Seattle Trademark Lawyer

Court’s order following the defendant’s bankruptcy filing

We don’t see it very often, but a bankruptcy filing can frustrate a trademark infringement claim. Or it can be a needed escape hatch for a trademark infringement defendant. Either way, it shouldn’t be forgotten as a factor in trademark infringement litigation.

I was reminded of that today in the Western District trademark infringement case of Precision Automotive LLC v. Avstar Fuel Systems, Inc.

The defendant filed for bankruptcy protection.

Game over. Or at least game stayed.

The court’s order says it all: “The court received notice that the Defendant has filed a Chapter 11 bankruptcy petition, and that as a result, the Plaintiff’s claims against Defendant may be subject to an automatic stay. The court ORDERS the Plaintiff to file a further notice no later than October 8, 2010, indicating the Plaintiff’s proposed course of action in this court with regard to its claims against Defendant in light of the bankruptcy filing.”

The case cite is Precision Automotive LLC v. Avstar Fuel Systems, Inc., No. 10-1174 (W.D. Wash. Sept. 13, 2010) (Jones, J.).

You can’t transfer more than you own.

On Sept. 1, the Eastern District applied that basic tenet of property law to the issue of who likely owns the trademark RELIANCE in connection with trailers. The first party claiming to own the mark is plaintiff Pacific Coast Trailers, LLC, which licensed the mark from the Reliance Trailer Manufacturing Corporation. The other is defendant Cozad Trailer Sales, LLC, which claims to have purchased the mark from Reliance Trailer Co.’s lender, Sterling Savings Bank, after Reliance Trailer Co. defaulted on its loans and filed for bankruptcy protection.

Both Reliance entities used to share common owners and managers.

On Pacific Coast’s motion for a preliminary injunction, Eastern District Judge Edward Shea sided with Pacific Coast. In the end, it found little evidence that Cozad purchased any rights to the RELIANCE mark.

“First, Pacific Coast holds ‘an exclusive, royalty bearing right and license’ to use the RELIANCE name, which it obtained from the presumed owner of the RELIANCE trademark, Reliance Mfg. Thus, Pacific Coast can likely prove it obtained a valid, protectable interest in the RELIANCE trademark.

“Second, Cozad’s use is likely unauthorized. Cozad attempts to rebut Reliance Mfg.’s presumed ownership by claiming that it purchased from Sterling all the assets and goodwill listed in Reliance, LLC’s bankruptcy schedule, which included the RELIANCE mark. Although a trademark may be validly assigned by sale or operation of law via bankruptcy, a transferor cannot convey any more interest than he or she has. But for the fact that the RELIANCE mark was listed in Reliance LLC’s bankruptcy schedule, there is no evidence that Reliance LLC (or Sterling) ever owned or obtained any interest in the RELIANCE mark. Furthermore, the fact that Sterling assigned to Cozad the marks for STURDYWELD, ALLOY, and COMET but not RELIANCE indicates that Sterling is at least uncertain whether it owned any interest in the RELIANCE trademark in the first place. If Sterling never owned any interest in the mark, it could not have transferred any interest to Cozad. Thus, Cozad has failed to rebut the presumption that Reliance Mfg. owns the RELIANCE trademark and could properly license it to Pacific Coast.”

Previous STL post on the case here.

The case cite is Pacific Coast Trailers, LLC v. Cozad Trailer Sales, LLC, 2010 WL 3489710, No. 10-111 (E.D. Wash. Sept. 1, 2010) (Shea, J.).

Medical Communications Resources, Inc., sued Global Initiative for Asthma, Inc. (GINA), and Global Initiative for Chronic Lung Disease, Inc. (GOLD) in the Western District for trademark infringement, among other claims.

GINA and GOLD counterclaimed for breach of contract and moved for a temporary restraining order.

In doing so, GINA and GOLD alleged that contracts with Medical Communications gave them the right to use and control their logos and to control their Web sites. GINA and GOLD claimed that Medical Communications breached the contracts by blocking control of their Web sites and threatening their use of certain intellectual property, among other things.

Medical Communications did not respond.

On Sept. 2, Western District Judge Benjamin Settle granted the motion. The court ordered Medical Communications to restore GINA’s and GOLD’s access to their Web sites and not to interfere with their operations. It also scheduled a preliminary injunction hearing for Oct. 15.

On Sept. 8, the parties informed the court they had agreed to resolve some of the issues in dispute. In response, the court vacated the TRO and ordered the parties to continue to try to resolve the issues that remained.

The case cite is Medical Communications Resources, Inc. v. Global Initiative for Asthma, Inc., No. 10-5541 (W.D. Wash. Sept. 2, 2010) (Settle, J.).

Plaintiff Trade Associates, Inc., sued defendant Fusion Technologies Inc. in the Western District on various patent issues and for breaching an alleged royalty agreement.

Fusion filed a counterclaim asserting an ownership interest in Trade Associates’ DURA-BLOCK mark in connection with sanding blocks for sanding automobiles. It argued that it independently conceived of the DURA-BLOCK mark and that the mark may be transferred to it pursuant to the parties’ royalty agreement because Trade Associates abandoned the marketing of Dura-Block technology.

Trade Associates argued that its registration is incontestable evidence that it owns the trademark and that the royalty agreement does not permit transfer of the mark to Fusion.

Trade Associates moved for summary judgment on the counterclaim.

On Aug. 30, Western District Judge Robert Bryan denied the motion, finding that Trade Associates’ incontestable registration did not mean that it had not assigned the mark to Fusion. The court also found that the royalty agreement was ambiguous, which impacted whether the alleged assignment was an assignment in gross.

“This ambiguity also affects whether the assignment of the trademark is an ‘assignment in gross,’” the court found. “An assignment of trademark must also transfer goodwill. An assignment made without goodwill is an assignment in gross. However, it is not necessary that an entire business or its tangible assets be transferred, it is the goodwill of the business that must accompany the mark. The purpose behind requiring that goodwill accompany the assignment mark is to maintain the continuity of the product symbolized by the mark. In this case, the Court is unable to determine the scope of the mark and the associated goodwill. Moreover, the Court is uncertain whether the Agreement provision includes the transfer of goodwill along with the trademark.”

The case cite is Trade Associates, Inc. v. Fusion Technologies Inc., 2010 WL 3432646, No. 09-5804 (W.D. Wash. Aug. 30, 2010) (Bryan, J.).

“Cake Boss” star Buddy Valastro

Buddy Valastro remains in the mix.

On Sept. 3, the Western District denied “Cake Boss” star Bartolo Valastro’s motion to dismiss Masters Software, Inc.’s claims against him for lack of personal jurisdiction and for failure to state a claim.  (For background on the software company’s trademark infringement case over the TV show’s use of “Cake Boss,” see STL’s last post on the case here.)

In short, Western District Judge Richard Jones found Mr. Valastro’s efforts to promote his upcoming tour stop in Seattle subjected himself to the court’s jurisdiction.

“Mr. Valastro attempts to shift attention away from his Tour stop in Seattle by arguing that it will not occur until November,” the court found. “Typically, only a defendant’s contacts leading up to litigation are relevant in personal jurisdiction analysis. In this case, however, it is not Mr. Valastro’s upcoming appearance on which the court focuses, but rather on his efforts to promote that appearance and sell tickets via the Tour Website. The Tour Website offered tickets for sale to all tour shows at least as early as June 28, 2010, the date on which Masters filed its opposition to the instant motion. Masters filed its amended complaint on May 21, 2010, and absent evidence from Mr. Valastro to the contrary, the court assumes that the Tour Website was online at that time as well. This is not an unreasonable assumption, given that the first show that the Tour Website promotes was in Pennsylvania on June 23, 2010.”

The court added: “Masters’ evidence gives rise to an uncontroverted inference that Mr. Valastro or his designee has intentionally targeted Washington residents for the sale of tickets to his Tour appearance in Seattle in November. As the court has noted, Mr. Valastro provides no evidence regarding the Tour or the Tour Website, other than to note that another entity claims a copyright in the Tour Website and credit for producing the Tour. Mr. Valastro does not, however, contend that he is merely a pawn, appearing in the Tour solely at the bidding of some unnamed master. Mr. Valastro’s participation in a Tour (and a Seattle Tour stop) focused entirely on him and his Cake Boss persona gives rise to an inference that Mr. Valastro himself has intentionally targeted Washington. Mr. Valastro offers no evidence to the contrary.”

The court gave three reasons why Masters had stated a claim against him.

“First, Masters has plainly stated a claim based on Mr. Valastro’s activities in promoting the Tour, as the court has already discussed.

“Second, contrary to Mr. Valastro’s contentions, Masters has alleged sufficient facts from which a jury could find Mr. Valastro personally liable for harm arising out of the airing of Cake Boss. Mr. Valastro asserts, in essence, that he cannot be personally liable for Discovery’s [the television network’s] actions. The complaint, however, alleges two facts inconsistent with this assertion. First, it alleges what this court has already noted, Mr. Valastro is not merely a pawn in Discovery’s promotion of Cake Boss, he is the star of the show. Second, in his capacity as star of the show, Mr. Valastro represented to Masters in March 2009 that he had the power to influence Discovery’s decisions with respect to the show’s name. These allegations are sufficient, at the pleading stage, to state a claim against Mr. Valastro.

“Third, Mr. Valastro argues that Masters does not state a tortious interference claim against him. That claim is based on allegations that Mr. Valastro personally contacted a bakeware supplier with whom Masters had contracted and threatened that TLC would take legal action if the supplier did not cease the sale of CakeBoss-branded bakeware. Mr. Valastro suggests that he was acting on TLC’s behalf, not his own. Mr. Valastro is free to make that factual argument to a jury. It is insufficient as a basis for a motion to dismiss.”

The case cite is Masters Software, Inc. v. Discovery Communications, Inc., No. 10-0405 (W.D. Wash. Sept. 3, 2010) (Jones, J.).