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MacKenzie-Childs, LLC v. MacKenzie-Childs

January 30, 2010

MACKENZIE-CHILDS, LLC AND MACKENZIE-CHILDS AURORA LLC, PLAINTIFFS,
v.
VICTORIA MACKENZIE-CHILDS, RICHARD MACKENZIE-CHILDS AND V&R EMPRISE, LLC, DEFENDANTS.
VICTORIA MACKENZIE-CHILDS, RICHARD MACKENZIE-CHILDS, AND V&R EMPRISE, LLC, COUNTERCLAIM PLAINTIFFS,
v.
PLEASANT ROWLAND, MACKENZIE-CHILDS, LTD., MCL ACQUISITION CORPORATION, MCNY ACQUISITION CORPORATION, MACKENZIE-CHILDS OF NEW YORK, LTD., LEE FELDMAN, MACKENZIE-CHILDS AURORA LLC, MACKENZIE-CHILDS WORTH AVENUE LLC, MC NYC LLC, MACKENZIE-CHILDS REAL ESTATE LLC, AND JOHN DOES 1-5, COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Plaintiffs MacKenzie-Childs, LLC and MacKenzie-Childs Aurora LLC, manufacturers and sellers of ceramic goods and housewares, bring this action pursuant to the Declaratory Judgment Act, the Lanham Act, and New York state law claiming that the defendants Victoria MacKenzie-Childs, Richard MacKenzie-Childs, and V&R Emprise, Ltd., have, inter alia, infringed plaintiffs' trademarks and engaged in unfair competition. Specifically, plaintiffs contend that they are the owners of the trademark "MacKenzie-Childs," and its derivatives, and that the defendants have infringed on this mark. Plaintiffs seek a declaration that they are the owners of the mark "MacKenzie-Childs", and damages for defendants infringement of the plaintiffs' marks.

Defendants deny that the plaintiffs own the mark "MacKenzie-Childs," and therefore claim that they have not infringed upon plaintiffs' mark. Defendants further contend that because they own the rights to the mark "MacKenzie-Childs," the plaintiffs, and third-party defendants, are infringing upon that mark.

In 2007, the parties moved for summary judgment on several of the claims and counterclaims raised respectively in the plaintiff's Original Complaint and the defendants' Answer and Counterclaims. By Decision and Order dated January 9, 2008, I held in-part that the plaintiffs were entitled to use the marks "MacKenzie-Childs, Ltd. 1983 Aurora New York" and "MacKenzie-Childs, Ltd. Aurora New York MC 1983", but held that the record was incomplete with respect to plaintiffs' entitlement to use of the mark "MacKenzie-Childs." I further granted defendants' motion for an injunction preventing the plaintiffs from interfering with defendants' use of the mark "Victoria and Richard" and a stylized thistle and torch logo.

Since that ruling, the parties have filed amended pleadings in which many of the claims made in the original Complaint and Counterclaim have been restated. The plaintiffs, however, no longer makes any claims against the defendants based on their use of the mark "Victoria and Richard" or the thistle and torch logo. The parties have also engaged in extensive discovery on the issues of the ownership and/or use of the mark "MacKenzie Childs." Based on the new information contained in the record, the parties again move for summary judgment. Specifically, plaintiffs seek a declaratory judgment that they are the owners of the mark "MacKenzie-Childs," and dismissal of the defendants' counterclaims. Defendants seek a declaration that they are entitled to use of the marks "Victoria and Richard" and "MacKenzie-Childs" as well as judgment in their favor with respect to their counterclaims.

For the reasons set forth below, I grant plaintiffs' motion for a declaratory judgment that it is the rightful owner of the marks "MacKenzie-Childs" and "MacKenzie-Childs, Ltd." and their derivatives. I further grant plaintiffs' motion for summary judgment with respect to the defendants' counterclaims. I deny defendants' request for a declaratory judgment that they are entitled to use of the mark "Victoria and Richard," and deny their motion for summary judgment with respect to plaintiffs claims of trademark infringement and unfair competition.

BACKGROUND

The factual background of this case was set forth in my January 9, 2008 Decision and Order as follows: In 1974, Defendants Richard Childs ("Richard") and Victoria MacKenzie ("Victoria") married. In 1983, they began making and selling ceramic goods of their own design. In 1985, the couple decided to incorporate their business, and incorporated under the name "Victoria and Richard MacKenzie-Childs, Ltd." Sometime thereafter, the company registered two trademarks: "Victoria and Richard MacKenzie-Childs, Ltd." and "MacKenzie-Childs, Ltd. 1983 Aurora New York." The company also registered the mark "MacKenzie-Childs, Ltd. Aurora New York MC 1983." By 1995, the company decided to stop using the first names of Victoria and Richard in the Company's logos, and in that same year, abandoned the trademark "Victoria and Richard MacKenzie-Childs, Ltd." According to the defendants, the company's products did not bear any mark using the first names of Victoria and Richard after 1995.

In 1999, Richard and Victoria incorporated a second company, "MacKenzie-Childs, NY, Ltd." In the late 1990's, Victoria and Richard MacKenzie-Childs, Ltd. and MacKenzie-Childs, NY, Ltd. (collectively the MacKenzie-Childs Companies") experienced a downturn in business, and in 2000, the companies were several million dollars in debt. According to the defendants, the bank which held most of the companies' debt installed a new President of the Companies, MacDonell Roehm, Jr. ("Roehm"), and shortly thereafter, Roehm (allegedly against the wishes of Richard and Victoria) began looking for ways to reorganize the MacKenzie-Childs Companies and limit the bank's losses.

According to the defendants, Roehm approached Third-Party Defendant Pleasant Rowland ("Rowland") to determine whether or not she was interested in investing in the MacKenzie-Childs Companies. Thereafter, according to the defendants, Rowland purchased (at a discount) the Companies' debt from the bank, and, on the same day that she purchased the debt, called the MacKenzie-Childs Companies' loan. Because the Companies were unable to repay the debt, they were required to seek bankruptcy protection.

With the MacKenzie-Childs Companies in bankruptcy, Rowland created two acquisition companies, and through those companies, made an offer to purchase the assets of the MacKenzie-Childs Companies. The purchase offer was accepted by Roehm and approved by the bankruptcy court. Shortly after the asset sale was completed, Roehm took a position with Rowland's new Company which had purchased the MacKenzie-Childs Companies' assets.

Pursuant to the terms of the asset sale, the MacKenzie-Childs Companies agreed to sell, inter alia, "All Intellectual Property . . . and all goodwill associated with the foregoing. . . ." Asset Purchase Agreement at p. 2. "Intellectual Property" is defined in the Asset Purchase Agreement in relevant part as mean[ing] all intellectual property, including, without limitation, . . . all trademarks, service marks, trade dress, logos, trade names, brand names and corporate names (including, without limitation, the name "MacKenzie-Childs", and all derivatives thereof), together with all translations, adaptations, derivations, and combinations thereof and including all good will associated therewith, and all applications, registrations, and renewals in connection therewith . . . . Asset Purchase Agreement at p. 37.

Following the completion of the sale of the MacKenzie-Childs Companies' assets, Rowland renamed her acquisition companies MacKenzie-Childs, Ltd., and MacKenzie-Childs of New York, Ltd. The company formerly known as Victoria and Richard MacKenzie-Childs, Ltd. was renamed MC Aurora, Ltd., and the company formerly know as MacKenzie-Childs, NY, Ltd. was renamed MC Madison, Ltd. (collectively, "MacKenzie Childs II")

According to the defendants, following the sale of the assets of the MacKenzie-Childs Companies, Rowland offered Victoria and Richard $10,000,000 not to compete with Rowland's companies, and not to use their name in competition with her companies. Richard and Victoria declined Rowland's offer, and defendants claim that as a result, Rowland (who owned much of the couples' personal debt) called Richard and Victoria's personal loans, and thereby caused Richard and Victoria to file for personal bankruptcy protection. Richard and Victoria contend that Rowland purchased many of the couples' personal assets and property in the bankruptcy proceeding.

In 2005, Richard and Victoria decided to re-enter the ceramics business, and incorporated a company known as V&R Emprise, LLC. V&R Emprise branded its products with a logo consisting of the names "Victoria and Richard" and an emblem design incorporating a torch, bearing stylized "V" and "R" initials, and the word "emprise", and a thistle (the "Emprise logo"). V&R Emprise filed trademark applications for the logos, which plaintiff has opposed.

On February 22, 2006, Plaintiff Mackenzie-Childs, Ltd. filed suit against Richard and Victoria, and V&R Emprise, LLC., claiming that the defendants were infringing upon their trademarks. Plaintiff sought an injunction prohibiting the defendants from using the names "MacKenzie-Childs," "Victoria and Richard MacKenzie-Childs," "Victoria and Richard," and the thistle design used by V&R Emprise. Since the filing of the complaint, Rowland sold her MacKenzie-Childs companies. By Amended Complaint dated August 18, 2008, plaintiffs MacKenzie-Childs LLC and MacKenzie-Childs Aurora LLC, as successors in interest to MacKenzie Childs II, seek a declaration from the court that they are the rightful owners of the mark "MacKenzie-Childs." Plaintiffs make no claims with respect to the defendants' use of the mark "Victoria and Richard" or the Emprise Logo.

The defendants assert several counterclaims against Mackenzie-Childs, Ltd., Pleasant Rowland, and MacKenzie-Childs of New York, Ltd. The defendants contend that because they own the mark "MacKenzie-Childs," any use of such mark by the plaintiffs constitutes infringement. Defendants contend that the plaintiffs do not own the MacKenzie-Childs mark because the original MacKenzie-Childs Companies did use that name, and did not trademark that name, and therefore, could not have conveyed the mark in the Asset Purchase Agreement. The defendants further claim that the plaintiffs have violated a host of federal and state laws by using the name "MacKenzie-Childs" in connection with their goods.

DISCUSSION

I. Summary Judgment Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." When considering a motion for summary judgment, all genuinely disputed facts must be resolved in favor of the party against whom summary judgment is sought. Scott v. Harris, 550 U.S. 372, 380 (2007). If, after considering the evidence in the light most favorable to the nonmoving party, the court finds that no rational jury could find in favor of ...


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