Trademark Law

According to the complaint, Alexander along with two other musicians formed ?Rehab? in the late 1990s in Atlanta, Georgia (see also Wikipedia write-up). The band has released 5 albums to date (its major label debut ?Southern Discomfort? was released in 2000 and sold over 170,000 albums).

Alexander also currently holds the registered mark REHAB for music (first use date of August 31, 1999) and clothing (first use date September 2000) which he acquired by assignment from Destiny Music, Inc. on January 31, 2005. You can see the ?Rehab? clothing line here. Alexander also has an application pending for the mark REHAB for live performances by a musical band.

According to the complaint, sometime in March 2006, a fan of the band ?Rehab? forwarded a photo of Britney Spears wearing a ?Rehab? shirt thinking that it was referring to the band, but in actuality it was a shirt from the Hard Rock?s ?Rehab? party.

This settlement, however, was apparently never approved and finalized before the Hard Rock was sold to Morgan Hotel Group for $770 million in 2007. Afterwards, Alexander was put in touch with Mr. Phillip Shahala, the newly appointed Vice President of Marketing, and the two came to some kind of ?agreement? through a series of e-mails whereby Alexander would allow the Hard Rock to continue to use the name ?Rehab? in exchange for a $13,000 payment to Alexander, a percentage of all clothing sales from the Hard Rock ?Rehab? pool parties, space for Alexander?s ?Rehab? clothing to be sold at the retail store located at the Hard Rock, and a promise to schedule 3 performances for the band to play at the Hard Rock?s concert venues.

It is not clear from the complaint whether an agreement was actually reached (and subsequently breached) by the Hard Rock or whether the parties were still in the negotiation phase. While Alexander claims to have acted pursuant to the terms of this ?settlement agreement? with Shahala by not pursuing any action to stop the Hard Rock form using the ?Rehab? name, it appears that Alexander was never paid the $13,000 nor was there any final written agreement memorializing the terms of any such settlement. [Ed. ? Wouldn?t you have been a little suspicious when the Hard Rock didn?t at least pay the $13,000? Is there really an enforceable settlement agreement here if there are only e-mail exchanges negotiating terms of a settlement? Did Shahala have authority to enter into such an agreement?] The Hard Rock apparently broke off contact with Alexander and did not take any actions consistent with the supposed terms of settlement.

Alexander claims that the Hard Rock?s use of its REHAB mark is likely to cause confusion with its own ?Rehab? mark. Alexander?s causes of action are for registered trademark infringement (15 U.S.C. § 1114), federal unfair competition (15 U.S.C. § 1125(a)), common law trademark infringement, breach of contract, and unjust enrichment.

Alexander seeks an injunction to stop the Hard Rock from using the name ?Rehab.? Alexander also seeks an accounting of Hard Rock?s profits from any infringement [Query?profits just from the sale of clothing or from the pool parties as well, which is where the real money is likely to be] as well as damages for the ?breach? of the settlement agreement, which Alexander values at in excess of $1,000,000 because of the promotional value to the band of the promised concert appearances.

Vegas?Esq. Comments:
With all of the talk these days about celebrities going to ?rehab,? I don?t think the mark, at least with respect to clothing goods, is especially strong ? especially where the word ?Rehab? appears on the clothing as more of an ornamental feature and not necessarily functioning as a source identifier and arguable whether it would even be recognized by consumers as an indicator of secondary source or sponsorship (i.e., recognizing ?Rehab? to be a reference to the band ?Rehab?) although the PTO was apparently satisfied with the specimens submitted.

The goods/services at issue (pool party entertainment versus rock band music CDs) are different enough that it will probably be enough for Hard Rock to prevail on a likelihood of confusion analysis. As for the Hard Rock?s sale of clothing bearing the Hard Rock?s own ?Rehab? mark, the Hard Rock?s best argument ? given the similarity of the marks, similarity of the goods, similar marketing channels, low degree of consumer care regarding purchases of clothing, and evidence of actual confusion (however specious), all of which tend to favor Alexander ? may actually end up being that it is simply not using the word ?Rehab? as a trademark for clothing because the Hard Rock?s ?Rehab? logo would be recognized by consumers as ornamental or as an indicator of secondary source or sponsorship and not as a trademark for such clothing.