FILED
NOT FOR PUBLICATION SEP 17 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
AIRS FRAGRANCE PRODUCTS, INC.; No. 08-17385
et al.,
D.C. No. 2:05-cv-00960-RCJ-RJJ
Plaintiffs - Appellees,
v. MEMORANDUM *
CLOVER GIFTS, INC.; et al.,
Defendants- Appellants,
and
PATRICIA LAU,
Defendant.
AIRS FRAGRANCE PRODUCTS, INC.; No. 08-17386
et al.,
D.C. No. 2:05-cv-00960-RCJ-RJJ
Plaintiffs - Appellants,
v.
CLOVER GIFTS, INC.; et al.,
Defendants - Appellees,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
and
PATRICIA LAU,
Defendant.
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, District Judge, Presiding
Argued and Submitted April 12, 2010
San Francisco, California
Before: SCHROEDER and N.R. SMITH, Circuit Judges, and MOODY, Senior
District Judge.**
Stephen Marcus (Marcus) and Clover Gifts, Inc. (collectively Appellants),
and Mine Hakim (Hakim) and Airs Fragrance Products, Inc. (AFP) (collectively
Appellees) appeal the district court’s decision to cancel Airs Fragrance family of
trademarks and to permanently enjoin them from asserting a superior right over the
marks.
Marcus, as the president of Airs International, Inc. (AII), transferred Airs
Fragrance family of trademarks to Hakim when AII was insolvent. Thereafter,
Marcus and Hakim worked in concert to use the marks continually by using straw
**
The Honorable James Maxwell Moody, United States District Judge
for the District of Arkansas, sitting by designation.
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persons and corporations. At the time, AII’s creditor First Bank and Trust obtained
a default judgment against Marcus and Hakim for over one million dollars. In
2003, Hakim transferred her rights to the marks to Clover Gifts, Inc. without any
consideration.
This court reviews the district court’s grant of summary judgment de novo.
Allied Orthopedic Appliances Inc. v. Tyco Health Care Group LP, 592 F.3d 991,
996 (9th Cir. 2010). The district court’s grant of permanent injunction is reviewed
for abuse of discretion. See United States v. Kapp, 564 F.3d 1103, 1109 (9th Cir.
2009). Findings of fact are reviewed for clear error and conclusions of law are
reviewed de novo. See id. The scope of the injunction is reviewed for abuse of
discretion. See N. Cheyenne Tribe v. Norton, 503 F.3d 836, 842 (9th Cir. 2007).
The district court did not err in granting summary judgment against
Appellants 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. See United States v. Stonehill, 83 F.3d 1156, 1160 (9th Cir. 1996); Erlich
v. Glasner, 418 F.2d 226, 228 (9th Cir. 1969). Clover Gifts likewise has no claim
to the marks. The assignment of the marks from Hakim to Clover Gifts was
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invalid because it is undisputed that there was no concurrent transfer of business
good will, see Mister Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838, 842 (9th
Cir. 1969), and Clover Gifts did not provide any consideration for the marks, see
May v. Anderson, 119 P.3d 1254, 1257 (Nev. 2005).
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 ownership of the property at issue. See
KP Permanent Make-Up, Inc. v. Lasting Impression, Inc., 408 F.3d 596, 602 (9th
Cir. 2005) (“Before infringement can be shown, the trademark holder must
demonstrate it owns a valid mark, and thus a protectable interest.”); Frantz v.
Johnson, 999 P.2d 351, 358 & n.6 (Nev. 2000) (elements of misappropriation of a
trade secret include acquisition or disclosure of the trade secret “of another”);
Wantz v. Redfield, 326 P.2d 413, 414 (Nev. 1958) (plaintiff must demonstrate an
ownership interest in property alleged to have been converted to state a cause of
action for conversion). 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.
Page 4 of 6
The district court did not err in entering summary judgment against
Appellees on their claim for a declaration of exclusive ownership of the marks.
Appellees failed to demonstrate a genuine issue of material fact existed as to the
lack of consideration for AII’s transfer of the marks to Hakim, and the district
court therefore properly invalidated that transfer. See Kremen v. Cohen, 337 F.3d
1024, 1028-29 (9th Cir. 2003) (consideration a necessary element of a contract).
Further, Appellees did not establish common law ownership of the marks through
their continuous use by Hakim and AFP. The standard test of ownership in
trademark law is priority of use. See Sengoku Works Ltd. v. RMC Int’l, Ltd., 96
F.3d 1217, 1219 (9th Cir. 1996). It is undisputed that AII used the Airs family of
trademarks before Hakim or AFP. The district court therefore properly concluded
that AII had a senior claim to the marks, and Appellees could not be declared their
exclusive owner. See Brookfield Comm., Inc. v. W. Coast Entm’t Corp., 174 F.3d
1036, 1046 (9th Cir. 1999).
The district court did not abuse its discretion by ordering the parties to
withdraw any pending trademark applications relating to the Airs family of
trademarks and to request the express cancellation of their registration of any
marks covered by the Airs family of trademarks. See 15 U.S.C. § 1119
(authorizing the district court to “rectify the [United States Patent and Trademark
Page 5 of 6
Office] register with respect to any registrations of any party to the action”). Nor
did the district court abuse its discretion when it enjoined both parties from
asserting rights to the marks superior to those of any other party, because the senior
interest in the marks belonged to AII. The permanent injunction was neither
overbroad nor vague.
AFFIRMED.
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