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Ninth Circuit Reiterates: You Can't Transfer What You Don't Own

As recently discussed, you can’t transfer what you don’t own. 

The Ninth Circuit latched onto that theme again in Airs Fragrance Products, Inc. v. Clover Gifts, Inc.

Stephen Marcus, as president of Airs International, Inc. (AII), transferred the Airs Fragrance family of trademarks to Mine Hakim when AII was insolvent. The Ninth Circuit found that Mr. Marcus and Ms. Hakim worked together to use the marks by using various “straw” persons and corporations.

AII’s creditor First Bank and Trust then obtained a default judgment against Mr. Marcus and Ms. Hakim for more than $1 million.

Thereafter, Ms. Hakim transferred her rights in the marks to Clover Gifts without any consideration.

The District of Nevada found on summary judgment that Mr. Marcus and Clover Gifts did not own the Airs Fragrance trademarks. Because they did not own the marks, the court likewise found they could not maintain claims for unfair competition. 

“The district court did not err in granting summary judgment against Appellants [Marcus and Clover Gifts] on their claim for a declaration of exclusive ownership of the marks. Before their transfer to Hakim, it is undisputed that the marks belonged to AII, not Marcus. Any claim to current ownership of the marks on the basis of AII’s previous ownership and use of them therefore could only be brought by AII, not Marcus. Clover Gifts likewise has no claim to the marks. The assignment of the marks from Hakim to Clover Gifts was invalid because it is undisputed that there was no concurrent transfer of business good will, and Clover Gifts did not provide any consideration for the marks.

“The district court properly granted summary judgment against Appellants on their tort claims for unfair competition and deceptive trade practices through trademark infringement, conversion, and misappropriation of trade secrets. An essential element of each of these claims is owners hp of the property at issue. The marks, domain names, and fragrance formulas were the property of AII, not Marcus, before their transfer to Hakim. Only the marks were included in the subsequent assignment from Hakim to Clover Gifts, and that assignment was invalid.”

The case cite is Airs Fragrance Prods., Inc. v. Clover Gifts, Inc., 2010 WL 3678949, Nos. 08-17385 and 08-17386 (9th Cir. Sept. 17, 2010).

Posted on September 26, 2010 by Registered CommenterMichael Atkins in | CommentsPost a Comment

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