ERIC F. MELGREN, District Judge.
Plaintiff MNM Investments, LLC, and Counterclaim Defendants Kansas Motorcycle Works, LLC, and Matthew Moore (collectively, "MNM") move for partial summary judgment on the ownership of the federally registered trademarks "Big Dog Motorcycles" and "BDM" (the "Asserted Marks").
The Asserted Marks were originally owned by Big Dog Motorcycles, LLC ("Old Big Dog")—a former dealer of high-end custom motorcycles. In April 2011, Intrust Bank, N.A. ("Intrust") foreclosed on its loans to Old Big Dog. Intrust possessed a security interest in Old Big Dog's physical and intangible assets, including the Asserted Marks. On April 5, 2011, Old Big Dog conveyed all of its property to Intrust so Intrust could dispose of and liquidate the assets as partial satisfaction of Old Big Dog's indebtedness. The next day, Intrust conveyed the registered trademark "BDM" and all associated goodwill to Motorcycle Enterprises, LLC. It also conveyed the registered trademark "Big Dog Motorcycles" and associated goodwill to Wichita Motorcycles, LLC.
More than two years later, on November 18, 2013, Intrust entered into an agreement with Matthew Moore—a former Old Big Dog employee and current principal of MNM—regarding the sale of Old Big Dog's assets held by Intrust. The Letter of Agreement signed by Moore and Intrust states that Moore was to act as liquidator of the foreclosed assets, and in exchange, Intrust would provide him "10% of the gross sales value of the assets" and the "Intellectual Property of [Wichita Motorcycles, LLC, Motorcycle Enterprises, and Big Dog Motorcycles, LLC]."
On October 2, 2014, Motorcycle Enterprises and Wichita Motorcycles executed a Quit Claim Bill of Sale (the "Quit Claim"). The Quit Claim states that Motorcycle Enterprises and Wichita Motorcycles "sell, transfer, and quit claim" to Intrust all of their right, title, and interest in the following property:
It further states:
The Quit Claim Bill does not specifically identify the Asserted Marks, their federal registration numbers, or any other trademarks owned by Wichita Motorcycles or Motorcycle Enterprises.
On November 13, 2014, Wichita Motorcycles and Intrust executed two identical conveyances titled "Assignment of Mark," except that one conveyance is for the "BDM" trademark and the other is for the "Big Dog Motorcycles" trademark. The "Assignment of Mark" documents contain two types of provisions. First, the documents state that Wichita Motorcycles "ratifies, confirms, and acknowledges the assignment" of the Asserted Marks to Intrust pursuant to the October 2014 Quit Claim. Second, the documents state that Intrust assigns all of its right, title, and interest in the Asserted Marks, together with the goodwill of the business, to MNM. The assignment provision states as follows:
Less than a week later, on November 17, Intrust and MNM executed a "Quit Claim Assignment and Assumption of Intellectual Property" setting forth the terms and conditions of Intrust's assignment of certain assets and technology to MNM. Paragraph 2 of this document contains an "Assignment" provision stating that Intrust "does hereby quitclaim, assign, sell and transfer unto [MNM] WITHOUT RECOURSE all right, title, and interest in and to: . . . (iii) the Marks, [and] (iv) the goodwill of the Business symbolized by and associated with the Marks. . . ." The term "Marks" is defined as "all trademarks and service marks and the registrations and/or applications that are identified in the Quitclaim Bill of Sale identified as
On November 20, an Intrust representative sent an email to Kathy Human, the manager of Wichita Motorcycles and Motorcycles Enterprises, stating that the parties had executed the wrong "Assignment of Mark" document for the "BDM" mark. The correct "Assignment of Mark" document lists Motorcycle Enterprises as the entity who assigned the mark to Intrust, and not Wichita Motorcycles. Motorcycle Enterprises executed a corrected Assignment of Mark for the "BDM" mark on November 24, and Intrust executed the same document on December 1.
Motorcycle Enterprises and Wichita Motorcycles were dissolved in June 2015.
HDM began selling parts and accessories bearing the Asserted Marks in 2003. From 2003 to 2012, HDM purchased parts and accessories for resale from Old Big Dog. As early as 2011, it began ordering and selling newly manufactured parts and accessories, some of which bore the Asserted Marks, with full knowledge of and without objection of Old Big Dog. HDM continued to sell Big Dog motorcycle parts through its eBay storefront through 2018.
From 2015 through 2018, HDM worked with Moore regarding selling parts and accessories bearing the Asserted Marks. After the liquidation of Old Big Dog in 2014, Moore represented that he owned the Asserted Marks because of the assignments executed between Motorcycle Enterprises, Wichita Motorcycles, Intrust, and MNM. Moore and MNM had full knowledge of, and did not object to, HDM's sale of parts and accessories bearing the Asserted Marks from 2015 through 2018. In addition, during this time period, HDM protected the Big Dog brand from unauthorized counterfeiters by pursuing them through the brand enforcement channels of various online retailers with MNM's knowledge and approval.
In 2017, the parties' relationship crumbled. MNM filed suit in September 2018 asserting claims of trademark infringement, trademark counterfeiting, and breach of contract. In response, HDM asserts that MNM is not the owner of the Asserted Marks due to gaps or missing conveyances that should have been executed but never were. HDM also asserts that it has acquired superior rights in the Asserted Marks due to HDM's use of them in commerce from 2003 to 2018. MNM now moves for partial summary judgment on the issue of ownership of the Asserted Marks.
Summary judgment is appropriate if the moving party demonstrates that there is no genuine issue as to any material fact, and the movant is entitled to judgment as a matter of law.
MNM seeks summary judgment on the ownership of the Asserted Marks based on the series of conveyances granting title in the marks to it. In response, HDM argues that summary judgment is not appropriate because the conveyances do not show that MNM owns the Asserted Marks as a matter of law and because there are genuine issues of material fact regarding loss of rights to the Asserted Marks and HDM's intervening rights in the marks by using them in commerce. The Court will first address the parties' arguments regarding the assignment of the Asserted Marks to MNM.
MNM contends that the conveyances at issue unambiguously transfer title in the Asserted Marks to it: Old Big Dog conveyed the Asserted Marks to Intrust on April 5, 2011. The next day, Intrust conveyed the "BDM" trademark to Motorcycle Enterprises and the "Big Dog Motorcycles" trademark to Wichita Motorcycles. Those two entities conveyed the Asserted Marks back to Intrust in October 2014 through the Quit Claim. Intrust subsequently conveyed the Asserted Marks to MNM through the "Assignment of Mark" documents and the "Quitclaim Assignment and Assumption of Intellectual Property" document in November 2014.
HDM argues that the October 2014 Quit Claim was ineffective to transfer any trademark rights from Wichita Motorcycles and Motorcycle Enterprises to Intrust. HDM further argues that as a result, title in the Asserted Marks was still held by Wichita Motorcycles and Motorcycle Enterprises as of November 2014. According to HDM, when those entities dissolved, it resulted in abandonment of the Asserted Marks, which HDM then acquired by its own use.
The Court will interpret the Quit Claim pursuant to Kansas law.
HDM argues that the Quit Claim does not transfer title in the Asserted Marks to Intrust because although it lists the transferred property in detail, it does not refer to intellectual property, trademarks, or the specific trademarks at issue here. HDM further argues that the Quit Claim contains a further assurances clause that by its plain meaning states that the conveyance of intellectual property would be completed through other documents. The Court disagrees.
The plain language of the Quit Claim unambiguously conveys the Asserted Marks to Intrust. The Quit Claim lists "general intangibles" in the list of property being conveyed to Intrust. Because this term is not defined in the Quit Claim, it must be given its ordinary meaning, which includes trademarks and other intellectual property.
Furthermore, the further assurances clause confirms that the term "general intangibles" includes trademarks. The further assurances clause states:
The clause includes "trademarks" and "the goodwill of the business associated therewith" as part of the "intangible property" described in the granting clause of the Quit Claim. Thus, when reading the further assurances clause in conjunction with the granting clause, the Court must conclude that the parties intended for the Asserted Marks be assigned to Intrust.
The Court also is not persuaded by HDM's argument that the further assurances clause plainly states that the conveyance of intellectual property would be completed through other documents. The further assurances clause requires Wichita Motorcycles and Motorcycles Enterprises to deliver documents to Intrust "to document . . . the conveyance" of the trademarks. The Court construes this to mean that the assignment occurred through the granting provision of the Quit Claim and that any further documentation of this assignment would occur later. HDM's argument would require the Court to read the further assurances clause in a vacuum, which it is not allowed to do. When the granting provision and the further assurances clause are read together, the Quit Claim effectively transfers title in the Asserted Marks from Wichita Motorcycles and Motorcycle Enterprises to Intrust.
Even if the Quit Claim could reasonably be construed as not conveying trademarks to Intrust, HDM has not shown that this issue would ultimately been resolved in its favor. "An instrument is ambiguous when the application of pertinent rules to the whole fails to make certain which one of two or more meanings is conveyed by the words employed by the parties."
Relevant in this case is Wichita Motorcycles' and Motorcycle Enterprises' ratification of the assignment to Intrust. Shortly after the execution of the Quit Claim, both entities executed "Assignment of Mark" documents ratifying and confirming the transfer of all their rights in the "Big Dog Motorcycles" and "BDM" marks pursuant to the Quit Claim. "Ratification has been defined as the acceptance of the result of an act with an intent to ratify, and with full knowledge of all the material circumstances." Thus, any question as to the parties' intent in executing the Quit Claim is answered by these subsequent agreements.
Other than the October 2014 Quit Claim, HDM does not challenge the sufficiency of the assignment documents conveying title in the Asserted Marks to MNM. The Court therefore concludes that the conveyances described in this Order transferred title in the Asserted Marks to MNM.
HDM argues that there is a genuine issue of fact regarding whether Wichita Motorcycles and Motorcycle Enterprises abandoned the Asserted Marks before they assigned them back to Intrust, thereby rendering the subsequent conveyances from Intrust to MNM invalid. Under the Lanham Act, trademarks may be abandoned when use is discontinued, and nonuse for three or more consecutive years is prima facie evidence of abandonment.
In response, MNM argues that HDM is precluded from making this argument because it contradicts their contentions in the First Amended Counterclaims. In paragraphs 22 and 30 of the First Amended Counterclaims, HDM alleges:
MNM points out that HDM's position since filing its Answer has been that Motorcycle Enterprises and Wichita Motorcycles owned the marks up until their dissolution in June 2015 and that HDM acquired the Asserted Marks, not because these entities abandoned them between 2011 and 2014, but because the conveyances were ineffective. According to MNM, HDM cannot reverse this position simply because it is convenient to do so in response to MNM's motion.
"Judicial admissions are formal, deliberate declarations which a party or his attorney makes in a judicial proceeding for the purpose of dispensing with proof of formal matters or of facts about which there is no real dispute."
"A statement or assertion of fact in a complaint or other pleading may serve as a judicial admission."
HDM next asserts that even if MNM obtained ownership of the Asserted Marks, there is a genuine issue of material fact as to whether a license existed between the parties, and what the terms of the license were. Assuming there was an implied license, HDM claims that MNM did not exercise control over the products made and sold by it featuring the Asserted Marks. HDM therefore argues that there is a genuine issue of material fact regarding whether MNM lost rights to the Asserted Marks through uncontrolled licensing.
Under the Lanham Act, a mark may be abandoned when "acts or omissions" of its owner cause the mark to "lose its significance."
MNM, however, contends that licensee estoppel bars HDM from claiming abandonment due to naked licensing. Under the doctrine of licensee estoppel, "[t]he licensee is estopped from claiming any rights against the licensor which are inconsistent with the terms of the license."
In his declaration, McCloud (HDM's principal) states that MNM was aware of HDM's sale of parts and accessories bearing the Asserted Marks from 2014 through 2018. He also states that from 2015 to 2018 MNM failed to exercise quality control over HDM's use of the Asserted Marks. These statements create a genuine issue of material fact regarding whether there was an implied license between MNM and HDM to use the Asserted Marks. But they do not create a genuine issue of material fact regarding whether MNM lost rights to the Asserted Marks through uncontrolled licensing. HDM's argument presumes that there is an implied license between the parties. If such license exists, HDM is estopped from relying on conduct during the term of that license to challenge the ownership of the Asserted Marks.
The Court's resolution of this issue is premature at this stage in the litigation. As noted above, HDM's uncontrolled licensing defense presumes the existence of a license agreement between the parties, and this issue is not currently before the Court. Should the parties later raise the licensing issue, HDM may assert that MNM engaged in uncontrolled licensing. But, HDM is estopped from relying on any conduct that occurred during the term of the alleged license in support of this defense.
Finally, HDM argues that there are factual issues pertaining to "intervening and superior rights" it obtained because of its use of the Asserted Marks between 2003 and 2014. HDM argues that there are genuine issues of material fact as to whether Wichita Motorcycles, Motorcycle Enterprises, and MNM lost rights to the Asserted Marks through nonuse, invalid assignments, and/or uncontrolled licensing. HDM has sold products bearing the Asserted Marks since 2003. HDM therefore argues that because use in commerce is a touchstone of trademark rights, there is a genuine issue of material fact regarding whether it obtained superior rights to the Asserted Marks.
The Court rejects HDM's argument to the extent it relies on Wichita Motorcycles' and Motorcycle Enterprises' alleged abandonment of the Asserted Marks from 2011 to 2014 and the alleged invalid assignment of the Asserted Marks to MNM. The Court has already disposed of these arguments as discussed above. To the extent HDM relies on an uncontrolled license defense, there are genuine issues of material fact regarding whether HDM has superior rights in the Marks because of its use of them in commerce. The Court will address this argument if and when the parties raise the uncontrolled licensing defense in the future.
The Court grants MNM's motion to establish ownership of the Asserted Marks against the claims of HDM that (1) the 2014 conveyances do not convey titled to MNM; (2) Wichita Motorcycles and Motorcycle Enterprises abandoned their rights to the Asserted Marks from 2011 to 2014; and (3) conduct during an alleged license agreement with MNM constituted naked licensing. Other than as stated above, the Court denies MNM's motion establishing ownership of the Asserted Marks.
