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2010_05_04 Franklin Mint v Manatt Phelps

2010_05_04 Franklin Mint v Manatt Phelps

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05/24/2010

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Filed 5/3/10
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR

FRANKLIN MINT COMPANY et al.,
Plaintiffs and Appellants,
v.
MANATT, PHELPS & PHILLIPS,
LLP, et al.,
Defendants and Respondents.
B190482
(Los Angeles County
Super. Ct. No. BC285388)
APPEAL from a judgment of the Superior Court for Los Angeles County,
Warren L. Ettinger, Judge. Reversed.

Loeb & Loeb, Andrew S. Clare, Lawrence B. Gutcho; Akin Gump Strauss Hauer & Feld, William A. Norris, Edward P. Lazarus, L. Rachel Helyar, Michael C. Small and Rex Heinke for Plaintiffs and Appellants.

Horvitz & Levy, David M. Axelrad, John A. Taylor, Jr., Frederic D. Cohen; Munger, Tolles & Olson, Michael R. Doyen and Brad D. Brian for Defendant and Respondent Manatt, Phelps & Phillips, LLP.

Hill Farrer & Burrill, Kevin H. Brogan, Neil D. Martin and Dean E. Dennis
for Defendant and Respondent Mark S. Lee.
2

The Franklin Mint Company and its principals, Stewart and Lynda Resnick,
(collectively, Franklin Mint) appeal from a judgment dismissing their malicious
prosecution action against the law firm Manatt Phelps & Phillips LLP and attorney
Mark S. Lee (collectively, Manatt). Manatt represented the executors of the estate
of Diana, Princess of Wales and the trustees of The Diana, Princess of Wales
Memorial Fund (collectively, the Fund) in a lawsuit filed against Franklin Mint

alleging claims related to Franklin Mint\u201fs use of Princess Diana\u201fs name and image
in connection with merchandise Franklin Mint advertised and sold. Franklin
Mint\u201fs malicious prosecution claim is based upon two of the claims that were
alleged in that underlying lawsuit, for false advertising and trademark dilution
under the Lanham Act (15 U.S.C. \u00a7 1125(a), (c)). After a 17-day jury trial, the
trial court granted Manatt\u201fs motion for nonsuit or directed verdict, finding that
Manatt had probable cause to prosecute those claims.1 We reverse.

We conclude that, based on the record before us, no reasonable attorney
could find tenable the false advertising claim as it was alleged and litigated in the
underlying action. Therefore, we hold there was no probable cause to prosecute
that claim.

We also hold there was no probable cause to prosecute the trademark
dilution claim because no reasonable attorney could conclude that the claim could
satisfy two fundamental, long-standing principles of trademark law. First, to be
protectable as a trademark,2 a word, phrase, name, or symbol must be used in
commerce to identify goods or services and their source. Although Manatt

1

Franklin Mint also sued the Fund for malicious prosecution of those claims; it
settled with the Fund before trial. (See Franklin Mint Co. v. Superior Court (2005) 130
Cal.App.4th 1550.)

2
For simplicity, we use the term \u201ctrademark\u201d to include a service mark.
3

contends that Princess Diana used her name in connection with her appearances at
charitable events, that use does not demonstrate trademark use. Second, a
trademark that is descriptive -- such as a personal name -- must acquire secondary
meaning to be protectable in a trademark dilution action. In other words, the
primary meaning of the mark (i.e., the descriptive meaning) must in the minds of
the public be subordinate to its meaning as the source of goods or services.

Because \u201cDiana, Princess of Wales\u201d has such an extraordinarily strong primary
meaning as descriptive of Princess Diana as a person, the contention that it had
acquired secondary meaning at the time of the underlying lawsuit was, as the
district court in the underlying lawsuit observed, \u201cabsurd.\u201d (Cairns v. Franklin
Mint Co. (C.D. Cal. 2000) 107 F.Supp.2d 1212, 1222 (Cairns III).) Therefore, we
conclude that the trademark dilution claim was untenable.

Manatt argues, however, that we should not find that the claim lacked
probable cause, because the issues are complex and there is no directly controlling
authority. But the fundamental principles of trademark law -- a trademark must
identify a source of a product or service, and a descriptive mark such as a personal
name must acquire secondary meaning in the minds of the public -- were clear and
well-established, and their application to this case is straightforward and
uncomplicated. The complexity of the issues arises only from Manatt\u201fs attempts to
avoid those fundamental principles. Accordingly, we reverse the judgment and
remand for trial on malice and damages issues.

BACKGROUND
The parties\u201f briefs on appeal contain extensive discussion of the factual
background of this case, including many facts relevant only to the issue of malice.
Because the only issue in this appeal is whether there was probable cause for the

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