“Neither neglecting to execute Ready for the World’s by-laws nor declining to sign the Shareholders Agreement demonstrates that Eaton or Riley were no longer co-owners of the mark at issue.”
The U.S. District Court for the Eastern District of Michigan, Southern Division, on September 9 granted Motions to Dismiss in favor of all defendants in a federal trademark infringement action brought by R&B band Ready for the World, Inc. (Ready for the World) against Melvin Riley, John Eaton, Daniel Dillman, Renee Atkins, and Jan Mark Land. Ready for the World brought us classic 1980s hits including “Oh, Sheila!” and “Love You Down”. Riley and Eaton are original band members, while Dillman works for a nonprofit that promoted a concert performed by Riley and Atkins and Land were alleged to be employed by Riley.
Ready for a Fight
In 2010, Ready for the World registered the “Ready for the World” trademark with the United States Patent and Trademark Office (USPTO) for exclusive trademark rights in entertainment, specifically live performances by a musical band. Riley, a Ready for the World band member, left the group in 2015 and began advertising performances with Eaton under the names “Ready 4 the World featuring Melvin Riley” and “Ready for the World.” Riley, Eaton, and Atkins (Riley’s alleged manager) did not respond to cease and desist letters from Ready for the World. The performances continued and Ready for the World filed suit; the court ultimately granted a temporary restraining order and preliminary injunction against the defendants. In response, Riley, Eaton, Atkins, Dillman, and Land all filed Motions to Dismiss.
In their Motions to Dismiss, Eaton and Riley argued lack of subject matter jurisdiction because Ready for the World did not plead a claim arising under the Lanham Act. Citing Derminer v. Kramer, they argued that they are co-owners of the Ready for the World trademark and thus cannot infringe upon the mark. To support this assertion, they supplied the court with Schedule K-1 tax forms showing that they each had a 16.7% share in ownership of Ready for the World, Inc., and argued that it was agreed that they were both members of Ready for the World in 2008. They also asserted that the trademark was federally registered in 2010, and since no transfer of trademark ownership had occurred, they were still co-owners. Riley, specifically, argued that his identification as a Shareholder on a Shareholder Agreement, even after leaving the group, was evidence of his membership in the band and his co-ownership of the trademark. Additionally, he contended that, because the band and the trademark were two separate entities, his departure from the band had no effect on his ownership rights in the trademark. Ready for the World responded to these assertions by stating that the trademark was owned by the corporation, and Eaton and Riley’s positions as co-founders of the band did not necessarily mean that they were co-owners of the trademark. Additionally, they argued that Riley’s refusal to execute the corporation’s by-laws or Shareholders Agreement was evidence that he was not a co-owner of the mark.
The court sided with Riley and Eaton, holding that they had demonstrated their co-ownership in the trademark by providing Schedule K-1 tax forms that clearly indicated that they each owned 16.7% of Ready for the World, Inc. Additionally, because Ready for the World previously stated that Eaton and Riley were a part of the mark’s incorporation, it was undisputed that they were co-owners. According to the court, “neither neglecting to execute Ready for the World’s by-laws, nor declining to sign the Shareholders Agreement demonstrates that Eaton or Riley were no longer co-owners of the mark at issue.” Additionally, said the court, since the Ready for the World band is a separate entity from the Ready for the World corporation, the fact that Riley left the band is of no consequence. Therefore, the court granted their Motion to Dismiss for failure to state an infringement violation under the Lanham Act.
Phone Calls and Emails Don’t Always Suffice
Dillman, the President and Artistic Director of the San Leandro Curtain Call Performing Arts organization (CCPA) in California, focused his Motion to Dismiss on the court’s lack of specific jurisdiction over him. According to Ready for the World, Dillman was liable for infringement because CCPA promoted a concert performed by “Melvin Riley & Ready for the World.” Dillman argued his motion on multiple grounds. First, he noted that under the Artist Engagement Agreement with “Melvin Riley & Ready for the World,” CCPA included a forum selection clause that agreed to all disputes being heard in California. Second, neither Dillman nor CCPA entered into any dealings involving the state of Michigan. Citing Southern Machine, Dillman contended that he did not purposefully avail himself of the benefits of doing business in Michigan, as the entire agreement was drafted and executed in California, and thus any alleged infringement action must be settled there. Ready for the World countered this by stating that Dillman’s business communications with Eaton and Riley while they were in Michigan led to a performance contract that involved infringing activity. Additionally, they argued that Dillman encouraged out-of-state residents to attend the concert by promoting it online. These facts together, they argued, allowed Michigan’s long-arm statute to confer personal jurisdiction over Dillman. Lastly, they argued that Dillman satisfied the test for infringement under Calder v. Jones (1984) by 1) acting intentionally; 2) aiming his acts at the state of Michigan; and 3) inflicting injuries on Ready for the World, of which the brunt were felt in Michigan.
The court sided with Dillman. First, the court found that Michigan’s long-arm statute did not apply because the communications between Dillman, Eaton, and Riley were not enough to warrant jurisdiction under this statute. Second, the court reasoned that Dillman did not purposefully avail himself of Michigan because the communications between Dillman and Riley while Riley was in Michigan did not establish a sufficient connection with Michigan to establish purposeful availment. Lastly, the court noted that Supreme Court precedent prohibits the use of the Calder “Effects” test in finding personal jurisdiction solely based on the argument that jurisdiction is proper wherever a plaintiff feels injury from the actions of the defendant. Therefore, the court granted Dillman’s Motion to Dismiss due to a lack of personal jurisdiction.
Business Transactions Must Be Conducted in the Forum State
Atkins, who Ready for the World alleged to be Riley’s agent and manager, focused her Motion to Dismiss on a lack of specific jurisdiction. Atkins argued that she was never Riley’s employee, she was not a resident of Michigan, and she also lacked sufficient contacts with Michigan required for jurisdiction. Ready for the World argued that Atkins was, in fact, employed by Riley and thus the long-arm statute applied. Ready for the World also argued that specific jurisdiction in Michigan was proper because her contributory infringement was felt by individuals in Michigan, as required under the Calder Effects test. The court found that a business relationship did exist between Atkins and Riley, but because no business transactions occurred within Michigan, Atkins was not subject to Michigan’s long-arm statute. The court also declined to apply the Calder Effects test here, again by stating that jurisdiction isn’t necessarily proper wherever injury is felt by Ready for the World.
Previous Relationships May Not Equate to Purposeful Availment
Lastly, Land, who Ready for the World alleged to be a social media curator for Riley who regularly transacted business in Michigan, focused his Motion to Dismiss on lack of specific jurisdiction. Land contended that he had never been paid to perform with Riley nor did he ever promote Riley under “Ready for the World.” He also argued that he was a California resident having insufficient contacts with Michigan for jurisdiction to be proper. Ready for the World again argued that Michigan’s long-arm statute applied here, arguing that Land transacted business in Michigan at various points with Eaton and Ready for the World and utilized social media to promote Eaton and Riley under the Ready for the World trademark. Additionally, Ready for the World argued that the Calder Effects test applied here. The court ultimately found that, although there may have been a business relationship between Land and Riley or Ready for the World, there was insufficient evidence to establish that a Michigan-specific relationship existed pertaining to the use of the trademark.
Thus Riley, Eaton, Dillman, Atkins, and Land were all granted their Motions to Dismiss and the preliminary injunction prohibiting their use of the “Ready for the World” trademark was lifted.
Darrin Auito of HEA Law, PLLC, who acted as counsel to Riley and Eaton, said the case “highlights the importance for entertainers and bands to have agreements that clearly spell out intellectual property rights – which is no different from technology companies.”
IPWatchdog reached out to Lisa Orlando of Orlando Law Practice, P.C.., counsel for Ready for the World, for comment on the decision, but had not received a response at the time of publication.
Image Source: https://www.youtube.com/watch?v=r3Ui8_oqc9Q