Haven Beauty and its parent, Hillair Capital Management, urged the Ninth Circuit appeals court to vacate a preliminary injunction granted last year prohibiting the company from selling its only product, Kardashian Beauty, while a $180 million breach of contract suit winds it way through arbitration.
The arbitration stems from a lawsuit launched by Haven, which alleges the sisters did not do enough to promote their beauty brand. The appeal, however, stems from a countersuit launched by the sisters claiming trademark infringement and that they were never paid royalties.
The sisters and Hillair dispute whether any royalties are due, but Hillair doesn’t feel a halt to sales of the product is serving either side and argued that the sisters’ breach should have been factored into the underlying decision.
“The court committed reversible error by refusing to apply the ‘unclean hands’ analysis and in fact refused to mention, or so much as discuss, our uncontroverted evidence of the Kardashians’ rampant, blatant and willful violations of my client’s rights to the very same marks to which they seek relief,” said Hillair counsel, Gregory Fayer, during oral arguments.
But the sticking point between the parties is proving to be technical, namely whether the sisters’ alleged failure to submit any invoices to receive their royalty payments is a violation of the related licensing agreement. If that is the case, the underlying injunction ruling would likely be sent back to the district court for further review or vacated.
After some prodding by the appellate judges, Fayer admitted that Hillair’s goal is to beat the injunction in order to again sell Kardashian Beauty and related products, despite ongoing arbitration.
Counsel for the Kardashians, Jonathan Steinsapir, argued there is no reason nor court precedent supporting a reversal of the injunction, noting that he assumes a permanent injunction will arise out of the arbitration. Even if that doesn’t happen, Steinsapir pointed out that the licensing agreement expires in May 2018.
The sisters would then be free to license their names elsewhere for beauty products.
Steinsapir went on to note that Hillair has so far been unable “to cite a single case where a licensor of a trademark is not getting paid and yet the licensee can still use the mark.”
Given that the extensive arbitration involves all of these issues as well, one judge questioned whether the Ninth Circuit even needed to rule on the appeal of the injunction. An additional hearing has yet to be set.
A status report on the arbitration is due in district court by the end of the month.
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