September 09 2005 - USA

Knobbe Martens Olson & Bear LLP

Infamous Mustang Ranch name still up in the air

In Burgess v Gilman (134 F Appx 200 (9th Cir June 14 2005)), the US Court of Appeals for the Ninth Circuit has affirmed a district court decision enjoining Lance Gilman from using the name Mustang Ranch for his brothel, the legendary establishment in Nevada that he purchased in 2003.

In 1999 the US government shut down the brothel after convicting its owners of fraud and racketeering. Uneasy about owning a brothel, the government put it up for sale on eBay. In 2003 Gilman bought the brothel for $145,000. Gilman believes that he acquired ownership in the MUSTANG RANCH trademark when he bought the building. However, the owner of a neighboring brothel, David Burgess, claims that he owns the MUSTANG RANCH mark due to his prior use of it in the entrance to his brothel, after the government had abandoned the mark while the original Mustang Ranch was under government control. Under US trademark laws, proof of non-use of a mark for three years creates a presumption that the mark has been abandoned.

Thus, prior to the grand opening of Gilman's brothel this year, Burgess filed a trademark infringement suit, claiming that Gilman's predecessor, the US government, had abandoned the rights in the MUSTANG RANCH trademark. The Reno District Court granted a preliminary injunction against Gilman, finding that Burgess is likely to succeed on the merits in proving abandonment of the MUSTANG RANCH mark. Gilman appealed the decision. The Ninth Circuit, however, affirmed and remanded the case to the district court for a finding on the merits.

Susan M Natland, Knobbe Martens Olson & Bear LLP, Newport Beach

 

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*This article first appeared in World Trademark Law Report