A federal district court did not err in awarding summary judgment in favor of Larry Flynt Publications in its trademark lawsuit against Larry Flynt's brother, Jimmy Ray Flynt, the U.S. Court of Appeals for the Sixth Circuit ruled Aug. 28 (L.F.P.IP, LLC v. Hustler Cincinnati, Inc., 6th Cir., No. 12-3132, 8/28/13).
Affirming summary judgment in favor of Larry Flynt Publications, the court determined that some of the arguments asserted by Jimmy Ray on appeal had not been properly raised before the district court and thus had been waived.
Larry Claxton Flynt Jr. is the well-known publisher of Hustler magazine. In 1969, Larry and his brother, Jimmy Ray Flynt, established the Hustler Club in Cincinnati. Jimmy Ray contributed $5,000 to the opening of the bar; Larry repaid the money within days.
Today, Larry Flynt Publications, or LFP Inc., based in Beverly Hills, Calif., and several affiliated entities, manages a series of adult-oriented entertainment services, such as magazines, books, videos, casinos, and night clubs. LFP or its affiliated entities hold several U.S. trademark registrations incorporating the term “Hustler.”
In the early 1980s, Larry Flynt was jailed for contempt after he wore an American flag to a court hearing regarding his leaking of a government surveillance video. While Larry was in jail, Jimmy Ray was granted conservatorship of the Hustler entities.
In 1997, Jimmy Ray established Hustler News & Gifts, a retail store in Cincinnati using the Hustler name. Larry also put Jimmy Ray in charge of Hustler Enterprises Inc., which operates the Hustler Hollywood chain of stores, established later in the 1990s.
After defending an obscenity charge, Hustler News & Gifts was reorganized as Hustler Cincinnati Inc. In 2000, Jimmy Ray also established Hustler Hollywood Ohio Inc. to operate a store in Monroe, Ohio. In 2001, LFP and Jimmy Ray entered into a contract that licensed use of the “Hustler” name to Hustler Hollywood Ohio. In 2004, Hustler Cincinnati also entered into a licensing agreement with LFP and paid “backdated” license fees for use of the trademarks prior to the execution of the agreement.
In 2007, Larry and Jimmy Ray's relationship began to sour. Jimmy Ray was removed as head of Hustler Enterprises, and Larry also dismissed Jimmy Ray's two sons from their positions in the Hustler companies. Jimmy Ray's sons, Jimmy Ray Flynt II and Dustin Flynt, then established Flynt Media Corp., and LFP successfully pursued an action to prevent them from operating under the Flynt name. Jimmy Ray was also dismissed from his role as an “unpaid consultant” for the Flynt entities. Hustler Cincinnati stopped paying licensing fees in 2009.
LFP then sued Hustler Cincinnati, alleging trademark infringement, false designation of origin, unfair competition, and deceptive trade practices. Hustler Cincinnati argued that it held rights in the Hustler trademarks based on Jimmy Ray's former status as a partner in his brother's enterprises. In a separate proceeding, Judge William O. Bertelsman of the U.S. District Court for the Southern District of Ohio ruled that “Jimmy Ray was not and had never been a partner in these enterprises.”
In 2011, the district court ruled that under the doctrine of licensee estoppel, Jimmy Ray could not attack the validity of LFP's claim of ownership rights in the relevant trademarks and granted summary judgment in LFP's favor (211 PTD, 11/1/11).
The district court also granted summary judgment in LFP's favor on all counterclaims asserted by Jimmy Ray and issued a permanent injunction barring Jimmy Ray from using any of LFP's trademarks. The district court also determined that the false impression and deceptive trade practices claims under federal law and Ohio state law were duplicative of trademark infringement claims under the Lanham Act. Jimmy Ray appealed.
Judge Julia Smith Gibbons first affirmed the district court's finding that Jimmy Ray had not been Larry's partner in the Hustler enterprises. Then, the court rejected Jimmy Ray's assertion that there were genuine outstanding issues of material fact with respect to the trademark infringement claims.
Specifically, Jimmy Ray had argued that the licensing agreement between LFP and Hustler Cincinnati constituted a “naked” license and thus LFP should be estopped from enforcing its terms. Jimmy Ray also asserted that the fees paid to LFP were “not true licensing fees.” The court found these arguments waived on the basis that Jimmy Ray had not adequately raised them before the district court.
Next, the court rejected Jimmy Ray's argument that the injunction against him was overbroad and vague. The court found that the injunction applies only to those trademarks that are held by LFP and its affiliated entities and “properly precludes Jimmy from willfully infringing Larry's trademarks.”
The court also rejected Jimmy Ray's claims of wrongful termination, unjust enrichment, fraud, breach of fiduciary duty, and breach of promise. The court thus affirmed all of the district court's rulings.
The court's opinion was joined by Judge Jeffrey S. Sutton and Judge Raymond M. Kethledge.
LFP was represented by Mark A. Vander Laan of Dinsmore & Shohl, Cincinnati. Jimmy Ray Flynt was represented by Robert William Hojnoski of the Reminger law firm, Cincinnati.
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