(CN) – The 2nd Circuit lifted an injunction barring fashion designer Joseph Abboud from using his name to push his new menswear label, jaz. A three-judge panel said the lower court misinterpreted a sales agreement with J.A. Apparel, which bought the designer’s trademarked name in 2000 for $65.5 million.
In exchange for the money, Abboud and his company, Houndstooth, sold J.A. Apparel the rights to all intellectual property, including trademarks and licensing.
Abboud also agreed to continue supplying design and marketing ideas for the first five years, and not to compete with J.A. Apparel for another two years.
But during this non-compete period, Abboud prepared to launch a new line of high-end men’s clothing, called jaz. His plans were publicized with articles in the Wall Street Journal and DNR, a leading men’s fashion magazine.
Abboud asked DNR to correct its initial statement that “Abboud, the person, is prohibited from using the Joseph Abboud name on any product or marketing materials.”
The magazine printed a statement clarifying that, according to Abboud and his attorney, “the designer … is, in fact, allowed to use his name and advertising materials for Jaz.”
J.A. Apparel filed suit in September 2007, seeking an injunction barring Abboud from using his name to promote jaz.
After a bench trial, U.S. Magistrate Judge Theodore H. Katz found the sales agreement “unambiguous” and ruled for J.A. Apparel.
The New York-based federal appeals court vacated the injunction, saying the agreement was more ambiguous than Katz concluded.
“[T]he fact that JA paid a large price for the Joseph Abboud brand … does not necessarily mean that JA purchased the right to prohibit Abboud from using his name to refer to himself in a non-trademark sense,” Judge Amalya Kearse wrote.
And because Abboud tried to distinguish his jaz line from J.A. Apparel products, the lower court’s finding that he acted in bad faith “lacked any proper foundation,” Kearse concluded.
The court vacated the injunction and remanded.