premium division, which defendant acquired by later sale. As a result defendant argues that it cannot be infringing since it owns an independent interest in the mark.
By its terms, the sale provision conveys to plaintiff "all of seller's rights" in the mark. The language could not be broader or more plain, and yet a subsequent provision of the contract excludes from sale all "assets" of the premium division. The broad language of the sale provision and the undefined term "assets" raises a question as to whether the contract was intended to preserve some right in the mark in the premium division. If an ambiguity exists in the contract, then parol evidence would have to be considered to determine the intention of the parties. Such a situation exists here and precludes summary judgment for the defendant. The issue of fact then is whether the exclusion provision of the contract was intended to include trademark rights.
Defendant also contends that SMS could not as a matter of law convey trademark rights of the premium division in the sale of the wholesale division because such a transfer would be invalid as in gross. Therefore, it is argued, defendant acquired independent rights to the mark in the premium division.
One cannot acquire a trademark in gross, it being transferable only in connection with the sale of a business. United Drug Co. v. Rectanus Co., 248 U.S. 90, 63 L. Ed. 141, 39 S. Ct. 48 (1918); Family Circle Inc. v. Family Circle Associates Inc., 332 F.2d 534 (3d Cir. 1964). While plaintiff could not purchase the mark of the premium division alone it could and did validly acquire a mark in connection with the wholesale division. It is the scope of the mark acquired that is material in this suit. Whether it is expressly limited by the terms of the contract of sale of the premium division as discussed above is an issue of fact. If it is determined that the contract does not so limit the trademark, it must be decided whether the use of the mark in the premium business is within the protection afforded by plaintiff's trademark.
Defendant argues that the parties are involved in separate markets with different customers, and that there is no likelihood of confusion in its use of the mark in its business. These are material issues of fact which are disputed. (See Biren Deposition). There is evidence that the parties may be, at least indirectly, competitors in the premium business. (Mullins Deposition, pp. 11-18).
Competition is not necessary to sustain a trademark infringement claim. E.g. Continental Motors Corp. v. Continental Aviation Corp., 375 F.2d 857 (5th Cir. 1967). Rather, a trademark's protection extends beyond the product of the mark owner to such products or enterprises as would likely be perceived by the consumer as originating with the owner of the mark. I.E. Waterman Co. v. Gordon, 72 F.2d 272 (2d Cir. 1934); Chandon Champagne Corp. v. San Marino Wine Corp., 335 F.2d 531 (2d Cir. 1964); see also, Scott Paper Co. v. Scott's Liquid Gold, Inc., 589 F.2d 1225 (3d Cir. 1978). Whether the premium sales market is so closely related to the wholesale giftware business as to warrant the protection of the trademark is a disputed issue of fact. This question is closely tied to the ultimate issue of the likelihood of confusion among the public, a factual issue which the parties dispute.
It appearing that there are material issues of fact in dispute, defendant's motion for summary judgment is denied.
AND NOW, in accordance with the foregoing Opinion, Defendant's Motion for Summary Judgment is DENIED.
SO ORDERED this 4th day of October, 1982.