Nina Parkinson v. Robanda International , 641 F. App'x 745 ( 2016 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
FEB 26 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
NINA PARKINSON, an individual, No. 14-55028
Plaintiff - Appellant, D.C. No. 2:13-cv-07029-R-AJW
v.
MEMORANDUM*
ROBANDA INTERNATIONAL, INC., a
California corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted February 5, 2016
Pasadena, California
Before: REINHARDT, PAEZ, and M. SMITH, Circuit Judges.
Plaintiff Nina Parkinson brought this case for trademark infringement and
unlawful competition in violation of 15 U.S.C. §§ 1114, 1125 against Defendant
Robanda International, Inc. (“Robanda”). At issue in this appeal is whether
Parkinson has adequately alleged ownership of the trademark associated with a
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
brand of hairbrushes distributed and manufactured by Robanda (the Marilyn
Mark). Although Robanda does not dispute that Parkinson had been formally
assigned the Marilyn Mark by the trademark’s previous owner, Camelot Hair Care
Products, LLC (“Camelot”), it argues that the assignment to Parkinson from
Camelot was an invalid assignment in gross, and that she therefore could not allege
a valid claim for ownership of the trademark. The district court agreed and
dismissed Parkinson’s complaint with prejudice. This appeal followed.
Trademarks are tangible representations of goodwill that cannot be separated
from that goodwill.1 See 3 McCarthy on Trademarks & Unfair Competition § 18:2
(4th ed. 2015). A trademark assignment that functionally severs the trademark
from its accompanying goodwill is an invalid assignment in gross. Mister Donut
of America, Inc. v. Mr. Donut, Inc., 418 F.2d 838, 842 (9th Cir. 1969).
This case presents a unique set of circumstances in which the assignment to
Parkinson was part of a three-party agreement. Under this agreement, Camelot
assigned Parkinson the Marilyn Mark, but sold its Marilyn Mark inventory to
Robanda, which allegedly licensed from Parkinson the right to use the Mark for a
1
As described by McCarthy on Trademarks and Unfair Competition,
“‘good will’ is an intangible concept that can be defined as a bundle of commercial
expectations that signifies the favorable reputation of a business, product or
service.” 3 McCarthy on Trademarks & Unfair Competition § 18:2 (4th ed. 2015).
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five-year period. Both the purchase agreement between Camelot and Robanda as
well as the license agreement between Parkinson and Robanda state that Robanda
will acquire the trademark after the five-year licensing period. The documents
constituting the three-party agreement, however, are less than clear regarding
whether Robanda or Parkinson initially received the goodwill of the Mark.
Although the purchase agreement between Camelot and Robanda gave Robanda
the Marilyn Mark inventory and business assets, it can be fairly read to state that
Robanda had not purchased the Mark itself or its goodwill. Rather, under Article
1.3 of the contract, Robanda needed to license the trademark for a five-year period
following the close of sale, before it would acquire both the trademark and its
goodwill, apparently from Parkinson. This agreement, however, appears to be
inconsistent with statements in the licensing agreement executed by Parkinson to
the effect that Robanda had purchased the “inventory and goodwill of the Marilyn
brand.”
Without attempting to construe these agreements or resolve any
inconsistencies at this stage of the proceedings, the district court determined that
the assignment to Parkinson was an invalid assignment in gross because she did
not allege that she ever sold products under the Mark and admitted that Camelot
sold the business assets to Robanda. That cannot, however, be the end of the
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inquiry because we have previously upheld a trademark assignment even when
someone other than the assignee possessed and distributed the business assets
associated with a trademark. E & J Gallo Winery v. Gallo Cattle Co., 967 F.2d
1280, 1290 (9th Cir. 1992). In fact, it is a “well-settled commercial practice” to
engage in what is referred to as an “assignment/license-back” agreement—a
transaction in which Company A assigns a trademark to Company B, but continues
to utilize the trademark under a license with Company B. Id. Such agreements are
valid so long as the transfer “does not disrupt continuity of the products or services
associated with a given mark,” such as when the assignee receives sufficient
information “to continue the lure of the business” that had been established prior to
the assignment. Id. at 1289–90.
Admittedly, the circumstances in the case before us are different from the
ordinary assignment/license-back agreement because the agreements here involve
three parties instead of only two. Our inquiry, however, should functionally be the
same: did the transaction as a whole “disrupt the continuity of the products or
services associated with a given mark”? Id. at 1290.
As currently alleged, the complaint fails to show that a disruption did not
occur. Unlike the assignment/license-back agreement that we upheld in Gallo,
Parkinson has not alleged that she was provided with “information ‘sufficient to
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enable [her] to continue the lure of business [Camelot] had been conducting under
the [Marilyn Mark]’” or that she had any related expertise that would allow her to
appropriately maintain the quality of the Mark through her license to Robanda. Id.
at 1289. Without such allegations, it is impossible to conclude—especially in light
of the contradictory statements in the contracts forming this three-party
agreement—that Parkinson received a valid assignment. We agree, therefore, that
the dismissal was not improper.
We disagree, however, with the district court’s conclusion that Parkinson
should not be given leave to amend because it is not clear to us that amendment
would necessarily be futile. See AE ex rel. Hernandez v. County of Tulare, 666
F.3d 631, 637–38 (9th Cir. 2012). Parkinson may be able to adequately plead
ownership if she explains the circumstances of the three-way agreement and sets
forth factual allegations tending to show that she maintained actual control
sufficient to ensure continuity of the mark consistent with our holding in Gallo.
Accordingly, we reverse the dismissal with prejudice and remand with instructions
for the district court to allow Parkinson to amend the complaint. We reject,
however, Parkinson’s request to have the case reassigned to a different district
judge on remand.
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Finally, we decline to reach the alternative ground for dismissal suggested
by Robanda—that the case should be dismissed under Rule 12(b)(7) for failing to
join a necessary party. A Rule 12(b)(7) inquiry is largely a “practical, fact-specific
one,” and we believe that the question is best addressed by the district court in the
first instance. See Dawavendewa v. Salt River Project Agr. Imp. & Power Dist.,
276 F.3d 1150, 1154 (9th Cir. 2002).
REVERSED IN PART and REMANDED with instructions.
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FILED
Nina Parkinson v Robanda International Inc 14-55028
FEB 26 2016
M. SMITH, Circuit Judge, concurring in part and dissenting in part: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I concur in the majority’s holding that Parkinson failed to allege a valid
claim for ownership of the trademark. I disagree, however, that the district court
abused its discretion in dismissing Parkinson’s complaint with prejudice.
Collectively, the licensing agreement and asset purchase agreement attached
to the complaint contain a number of contradictions with Parkinson’s allegations.
When deciding a motion to dismiss under Rule 12(b)(6), we need not “accept as
true allegations that contradict matters properly subject to judicial notice or by
exhibit.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see
United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003); Federal Rule of Civil
Procedure 10(c) (“A copy of a written instrument that is an exhibit to a pleading is
a part of the pleading for all purposes.”). Moreover, we are not obligated to credit
“allegations that are merely conclusory, unwarranted deductions of fact, or
unreasonable inferences.” Sprewell, 266 F.3d at 988. In this case, the
inconsistencies in the transactional documents attached to the complaint are legion,
and the district court did not abuse its discretion in determining that no manner of
amendment could cure such deficiencies.
First, the licensing agreement—the sole document signed by Parkinson
herself—states that Robanda purchased “the goodwill of the Marilyn brand from
Camelot.” This bold statement is patently inconsistent with the allegations in the
complaint, which claims that the goodwill transferred with the assignment to
Parkinson. Parkinson cannot plausibly amend the complaint to account for this
discrepancy, or retract her own admission that goodwill had transferred. See Reddy
v. Litton Indus., Inc., 912 F.2d 291, 296–97 (9th Cir. 1990) (amendments must
allege “facts consistent with the challenged pleading.”). Nor, as the majority
acknowledges, does the asset purchase agreement offer clarity on this point.
Equally damning is Parkinson’s admission in the licensing agreement that
she received no consideration for licensing the mark to Robanda. “California courts
have repeatedly refused to enforce gratuitous promises, even if reduced to writing
in the form of an agreement.” Jara v. Suprema Meats, Inc., 121 Cal. App. 4th
1238, 1249 (2004). A significant risk of consumer confusion would ensue if the
assignee had no legally valid means of enforcing the terms of a licensing
agreement. See E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th
Cir. 1992). Nor, it appears, could Parkinson cure this defect without directly
contradicting the admission made in her licensing agreement, a document integral
to her underlying trademark infringement claim.
Given this morass of inconsistencies, the district acted well within its
discretion in determining that amendment would be futile. Accordingly, I would
2
affirm the district court’s judgment call in this situation.
I respectfully dissent.
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