Airs Aromatics, a purported owner of an ANGEL DREAMS trademark, filed a lawsuit against Victoria’s Secret alleging breach of contract claims and requesting cancellation of Victoria’s Secret’s registered DREAM ANGELS trademark.
The district court entered an order dismissing the complaint for failure to allege actual breaches of the contract and lack of standing for the cancellation claim. Airs Aromatics appealed only the dismissal of the cancellation claim.
Airs International began using the trademark ANGEL DREAMS in connection with the sale of perfume and personal care products in 1991. In 1999, Airs International entered into a mutual consent-to-use agreement with Victoria’s Secret.
The agreement allowed Victoria’s Secret to use the trademark DREAM ANGELS in connection with the marketing of various personal care products. As part of that agreement, Victoria’s Secret paid Airs International $25,000 per year. The agreement was renewable yearly, at the election of Victoria’s Secret.
In 2000, while the consent-to-use agreement with Victoria’s Secret was still in effect, Stephen Marcus, the principal of Airs International, assigned the Airs family of trademarks, which included ANGEL DREAMS, to Mine Hakim. In May 2002, the California Secretary of State’s office suspended Airs International’s corporate status.
Litigation over the ownership of these marks ensued between Marcus, Hakim, and their agents and purported transferees of the family of marks. Airs International was not a party to that litigation.
Because the district court determined the transfers were made to defraud creditors, it enjoined all parties to the litigation, including Marcus and Hakim, from asserting any rights superior to any other parties’ use of rights in the Airs family of trademarks. The court also ordered cancellation of any registered marks covering the Airs family of marks in any of the parties’ names.
During the litigation, Victoria’s Secret made its contractual payments into an escrow account. In 2008, Victoria’s Secret ceased making payments and withdrew the funds from the escrow account. In late 2007, Victoria’s Secret applied for trademark registration for eight DREAM ANGELS marks; the trademark office granted the registrations.
In 2011, Marcus revived Airs International and attempted to transfer all of its common law rights in the ANGEL DREAMS mark to the newly formed Airs Aromatics, LLC. Marcus is the sole member of Airs Aromatics.
On June 2, 2011, Airs Aromatics filed a complaint against Victoria’s Secret that alleged Victoria’s Secret had breached the consent-to-use agreement and the associated implied covenant of good faith and fair dealing.
Airs Aromatics sought a declaratory judgment, finding that Victoria’s Secret had breached the consent-to-use agreement and cancelling the trademark registrations based on a likelihood of confusion.
Victoria’s Secret moved to dismiss the first amended complaint on a variety of grounds, including Airs Aromatics’ failure to sufficiently plead the continuous usage of the ANGEL DREAMS mark that would establish its common law ownership.
On November 28, 2011, the district court granted the motion orally on the record after a hearing. The district court held that Airs Aromatics lacked standing to pursue its trademark cancellation claim as it had not adequately alleged non-abandonment of its ANGEL DREAMS trademark.
The district court also dismissed the claims based on the consent-to-use agreement after determining that the alleged breaches of the consent-to-use agreement did not breach the actual terms. The district court subsequently entered a written order dismissing the case with prejudice. Airs Aromatics appealed the dismissal of its claim for cancellation of trademarks or, alternatively, that it was dismissed with prejudice.
To establish a claim for trademark infringement, Airs Aromatics must allege facts to show “(1) that it has a protectible ownership interest in the mark; and (2) that the defendant’s use of the mark is likely to cause consumer confusion, thereby infringing upon Airs Aromatics’ rights to the mark.”
To establish a protectible ownership interest in a common law trademark, the owner must “establish not only that he or she used the mark before the mark was registered, but also that such use has continued to the present.” Continuous usage requires sufficiently public usage as “to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark.”
Therefore, Airs Aromatics must allege facts showing continuous usage of the ANGEL DREAMS mark. In its complaint, Airs Aromatics neither alleged continuous usage by Airs International throughout the relevant period nor any attempt by Airs Aromatics to use the mark in commerce before it commenced the suit against Victoria’s Secret.
In its opening brief, Airs Aromatics acknowledged that Airs International was not actively using the marks from 2004 to 2011 but argued that the ongoing litigation constitutes sufficient attempts to continue usage.
There is no case law to support the contention. Airs Aromatics has not adequately alleged that the litigation here is the kind of continuous, public usage of a trademark that serves to identify the marked goods to the public as those of the mark’s owner. Airs Aromatics has not alleged sufficient facts to support a claim for trademark infringement.
Airs Aromatics, however, in its briefing before this court has stated that Airs International “was not actively using the marks” between 2004 and 2011 and that its activity was “effectively on hold” during the period of litigation.
Airs Aromatics has established that its allegations for continuous usage rest on the theory that litigation, rather than business activity, is sufficient. This type of non-public, non-commercial activity does not meet the established standard for continuous usage.