Holding

In this infringement suit involving the “Joseph Abboud” mark, a district court permanently enjoined fashion designer Joseph Abboud from using his own name to sell, market, or even promote his new menswear clothing line called “jaz.” Specifically, the district court found that Abboud did in fact sell, convey and transfer to plaintiff JA Apparel all of his right and interest to the use of his personal name, in addition to the trademarks, trade names, and designations containing his name, for commercial purposes. On this basis, the district court found Abboud’s proposed use, in connection with his new “jaz” clothing line, would constitute a breach of a prior agreement, irrespective of whether his planned use constituted trademark use. Even in the context of good faith analysis under the “fair use” doctrine, Abboud had attempted to use that which he expressly sold to plaintiff. Consumers seeing JA Apparel’s products marked or advertised as “Joseph Abboud” or “by Joseph Abboud,” would be utterly confused as to whether the “jaz” products advertised as “by designer Joseph Abboud,” were derived from the same source. Abboud was not however restricted from identifying himself when he personally presents his line to buyers within the industry or to potential licensees, or in making personal appearances that do not relate to the sale, marketing, or promotion of goods, products, or services.

Detailed Summary

Defendant Joseph Abboud (“Abboud”) is a fashion designer.  In 1987, Abboud launched his first menswear line under the “Joseph Abboud” label, while working for the Milton Freeberg Company.  It was at this time that Abboud also registered his personal name, “Joseph Abboud,” as a trademark with the U.S. Patent and Trademark office (“USPTO”).  Thereafter, in March 1988, Abboud, through his wholly-owned corporation, Houndstooth Corp., entered into a joint venture with GFT International B.V. (“GFT”) to manufacture, market, and sell various products under the Joseph Abboud brand name.  The joint venture was named JA Apparel, which is the plaintiff in this case.  During the joint venture, pursuant to a March 1, 1988 License Agreement, Abboud licensed the “Joseph Abboud” trademarks to JA Apparel, which used the “Joseph Abboud” trademarks in the manufacture, marketing, and sale of its products.  Opinion, pp. 3-4.

On June 16, 2000, JA Apparel entered into a Purchase and Sale Agreement with Abboud and Houndstooth (“Agreement”).  In this Agreement, Abboud was to be paid the sum of $65.5 million, and in exchange, he agreed to sell and convey to JA Apparel all of this right, title and interest to “…trade name, trademarks, service marks…. containing the words ‘Joseph Abboud,’ ‘designed by Joseph Abboud,’ ‘by Joseph Abboud,’ ‘JOE,’ or ‘JA,’ or anything similar to or derivative thereof, either alone or in conjunction with other words or symbols…for any and all products and services.” Opinion, pp. 5-6, citing PX 1 at paragraphs 1.1(a)(A)-(E).

On July 13, 2000, the same parties entered into another agreement (“Side Agreement”).  This agreement was to expire on July 13, 2005, but the terms provided that upon expiration, Abboud would not compete with JA Apparel for a period of two years, or until July 13, 2007 (“Restricted Period”). The Side Agreement further provided that the $65.5 million Abboud received in connection with the Agreement provided him full and fair consideration for his non-competition obligation. Opinion, pp. 7-8, citing PX 2 at paragraph 2(a) and (c).

Shortly after, Abboud and the then-owners of JA Apparel became embroiled in a dispute, resulting in his disengagement from JA Apparel. Seeking to re-enter the men’s fashion world, Abboud conceived a high-end line of men’s clothing that would be sold under the trademark ”jaz.” Abboud engaged in certain activities that would enable him to launch his new “jaz” menswear line after the expiration of the Restriction Period. Plaintiffs got wind of Abboud’s activities through magazines and newspapers, thus triggering this legal dispute.

In this case brought before the U.S. District Court for the Southern District of New York, plaintiff asserted, inter alia, claims for violations of the Lanham Act and permanent injunction “enjoining Defendants from breaching the …Agreement and enjoining Defendants’ infringing and other wrongful conduct.” Opinion, p. 14, citing Pl.’s Post-Trial Mem., at 88.

Plaintiff argued that while Abboud was free to compete in the menswear market, he sold all rights to use his name in connection with goods and services, and that his proposed uses of his name in connection with the “jaz” line violated the Agreement because they were plainly similar or derivative of the names, trademarks, and designations he expressly sold, namely “Joseph Abboud,” “designed by Joseph Abboud,” and “by Joseph Abboud.” Opinion, p. 12.

The issue here was whether and how an individual, whose name and reputation have become clearly identified with a business and line of products, and which served as its trademarks, could continue to use his name after he sold the business, its trademarks, and his name, for a considerable amount of money.  Opinion. p. 13.

Based on a close examination of the terms of the Agreement, the district court found that Abboud did in fact sell, convey and transfer to JA Apparel all of his right and interest to the use of his personal name, in addition to the trademarks, trade names, and designations containing his name, for commercial purposes.  On this basis, the district court found Abboud’s proposed use, in connection with his new “jaz” clothing line, would constitute a breach of the Agreement, irrespective of whether these phrases constituted trademark use.  Opinion, pp. 38-39.  The district court made this finding because it was difficult to analyze the trademark claims in isolation from the Agreement because Abboud not only sold the rights to his name, he also sold the rights to use and apply for the registration of new trademarks and designations containing the disputed names.

In addition to the fact that a simple side-by-side comparison should lead to the conclusion that Abboud’s proposed uses were undeniably similar to plaintiff’s trademarks, plaintiff was able to demonstrate: (a) the strength of the Abboud marks; (b) the close proximity of the goods and services at issue; (c) at least some instance of actual confusion within the industry, despite the fact that the “jaz” products have not even hit the market. Id., p. 42.

Based on this evidence, the district court concluded that there existed a substantial likelihood of confusion between Abboud’s proposed uses and plaintiff’s trademarks. Id. Defendants’ argument that there was no evidence of actual confusion in the form of a “mistaken purchasing decision” failed to acknowledge that there could, as of yet, be no such evidence.  Id., p. 43, citing Defs.’ Post Trial Mem. at 40, n.7.

Even in the context of good faith analysis under the “fair use” doctrine, it must be noted that Abboud had attempted to use that which he expressly sold to plaintiff. Id., pp. 48-49, citing Equibrand Corp.. V. Reinsman Equestrian Products, Inc., No. 3:07-CV-0536, 2007 WL 1461393, at *13 (N.D. Tex. May 17, 2007). Consumers seeing JA Apparel’s products marked or advertised as “Joseph Abboud” or “by Joseph Abboud,” would be utterly confused as to whether the “jaz” products advertised as “by designer Joseph Abboud,” were derived from the same source. Opinion, p. 49, citing KP permanent Make-up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 123, 125 S.Ct. 542 (2004).

With regard to plaintiff’s request for injunctive relief against defendants, plaintiff was able to establish that it would be irreparably injured, and would not be able to calculate the damages, if Abboud were permitted to infringe plaintiff’s trademarks by using his name in connection with the “jaz” line.  Opinion, p. 57.  The district court further concluded that the balance of hardships weighed in plaintiff’s favor.  At bottom, this case was primarily a contract dispute stemming from a transaction in which Abboud sold the rights to his name in exchange for payment. Id., p. 58.

Public interest also weighed in favor of prohibiting Abboud from using his personal name in relation to the “jaz” line based on the rule that the public has a right to be free of confusion in the market place. Id., citing Park ‘N Fly v. Dollar Park & Fly., 469 U.S. 189, 198, 105 S. Ct. 658 (1985). If Abboud advertised his products as “by designer Joseph Abboud,” the public would have virtually no way of distinguishing Aboud’s clothing from JA Apparel’s.

On the basis of the foregoing analysis, the district court issued a permanent injunction against defendants, enjoining and restricting them from using Abboud’s personal name to sell, market, or otherwise promote goods, products, and services to the consuming public.  Abboud was not however restricted from identifying himself when he personally presents his line to buyers within the industry or to potential licensees, or in making personal appearances that do not relate to the sale, marketing, or promotion of goods, products, or services.

With regard to Abboud’s counterclaim for right of publicity under 15 U.S.C.A. section 1125 (a), the district court rejected Abboud’s argument that plaintiff violated his right of publicity by using Abboud’s name in a non-trademark fashion in advertising and promotional materials without his consent. Opinion, p. 83. Defendants did not present credible evidence that consumers have been or are likely to be misled into believing that the “Do You Know Joe?” Hey Joseph, What Should I Wear?” or “Ask Joseph About” campaigns indicated an association with Joseph Abboud the individual, as opposed to Joseph Abboud, the brand.  Id., p. 84, citing 15 U.S.C.  Section 1125(a). Even in the Side Agreement, Abboud did not reserve the right to make media appearances, or otherwise use his name, in a way that competed with JA Apparel. Id., p. 85.