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Where a complaint alleges a federally conferred right, such as a copyright, a trademark or a patent, then alleges violations of that right and requests remedies provided by federal statute, this should be enough to confer federal jurisdiction. The fact that such a claim arises in the context of a disruption of contractual arrangements and presents certain contract issues should not remove it from that jurisdiction. The nature of a famous individual's persona is such that its value is diluted by unauthorized use. In the context of a motion for an injunction in a trademark infringement action, the probability of serious dilution in the value of a trademark by any unauthorized use on the part of a defendant provides an adequate basis for a finding of irreparable injury.
Plaintiff Nolan Ryan was a former Major League Baseball player. In light of his accomplishments and illustrious career, plaintiff derived substantial revenue from endorsements, commercials, and the licensing of his name and image. He was represented with respect to these matters by his agent Mattgo Enterprises, Inc. Defendant Volpone Stamp Company, Inc. d/b/a Sport Stamps Collectors Association was in the business of selling sports-related merchandise. In 1998 Ryan through his agent entered into a licensing agreement called Master Agreement with defendant. The Master Agreement dated March 1998 and was signed by the parties. The Master Agreement granted defendant exclusive rights to manufacture, sell, and sublicense numerous plaintiff’s products, including, stamps, coins and medals, cards and all products with facsimile plaintiff signatures. The Master Agreement was for a term of two years with an effective starting date of January 1998. In return defendant promised to pay royalties equal to ten percent of its wholesale price and guaranteed minimum royalties per year to be paid according to a schedule outlined in the agreement. In case of nonpayment, defendant would have sixty days to cure any default, after which the Master Agreement would terminate and all licensing rights would revert to plaintiff’s agent. A second agreement was entered into expanding defendant’s rights called the Train Set Agreement. The third and final agreement between the parties was executed granting defendant the license to manufacture, sell and sub-license plaintiff’s Plush Teddy Bears. The instant action arose out of a dispute that in accordance with the Master and Teddy Bear Agreement, defendant delivered post-dated checks covering its minimum guarantee payments in late June 1999. The checks were returned for insufficient funds. Plaintiff’s counsel wrote a letter to defendant stating that its allegations concerning violations of the Master Agreement did not justify its failure to make the minimum guarantee payments. Such failure to pay, the letter continued, constituted a breach of the licensing agreements, and, therefore, the letter was to serve as notice that the licensing agreements were terminated. Plaintiff alleged that defendant disregarded the termination letter and continued to manufacture and distribute merchandise. Plaintiff commenced the present action in this Court in August 1999. Believing that defendant continued to market plaintiff’s products even after the commencement of litigation by both sides to this dispute, counsel for plaintiff sent another cease-and-desist letter addressed to counsel for defendant. Plaintiff alleged that defendant has failed to comply and now moves for a preliminary injunction pursuant to Fed.R.Civ.P. 65(a) enjoining defendant from continuing to manufacture, sell, distribute and otherwise market plaintiff’s products. Defendant cross-moved to dismiss the action in its entirety in deference to the action between the parties pending in the state court.
Did the court have jurisdiction over this federal trademark infringement claim?
The court held that notwithstanding state law claims, federal trademark infringement claim conferred subject matter jurisdiction upon court. Thus, the court denied defendant's motions to dismiss in deference to state court action and for lack of subject matter jurisdiction, nonjoinder of indispensable parties, and failure to state viable claims. The court held that the plaintiff stated viable violation of privacy claims under state statutory law, and a viable claim for impairment and dilution of the value of the plaintiff's celebrity, persona and image, to the extent it was based on state statutory law. Lastly, finding a probability of success on the merits and the threat of irreparable harm, the court granted the plaintiff's motion for a preliminary injunction.