Southern California Darts Association v. Zaffina
The U.S. Court of Appeals for the Ninth Circuit affirmed a grant of summary judgment and a permanent injunction in favor of a common law trademark owner whose marks were misappropriated by a former member, on the grounds that unincorporated associations have capacity to own trademark rights and standing to enforce such rights under the Lanham Act. Southern California Darts Association v. Zaffina, Case No. 13-55780 (9th Cir., Aug. 11, 2014) (Wolf, J.).
For at least 40 years, Southern California Darts Association (SCDA) has used the trademarks “Southern California Darts Association,” “SCDA,” “SoCal Darts” and a related logo design, in connection with promoting the competitive play of darts. Defendant Dino Zaffina was a member of SCDA but, after turmoil with the group, was expelled. Zaffina subsequently registered with the State of California a corporation named Southern California Darts Association, Inc., registered a corresponding domain name, contacted darts-related businesses under the name and enforced his purported rights to the name by suing third parties. In 2012, SCDA sued Zaffina and his corporation alleging violations of the Lanham Act, California Business and Professions Code, common law trademark infringement and unfair competition; SCDA requested a preliminary injunction. The district court granted summary judgment in the plaintiff’s favor and issued a permanent injunction against Zaffina that prohibited him and associated businesses from using SCDA’s marks. The district court also awarded SCDA over $115,000 in damages. Zaffina appealed.
On appeal, Zaffina argued, in part, that SCDA lacked capacity to sue because SCDA was a “delinquent corporation” whose corporate powers had been suspended by the State of California in the 1970s. While acknowledging that, under California law, a delinquent corporation “may not bring suit and may not defend a legal action,” the 9th Circuit held that California law was not dispositive of standing in this case. The circuit court reasoned that SCDA’s capacity to sue in federal court is permitted under the Federal Rules of Civil Procedure 17(b), which allows an unincorporated association lacking capacity to sue under state law to bring an action in federal court “to enforce a substantive right existing under the United States Constitution or laws.” Relying on prior 9th Circuit precedent, the court held that corporations whose powers were suspended under state law can be treated as unincorporated associations who are permitted to sue in federal court, even if prohibited from filing suit in state court. The district court applied this analysis in its determination that SCDA should be treated as an unincorporated association, so the 9th Circuit held that the district court’s conclusion that SCDA had standing to sue under the Lanham Act was legally sound.
Having established that SCDA was justified in bringing the Lanham Act claim, the 9th Circuit also confirmed that unincorporated associations have the capacity to own trademarks. The 9th Circuit reasoned “an entity of this character may engage in commercial activities and may use names and marks in connection with those activities.” On the merits, the 9th Circuit concluded that while descriptive, SCDA’s marks acquired secondary meaning through long and continuous use in the marketplace with its services, and the similarity of Zaffina’s mark was likely to cause consumer confusion. Therefore, the 9th Circuit affirmed the district court’s grant of summary judgment and the issuance of the permanent injunction against the defendant.