Faithless Servant Indeed
by Pamela Chestek • April 7, 2009 • trademark
Asociación de Industriales de Puerto Rico v. MarketNext, Inc. is a classic trademark ownership dispute. The plaintiff, Asociación de Industriales de Puerto Rico (AIPR), also known as the Puerto Rico Manufacturer’s Association, is a trade association representing businesses in the manufacturing and service sectors in Puerto Rico. It was commonly referred to as “los Industriales” and published a trade magazine, “Industriales.” In 2001 it twice published the magazine as a supplement in the daily newspaper El Nuevo Día but was unhappy so sought a new publisher, next contracting in 2003 with the defendant, MarketNext, Inc. MarketNext was to use its best efforts in developing, publishing and promoting the publication and was to keep a portion of the profits from advertising as its compensation. The contract put restrictions on what MarketNext could publish and gave a number of controls to AIPR, particularly content review. There was no mention of intellectual property rights in the contract.
MarketNext published the magazine from 2003 to 2008. The first issue of the magazine (it’s unclear whether subsequent issues were similar) had “Asociación de Industriales de Puerto Rico” and the AIPR web address on the cover, and stated “INDUSTRIALES is published quarterly by MarketNext for the Puerto Rico Manufacturer’s Association.” MarketNext registered the copyright in the magazines in its own name.
In February, 2008, MarketNext sent a letter to AIPR asking to renegotiate the contract and demanding that AIPR recognized MarketNext’s rights in the intellectual property. AIPR refused. MarketNext then filed an application to register “Industriales” as its trademark with the Puerto Rico Department of State, claiming first use since 2003. AIPR gave notice to terminate the contract in November, 2008. MarketNext continued to publish the magazine after the contract was terminated, taking references to AIPR off the masthead. AIPR sent a cease and desist letter, dueling federal trademark applications were filed (MarketNext first, AIPR second), dueling magazines were published, and confusion ensued.
Based on the facts, there was little question that AIPR should own the mark, the only question was how the court would get there, and the law of agency was the vehicle. Although the first use of the mark in interstate commerce occurred when MarketNext published the magazine, MarketNext was acting as AIPR’s agent in doing so, so the fruits received in the course of the relationship belonged to the principal, AIPR.
The eight likelihood of confusion factors in the First Circuit were disposed of in four short paragraphs. Irreparable harm, balance of the equities and public interest mandated an injunction against MarketNext’s continued publication.
The court was not pleased with MarketNext’s perfidy:
“[MarketNext’s President] effectively confessed his disloyalty in open court when he testified that he considered his advertising customers to be the chief clients for MarketNext. Furthermore, MarketNext should have known that any customer relations that it had developed under the Contract were for Plaintiff’s benefit and that it ought not wrest members away from Plaintiff. In attempting to cement its usurpation of Plaintiff’s proprietary interests by its abuse of legal procedure, and in breaching its duty of loyalty to Plaintiff, MarketNext has proven itself to be a faithless servant indeed.”
Asociación de Industriales de Puerto Rico v. MarketNext, Inc., Civ. No. 09-1122 (JAF), 2009 WL 793619 (D.P.R. Mar. 23, 2009).
© 2009 Pamela Chestek