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Intellectual Property Keyed to Merges
Zazu Designs v. L’Oreal, S.A.
Facts
A licensee of L’Oreal, S.A. (Defendant) in the United States developed a line of hair cosmetics in electric hair colors in 1985. When researching the availability of “ZAZU” as trademark, a state service mark registration using that word was found to belong to Zazu Hair Designs in Hinsdale, Illinois, (ZHD) (Plaintiff). Plaintiff had registered the ZAZU mark with Illinois in 1980 as a trade name for its beauty salon. L’Oreal (Defendant) called to find out if ZHD (Plaintiff) was selling its own products and was informed that it was not at that time but that it might later on. Defendant paid the sole holder of a federal registration, an apparel manufacturer, for a covenant not to sue if L’Oreal (Defendant) used the mark on cosmetics. Defendant then began shipping hair cosmetics under the ZAZU name and also applied for federal registration. At that time, ZHD (Plaintiff) was selling small amounts of shampoo in bottles labeled with the ZAZU name. Plaintiff sued Defendant for trademark infringement. After a bench trial, the district court held that ZHD’s (Plaintiff) sales gave it an exclusive right to use the ZAZU name nationally for hair products, enjoined Defendant from using the mark, and award Plaintiff damages for lost profits and punitive damages. L’Oreal (Defendant) appealed.
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