The US Court of Appeals for the Ninth Circuit upheld the district court’s decision that the plaintiff was the assignee of a valid trademark co-existence agreement entered into with the former owner of the registered mark “Crazy Horse.” Russell Road Food and Beverage, LLC v. Frank Spencer, et al., Case No. 14-16096 (9th Cir., July 22, 2016) (Wardlaw, J).

In 2006, strip club owner Carl Reid registered with the US Patent and Trademark Office (PTO) his rights in the “Crazy Horse” and “Pure Gold’s Crazy Horse” marks for use in connection with “exotic dancing services.” Later, two other strip club operators tried to register similar marks with the PTO. Russell Road tried to register the mark “Crazy Horse III Gentlemen’s Club at the playground” for his strip club in Las Vegas, and Frank Spencer tried to register “Crazy Horse” for his strip clubs in Ohio. The PTO rejected both applications based on likelihood of confusion with Reid’s previously registered “Crazy Horse” marks. In 2009, another third party, John Salvador and his company Crazy Horse Too A Gentlemen Club, tried to register a similar name for his strip club in Las Vegas. The application was once again rejected, but Salvador initiated a cancellation proceeding against Reid based on non-use and obtained a co-existence agreement. Salvador later assigned his rights under the co-existence agreement to Road. In 2010, Reid assigned his rights in the Crazy Horse trademark to Spencer.

In 2011, Spencer learned that Road was operating clubs in Las Vegas under the name Crazy Horse III and asked Road to enter into a license agreement to license the trademark from Spencer. Instead, Road entered into an assignment agreement with Salvador (on behalf of Crazy Horse Too), whereby Crazy Horse assigned to Road its rights under the 2009 trademark co-existence agreement.

Road later sought a declaratory judgment confirming that his use of the Crazy Horse name did not infringe Spencer’s trademark. After the district court granted the motion for summary judgment, Spencer appealed.

The Ninth Circuit affirmed the summary judgment, confirming the district court’s conclusion of a valid assignment of rights under the trademark co-existence agreement between Reid and Crazy Horse Too (now Road). The Ninth Circuit explained that when a trademark is assigned, the assignee “steps into the shoes of the assignor,” and the assignee not only acquires all of the assignor’s rights, but also assumes any “burdens or limitations” on the use of the mark. Here, Road obtained the rights that Crazy Horse Too had possessed, whereas Spencer and Crazy Horse Too retained the duties not to oppose each other’s use of the Crazy Horse mark. The Court also found “that the trademark co-existence agreement made it explicit that it would ‘be binding upon and shall inure to the benefit of the parties hereto, their respective successors, assigns, and licensees.’”

Practice Note:  In an order dated August 17, 2016, the Ninth Circuit denied a petition for panel rehearing.