I originally wrote this back in November but took it down the next day to wait for a more appropriate time.
As noted in my LaserPerformance United Unions post, Rastegar has quite the maze of confusingly incestuous entities. It appears that he lost track and the result is that he may very well have lost some of the trademarks for LASER, SUNFISH, VANGUARD, ZUMA, RED DRAGON and NOMAD.
Quarter Moon Inc. d/b/a Vanguard Sailboats sold several trademarks to Karaya Holdings Limited, an Irish entity, which then transferred the trademarks to Karaya (Jersey) Limited, a Jersey Island entity. Seems fairly straight forward except that some errors in the transfer to the Jersey entity makes it questionable that the last transfer is valid which leaves everything still in the name of the Irish entity which is now dissolved. Whether or not the errors can be papered behind to salvage ownership of the marks may have to be determined by a court of law.
So, to be specific on the errors, check for yourself. Here is the Vanguard to Karaya Irish assignment and here is the Karaya Irish to Karaya Jersey assignment. Look closely at the supporting document of the second assignment. It’s just a name change from Karaya Jersey’s former name, Dorsal, to its current name. Did you catch the error? Who cares what the former name of Karaya Jersey is when it is Karaya Irish that owns the trademarks. Note that the assignment was trying to go from an Irish company to a Jersey company and submitted a Jersey name change as evidence of assignment. Even the US Patent and Trademark Office (USPTO) didn’t catch this error and incorrectly lists Karaya Jersey as the current owner.
So then, being curious, I pulled the publicly available paperwork for Karaya Irish to see if I could determine if they properly conveyed the trademarks to Karaya Jersey which would mean an easy filing with the USPTO to correct things. What I found was that the paperwork did indeed list the conveyance to Karaya Jersey but they listed the transfer as of January 1, 2009. If you go back and look at the name change document they filed with the USPTO, you’ll see that the name change from Dorsal Irish to Karaya Irish didn’t happen until February 23, 2009. Meaning, it could maybe be argued that the trademarks were conveyed to an entity that wasn’t yet legally in existence.
But then the icing on the cake is that the Karaya Irish entity, which, at present, may be the last entity to hold clear title to the trademarks, was dissolved on October 22, 2010. That might be a problem. Hard to paper behind something when the conveyance was hosed up and the entity that needs to correct it is dead.
Confused? Easy to see how they lost track of which door the trademarks were hiding behind. Doug drew the diagram above to make it simple. It didn’t help matters that they had two Karaya entities and two Dorsal entities, a pair of each in each country, and in Jersey one became the other but in Ireland they remained separate and then 2 were dissolved, leaving only 1. That’s just plain jacked up.
The LASER marks owned by Karaya that are possibly up for grabs are in the classes of goods that include sailboats and sails. LP has another foreign entity, Velum Limited, that owns the LASER marks that secure the class of services that includes regattas. And that registration is jacked up too.
Most people have heard about the critically received 8 year deal that LP secured with the US Inter-Collegiate Sailing Association to use LP manufactured boats exclusively for all national and semi-final college championships. After securing such a deal, I predicted back in November that the ILCA would be influenced to go in the direction of following through with their fundamental rule change, which they did. I mean from a business point of view, LP has the LASER trademarks and the 8 year exclusive deal with ICSA. That seems like a fairly strong bargaining position.
But, let’s think about this. If LP entities don't have clear title to the trademarks, can that be used to invalidate the 8 year exclusive agreement? And, really, LP doesn’t even own the trademarks. I mean, we all know that some how, some way, Rastegar is the ultimate owner but the ILCA’s fundamental rule change indicates that the manufacturer has to have trademark rights. Legally, LP doesn’t own the trademarks but the ILCA doesn't elaborate on what 'trademark rights' means. But what if the LASER trademarks are totally up for grabs?
Then I found this very interesting post about why trademark holdings companies are a bad idea. Skip down to the section titled: Legal Pitfalls of Licensing through Trademark Holding Companies:
"One of the defenses mounted ... for invalidity is that the licensor holding company doesn’t exercise sufficient control over its licensees. Rather, they argued, control is exercised by the holding company’s parent corporation and the holding company has therefore made a “naked license.” The remedy for a naked license is for the court to declare that the trademark in question was abandoned by the trademark owner."
You have to wonder "why"? Why does someone create all those offshore entities and relay valuable US trademarks out of the USA and through an effective maze of companies and corporate name changes?ReplyDelete
I can think of only one good reason ....
It's not uncommon business practice. In fact, try to unravel all the companies and names behind Global Sailing (who BK sold the "design rights" to a few years ago) and you'll find a similarly confusing maze.Delete
The Spencer family that owns PSA and Global Sailing are I think worth quite a bit more than Rastegar, despite their generally very low profile. It would be interesting to know what involvement, if any, they have behind the scenes in the current craziness.
One would assume that if the cases etc go BK's way, he will eventually return to his 'estate planning' as he put it and look to re-sell the rights. GS would undoubtedly still be top of his buyers list so would be nice to know more about them. Are they pulling strings right now behind the scenes or are they just sitting back, quietly watching?
Yes, I've heard things about the Spencer's. Bottom line for me is that they are sailors and Rastegar is not. Whatever they might be up to, I'm not motivated to find out. But I'm not done unraveling the Rastegar mess.Delete