AIRS AROMATICS, LLC, a Delaware Limited Liability Company with its principal place of business in Wilmington, DE, Plaintiff-Appellant,
VICTORIA'S SECRET STORES BRAND MANAGEMENT, INC., a Delaware Corporation with its principal place of business in Reynoldsburg, OH, Defendant-Appellee
Submitted, Pasadena, California: February 11, 2014 [*]
Appeal from the United States District Court for the Central District of California. D.C. No. 2:11-cv-04718-R-JC. Manuel L. Real, District Judge, Presiding.
John Derrick, Law Office of John Derrick, Santa Barbara, California, for Plaintiff-Appellant.
Diana Torres, Michael Shipley, and David Klein, Kirkland & Ellis LLP, Los Angeles, California, for Defendant-Appellee.
Before: Jerome Farris, N. Randy Smith, and Paul J. Watford, Circuit Judges. Opinion by Judge Farris.
FARRIS, Circuit Judge:
Airs Aromatics, a purported owner of an ANGEL DREAMS trademark, filed a lawsuit against Victoria's Secret alleging breach of contract claims and requesting cancellation of Victoria's Secret's registered DREAM ANGELS trademark. The district court entered an order dismissing the complaint for failure to allege actual breaches of the contract and lack of standing for the cancellation claim. Airs Aromatics appealed only the dismissal of the cancellation claim.
Airs International began using the trademark ANGEL DREAMS in connection with the sale of perfume and personal care products in 1991. In 1999, Airs International entered into a mutual consent-to-use agreement with Victoria's Secret. The agreement allowed Victoria's Secret to use the trademark DREAM ANGELS in connection with the marketing of various personal care products. As part of that agreement, Victoria's Secret paid Airs International $25,000 per year. The agreement was renewable yearly, at the election of Victoria's Secret.
In 2000, while the consent-to-use agreement with Victoria's Secret was still in effect, Stephen Marcus, the principal of Airs International, assigned the Airs family of trademarks, which included ANGEL DREAMS, to Mine Hakim. In May 2002, the California Secretary of State's office suspended Airs International's corporate status. Litigation over the ownership of these marks ensued between Marcus, Hakim, and their agents and purported transferees of the family of marks. Airs International was not a party to that litigation. Because the district court determined the transfers were made to defraud creditors, it enjoined all parties to the litigation, including Marcus and Hakim, from asserting any rights superior to any other parties' use of rights in the Airs family of trademarks. The court also ordered cancellation of any registered marks covering the Airs family of marks in any of the parties' names. This court affirmed the district court's order and stated that Airs International had a senior claim to the marks. Airs Fragrance Products, Inc. v. Clover Gifts, Inc., 395 F. App'x 482, 485 (9th Cir. 2010).
During the litigation, Victoria's Secret made its contractual payments into an escrow account. In 2008, Victoria's Secret ...