to the letter of the 1992 Agreement, sometimes by mutual consent and sometimes not -- did not intend to abandon their bargain. It was only when Cohen came on the scene and sought ownership and control of the mark that the parties began their posturing about the legal effect of the agreement, none of which is particularly convincing in view of the inconsistency of each side.
The foregoing demonstrates that the 1992 Agreement is an enforceable agreement. The next question is whether it transferred ownership of the TOPICLEAR mark from the Triquet successors, specifically CCI, to TBPI.
The Effect of the Agreement on Ownership of the Trademark
A trademark of course is a species of property and therefore subject to assignment.
Whether the 1992 Agreement effected such a transfer, a matter governed by New York law,
requires some analysis.
"An assignment is a transfer or setting over of property, or of some right or interest therein, from one person to another, and, unless in some way qualified, it is properly the transfer of one whole interest in an estate or chattel or other thing." Griffey v. New York Century Ins. Co., 100 N.Y. 417, 422, 3 N.E. 309 (1885) (quoted in In re Houbigant, Inc., 914 F. Supp. 964, 987 (S.D.N.Y. 1995)). While New York law requires no special form or forms to effect an assignment, the present surrender of the putative assignor's right, title and interest is essential to a valid assignment. E.g., Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 974, 638 N.E.2d 511 (1994); Maloney v. John Hancock Mutual Life Ins. Co., 271 F.2d 609, 614 (2d Cir. 1959); Whalen v. Gerzof, 206 A.D.2d 688, 615 N.Y.S.2d 465, 467 (3d Dept.), leave denied, 84 N.Y.2d 809, 621 N.Y.S.2d 518 (1994).
At first blush, the 1992 Agreement appears to fall short of this standard. It speaks prospectively, stating "that CCI shall transfer all its trademarks" to TBPI (PX 7, at 1), thus perhaps suggesting that the agreement contained no more than an executory promise to make an assignment in the future.
On reflection, however, the Court rejects this view.
The substance, not the form, prevails in determining whether a particular transaction constitutes an assignment. E.g., Estate of Palmer, 53 Misc. 2d 217, 220, 278 N.Y.S.2d 352, 355 (Surr. Ct. Broome Co. 1967). As in any other contract dispute, the issue ultimately depends upon the intention of the parties. Leon, 84 N.Y.2d at 88-89, 614 N.Y.S.2d at 974-75; see Maloney, 271 F.2d at 614. Moreover, New York "recognize[s] the validity of conditional assignments . . ." Maloney, 271 F.2d at 614. Thus, it is perfectly possible for parties to enter into a valid assignment subject to the occurrence of conditions. Id.
In this case, there are at least two possible constructions of the prospective contract language. One might, to be sure, interpret the words as reflecting a promise to assign the mark in the future. On the other hand, the language is equally consistent with a simple recognition of the fact that the entire agreement was conditioned expressly upon the Jedouane group producing proof that they in fact had paid Triquet in full. In other words, the language well could have been intended to mean, in substance, that the assignment of the marks would be effective upon the production of the proof of payment or the waiver by the parties of that condition.
Viewing the entire agreement in context, the Court finds that the parties intended the 1992 Agreement to vest in TBPI, subject only to the satisfaction of the proof of payment condition, all of the right, title and interest of CCI and the Ainis in the TOPICLEAR mark. Had the proof of payment condition been satisfied promptly after the execution of the 1992 Agreement, the matter would have been straightforward. The assignment would have been effective long before CCI purported to assign its rights to SIC in January 1996, and CCI clearly would have had nothing to convey. But nothing about this case is straightforward.
In the United Kingdom litigation in which SIC sought cancellation of Charles Aini's U.K. registration, Aini rested his claim of ownership on the proposition that the 1992 Agreement never had come into force. (DX CC, P 5; see PX 25, P 7) He evidently contended, inter alia, that no proof of payment ever had been tendered -- in response to which Cohen filed an affidavit attaching what purported to be the requisite proof, which bears the date January 14, 1992. (PX 25, Ex. 7; DX NH, DX NI) Aini responded, albeit on information and belief, that the document was a forgery. (DX CC, P 8) Thus, there are questions as to (a) whether the requisite proof existed, (b) if so, when it was tendered, and (c) whether any of this matters to the validity of the assignment.
Given this background, it is curious indeed that the proof at trial did not squarely address these points. Nevertheless, the record is sufficient for the Court to make the necessary findings. To begin with, the Court is satisfied that the Jedouane group paid Triquet for the TOPICLEAR business. There simply is no reason to believe that the founder of this valuable business walked away from it without recompense. Nor is there any substantial basis for supposing that the Triquet acknowledgment (DX NH, DX NI), which was received in evidence without objection, is a forgery.
Hence, the proof of payment upon which the 1992 Agreement was conditioned has existed since January 1992. The question is whether the failure to tender that proof to the Ainis prevented the assignment of CCI's rights to TBPI from becoming effective prior to the date on which CCI transferred the very same rights to SIC. In this Court's judgment, it did not for at least two reasons.
First, the Court infers from Cohen's production of the Triquet document in mid-1996, the failure of either side to tender any evidence from Triquet at trial, and from evidence that Triquet could not be located by mid-1996 (DX CC, P 9) that the document had been in the possession of the Jedouane group since 1992. The satisfaction of the contractual condition therefore was entirely within their control at all times. They accepted benefits of the 1992 Agreement, including Aini's $ 100,000 and the profits on the TOPICLEAR products purchased from REC, without objection. They will not now be heard to contend that their assignment of CCI's rights to TBPI was ineffective because they elected not to tender the proof upon which the agreement was conditioned. M. O'Neil Supply Co. v. Petroleum Heat & Power Co., 280 N.Y. 50, 56, 19 N.E.2d 676 (1939) (party "cannot rely on the condition precedent to prevent recovery where the non-performance of the condition was caused or consented to by itself.").
Second, conditions to contracts may be waived, and waivers may be inferred from conduct as long as the intention clearly appears. See, e.g., Dun & Bradstreet Corp. v. Harpercollins Publishers, Inc., 872 F. Supp. 103, 109 (S.D.N.Y. 1995). Here, Aini paid and the Jedouane group accepted the $ 100,000 called for by the 1992 Agreement notwithstanding the fact that the Triquet acknowledgment had not been produced. The Court therefore finds that the parties intended to dispense with that condition and shifted ground only when it became expedient in the course of this and related litigation.
For all of the foregoing reasons, the Court holds that TBPI acquired by assignment all of CCI's right, title and interest to TOPICLEAR trademarks in the United States and wherever else in the world CCI owned such marks as of January 14, 1992. The necessary consequence of this holding is that any use in the United States by SIC and its associates of the TOPICLEAR mark infringes TBPI's mark unless there is some other defense to such a claim.
II. Cancellation of the U.S. Registration
SIC and its compatriots seek cancellation of Charles Aini's U.S. registration of the TOPICLEAR mark, essentially on the ground that Aini never had any interest in the mark and therefore was incapable of registering it.
Section 37 of the Trademark Act of 1946, 15 U.S.C. § 1119, provides in relevant part:
"In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, . . . and otherwise rectify the register with respect to the registrations of any party to the action."
The statute thus gives the federal courts concurrent power with the PTO to cancel a trademark registration. 4 MCCARTHY § 30:109. Accordingly, courts may order cancellation for any of the reasons enumerated in Section 14 of the Act, 15 U.S.C. § 1064. Id. § 30:112. Broadly speaking, "cancellation [of marks less than five years old] may be based on any ground in the Lanham Act that would have barred registration in the first instance." Id. § 20:52, at 20-89 to 20-90; accord, International Order of Job's Daughters v. Lindeburg & Co., 727 F.2d 1087, 1091 (Fed. Cir. 1984).
Section 2(d) of the Act provides that registration will be refused if the mark sought to be registered "so resembles a mark . . . previously used in the United States by another and not abandoned as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. § 1052(d). The mark registered by Charles Aini -- TOPICLEAR Number One -- was substantially identical to the mark previously used in the United States by the Triquet interests. There simply is no colorable claim that he was entitled to registration. Accordingly, the judgment entered herein will provide for cancellation of the U.S. registration held by Charles Aini.
III. Jack Aini's Claim on the Note and Loan Agreement
Jack Aini claims that he is entitled to recover $ 300,000 on the October 21, 1992 promissory note and to a determination that he has acquired all of the collateral pledged pursuant to the attendant loan agreement, which includes among other things all of the TBPI stock owned by the Jedouane group, which subsequently was transferred to SIC.
There is no basis for this claim.
As the Court already has found, the note and loan agreement were executed in anticipation that Jack Aini would lend Jedouane, Garau and Mamane $ 300,000. The money never was forthcoming. The documents were not delivered by the makers.
The delivery of a note or other instrument was essential at common law and under the former Negotiable Instruments Law to the inception of any legal obligation.
It remains so under the Uniform Commercial Code.
Accordingly, the note and loan agreement never gave rise to any legal obligation. Aini's claims based upon them are without merit.
IV. Goods Sold and Delivered
SIC and GMJ claim that Aini is indebted to it for over $ 1 million for goods sold and delivered. The evidence, which was unrefuted by any that the Court finds persuasive, is that RNM owes REC and GMJ 2,351,713.75 francs and 209,766.77 francs, respectively, and that La-La Designs, another Aini company, owes GMJ 204,404.70 francs. (DX YF, at 14-18; DX XE; DX XF) As it is perfectly clear that RNM, even assuming that it is a corporate entity, is an alter ego of Jack Aini, REC is entitled to judgment against Aini for the sum owed to it by RNM, translated into dollars according to law.
GMJ, however, is not a party to the action. There is no evidence that any of the existing parties is an assignee of or otherwise has succeeded to its rights. Accordingly, no judgment will be entered for the sums claimed by it.
V. Exports to the United States
The Ainis seek also to enjoin the SIC and Jedouane interests from exporting products under the TOPICLEAR mark to the United States on the theory that they (or TBPI) owns the mark in this country. SIC and Jedouane rejoin that their TOPICLEAR products are genuine and, in consequence, that no injunction should issue.
The principles governing this claim are straightforward. The gravamen of a claim of trademark infringement is consumer confusion as to source. The sale by a person other than the trademark owner of genuine goods under the owner's mark deceives no one concerning the source of the products and therefore does not infringe the mark. Polymer Technology Corp. v. Mimran, 37 F.3d 74, 78 (2d Cir. 1994). In order for goods to qualify as "genuine," however, they must conform to the trademark owner's quality control standards.
Id. at 78-80.
The pertinent facts in this case are clear. The TOPICLEAR tubes sold in the United States by Aini and his companies since the 1992 Agreement have been manufactured for him by REC and others. The Court is not persuaded that the tubes which SIC and the Jedouane group have exported, and wish to export, to the United States for sale by persons other than Aini are any different than those sold to Aini. In consequence, the REC TOPICLEAR tubes are genuine within the meaning of the cases, and their sale in the United States by SIC and its affiliates does not infringe TBPI's U.S. mark. On the other hand, the record is equally plain that REC never has made the soaps, lotions and other products sold by Aini under the TOPICLEAR mark. There is no basis for concluding that such products, if sold here by SIC and its affiliates, would be "genuine." TBPI therefore is entitled to an injunction restraining such sales.
VI. Personal Jurisdiction
The jurisdictional defenses of Jedouane and Garau are easily disposed of. Jedouane and Garau negotiated and signed the 1992 Agreement -- the genesis of a good part of this dispute -- in New York. The agreement contained a New York choice of law clause. It specifically contemplated the formation of TBPI, an entity in which they would own shares, as a New York corporation. To suggest that this action does not arise out of their transaction of business in New York, or that they lack sufficient contacts with this forum to make the exercise of jurisdiction over them reasonable, is absurd.
Marcel Cohen, the owner of 64 percent of the stock of each of SIC and GMJ, contends that he has had very little contact with New York, that he does not direct the day-to-day activities of the latter company, and that he is not subject to jurisdiction here on the claim of trademark infringement asserted against him. It is reasonably plain, however, and the Court finds, that Cohen is the moving force behind the effort to capture the TOPICLEAR U.S. rights for SIC. He does not deny that he controls the day-to-day operations of SIC. He caused SIC to sue the Ainis and ICE in Miami for cancellation of Charles Aini's U.S. registration. The value of his investment in the GMJ reorganization in France is dependent in at least some significant degree on the outcome of this litigation. He has the largest personal financial interest in the shipment by SIC and/or GMJ of TOPICLEAR products into the United States. The Court therefore infers, particularly given the informality with which all of the corporations and other entities involved in this matter operate, that Cohen is subject to long-arm jurisdiction on the infringement claims because he is the "moving, active conscious force behind" the alleged infringement. Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 913 (E.D.N.Y. 1988) (quoting Polo Fashions, Inc. v. Branded Apparel Merch., 592 F. Supp. 648 (D. Mass. 1984)).
The question of jurisdiction over Michel Farah and his company, Mitchell International Pharmaceuticals Ltd., both of which are located in England, is somewhat different. The pretrial order, which amended the pleadings (PTO at 3), simply asserted that Farah and Mitchell manufactured TOPICLEAR products for GMJ. (Id. at 11) While it contended that the products thus manufactured were sent to the United States, it did not charge Farah or Mitchell with sending them to this country. The evidence at trial, the Court finds, established that Mitchell simply makes the product in England for GMJ, that title passes in England, and that GMJ is responsible for shipping the goods to the United States. (DX YJ PP 4-11) Nevertheless, it appears, in light of Lipton v. The Nature Co., 781 F. Supp. 1032, 1035-36 (S.D.N.Y. 1992), aff'd., 71 F.3d 464 (1995), that the Court has jurisdiction over these parties because their manufacture and packaging of TOPICLEAR products in England for export to the United States constituted the commission of a tortious act outside New York causing injury within New York. See N.Y. CPLR § 302(a), subd. 2.
As amended by the pretrial order, the relief sought in these actions is as follows:
The Aini group and SIC each seek to enjoin the other from continued use of the TOPICLEAR mark and damages for its alleged infringement. SIC seeks cancellation of Charles Aini's U.S. registration of the mark. Jack Aini seeks a determination that he has acquired worldwide rights in the TOPICLEAR mark and manufacturing processes as well as ownership of all of the stock of TBPI pursuant to the October 21, 1992 agreement and, it appears, judgment on the promissory note. The SIC group seeks judgment for damages for goods delivered. The issue of damages for trademark infringement and unfair competition has been severed. (PTO, § XI)
In view of the foregoing discussion, an interlocutory judgment to the following effect will enter:
1. TBPI is entitled to a permanent injunction restraining SIC and the Jedouane group from infringing the TOPICLEAR mark in the United States, provided, however, that the injunction will not restrain them from exporting to the United States TOPICLEAR tubes manufactured by REC which are the same as the TOPICLEAR tubes made by it for Aini. All other claims for trademark infringement and unfair competition, whether brought by the Ainis, SIC or the Jedouane group, are dismissed save for any remaining claim by TBPI for damages for trademark infringement.
2. REC shall recover of Jack Aini the appropriate dollar equivalent of 2,351,713.75 francs together with prejudgment interest according to law.
3. Aini's claim on the promissory note and his claim, derived from the October 21, 1992 agreement and the note, to ownership of worldwide TOPICLEAR trademark and manufacturing rights and of the stock of TBPI owned by the Jedouane group (other than Mamane) is dismissed.
4. The claims against Choice International shall be dismissed pursuant to stipulation.
The Court will hold a conference with counsel on May 19, 1997 at 2:00 p.m. in Courtroom 12D to fix a schedule for any necessary proceedings with respect to damages for trademark infringement and unfair competition.
Settle judgment on five business days notice.
Dated: May 6, 1997
Lewis A. Kaplan
United States District Judge