Abboud could and could not do in using his name to advertise his new “jaz” clothing line. The court specifically precluded Abboud from using his name either personally or through an entity as a trademark, service mark, trade name, or brand name or in any other manner on “jaz” clothing or their labels, hang tags, or packaging. On the other hand, the court allowed Abboud to use his name in advertising in a purely descriptive manner in the context of a complete sentence or descriptive phrase (i.e., JAZ IS A NEW LUXURY COLLECTION CREATED BY THE AWARD WINNING DESIGNER JOSEPH ABBOUD) and in typeface no larger or more prominent than the surrounding words in that sentence or phrase, provided that such use was also accompanied by the prominent display of the “jaz” trademark or another trademark. As to certain of Abboud's advertising, the court further required Abboud's inclusion of a disclaimer of any affiliation with JA Apparel products sold under its Joseph Abboud's trademarks.

Two Important Lessons

There are two important lessons to be learned from this case. First, in acquiring family name rights from an individual, care must be taken to ensure that the purchaser and seller reach an express meeting of the minds as to the precise rights being transferred (and any rights that are being retained by the seller). Second, even assuming certain rights are retained, the seller must tread carefully to ensure that its use is not ultimately viewed as being overtly intrusive of the rights conveyed to the purchaser such that confusion in the marketplace is likely to occur.

Christopher P. Bussert is a partner in the Atlanta office of Kilpatrick Stockton LLP, where he focuses his practice on trademark, copyright, unfair competition, and franchise litigation. He can be reached at [email protected].