9 I
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`N THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`In re Registration Nos. 1,524,672, issued February 14, 1989; l,740,5 70, issued December 15,
`1992; 1,761,487, issued March 30, 1993; 1,783,446, issued July 20, 1993; 2,150,771, issued
`April 14, 1998; 2,158,682, issued May 19, 1998; and 2,322,686, issued February 29, 2000.
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`X
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`}
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`I
`X
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`ISAAC MIZRAHI,
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`Petitioner’
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`-against-
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`ISAAC MIZRAHI & CO., L.P.,
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`Respondent.
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`Assistant Commissioner for Trademarks
`BOX TTAB NO FEB
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`2900 Crystal Drive
`Arlington, Virginia 22202-3 513
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`Cancellation No. 92040169 9 p
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`Er"
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`"
`F
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`‘A: g
`6'8!
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`REPLY MEMORANDUM OF LAW IN SUPPORT OF
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`MOTION TO SUSPEND CONSOLIDATED PETITION FOR
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`CANCELLATION AND OPPOSITION TO PETITIONER’S
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`CROSS-MOTION FOR DEFAULT JUDGMENT FOR FAILURE TO ANSWER
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`Isaac Mizrahi & C0,, L.P. (“Partnership” or “Respondent”), by its general partner,
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`American Fragrances, Inc. (“AFI”), hereby submits this reply memorandum of law in support of
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`its request that the proceeding pending before the Trademark Trial and Appeal Board (“TTAB”)
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`regarding Isaac Mizrahi’s (“Mizrahi” or “Petitioner”) Consolidated Petition for Cancellation
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`(“Cancellation Proceeding”) be suspended pursuant to Trademark Rule 2.1l7(a) pending the
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`10658943
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`outcome of the Civil Action‘ instituted by the Petitioner in the Supreme Court of the State of
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`New York, New York County, prior to the institution of these proceedings, and bearing on the
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`issues herein.
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`In addition, Respondent hereby requests that the TTAB stay all deadlines for
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`Respondent in this proceeding, including the time for Respondent to answer the Consolidated
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`Petition for Cancellation (“Cancellation Petition”), and deny Petitioner’s cross-motion for a
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`default judgment for failure to answer the Cancellation Petition.
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`PRELIMINARY STATEMENT
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`In April 2001, the Petitioner filed the Civil Action in New York State Supreme
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`Court, at the heart of which was a request for equitable relief granting to him right, title, and
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`interest in the very trademarks he now seeks to have declared invalid. In a decision rendered in
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`that state court action, the Court found that the trademarks were indeed Partnership property and
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`did not belong to Mizrahi. It is both inequitable and illogical for Mizrahi to seek ownership of
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`valuable intellectual property rights in the Civil Action and then-——having lost his claim illegally
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`to wrest control of Partnership property——~seek to destroy the same intellectual property in the
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`Cancellation Proceeding here.
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`It is simply wrong to say that AF1, the Partnership’s general partner charged with
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`managing the affairs of the Partnership, does not have standing. Indeed in the Civil Action,
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`Mizrahi took the directly contrary view on this point as well as insisting that AFI continue to act
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`on behalf of the Partnership:
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`1
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`2
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`Isaac Mizrahi et al. v. Chanel Inc. et al, Index No. 601103/01, was filed by the Petitioner, along with 1M
`Holdings, on April 16, 2001.
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`Mizrahi also asserts that Chanel, Inc. (“Chanel”) likewise has no standing to represent the Partnership.
`Chanel is neither a movant, nor sought an active role with respect to the Cancellation Proceeding.
`However, AFI is an indirect wholly-owned subsidiary of Chanel. Chanel has been named as a defendant
`along with AFI in the Civil Action. In fact, in the Partnership Agreement, AF1, the general partner, is
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`-2-
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`10658943
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`ARGUMENT
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`I.
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`THE CIVIL ACTION WILL BE DISPOSITIVE OF ALL ISSUES
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`RELATED TO THE DISTRIBUTION OF PARTNERSHIP ASSETS,
`INCLUDING THE TRADEMARKS.
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`Pursuant to Trademark Rule 2. 1 17(a), the TTAB is empowered to suspend
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`this Cancellation Proceeding. “Whenever it comes to the attention of the Board that the
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`parties to a case pending before it are involved in a civil action which may be dispositive
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`of the Board case, proceedings before the Board may be suspended until final
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`determination of the civil action.” TTAB Manual of Procedure § 51O.O2(a).3 The
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`Partnership’s motion to suspend should be granted because there is a prior pending action
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`in New York State Supreme Court———brought by Mizrahi—-predicated on the theory that
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`the trademarks, as represented by the registrations at issue in this proceeding, have value.
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`Indeed, at the heart of both the Civil Action and the Cancellation Proceeding is that
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`Mizrahi wants control and use of the Partnership trademarks. As a result, the Civil
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`Action will be entirely dispositive of these issues.
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`As a threshold matter, Petitioner’s claims of “abandonment” in this Cancellation
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`Proceeding contradict his own allegations in the state court proceeding and should be judicially
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`estopped. The doctrine ofjudicial estoppel is directed to the preservation of the integrity of
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`judicial proceedings by protecting against litigants who “play fast and loose with the courts.”
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`referred to as “Chanel.” Therefore, in papers submitted by defendants in the Civil Action, AFI and Chanel
`are referred to collectively as Chanel.
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`See also 37 CFR §2.117(a); PHC Inc. v. Pioneer Healthcare Inc., 75 F.3d 75, 78 (lst Cir. 1996); Argo &
`Co., Inc. v. Cgrpetsheen Mfg, Inc., 187 U.S.P.Q. 366, 367 (TTAB 1975) (suspending TTAB proceeding
`pending outcome of civil suit in state court); The Other Tel. Co. v. Connecticut Nat’l Tel. Co., 181
`U.S.P.Q. 125 (TTAB 1974); Townley Clothes Inc. V. Goldring, Inc., 100 U.S.P.Q. 57, 58 (1953). Under
`such circumstances, cancellation proceedings are generally suspended in accordance with Rule 2.117(a).
`General Motors Corp. v. Cadillac Club Fashions Inc., 22 U.S.P.Q.2d 1933, 1937 (TTAB 1992) (abrogated
`on other grounds); Whopper-Burger Inc. v. Burger King Corp, 171 U.S.P.Q. 805, 807 (TTAB 1971);
`Dwinell-Wright Co. v. Nat’l Fruit Product Co., Inc, 129 F.2d 848 (1st Cir. 1942).
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`-3-
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`T3
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`10658943
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`U.S. Phillips Corp. v. Sears Roebuck & Co., 34 U.S.P.Q.2d 1699, 1703 (Fed. Cir. 1995).
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`Judicial estoppel bars a party from advancing a factual position in a proceeding if: (1) that party
`advanced an inconsistent factual position in a prior proceeding; and (2) the prior inconsistent
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`position was adopted by the first court in some manner.
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`_S_ee Smith & Johnson, Inc. v. Hedaya
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`Home Fashions Inc., 42 U.S.P.Q.2d 1386, 1389 (S.D.N.Y. 1996) (plaintiffs copyright
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`infringement case barred by judicial estoppel where plaintiff commenced prior unfair
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`competition action in New York State Supreme Court, and successfully opposed removal of that
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`state case to federal courts by claiming not to own copyrights) (citing Bates v. Long Island R.R.
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`_C_g_., 997 F.2d 1028, 1037-38 (2d Cir. 1992)); U.S. Phillips, 34 U.S.P.Q.2d at 1703 (defendant
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`judicially estopped from asserting antitrust counterclaims in federal patent infringement case
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`based on arguments made by defendant in related litigation in Florida state court); s_e_e also
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`Novartis Consumer Health Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 57
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`U.S.P.Q.2d 1522, 1528 (D.N.J. 2000); Zip Dee, Inc. v. The Dometic Group, 38 U.S.P.Q.2d 1239,
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`1251 (ND. 111. 1995).
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`In the instant matter, Petitioner unequivocally took the position in the Civil
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`Action that the trademarks were the property of the Partnership, and were required to be
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`distributed post-dissolution in accordance with Section 8.02 of the Partnership
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`Agreement.
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`(_S_ge Init. Cplt., 1111 18, 20, 23, 28, 66, 70, Neidl Aff4 Ex. 1, Sec. 802 ofthe
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`Partnership Agreement, Neidl Aff. Ex. 2, Sub-Ex. B at 35; Supp. Cplt. 111] 20, 22, 25, 30
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`Neidl Aff Ex. 9.) Justice Lowe agreed, writing in his Opinion and Order of December
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`17, 2001 that the Partnership Intellectual Property was an “undisputed asset of the
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`The abbreviation “Neidl Aif” refers to the Affidavit of Benjamin F. Neidl dated May 17, 2002, which
`Respondent submitted to the TTAB with the Motion to Suspend.
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`10658943
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`Partnership,” and that it would be distributed in accordance with Section 8.02.
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`(_S;e_e
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`Neidl Aff. Ex. 8 at 3-5.) Accordingly, Petitioner's contention to this Board that the marks
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`should not be distributed as part of the state court proceeding because they have been
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`“abandoned” is wholly inconsistent with factual positions asserted by Mizrahi, and relied
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`on by Justice Lowe in the Civil Action. Such an about-face is not only precluded by the
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`doctrine ofjudicial estoppel, but may also violate Rule 11 of the Federal Rules of Civil
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`Procedure. §_e_e Z_ip__I_)_ee_:, 38 U.S.P.Q.2d at 1251.
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`Although the Civil Action has not yet concluded, the Court has determined
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`that Mizrahi’s rights to the trademarks are subordinate to the rights of the Partnership’s
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`creditors to be repaid their debts.
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`(_S;e_e_ Opinion and Order of Justice Lowe dated
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`December 17, 2001, Neidl Aff. Ex. 8 at 10.) All that remains to be determined in the
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`Civil Action is whether the trademark rights will need to be liquidated in order to satisfy
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`these debts. It is blatant forum-shopping for Petitioner to ask this Board to consider the
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`merits of his belated allegation that the trademarks were “abandoned” (see Cancellation
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`Petition 111] 16-18) before the Court in the Civil Action is able to complete its proceedings
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`and decide who will ultimately obtain rights of ownership and use of the trademarks
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`post-dissolution. 5
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`In his opposition to the instant motion, Mizrahi expends considerable effort attempting to prove why the
`trademarks have been abandoned. These arguments, however, go to the ultimate relief sought in this
`Cancellation Proceedingmrelief which may prove unnecessary or inappropriate pending the outcome of the
`Civil Action. Because the TTAB has not issued a decision on the Respondent’s motion to suspend,
`Mizrahi’s abandonment arguments are premature and should not be considered.
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`Moreover, abandonment occurs in “situations of non—use of a mark, coupled with an express or implied
`intention to abandon or not to resume use.” J. Thomas McCarthy, 2 McCarthy on Trademarks and Unfair
`Competition, § 17.5 (4th ed. 2000). Respondent maintains that this has not occurred. Indeed, any practical
`use of the trademarks has been interrupted by both Mizrahi’s Civil Action and Cancellation Proceeding.
`Therefore, it would be premature for the Cancellation Proceeding to move forward at this time and it
`should be suspended pending the outcome of the Civil Action.
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`-5-
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`10658943
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`Of course, this is not the first time Petitioner has played “fast and loose
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`with the courts” in this dispute. Indeed, several months after commencing the Civil
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`Action——alleging that the trademarks were assets of the Partnership~——Petitioner filed an
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`application with the Patent and Trademark Office (“PTO”) to “register” one of the very
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`marks at issue in the Civil Action (the “Registration Application”). In a sworn
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`declaration attached to that application, Petitioner stated that he, Isaac Mizrahi, was the
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`“owner of the trademarksought to be registered,” and that. “to the best of his knowledge
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`and belief no other person, firm, corporation, or association ha[d] the right to use the
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`mark in commerce.” (S_e_e Ried Aff. Ex. A at 3.) Petitioner failed to advise the PTO of
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`the Partnership’s ownership of the Trademarks. Petitioner’s declaration was a false
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`statement under oath in violation of 18 U.S.C. § 1O01(a).6
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`Lastly, it is significant that Petitioner never alleged in the Civil Action, or
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`the negotiations preceding it, that the trademarks were abandoned. This is an allegation
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`of convenience so that Petitioner may hedge his bets. In the Civil Action, he claims that
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`the marks are valuable Partnership property that should be distributed to him in the
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`course of a judicial accounting. Conversely, in the Cancellation Proceeding, he claims
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`that the marks are Valueless and abandoned, and not Partnership property at all, thus
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`enabling him to register the marks in his name. In the end, therefore, the issue in both
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`proceedings is the same—who, as between Petitioner and the Partnership, is entitled to
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`control of the trademarks. The Civil Action will fully resolve this issue.
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`The PTO subsequently denied the Registration Application as being “identical in appearance, sound,
`connotation, and commercial impression” to certain of the Partnership’s trademarks so as to “create a
`likelihood of confusion.”
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`10658943
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`Petitioner commenced the Civil Action over one year ago and chose, in the
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`first instance, to resolve this issue in that forum. Since then the parties have spent
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`considerable resources litigating that action. Because the final determination in the Civil
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`Action will be dispositive as to Mizrahi’s rights in the Partnership’s trademarks, and
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`because the TTAB is empowered to suspend this Cancellation Proceeding in such
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`circumstances, the Pa1tnership’s motion to suspend should be granted to allow the Civil
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`Court to finish what Mizrahi started there.
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`II.
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`AFI, AS GENERAL PARTNER, HAS THE RIGHT TO REPRESENT THE
`PARTNERSHIP IN THE CANCELLATION PROCEEDING.
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`Much of Petitioner’s opposition and cross—motion hinges on the allegation that
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`AFI lacks standing to represent the partnership in this Cancellation Proceeding.
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`(_S_ee Pet. Opp. at
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`2, 4, 5, 6, and 8.) This allegation, however, is patently incorrect because: (1) it is undisputed that
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`the Partnership is the registered owner of the trademarks (s_e_e_ Pet. Opp. at 3); (2) under Delaware
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`limited partnership law, AFI—-the undisputed general partner——has the right and responsibility to
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`represent the Partnership in these proceedings; and (3) the TTAB has recognized that AFI is the
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`proper party to represent the Partnership in these proceedings.
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`Under Delaware limited partnership law, AFI has the right and responsibility to
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`represent the Partnership in these proceedings. Mizrahi’s argument that the Partnership has been
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`dissolved and, therefore, no one can respond on its behalf in the Cancellation proceeding has no
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`basis in law or fact. Section 17-803(b) of the Delaware Uniform Limited Partnership Act
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`(“DUPLA”) states:
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`10658943
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`Upon dissolution of a limited partnership, and until the filing of a
`certificate of cancellation7 as provided in § 17-203 of this title, the persons
`winding up the limited partnership's affairs may, in the name of, and for
`and on behalf of, the limited partnership, prosecute and defend suits,
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`whether civil criminal or administrative, gradually settle and close the
`limited partnership's business, dispose of and convey the limited
`partnership's property, discharge or make reasonable provision for the
`limited partnership‘s liabilities, and distribute to the partners any
`remaining assets of the limited partnership...
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`Del. Code Ann. tit. 6 § 17-803 (b) (emphasis added). The proper “persons winding up the
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`limited partnership’s affairs,” as that phrase is used in the above provision, are identified in
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`Section 17-803(a) as the general partner:
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`Unless otherwise provided in the partnership agreement, the general
`partners .
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`. may wind up the limited partnership's affairs .
`.
`.
`.
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`Lg, at § 17-803 (a). Therefore, under Delaware law, AFI, as the general partner, has the power to
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`wind up the Partnership‘s affairs, and that power includes defending “administrative” suits and
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`disposing of and conveying the Partnership’s property——precisely the two matters at issue here.
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`Mizrahi’s standing argument, therefore, must fail.8
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`Further, the TTAB has recognized that AFI is the proper party to respond to the
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`Cancellation Petition on behalf of the Partnership. On April 10, 2002, Amy King, TTAB
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`Paralegal Specialist, served a copy of the Cancellation Petition on AFI, as representative of the
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`Partnership, indicating that AFI had the right and standing to respond on behalf of the
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`Partnership:
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`As the winding up of the Pa;ttnership’s affairs has not terminated, the Partnership has not yet filed a
`certificate of cancellation under Del. Gen. Stat. § 17-203.
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`Not only does Section 17-803(a) authorize AFI to wind up affairs but, in fact, Mizrahi’s accounting action
`demands that AFI do just that. Mizrahi has continued to maintain that plaintiffs in the Civil Action
`demanded an accounting because AF1 had a duty to account, and brought the Civil Action on the theory
`that AF1 failed to do so,
`_S_ge_ Answering Brief in Opposition to Defendant’s Motion to Dismiss at 7-9,
`Neidl Afl'. Ex. 4. Again, the Civil Action is evidence that Mizrahi recognizes AFI's rights and duties under
`Delaware law.
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`

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`pl Al
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`l065894.3
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`The notice instituting this proceeding and a copy of the petition to cancel
`were forwarded to registrant but were returned by the Postal Service as
`undeliverable.9
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`The Office was advised on March 15, 2002 that service upon registrant
`could be effected and would be accepted when documents are mailed as
`follows:
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`Isaac Mizrahi & Co., L.P.
`c/o American Fragrances, Inc.
`Chanel Inc.
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`Attn: Veronica Hrdy
`9 West 57th Street
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`New York, NY 10019
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`Accordingly, the above notice, with enclosure, is remailed as indicated
`above.
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`_S_e§ Notice from Amy King, dated April 10, 2002 (the “April 10 Notice”).1°
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`Because both Delaware law and the TTAB support AFI’s right to represent
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`the Partnership in the Cancellation Proceeding, Mizrahi’s argument that AFI lacks
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`standing should fail.“
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`‘°
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`"
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`The initial notice was returned as undeliverable because Mizrahi erroneously provided the TTAB with the
`incorrect address for the Partnership in the Cancellation Petition. Once the TTAB learned of Mizrahi’s
`“mistake,” they asked Mizrahi for the correct information so they could serve the proper party.
`_S_§_e Letter
`dated March 7, 2002 from Amanda J. Pestcoe to Denise DelGizzi, a true and correct copy is attached as
`Exhibit A to the Affidavit of William M. Ried, sworn to June 28, 2002 (“Ried Aff”).
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`A copy of the April 10 Notice is attached as Exhibit B to the Ried Aff.
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`Mizrahi also argues that AFI lacks standing to make a motion to suspend because it has failed to submit
`documentation establishing its ownership of the trademarks at issue. Pet. Opp. at 3-4. Such documentation
`is not necessary here. As the TTAB indicated in the April 10 Notice, documentation of ownership is only
`required “[i]f there has been any transfer of interest in the involved registration [and then] registrant must
`so advise the Board and registrant must submit copies of the appropriate documents. See Section 10 of the
`Trademark Act and Patent and Trademark Rules 371 and 3.73 .” According to the Trademark Office, as of
`June 28, 2002, the Partnership, not AFI, remains the registered owner of the trademarks and, therefore,
`documentation establishing a transfer in ownership is not required.
`_S_e_e
`<http://www.uspto.gov/main/cheekstatus.htm>.
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`-9-
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`

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`.
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`V”
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`10658943
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`IV.
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`PETlTIONER’S CROSS—MOTION FOR A DEFAULT JUDGMENT
`SHOULD BE DENIED.
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`Mizrahi’s cross-motion for a default judgment for failure to answer should not be
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`granted. Mizrahi asserts: “since the Motion to Suspend is not properly before the Board because
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`it was not made by the Respondent or a successor of record in ownership of the subject
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`registrations, the Motion to Suspend could not toll the running of the time period allotted to the
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`Respondent to Answer the Petition, which has now expired.” Pet. Opp. at 6. Mizrahi’s
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`argument is flawed. As discussed above, under Delaware law, the motion was properly made by
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`AFI, the general partner, on behalf of the Partnership.
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`_S_e_:§ §y_p;a_ § 11. Therefore, because AFI
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`has standing to represent the Respondent in this proceeding, the Partnership’ s time to answer the
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`Cancellation Petition should accordingly be tolled.
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`Further, section 2. l27(b) of the Trademark Rules of Practice stipulates that when
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`any party files a motion “which is potentially dispositive of a proceeding, the case will be
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`suspended by the [TTAB] with respect to all matters not germane to the motion and no party
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`should file any paper which is not germane to the motion except as otherwise specified in the
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`Board’s suspension order.” Because the motion to suspend, if granted, will ultimately result in
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`the disposition of the Cancellation Proceeding, section 2. l27(b) indicates that an answer should
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`not be filed until after the TTAB reaches a decision on the motion.
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`-10-
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`if
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`I-I
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`CONCLUSION
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`For the reasons set forth herein, the motion to suspend this Cancellation
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`Proceeding should be granted and the cross-motion for a default judgment for failure to answer
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`should be denied.
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`Dated: New York, New York
`June 28, 2002
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`Respectfully Submitted,
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`WILLKIE FARR & GALLAGHER
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`By:
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`M/LZ(/(,0:/:2». aw
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`William M. Ried
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`787 Seventh Avenue
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`New York, N.Y. 10019-6099
`Attorneys for Chanel, Inc. and
`American Fragrances, Inc.
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`

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`Certificate of Mailing
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`I hereby certify that this correspondence is being deposited with the United States
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`Postal Service with sufficient postage as first—class mail in an envelope addressed to:
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`Randy Lipsitz, Esq.
`Kramer Levin Naftalis & Frankel LLP
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`919 Third. Avenue
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`New York, New York 10022
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`onJuly 1,2002.
`
`*
`/
`
`A
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`'
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`,
`/50¢»--"""“‘*‘“
`
`Benjamin F. Neidl
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`Willkie Farr & Gallagher
`787 Seventh Avenue
`
`New York, New York 10019-6099
`
`(212) 728-8674