Gabana Gulf Distribution, Ltd. v. Gap International Sales, Inc.

dissenting:

I respectfully dissent. I believe that the majority has misapprehended both the applicable law and the facts.

The element of California Business and Professions Code § 20001 requiring “substantial association” with a franchisor’s *260 trade name or other commercial symbol must be analyzed from the perspective of the putative franchisee’s customers. See Kim v. Servosnax, Inc., 10 Cal.App.4th 1346, 1353, 1356-57 , 13 Cal.Rptr.2d 422, 426, 427-28 (1992); see also Cooper Distrib. Co. v. Amana Refrigeration, Inc., 63 F.3d 262 , 273 n. 10 (3d Cir.1995). The question is whether the distribution arrangement pursuant to the contract was such that those customers “associated” Gabana’s business operation with Gap’s reputation and goodwill. Kim, 10 Cal.App.4th at 1355-57 , 13 Cal.Rptr.2d at 427-28 ; see also Cooper, 63 F.3d at 272-73 (substantial association exists where a distributor’s customers perceive that the manufacturer effectively endorses the quality of the product being distributed or otherwise vouches for the distributor’s activity).

The evidence strongly supports a conclusion that such a connection was perceived by Gabana’s customers, the retailers in the specified…

MEMORANDUM *

Plaintiffs Gabana Gulf Distribution, Ltd. and Gabana Distribution, Ltd. (collectively, “Gabana”) appeal the district court’s grant of summary judgment in favor of Defendant Gap International Sales, Inc. on Ga-bana’s breach of contract claim. We have jurisdiction under 28 U.S.C. § 1291 , and we affirm.

The district court correctly concluded that the material facts are not disputed and the contract between Gabana and Gap was not a franchise agreement under California law. The undisputed facts show that Gabana was merely a distributer or wholesaler of Gap products, but not substantially associated with Gap’s trademarks. In fact, the contrary is the case: Gabana was expressly prohibited by contract from associating itself with Gap’s trademarks beyond selling its merchandise.

The dissent supports its conclusion with non-California cases that we do not find persuasive. The Third Circuit’s conclusion that the product-trademark distinction was “ephemeral” was limited to “the context of [that] case” in which (1) the franchisee was the sole distributor of the franchisor’s products in the relevant region for 30 years, (2) the franchisee’s customer’s testified that they…