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