How important is the DREAM ANGELS brand to Victoria’s Secret?

Victoria’s Secret has a robust portfolio of federally-registered trademarks to protect the DREAM ANGELS sub-brand for undergarments and a line of personal care products and fragrances. Years ago, apparently Victoria’s Secret entered into a consent-to-use agreement with Airs International, a company that had rights in ANGEL DREAMS for fragrances and personal care products.

Although the exact terms of the agreement are unclear, Victoria’s Secret was supposed to pay $25,000 each year to Airs International, but in late 2007 it sought registration of eight DREAM ANGELS marks itself and ceased making payments in 2008.

I’m thinking the payments must have been contingent on the continued existence of exclusive rights in ANGEL DREAMS. If so, nice lawyering because it appears those rights became abandoned. Had there been a license as opposed to a mere consent, I’m thinking it would have much more difficult for Victoria’s Secret to make the moves that it did.

In any event, Airs Aromatics, the successor to Airs International brought a breach of contract claim and a claim to cancel the DREAM ANGELS registrations obtained by Victoria’s Secret, but the district court dismissed both claims, and then Airs Aromatics appealed the dismissal, but only as to the cancellation claim.

Just over a week ago, the Ninth Circuit Court of Appeals affirmed the dismissal of the attempt to cancel the DREAM ANGELS registrations in Airs Aromatics, LLC v. Victoria’s Secret Stores Brand Management, Inc.

The Ninth Circuit made clear that the cancellation claim could not go forward, at least in federal district court:

“The plain language of Section 37 states that cancellation is available in ‘any action involving a registered mark.’ 15 U.S.C. § 1119. This language specifies that cancellation may only be sought if there is already an ongoing action that involves a registered mark; it does not indicate that a cancellation claim is available as an independent cause of action. Furthermore, each circuit to directly address this statutory language has held that it “creates a remedy for trademark infringement rather than an independent basis for federal jurisdiction.” Nike, 663 F.3d at 98; see also Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir. 1992); Windsurfing Int’l Inc. v. AMF Inc., 828 F.2d 755, 758 (Fed. Cir. 1987). This interpretation also helps preserve the use of actions before the USPTO Trademark Board as the primary vehicle for cancellation. See McCarthy on Trademarks and Unfair Competition § 30:110 (4th ed.).

We therefore hold that Section 37 of the Lanham Act does not provide an independent basis for federal jurisdiction. Because Airs Aromatics has not appealed the dismissal of the only claims it brought that could support jurisdiction, the district court’s judgment dismissing this action with prejudice must be affirmed.”

So, will we now see petitions to cancel filed at the TTAB of the USPTO — “the primary vehicle for cancellation” — or have we seen the end of this DREAM ANGELS pillow fight?

Based on this decision, it would appear that DREAM ANGELS is a valuable piece of intellectual property to Victoria’s Secret, but if that’s true, why has it allowed the nearly identical DREAMANGEL mark to be federally-registered by another for pillows? Aren’t these Victoria’s Secret DREAM ANGELS registrations (here, here, and here) covering related goods?

Actually, I’m not sure I’d be able to sleep at night knowing this nearly identical mark is out there and unchallenged. How about you?