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Jill Stuart (ASIA) LLC v. Sanei International Co.
566 F. App'x 29
2d Cir.
2014
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Background

  • Jill Stuart appeals district court orders: dismissal of unjust enrichment and contract-related claims, and summary judgment on contract damages, all tied to Sanei's use of Jill Stuart trademark.
  • PAA assigned Jill Stuart trademark rights to Sanei for certain goods/territories in exchange for $45 million to the Stuart-Curtis Family Trust.
  • PAA does not expressly prohibit Sanei's use of the mark on products outside the covered categories; court considered ambiguity about such uses.
  • District Court held PAA silent on broader uses, thus no contract-based prohibition against unauthorized trademark use; extended reasoning from copyright prohibition only.
  • On summary judgment, Jill Stuart failed to prove lost profits or reasonably certain consequential damages; nominal damages awarded.
  • Harper Brothers v. Klaw argument for implied negative covenant was rejected as inapposite because PAA is an assignment, not a license.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Does PAA's silence on broader uses imply a prohibition on unauthorized trademark use? Stuart argues PAA implies a prohibition to avoid meaningless terms. Sanei contends no prohibition is implied where PAA expressly prohibits certain copyright uses but omits trademark uses. No implied prohibition; PAA silent on trademark uses, but assignment rights granted are not rendered meaningless.
Does Harper Brothers imply a negative covenant restricting value destruction in IP assignments? Stuart invokes implied negative covenant to protect licensed property value. Sanei argues Harper Brothers is inapposite; PAA is an assignment, not a license. Harper Brothers rejected as inapposite; no implied negative covenant in this assignment.
Were contract damages properly awarded given proof of lost profits and reasonable royalties? Stuart seeks consequential damages, including lost profits or royalties from license theory. Sanei argues lost profits/royalties are not proven with reasonable certainty and are too speculative. Nominal damages awarded; plaintiffs failed to prove recoverable consequential damages with reasonable certainty.

Key Cases Cited

  • Two Guys from Harrison N.Y. v. S.F.R. Realty Associates, 63 N.Y.2d 396 (New York Court of Appeals 1984) (interpretation to avoid meaningless contractual provisions)
  • Reiss v. Fin. Performance Corp., 97 N.Y.2d 195 (New York Court of Appeals 2001) (ambiguity assessed from face of agreement)
  • Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168 (2d Cir. 2004) (contract interpretation; context and trade practices)
  • Freund v. Wash. Square Press, 34 N.Y.2d 379 (New York Court of Appeals 1974) (damages must be measurable and proven; foreseeability)
  • BiEconomy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d 187 (New York Court of Appeals 2008) (consequential damages proof cannot be speculative)
  • Standard Inv. Chartered, Inc. v. Nat’l Ass’n of Sec. Dealers, Inc., 637 F.3d 112 (2d Cir. 2011) (de novo review of motion to dismiss; standards)
Read the full case

Case Details

Case Name: Jill Stuart (ASIA) LLC v. Sanei International Co.
Court Name: Court of Appeals for the Second Circuit
Date Published: May 14, 2014
Citation: 566 F. App'x 29
Docket Number: No. 13-2701-cv
Court Abbreviation: 2d Cir.