Monday, November 20, 2006
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‘Zankou Chicken’ Trademark Remained With Founders Of Restaurant, Not Their Son—Court of Appeal
By TINA BAY, Staff Writer
The dissolution of a father-son partnership so that the son could expand the family business did not result in the transfer of exclusive business or trademark rights to the son, this district’s Court of Appeal ruled Friday.
Affirming an order by Los Angeles Superior Court Judge John Shepard Wiley Jr.,
Div. Eight concluded that rights to the trademark “Zankou Chicken” were validly assigned by one of the restaurant’s founders to her three adult children.
Markrid Iskenderian and her husband Vartkes, both deceased, opened a chicken restaurant decades ago in Beirut, Lebanon called Zankou Chicken. After immigrating to the United States in the 1980s, the Iskenderian family—the couple and their three children, Mardiros, Dzovig, and Haygan Iskenderian—opened the first stateside Zankou Chicken in Hollywood.
Though no written partnership agreement existed, the business filed taxes as a father-son partnership with a 60 percent interest held by the father and 40 percent by son Mardiros Iskendarian.
Markrid Iskenderian, who created Zankou Chicken’s signature garlic sauce, worked in the Hollywood restaurant with her husband and son. The partnership registered the Zankou Chicken trademark with the state in 1984.
In late 1991, a disagreement between parents and son regarding expansion of the business led to the dissolution of the partnership, with father paying son $40,000 for his partnership share. The parents, who did not want to open stores in other locations, continued operating the flagship store while allowing their son to open additional restaurants of his own.
He eventually opened Zankou Chicken restaurants in Glendale, Van Nuys, Anaheim and Pasadena, retaining all the profits from the additional locations while his parents kept the profits from the Hollywood store.
After Vartkes Iskenderian’s death in 1992, Markrid Iskenderian continued operating the Hollywood restaurant, and created a living trust conveying her sole ownership interest in the store to the trustee for the benefit of her two daughters. Though she once amended the trust to include her son as a beneficiary, she ultimately designated the trust only for her daughters’ benefit.
Since he had reaped the benefit of his parents’ fortune and had four stores of his own, she told her son in a letter, she was designating the flagship store for his sisters.
Without her knowledge, her son in 1992 registered the Zankou Chicken service mark in the United States Patent and Trademark Office, declaring in the application that he owned the mark and no other person had the right to use it. The registration was canceled in 2000 after Markrid Iskenderian discovered the action.
In 2002, Markrid Iskenderian created a second trust in which the trustees of the first trust assigned to the 2002 instrument’s trustees “all of her right, title and interest in the restaurant business, the trade name, service mark, or trademark commonly known as ZANKOU CHICKEN.” The trust provided for distribution of the trademark rights to her three children in equal shares, and of the Hollywood restaurant to her daughters.
In January 2003, Mardiros Iskenderian, who had been diagnosed with cancer two years earlier, shot and killed his mother, his sister Dzovig Iskendarian, and himself.
Eight months later, his widow, Rita Iskenderian, filed a petition in probate court asserting that she exclusively owned the Zankou Chicken Mark. She sought an order declaring the mark was not property of the 2002 trust and directing the trustee to execute a quitclaim of the mark to her. Haygan Iskenderian and Dzovig Iskenderian’s surviving sons and successors in interest agreed that she owned the mark, she alleged.
At a bench trial, she testified that after the partnership’s dissolution, her husband told her he “gave away” the Hollywood restaurant to his parents in return for the Zankou Chicken trademark.
Wiley declined to believe her, saying there was “no sensible reason” why parents who devoted their lives to building a business would forfeit all of their rights to the trademark embodying their lifelong work.
The judge found that the 1991 dissolution merely marked a realignment of the family members’ duties and the start of a “generally unified and cooperative family enterprise” that operated for decades until the 2003 tragedy. The Zankou Chicken mark was owned by the family enterprise on the day Markrid Iskenderian was killed, Wiley ruled, and she had validly transferred her interest in the mark to the 2002 trust.
The judge ordered that the trademark rights be equally distributed among Markrid Iskenderian’s three children, effectuating the trust.
Writing for the Court of Appeal, Justice Paul Boland agreed with Wiley:
“[T]he court expressly found, as a matter of fact, that the mark was not transferred to Mardiros when the partnership was dissolved. Therefore, ownership of the mark either remained with the family enterprise (as the trial court described it) or with Vartkes alone (as the partner who retained the mark). In either case, on Vartkes’s death, Markrid succeeded to his rights (and necessarily had community property rights of her own) in the mark, and had the authority to transfer those rights to the trust.”
Boland also rejected Rita Iskenderian’s argument that joint ownership of the mark was unlawful.
“To be sure, the joint ownership of a trademark can raise difficult problems when joint owners refuse to cooperate,” the justice wrote. “However, no evidence indicates Rita and the other family members with interest in the Zankou Chicken mark will be unable to agree on terms for the continuation of the family enterprise, or for a buyout of interests in the enterprise should they decide not to cooperate as they have in the past.”
Presiding Justice Candace Cooper and Justice Madeleine Flier concurred in the opinion.
Peter B. Gelblum, Douglas Bordewieck and Valentine Shalamitski of Mitchell, Silberbert & Knupp represented the plaintiff on appeal. Tulane M. Peterson and Gary W. Morris of Hart, Mieras & Morris represented the defendants.
The case is Iskenderian v. Iskenderian, 06 S.O.S. 5576.
Copyright 2006, Metropolitan News Company