By Cheryl Beise, J.D.
The federal district court in Orlando, Florida, did not err in preliminarily enjoining the former lead guitarist for the 1970s funk/soul band The Commodores, from infringing the band’s trademarks, including performing under the name “The Commodores featuring Thomas McClary” or “The 2014 Commodores,” the U.S. Court of Appeals in Atlanta has ruled (Commodores Entertainment Corp. v. McClary, April 15, 2016, per curiam).
The Commodores gained recognition during the 1970s with hits such as “Brick House,” “Three Times a Lady,” and “Easy Like Sunday Morning.” In 1978, the original band members, including defendant Thomas McClary, entered into a partnership and formed Commodores Entertainment Corp. (CEC). After band members McClary and Lionel Richie left in the early 1980s, The Commodores brought on new members, continued to perform nationally and internationally, and won a Grammy award for the song “Nightshift.” In 2001, CEC obtained four federal trademark registrations for use of the terms “Commodore” and “Commodores.”
After discovering that McClary formed a band called “The Commodores Featuring Thomas McClary,” also referred to as “The 2014 Commodores,” CEC filed suit for trademark infringement and related claims against McClary and Fifth Avenue Entertainment, LLC. The district court granted CEC’s motion for a preliminary injunction and enjoined the defendants from using CEC’s marks and from performing under the name “The Commodores featuring Thomas McClary” and “The 2014 Commodores.” The district court found that McClary had no common law rights to CEC’s marks because those rights belonged to the members of The Commodores who “stayed with the group” and “continued to control the nature and quality of the [m]arks.” The district court subsequently clarified that the defendants were enjoined from performing under the marks both domestically and internationally.
On appeal, McClary and Fifth Avenue Entertainment (“appellants”) argued that the district court erred by (1) finding CEC was likely to succeed on the merits of its infringement claims; (2) finding CEC was likely to suffer irreparable injury absent an injunction, and (3) enjoining the appellants from using the “Commodore” marks outside the United States.
Likelihood of success on the merits. The appellants contended that CEC did not have enforceable rights to the marks, and thus did not have standing to assert claims of infringement. In particular, the appellants disputed the district courts finding that the remaining original members of The Commodores, William King and Walter Orange, held the common law rights to the band’s marks, and had assigned their rights to CEC. The appeals court, however, found that the sufficient evidence existed showing King and Orange transferred their rights to CEC. King and Orange, as the sole corporate officers of CEC from 2001 to the present, displayed conduct consistent with transfer or assignment of the rights to the marks to CEC. At this stage in the litigation CEC sufficiently showed it had standing to seek a preliminary injunction.
The appellants also argued that CEC’s federal trademark registration was invalid because CEC’s name is misspelled on the USPTO registration. The appellants cited Nevada corporate law to buttress their argument that the misspelling affected substantive rights. However, as the Eleventh Circuit pointed out, state corporation law was not controlling of CEC’s federal trademark right. Moreover, the district court also found that CEC had substantive common law rights in the COMMODORE marks.
The district court also relied on sufficient evidence, including evidence of actual confusion, to find a likelihood of confusion between the COMMODORE marks and “The Commodores featuring Thomas McClary” and “The 2014 Commodores.” The appeals court found no error as to the district court’s determination that CEC established a substantial likelihood of success on the merits.
Irreparable harm. The appellants asserted that the district court erred by applying a presumption of irreparable harm in contradiction of the United States Supreme Court’s holding in eBay Inc. v. MercExchange, LLC., 547 U.S. 388, 126 S. Ct. 1837 (2006). “However, the Supreme Court in eBay did not hold that the same evidence proffered to support a likelihood of success on the merits cannot be proffered to determine a likelihood of irreparable harm,” the Eleventh Circuit noted.
In this case, the district court made factual findings of irreparable harm by relying on CEC’s previously proffered evidence as to a likelihood of confusion. For example, the district court found that CEC “demonstrated a sufficient likelihood of consumer confusion, evidenced by the general public mistaking [Appellants’] band with the Grammy award winning Commodores and the venue’s Executive Director thinking he hired the Grammy award winning Commodores when he in fact hired [Appellants’] band.” At this point in the litigation, the district court did not err in finding a likelihood of irreparable harm.
International scope of injunction. Lastly, the appellants argued that the district court lacked jurisdiction to issue a preliminary injunction enjoining use of the marks extraterritorially.
The Eleventh Circuit disagreed. Three factors are generally considered in determining whether the Lanham Act can reach infringing activity that takes place abroad: (1) whether the defendant’s conduct outside of the United States had potential adverse effect on commerce in the United States; (2) the U.S. citizenship of the defendant; and (3) whether issuing an injunction would infringe on the sovereignty of the nation within which the alleged infringing conduct occurred.Steele v. Bulova Watch Co., 344 U.S. 280, 285-87, 289, (1952). In this case, the district court appropriately considered the Bulova factors, the Eleventh Circuit determined. The district court found that both parties were citizens of the United States; McClary’s booking agent operated from the United States; the customer confusion was not limited to the United Kingdom and Switzerland (where McClary booked performance dates) but was also present in the United States; the marks were not registered in a foreign country; and use of the marks extraterritorially would have an effect on CEC, a U.S. corporation.
The appellants argued that the injunction posed a potential threat to international comity because they had applied for a Community Trade Mark (CTM) with the European Union’s Office of Harmonization in the Internal Market (OHIM). However, the appellants presented no evidence that a CTM had been issued by the OHIM, nor did they “present any law under which submitting an application to a CTM would affect a United States court’s ability to protect the interests of its citizens here and abroad,” the court said. There was no indication that the district court’s injunction imposed on the sovereignty of the EU or any foreign nation. Thus, the district court did not err in concluding that the appellants could be enjoined extraterritorially from using CEC’s marks.
The district court’s preliminary injunction, enjoining the appellants from using CEC’s marks and performing under the name “The Commodores featuring Thomas McClary” or “The 2014 Commodores,” was accordingly affirmed.
The case is No. 14-14883.
Attorneys: Dean Adrian Kent (Trenam Kemker) for Commodores Entertainment Corp. Marie Claire Mirch (Mirch Law Firm, LLP) for Thomas McClary.
Companies: Commodores Entertainment Corp.
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