JA Apparel Corp. v. Joseph Abboud

Joseph Abboud owned Houndstooth Corp. and Herringbone Creative Services, Inc. (collectively, Abboud) (defendants) and enjoyed worldwide recognition for fashion design. The name “Joseph Abboud” was registered as a trademark. Abboud entered into a contractual agreement with JA Apparel Corp. (JA) (plaintiff) for the sale of certain assets to JA in exchange for $65.5 million. Paragraph 1.1(a)(A) of the agreement provided for the sale of all rights to “the names, trademarks, trade names, service marks, logos, insignias, and designations identified on Schedule 1.1(a)(A).” The name “Joseph Abboud” appeared many times in Schedule 1.1(a)(A), which listed trademark registrations. Subsequently, Abboud prepared to start a new clothing brand called “jaz.” JA filed a breach-of-contract complaint in federal district court due to Abboud’s proposed use of the name “Joseph Abboud” to market the “jaz” brand. The district court agreed with JA’s argument that the language in Paragraph 1.1(a)(A) unambiguously transferred to JA all rights to commercial use of the name “Joseph Abboud.” In particular, the district court stated that JA expressly purchased all of Abboud’s rights to use the name for commercial purposes. The agreement did not contain such language. JA asserted it would be absurd to think JA would pay $65.5 million for use of the name as a trademark yet agree to allow Joseph Abboud to use his name in a nontrademark sense in connection with a competing clothing brand. Abboud argued the intended meaning of the word names in Paragraph 1.1(a)(A) was limited to brand names. The district court ruled in JA’s favor, finding the agreement was unambiguous and refusing extrinsic evidence. Abboud appealed.