Property, intangible

a blog about ownership of intellectual property rights and its licensing

Walter Mercado Still Losing

Walter Mercado can’t get a break – but then he’s trying to fight two separate district court decisions that both went against him. Odds in the appeals court were slim and he didn’t beat them.

The dispute is over an agreement between Mercado, an astrologer, and Bart Enterprises International Ltd., a company to which Mercado

  • “irrevocably assign[ed] … all right, title and interest, including all copyrights” to Preexisting Materials;
  • “grant[ed] … the exclusive right and license … to develop, produce, distribute and copyright” New Materials;
  • irrevocably assign[ed] … all right, title and interest in and to the [WALTER MERCADO] Mark, together with that part of the goodwill of Mercado’s business connected with and symbolized by said Mark, for use in connection with the Pre-existing Materials and the New Materials“; and
  • “grant[ed] … the right and license … to use Mercado’s performance, name, signature, photographs, voice, picture, likeness and other indicia of his identity” subject to Mercado’s approval.

Mercado was to provide psychic and astrological services for the creation of the new materials, but retained the right to conduct his radio, newspaper, magazine and personal consultation services. In exchange for all of this, Mercado was to get $25,000 per month, $5,000 per month for costumes, and some other monies.

What $5,000 a month for costumes gets you
The parties had a falling out, with Mercado refusing to provide the services and Bart Enterprises refusing to pay him. Two different federal courts held that the agreement assigned the WALTER MERCADO mark to Bart Enterprises and that the mark would revert to Mercado upon termination of the agreement, but the agreement had not been validly terminated (more details in a post here). Mercado was preliminarily enjoined from using the WALTER MERCADO mark. Mercado appealed.

The court reviewed the opposing positions on whether the mark had been assigned:

The district court adopted Bart’s view that Mercado fully assigned the trademark to Bart because the Agreement plainly uses the term “assign.” Section 2(b) of the Agreement states that “Mercado hereby irrevocably assigns to Bart . . . all right, title and interest in and to the Mark, together with that part of the goodwill of Mercado’s business connected with and symbolized by said Mark.” This unequivocal language is contrasted with Section 3(b), in which Mercado “grants to Bart the right and license . . . to use Mercado’s . . . Name and Likeness.”

This contrast in language, the district court noted, suggests that the parties intended to grant Bart a full assignment of the trademark.

Still, the district court acknowledged language suggesting otherwise: the text of Section 2(b) includes the subsidiary phrase “for use in connection with the Pre-existing Materials and the New Materials.” The district court reasoned, however, that this language is merely purposive and does not restrict the scope of the assignment.

The district court also noted that the Agreement stipulates that Bart has the right to register the trademark in its own name and the right to enforce the trademark in court. Such rights typically inure to assignees, not licensees. There was evidence that the parties took actions consistent with this reading. Not only did Bart file an application for the “Walter Mercado” trademark with the U.S. Patent and Trademark Office (PTO) in 1996, but Mercado filed at least three documents that ratified Bart’s right to do so.[*]

Mercado, however, urges adoption of the magistrate judge’s reading that the Agreement grants Bart only a limited license to use the trademark. The magistrate judge concluded that because the Agreement consistently limits the use of the trademark to uses “in connection with” the Preexisting and New Materials, the grant is a limited license.

But on the deferential review of a preliminary injunction:

We do not say that the issue of the scope of the trademark transferred has been resolved, only that there was no abuse of discretion as to preliminary injunctive relief.

Further, even if Bart was only a licensee, not an assignee, it was entitled to a preliminary injunction, having demonstrated likelihood of confusion and irreparable harm.

Mercado-Salinas v. Bart Enter. Int’l, Ltd., No. 10-2359 (1st Cir. Dec. 20, 2011) (Scrib’d link here).

* One consent in this document.

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