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Baskim Holdings, Inc. v. Two M, Inc.

United States District Court, D. Nevada

March 16, 2018

TWO M, INC. and OMAR ALDABBAGH, Defendants.



         Plaintiff Baskim Holdings, Inc. filed this lawsuit against defendants Two M, Inc. and Omar Aldabbagh, alleging the defendants infringed Baskim's trademarks related to Babe's Cabaret. The defendants move for summary judgment, arguing Baskim lacks standing to bring its trademark claims because it did not own the trademarks at the time this lawsuit was initiated, and a March 2017 nunc pro tunc assignment cannot retroactively confer standing on Baskim. The defendants also argue Baskim procured its federally-registered marks through fraud by falsely representing to the United States Patent and Trademark Office (USPTO) that Baskim had used the marks since 2005 when Baskim was not even formed until 2009. Finally, they contend that Baskim could not have used the trademark before the defendants did because Baskim did not exist until 2009 and Baskim did not obtain the rights to the Babe's marks until the March 2017 assignment.

         Baskim responds that it obtained the trademark rights through a 2009 oral assignment that pre-dates the marks' federal registrations. Baskim contends it has standing because oral assignments of unregistered marks are valid. Baskim argues that the assignor used the mark starting in 2005, so Baskim's statements to the USPTO that it or its predecessors had used the marks since 2005 were truthful. Finally, Baskim asserts that for these same reasons, its use predates the defendants' use because Baskim steps into the shoes of its assignor.

         I deny the defendants' motion because they have not shown as a matter of law that Baskim lacks standing or committed a fraud on the USPTO. Additionally, because Baskim as assignee steps into the shoes of its assignor, the defendants also have not shown as a matter of law that their use of the Babe's marks pre-dates Baskim's.

         I. BACKGROUND

         In 2005, non-party RMDR Investments, Inc. began operating a strip club called Babe's Cabaret in New Orleans, Louisiana. ECF No. 44-1 at 3. RMDR continuously used the Babe's Cabaret mark until 2009, when RMDR was sold to the same individuals who formed and own Baskim. Id.; ECF Nos. 80 at 24; 99-2 at 3-4. Baskim was formed to hold the Babe's Cabaret intellectual property, and according to Baskim's president, Charles Bass, RMDR orally assigned its rights in the Babe's Cabaret name to Baskim. ECF Nos. 44-1 at 3; 80 at 24; 99-2 at 3-4. Baskim then licensed use of the Babe's name back to RMDR. ECF No. 44-1 at 3. Following the 2009 oral assignment, Baskim has licensed the Babe's marks to other strip clubs, including one in Texas and another in New Jersey. ECF No. 44-1 at 5.

         In February 2015, Baskim filed applications with the USPTO to register the “Babe's Cabaret, ” “Babe's NOLA, ” “Babe's NOLA Cabaret, ” and “Babe's Cabaret NOLA” marks in connection with exotic dancing. Id. at 4-5; ECF No. 80 at 43, 61. In its application for the Babe's Cabaret mark, Baskim represented to the USPTO that “the mark was first used by the applicant or the applicant's related company or licensee predecessor in interest at least as early as 11/28/2005.” ECF No. 99-1 at 5. All four applications were granted. ECF No. 44-1 at 4-5.

         Baskim filed this lawsuit on August 10, 2016, alleging that the defendants infringed on the Babe's marks by operating “Babe's Cabaret, ” a strip club in Las Vegas. ECF No. 1. In March 2017, Baskim and RMDR entered into a written “nunc pro tunc agreement of mark, ” by which RMDR assigned its rights in the Babe's marks, including all associated goodwill and rights to sue for past and future infringement, “nunc pro tunc effective as of November 28, 2005.” ECF No. 80 at 58. This is the only written assignment between RMDR and Baskim regarding the Babe's marks.

         II. ANALYSIS

         Summary judgment is appropriate if the movant shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). I view the evidence and reasonable inferences in the light most favorable to the non-moving party. James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008).

         A. Standing

         “To establish standing to sue for trademark infringement under the Lanham Act, a plaintiff must show that he or she is either (1) the owner of a federal mark registration, (2) the owner of an unregistered mark, or (3) a nonowner with a cognizable interest in the allegedly infringed trademark.” Halicki Films, LLC v. Sanderson Sales & Mktg., 547 F.3d 1213, 1225 (9th Cir. 2008). Baskim owns federally registered marks and asserts rights in unregistered marks as well. The question is whether Baskim lacks standing because it did not have a written assignment of those rights until after this suit was filed.

         Trademarks are assignable. Russell Rd. Food & Beverage, LLC v. Spencer, 829 F.3d 1152, 1156 (9th Cir. 2016) (citing 15 U.S.C. § 1060(a)(1) (“A registered mark . . . shall be assignable . . . .”)). Under the Lanham Act, assignments of federally registered marks must be in writing. 15 U.S.C. § 1060(a)(3) (“Assignments shall be by instruments in writing duly executed . . . .”). However, common law trademark rights may be assigned orally. See Taylor v. Thomas, 624 F. App'x 322, 326 (6th Cir. 2015) (“When, as here, an assignment is not in writing, the plaintiff can prove an implied agreement to transfer with strong evidence of conduct manifesting agreement.” (quotation omitted)); Doeblers' Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 822 (3d Cir. 2006), as amended (May 5, 2006) (“Even if a writing is lacking, an assignment may be proven . . . by the clear and uncontradicted oral testimony of a person in a position to have actual knowledge.”); TMT N. Am., Inc. v. Magic Touch GmbH, 124 ...

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