Urban Dollz

Title: Lashify, Inc., Plaintiff, v. Urban Dollz LLC d/b/a Urban Doll, Sima…

Court: United States District Court, Central District of California

Case Number: CV 22-6148-GW-AFMx

Date: Jan 5, 2023

Fact:

In 1982, D sold to his four children equal amounts of common stock in his wholly owned corporation, S. The purchase agreement stated that the purchase price for the S stock was equal to the stock’s fair market value, which was determined by appraisal to equal $141,050 for each block of stock sold. Pursuant to the purchase agreement, D and each of his children executed a promissory note in the principal amount of $141,050, payable in 20 annual installments, with interest payable annually at a rate of 12 percent on any unpaid principal. Each promissory note contained a provision that unless sooner paid the obligations would be “cancelled and extinguished as though paid” upon the death of D. Also, pursuant to the purchase agreement, D and each child executed a collateral pledge and security agreement which stated that the total purchase price of the S stock was $141,050.

At the time of the sale, D’s life expectancy exceeded the 20-year term of the promissory notes. However, D died in 1984 after receiving two payments on each promissory note. D reported gain attributable to the two payments received from the sale of the S stock under the installment method of accounting. No gain attributable to the installment obligations held at D’s death was reported on his final income tax return.

HELD, the installment obligations held by D at his death were cancelled within the meaning of sec. 453B(f), I.R.C. As a result, each installment obligation is treated as if it were disposed of in a transaction other than a sale or exchange by D. Sec. 453B(f)(1), I.R.C. HELD, FURTHER, the six-year period of limitations on assessment and collection under sec. 6501(e), I.R.C., is applicable to D’s final return. David L. Cornfeld, David T. Karzon, Jr., and Donald W. Paule, for petitioners. Steven W. LaBounty, for respondent.

Issue:

  • Whether the court should grant Lashify’s Motion for a Preliminary Injunction, thereby enjoining Urban Doll from any trademark use of Lashify’s registered “BONDAGE” trademark in connection with artificial eyelashes and cosmetics.

Decision:

  • The court grants Lashify’s Motion for a Preliminary Injunction.
  • Defendant Urban Doll, its officers, agents, employees, and others in concert with Urban Doll are enjoined from any trademark use of Lashify’s registered “BONDAGE” trademark, including use on websites, social media platforms, marketing materials, product packaging, or on any product itself.
  • The injunction does not prohibit Urban Doll from properly using descriptive terms necessary to identify and describe their products or engaging in lawful comparative advertising.
  • Urban Doll is ordered to provide notice of the injunction to those bound by it, including current and future Brand Ambassadors.
  • The injunction will take effect within ten days, and Lashify is required to post a bond of $90,000 with the court.

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