Asociacion de Industriales de Puerto Rico v. MarketNext, Inc. et al, No. 3:2009cv01122 - Document 58 (D.P.R. 2009)

Court Description: MEMORANDUM OPINION, AND ORDER TO SHOW CAUSE. We reinstate the preliminary injunction against Defendants, Docket No. 46 , and ORDER the Defendants to show cause, on or before April 3, 2009, as to why the preliminary injunction should not be converted into a permanent injunction. Show Cause Response due by 4/3/2009. Signed by Chief Judge Jose A Fuste on 3/23/09.(mrj)

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1 2 3 4 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO ASOCIACIà N DE INDUSTRIALES DE PUERTO RICO, 5 6 Civil No. 09-1122 (JAF) Plaintiff, v. 7 8 9 MARKETNEXT, INC., et al., Defendants. MEMORANDUM OPINION 10 11 Plaintiff, Asociación de Industriales de Puerto Rico ( Puerto 12 Rico Manufacturers 13 against Defendants, MarketNext, Inc. ( MarketNext ), Edison R. Misla- 14 Grillasca ( Misla ), Yvette Olivero-Vázquez ( Olivero ), the conjugal 15 partnership between Misla and Olivero, Graphic Print & Design, Inc. 16 ( Graphic ), Guillermo Avilés-Aguirrechea ( Avilés ), Glorimar de 17 Jesús-Mila ( de Jesús ), and the conjugal partnership between Avilés 18 and 19 infringement, false designation of origin, unfair competition, false 20 advertising, and trade name infringement under the Lanham Act, 15 21 U.S.C. § 1125(a); and trademark infringement, unfair competition, 22 false advertising, trade name infringement, contractual breach, and 23 pre-contractual liability under Puerto Rico law, Civil Code art. 1802 24 (P.R.). Id. Specifically, Plaintiff accuses Defendants of usurping de Jesús. Association, Docket No. 50. or AIPR ), Plaintiff brings alleges this case trademark Civil No. 09-1122 (JAF) -2- 1 Plaintiff s use of its trademark, Industriales. Id. Plaintiff seeks 2 a preliminary injunction against Defendants to bar them from further 3 infringement of Plaintiff s trademark, Docket No. 3; Defendants 4 opposed, Docket Nos. 42, 44. On March 11, 2009, we entered an order 5 for a preliminary injunction against Defendants with a note that a 6 memorandum opinion would follow. Docket No. 46. 7 I. 8 Factual and Procedural Synopsis 9 10 We draw the following facts from the record in this case thus far. Docket Nos. 1, 3, 15, 27, 42, 44, 50; Prelim. Inj. Hr g Tr. 11 Plaintiff is a non-profit trade association, formed in 1928, 12 that represents businesses in the manufacturing and services sectors 13 of Puerto Rico. Manufacturing constitutes forty percent of the Puerto 14 Rican economy. From a peak of 1600 members in 2001, Plaintiff s 15 membership has declined in recent years to 1200 members. 16 In addition to manufacturers, Plaintiff s membership includes 17 law firms and universities in Puerto Rico, and port authorities and 18 banks in the United States proper. Plaintiff regularly communicates 19 with its members through electronic and print media, and seeks to 20 inform the public on matters relevant to manufacturing and services 21 through educational programs and publications. Plaintiff relies on 22 its relationship with its members to achieve its educational and 23 legislative aims. To communicate with its members, Plaintiff has 24 published a trade magazine, Industriales. Civil No. 09-1122 (JAF) -3- 1 People in the manufacturing and services sectors in Puerto Rico 2 frequently refer to Plaintiff as los Industriales. Several news 3 articles, 4 Plaintiff as representative of the views of manufacturers in Puerto 5 Rico. Docket Nos. 1-8, 15-4. An article dated August 29, 2000, 6 referred to Plaintiff by the short form, Industriales. dating from as early as 1994, quoted statements by Id. 7 MarketNext, Inc., is a Puerto Rico company engaged in marketing 8 products and services through print media that it produces. Misla is 9 the president of MarketNext; Olivero is Misla s wife. Graphic is a 10 Puerto Rico company engaged in printing media for distribution. 11 Avilés is the president of Graphic; de Jesús is Avilés spouse. 12 In 2001, Plaintiff published two supplements called 13 Industriales in El Nuevo Día, the daily newspaper with the largest 14 circulation in Puerto Rico. The supplement dated July 1, 2001, bore 15 the title, Industriales, with the circular AIPR logo printed over 16 the second I on the front cover. Docket No. 1-6. Disappointed with 17 the inability of El Nuevo Día to run the supplement on glossy paper, 18 Plaintiff terminated publication with El Nuevo Día and sought a new 19 publisher. 20 Plaintiff and MarketNext executed a contract dated April 29, 21 2003 ( Contract ), in which MarketNext agreed to undertake its best 22 efforts in developing, publishing, and promoting Plaintiff s official 23 publication, Industriales. Docket Nos. 1-10, 15-6. The Contract 24 provided that MarketNext would be the exclusive dealer of the Civil No. 09-1122 (JAF) -4- 1 publication and would enjoy a portion of the profits from advertising 2 for 3 MarketNext from contracting advertisements that promote partisan 4 politics, 5 Furthermore, the Contract required MarketNext to notify Plaintiff 6 prior to changing advertising fees, report to Plaintiff monthly on 7 the magazine s content and advertisements contracted by MarketNext, 8 consult with Plaintiff regularly on MarketNext s promotional efforts 9 for the magazine, submit proposed advertisements in digital format to the magazine as religion, in advance compensation. pornography, The Contract tobacco, MarketNext 12 publications 13 provided for termination by either party with thirty days notice. 14 Id. Finally, the Contract was silent on intellectual property rights. 15 See id. Plaintiff did not discuss or contemplate copyright and 16 trademark protection in the course of forming the Contract. and content for the from first report an to agreed year. Id. Plaintiff Id. 11 deviate and alcohol. Plaintiff to printing, or prohibited 10 intended of Id. schedule The if for Contract 17 MarketNext produced the first issue of Industriales in 2003. 18 The front cover bore the inscription, Asociación de Industriales de 19 Puerto Rico, above the title, as well as Plaintiff s website, 20 www.prma.com, immediately beneath the title. Docket No. 1-12. The 21 title, however, does not include Plaintiff s logo. Id. The masthead 22 within the magazine listed Misla as director, Olivero as sales agent, 23 and Plaintiff s president, executive vice president, and public 24 relations officer. Id. A notice appeared beneath the names, advising Civil No. 09-1122 (JAF) -5- 1 readers that INDUSTRIALES is published quarterly by MarketNext for 2 the Puerto Rico Manufacturer s Association. Id. Another advisory at 3 the bottom of the masthead alerted readers to MarketNext s assertion 4 of copyright protection over the first issue. Id. Lastly, a letter 5 from Manuel Cidre, Plaintiff s president, appeared in a vertical 6 column next to the masthead. Id. The letter endorsed the new magazine 7 and bears Plaintiff s circular logo. Id. 8 During the course of MarketNext s performance on the Contract, 9 William Riefkohl, Plaintiff s executive vice president, occasionally 10 instructed Misla on content for Industriales, such as directing him 11 to exclude coverage of politicians in an issue preceding the 2004 12 Puerto 13 MarketNext under the profit-sharing clause in the Contract, and 14 MarketNext never gave full accounting of its profits arising from its 15 advertisement 16 testified that he had provided some figures to Plaintiff, but could 17 not cite specific documents. Misla considered the advertisers to be 18 the chief clients for MarketNext, as the fees paid by advertising 19 companies contributed to the production of Industriales. 20 Rico elections. campaign MarketNext had Plaintiff for Industriales. originally customers from never obtained Plaintiff received At a the list hearing, of Misla potential advertising 22 membership after the conclusion 23 Initially, MarketNext primarily 24 Plaintiff s members. See Docket No. 1-14. MarketNext has further their promoted of from 21 of comprised payments Contract Plaintiff s in 2003. Industriales among Civil No. 09-1122 (JAF) customer -6- 1 developed relations 2 supplemented its 3 directories that 4 Plaintiff s members continue to comprise a substantial portion, 5 perhaps nearly one-half, of MarketNext s advertising customer base. 6 Between October 2005 and September 2007, MarketNext filed for, 7 and secured, copyright protection from the United States Copyright 8 Office for all issues of Industriales from 2004 to 2007. Docket 9 No. 44-2. The certificates of registration include no reference to 10 Plaintiff, and Misla affirmed by signature on each of these filings 11 that he is the authorized agent of the copyright claimant. Id. contacts Misla through with once its own Plaintiff s received as efforts, updated a member and has membership of AIPR. 12 On February 4, 2008, MarketNext sent a letter to Plaintiff 13 seeking renegotiation of the Contract, demanding that Plaintiff 14 recognize MarketNext s claim of intellectual property rights over 15 Industriales. Docket Nos. 1-15, 15-10. Plaintiff resisted these 16 demands in writing. Docket Nos. 1-16, 15-10. Riefkohl met Misla 17 personally in August 2008 to discuss the contractual dispute. Misla 18 attended the meeting under the belief that Riefkohl had invited him 19 to discuss the content of the magazine, an authority which Riefkohl 20 had rarely exercised during MarketNext s course of performance to 21 that date. After this meeting, MarketNext and Plaintiff exchanged 22 further 23 ownership over the magazine and Plaintiff consistently contested 24 these claims. Docket Nos. 1-20, 1-21, 15-14, 15-15. correspondence in which MarketNext persistently claimed Civil No. 09-1122 (JAF) 1 -7- On May 5, 2008, MarketNext petitioned the Puerto Rico Department 2 of State 3 publications. 4 certified that he had no knowledge of any other entity with the right 5 to 6 application, Misla also submitted an affidavit dated April 24, 2008, 7 asserting MarketNext s own use of the mark in its publications since 8 2003. Docket Nos. 1-23, 15-17. use to the register Docket same Industriales Nos. mark in 1-17, Puerto as 15-11. Rico. its In own the Id. In trademark petition, support for Misla of this 9 Publication continued under the Contract until November 5, 2008, 10 when Plaintiff gave notice of its intent to terminate the Contract. 11 Docket Nos. 1-22, 15-16. Since then, Defendants have produced two 12 more issues of their publication without Plaintiff s authorization. 13 Docket Nos. 1-25, 1-26, 15-18. The masthead in the first of these 14 issues omitted all references to Plaintiff and its officers, and 15 stated that MarketNext is the publisher of Industriales. Docket 16 Nos. 1-25, 15-18. The issue included a letter from Misla which 17 asserted that MarketNext will continue publication after six years as 18 publisher 19 advertisements 20 MarketNext maintains a website, www.industrialesmag.com, to promote 21 its publication. Docket No. 1-30. 22 On of Industriales. from December 17, firms 2008, Id. doing after This issue business Plaintiff featured in Puerto had numerous Rico. learned of Id. the 23 publication of the first issue without its permission, Plaintiff 24 demanded that Graphic, MarketNext s printer, cease and desist from Civil No. 09-1122 (JAF) publication. -8- 1 further Docket Nos. 1-28, 15-20. In its letter, 2 Plaintiff asserted ownership of the trademark, Industriales, and 3 informed Graphic that it had a pending application for trademark 4 protection with the Puerto Rico Department of State. Id. 5 On January 23, 2009, MarketNext filed a petition before the 6 United States Patent and Trademark Office ( PTO ), claiming ownership 7 of the mark, Industriales, and asserting that it had first used the 8 mark in February 2003, and that it had first used the mark in 9 commerce in September 2007. Docket No. 1-24. Subsequently, Plaintiff 10 filed its own petition for trademark protection for Industriales on 11 January 29, 2009, asserting first use and first use in commerce on 12 July 1, 2001. Docket No. 1-33. 13 Misla sent a letter dated February 5, 2009, informing his 14 advertising customers that Industriales, as published by MarketNext, 15 was no longer affiliated with Plaintiff. Docket Nos. 1-32, 15-22. 16 The letter stated that MarketNext would continue to develop its 17 publication and expand distribution in Puerto Rico and the United 18 States. Id. Lastly, the letter asserted that Defendant Olivero was 19 the only person authorized to receive communications on placing 20 advertisements in Industriales. Id. 21 After Plaintiff had terminated its Contract with MarketNext, it 22 hired a new publisher, Media & Marketing Partners Co. ( Media ), to 23 continue 24 president of Media, encountered significant problems from competition publication of Industriales. José J. Balmaceda, the Civil No. 09-1122 (JAF) -9- 1 with MarketNext after Plaintiff had retained him in December 2008 to 2 print Industriales. On January 27, 2009, MarketNext threatened Media 3 with legal repercussions from Media s illegal use of Industriales 4 for its publication authorized by Plaintiff. Docket No. 1-31. In the 5 letter, MarketNext claimed trademark protection under Puerto Rico law 6 and asserted that it had been using the title, Industriales, since 7 May 8 reservations about cooperating with Media due to their previous 9 relationship with MarketNext, leading Balmaceda to believe that 10 MarketNext is thwarting his efforts at producing Industriales on 11 behalf of Plaintiff. Two of Plaintiff s members attested to their 12 confusion 13 Plaintiff s authorization. Docket No. 1-29. These affiants asserted 14 that they would not have advertised in MarketNext s publication if 15 they had known that the magazine was unauthorized. 2003. Id. over Potential interviewees continued and publication advertisers by expressed MarketNext without Id. 16 Plaintiff depends on Industriales to effectively communicate 17 with its members and to inform the public at large about its 18 positions on economic policy in Puerto Rico. Since the termination of 19 the Contract, Plaintiff has had no editorial control over Defendants 20 rival 21 opportunities, and a vehicle to expand its membership if it cannot 22 use the mark, Industriales, without interference. 23 24 publication. Plaintiff risks loss of goodwill, business On February 10, 2009, Plaintiff commenced this action in federal district court seeking monetary damages and injunctive relief. Civil No. 09-1122 (JAF) -10- 1 Docket No. 1. Plaintiff sought a preliminary injunction against 2 Defendants on February 10, 2009, Docket No. 3; Defendants opposed on 3 March 9, 2009, Docket Nos. 42, 44; we held a hearing on March 10, 4 2009, Docket Nos. 47, 48, 49. 5 On March 11, 2009, we entered an order against Defendants, 6 preliminarily enjoining them from using the mark, Industriales, in 7 commerce 8 associate Defendants services with Plaintiff, and competing unfairly 9 with Plaintiff or its licensees by falsely representing the nature of 10 Defendants services. Docket No. 46. We allowed Defendants ten days 11 to comply with the order and certify their compliance by sworn 12 affidavit. Id. Furthermore, we granted the preliminary injunction on 13 the condition that Plaintiff post a duly-qualified surety bond in the 14 amount of $20,000 within seventy-two hours to insure Defendants 15 against the effects of an unwarranted injunction. Id. Lastly, we said 16 that a memorandum opinion would follow the order. via print or electronic media, 17 the public to Id. II. 18 causing Analysis 19 A party may move for a preliminary injunction pursuant to 20 Federal Rule of Civil Procedure 65. In considering the motion, we 21 must ascertain (1) the movant s likelihood of success on the merits; 22 (2) the potential for irreparable harm to the movant absent the 23 injunction; (3) the balance of the equities; and (4) the public Civil No. 09-1122 (JAF) -11- 1 interest. Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 2 112, 115 (1st Cir. 2006). 3 A. 4 Likelihood of Success on the Merits To obtain a preliminary injunction against trademark 5 infringement, the likelihood of a plaintiff s success on the merits 6 turns 7 protection and that the allegedly infringing use is likely to result 8 in consumer confusion. Borinquen Biscuit, 443 F.3d at 116. 9 on 1. the plaintiff s demonstration that its mark merits Entitlement to Trademark Protection 10 Plaintiff asserts that the mark, Industriales, is entitled to 11 trademark protection and that Plaintiff has priority in right over 12 the mark. Docket No. 3. We find that Plaintiff has sufficiently shown 13 that Industriales is a distinctive mark in the market of trade 14 magazines printed in Puerto Rico, and that Plaintiff has prior 15 ownership of the mark. 16 a. Distinctiveness 17 Federal trademark law only protects marks that distinguish one 18 product from another. Borinquen Biscuit, 443 F.3d at 116 (citing Two 19 Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992)). The mark 20 must serve[] the purpose of identifying the source of the goods. 21 Colt Def. LLC v. Bushmaster Firearms, Inc., 486 F.3d 701, 705 (1st 22 Cir. 2007). Where a trademark is unregistered, the plaintiff seeking 23 protection must satisfy the court of the mark s distinctiveness 24 through specific facts. Borinquen Biscuit, 443 F.3d at 117. In Civil No. 09-1122 (JAF) the -12- 1 rebuttal, defendant may show the mark s genericness 2 by preponderance of the evidence. See Colt Def., 486 F.3d at 705. 3 Firstly, marks classified as suggestive, arbitrary, or fanciful 4 are inherently distinctive. Borinquen Biscuit, 443 F.3d at 116. A 5 suggestive mark itself does not convey information about [the] 6 product, 7 imagination in order to draw a conclusion as to the nature of goods 8 and services. Equine Techs., Inc. v. Equitechnology, Inc., 68 F.3d 9 542, 545 (1st Cir. 1995). For instance, COPPERTONE is suggestive of 10 suntan lotion because it hints at the nature of the connected 11 product. Boston Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 12 12 n.10 (1st Cir. 2008). An arbitrary mark consists of a word or 13 symbol in common use, but applied to a product in an idiosyncratic 14 way such that it cannot relate to the mark s common definition. 15 Boston Duck Tours, 531 F.3d at 13 n.11 (citing APPLE computers as 16 unrelated to fruits). A fanciful mark consists of a word that was 17 specifically invented to identify a certain product. Id. at 13 n.12 18 (citing EXXON as designed solely to designate petroleum and other 19 related goods ). 20 but Secondly, rather requires descriptive marks the are consumer those to that exercise fall short the of 21 inherent distinctiveness. Borinquen Biscuit, 443 F.3d at 116. For 22 example, Commerce has been held to be descriptive as applied to an 23 insurance company, rather than inherently distinctive, because it is 24 a word in common use in business. Commerce Nat l Ins. Servs., Inc. v. Civil No. 09-1122 (JAF) -13- 1 Commerce Ins. Agency, Inc., 214 F.3d 432, 440 (3d Cir. 2000). 2 Descriptive marks must acquire secondary meaning before they warrant 3 protection as distinctive marks. Borinquen Biscuit, 443 F.3d at 116. 4 The holder must establish that, in the minds of the public, the 5 primary significance of the mark is to identify the source of the 6 product rather than the product itself. Id. (internal quotation 7 marks omitted). Secondary meaning could be founded upon the holder s 8 longstanding use of the mark in a particular market. See Commerce 9 Nat l Ins. Servs., 214 F.3d at 443-44. 10 Lastly, generic marks are never distinctive. Id. Their primary 11 significance to the relevant public [is] to identify the nature of a 12 good, rather than its source. Colt Def., 486 F.3d at 705 (citing 15 13 U.S.C. § 1064(3)) (internal quotation marks omitted). For instance, 14 M4" was found to be a generic reference to a class of firearms, 15 rather than a specific designation of a particular manufacturer s 16 products. Id. at 710. To establish genericness as a defense, the 17 defendant may resort to consumer surveys, common use in media, use by 18 competitors, purchaser testimony, and plaintiff s own use. Id. at 19 706. 20 I. Suggestive Mark 21 Plaintiff insists that Industriales qualifies as a suggestive 22 and, hence, an inherently distinctive, mark. Docket No. 3. Although 23 Spanish is an official language in Puerto Rico, 1 L.P.R.A. § 59 24 (1999), we translate non-English words into English to assess whether Civil No. 09-1122 (JAF) -14- 1 putative marks are suggestive or descriptive, see Attrezzi, LLC v. 2 Maytag Corp., 436 F.3d 32, 38 (1st Cir. 2006) (applying the doctrine 3 of foreign equivalents). 4 The Spanish term, Industriales, simply means industrialists 5 in English. Cassell s Spanish-English Dictionary 367 (1978). Even 6 though the readers of Industriales may apprehend that it is a trade 7 magazine targeting manufacturers, industrialist, by itself, does 8 not 9 publication. require an imaginary Cf. Equine leap to Techs., 68 identify F.3d the at 545 nature of (finding the that 10 imagination is needed to link Equine Technologies to plaintiff s 11 hoof care products). Therefore, Plaintiff will not likely establish 12 Industriales as an inherently distinctive mark at trial. See id. ii. 13 14 Although Secondary Meaning Industriales does not meet the standard for 15 suggestive marks, it has nonetheless acquired secondary meaning as a 16 descriptive 17 associate[] the [descriptive] term . . . not only with a specific 18 feature or quality, but also with a single commercial source. 19 Boston Duck Tours, 531 F.3d at 13. mark. To become distinctive, the public [must] 20 Like commerce, industrialist is a word in common use which 21 describes certain goods or services. See Commerce Nat l Ins. Servs., 22 214 F.3d at 440. However, Plaintiff points to news articles referring 23 to it as los Industriales as early as 2000. Docket Nos. 1-8, 15-4. 24 The first several issues of Industriales explicitly advertised its 25 affiliation with Plaintiff on the front cover. See Docket No. 1-12. Civil No. 09-1122 (JAF) 1 Mastheads 2 publication s association with Plaintiff until Defendants produced 3 two unauthorized editions in late 2008. Even if the title by itself 4 failed to distinguish the magazine, MarketNext s tireless efforts in 5 promoting the publication served to publicly associate Industriales 6 with Plaintiff s periodical. Certainly, by the end of 2008, the 7 advertising customer base of Industriales, which included many large 8 entities engaged in commerce in Puerto Rico, had come to identify the 9 mark with the journal itself. Such association explains the confusion 10 of some customers when Media approached them for advertising and 11 interviews for its licensed publication. Thus, Plaintiff has produced 12 sufficient evidence for a preliminary finding that Industriales has 13 gained secondary meaning to become a distinctive mark. See Boston 14 Duck Tours, 531 F.3d at 13. later issues continued to alert readers of the iii. Genericness Defense 15 16 in -15- In an effort to defeat trademark protection, Defendants assert 17 that Industriales is a generic term. Docket No. 42. We direct our 18 inquiry to the meaning that the relevant public attaches to the 19 word. See Colt Def., 486 F.3d at 706. 20 Based on the evidence in the record, we find that the relevant 21 market is that of potential advertisers and readers interested in 22 doing business in, or engaging in commerce with, Puerto Rico. As 23 noted above, Plaintiff has cited instances of actual confusion among 24 potential 25 publication. Docket No. 1-29. Defendant has presented no evidence of advertisers who associated the mark with a single Civil No. 09-1122 (JAF) -16- 1 other publications with an identical title, such that Industriales 2 has become a commonplace name for publications in Puerto Rico. Cf. 3 Colt Def., 486 F.3d at 710 (finding that M4" described an entire 4 class 5 trademark protection in Puerto Rico, Docket No. 1-17, does not estop 6 them from raising the genericness defense, see Boston Duck Tours, 531 7 F.3d 8 significance to the relevant public, see id. at 18. As Defendants 9 evidence is equivocal at best, they cannot rebut Plaintiff s case for 10 11 of at firearms). 22-23, it Although is relevant Defendants evidence own of the application mark s for primary trademark protection. See id. b. Priority in Right 12 In riposte, Defendants maintain that, even if Industriales 13 deserves trademark protection, MarketNext, not Plaintiff, owns the 14 mark. Docket No. 42. On the contrary, we find that Plaintiff owns the 15 mark by virtue of its agency relationship with MarketNext. i. 16 First Use 17 At the threshold, it is well settled that the right to use [a] 18 . . . mark is based on priority of appropriation. See Blanchard 19 Importing & Distrib. Co. v. Charles Gilman & Son, Inc., 353 F.2d 400, 20 401 (1st Cir. 1965). However, for federal trademark protection to 21 attach, a mark must have been used in interstate commerce. See The 22 Trade-Mark Cases, 100 U.S. 82 (1879). 23 Although Plaintiff first printed a newspaper supplement, 24 Industriales, in El Nuevo Día in 2001, there is no evidence that 25 circulation of this supplement reached beyond Puerto Rico. However, Civil No. 09-1122 (JAF) -17- 1 there is ample evidence that the magazine, Industriales, has been 2 distributed to Plaintiff s members, which includes public and private 3 entities in the United States proper. See Docket No. 48 (item 18). 4 Moreover, Misla has informed his customers that MarketNext intends to 5 expand distribution in the United States. Docket Nos. 1-32, 15-22. 6 Thus, first use of Industriales as a mark for a magazine may 7 not have occurred until 2003.1 Indeed, MarketNext asserted in its 8 application for trademark protection that it had first used the mark 9 in commerce in September 2007. Docket Nos. 1-17, 15-11. In other 10 words, the mark did not become a valuable asset subject to ownership 11 until it was appropriated by first use in a magazine under the 12 Contract between Plaintiff and MarketNext. See Blanchard Importing, 13 353 F.2d at 401. Assuming that first use occurred during the course 14 of performance on the Contract, we address the ownership of fruits of 15 the contractual relationship. ii. 16 Agency Relationship 17 The civil law of Puerto Rico, 31 L.P.R.A. § 4421-88 (1990), 18 furnishes the substantive law of agency. González-González v. United 19 States, 581 F. Supp. 2d 272, 279 (D.P.R. 2008) (citing Erie R.R. v. 20 Tompkins, 304 U.S. 64, 78 (1938)). In Puerto Rico, an agent binds 21 himself to render a service on behalf of his principal. 31 L.P.R.A. 22 § 4421. The agency relationship ( mandato ) may be formed expressly 23 or may be implied from the acts of the putative agent. Id. § 4422. 1 If Plaintiff had indeed first used Industriales as a mark for publications in 2001, Plaintiff would necessarily be the owner of the mark. See Blanchard Importing, 353 F.2d at 401. Civil No. 09-1122 (JAF) -18- 1 Generally, unless the parties agree to compensation, the agent 2 presumably agrees to perform his services gratuitously. Id. § 4423. 3 Finally, an agent must account for all transactions conducted on 4 behalf of the principal. Id. § 4443. The agent must render to the 5 principal 6 relationship, even if they did not arise from debts owed to the 7 principal. Id. all fruits received in the course of the agency 8 In the case at bar, Plaintiff contracted MarketNext to produce, 9 publish, and promote the publication, Industriales. Docket Nos. 1-10, 10 15-6. MarketNext undertook to make its best efforts to promote 11 Industriales as the exclusive dealer of the trade journal. Id. The 12 Contract required MarketNext to abide by numerous conditions, in 13 terms of production schedules and prohibited content, in rendering 14 performance for Plaintiff. Id. The Contract obliged MarketNext to 15 submit its advertising efforts to regular review by Plaintiff. Id. 16 Although 17 MarketNext was to account for profits, it provided that a certain 18 portion of the profits could become payable to Plaintiff. Id. In the 19 course 20 discretion over the content of the publication. Furthermore, Misla 21 testified that he believed that Riefkohl could influence the content 22 of the magazine. Even if the Contract did not expressly define the 23 relationship as one of agency, we may infer it from the terms of the 24 Contract 25 L.P.R.A. § 4422. the of Contract failed performance, and MarketNext s to Riefkohl conduct specify the manner occasionally under the in exercised agreement. which final See 31 Civil No. 09-1122 (JAF) -19- 1 Because MarketNext was Plaintiff s agent, all fruits received in 2 the course of MarketNext s performance naturally belong to the 3 principal, Plaintiff. See id. § 4443. The mark, Industriales, 4 became a valuable asset after its first use in the magazine in 2003. 5 Although MarketNext was instrumental to the creation of this asset, 6 MarketNext was an agent to Plaintiff and, thus, could not have used 7 the mark for its own sake to appropriate it. Furthermore, MarketNext 8 was under obligation to tender the mark to Plaintiff upon the 9 termination of their Contract.2 See id. Therefore, ownership of the 10 mark properly rests with Plaintiff. 11 2. 12 Plaintiff contends that it is likely to prevail on the merits 13 because of actual confusion by Plaintiff s members and customers who 14 advertise in Industriales. Docket No. 3. Eight factors guide the 15 inquiry into consumer confusion: 16 17 18 19 20 21 22 23 Likelihood of Consumer Confusion (1) the similarity of the marks; (2) the similarity of the goods; (3) the relationship between the parties channels of trade; (4) the relationship between the parties advertising; (5) the classes of prospective purchasers; (6) evidence of actual confusion; (7) the defendant s intent in adopting its mark; and (8) the strength of the plaintiff s mark. 2 In addition, Plaintiff did not grant its rights to Defendants as compensation. The Contract is silent on intellectual property rights, Docket Nos. 1-10, 15-6, and the law generally presumes gratuitous assumption of duties by an agent, 31 L.P.R.A. § 4423. Moreover, the Contract expressly provided for profit-sharing with MarketNext, Docket Nos. 1-10, 15-6, and, thus, fulfilled Plaintiff s obligation to pay MarketNext as an agent who specializes in marketing, see 31 L.P.R.A. § 4423. Civil No. 09-1122 (JAF) -20- 1 Borinquen Biscuit, 443 F.3d at 120. A court should take all eight 2 factors into account, but none is dispositive by itself. Id. 3 Of the eight factors, evidence of actual confusion is most 4 probative of potential confusion in the market. Id. Plaintiff has 5 presented statements from its members indicating actual confusion 6 over 7 Defendants. Docket No. 1-29. the identity of the competing magazines of Plaintiff and 8 Furthermore, Plaintiff and Defendants sparring over the use of 9 an identical magazine title easily disposes of the first two factors. 10 See Borinquen Biscuit, 443 F.3d at 120. Plaintiff s evidence of 11 reluctance of prospective interviewees and advertisers on account of 12 their prior engagement with Defendants satisfies the third, fourth, 13 and fifth factors. See id. 14 Misla s letter informing his customers of the severance of 15 relations with Plaintiff satisfies the seventh factor. Docket Nos. 1- 16 32, 15-22; see Borinquen Biscuit, 443 F.3d at 120. By projecting 17 further 18 understood that Industriales had become a valuable asset for 19 advertising purposes. See Docket Nos. 1-32, 15-22. Furthermore, by 20 insisting that Olivero is the only person authorized to contract 21 advertisements for Industriales, Misla tried to steer clients away 22 from Plaintiff and usurp Plaintiff s trademark ownership to reap 23 anticipated benefits. See id. expansion of the magazine s circulation, Misla clearly 24 Lastly, our previous discussion of the mark s entitlement to 25 protection suggests that the mark has some strength. See Boston Duck Civil No. 09-1122 (JAF) -21- 1 Tours, 531 F.3d at 23 (discussing strength of mark by reference to 2 prior analysis of secondary meaning). Therefore, Plaintiff has shown 3 that it is likely to prevail on the merits. See Borinquen Biscuit, 4 443 F.3d at 116. 5 B. Irreparable Harm 6 [T]rademark infringements may be presumed without more to cause 7 irreparable harm. Am. Bd. of Psychiatry & Neurology v. Johnson- 8 Powell, 129 F.3d 1, 4 (1st Cir. 1997). 9 demonstrated its entitlement to trademark protection and actual 10 confusion among consumers. Plaintiff s loss of editorial control over 11 the contents of Defendants publication also threatens to tarnish 12 Plaintiff s public image, as readers may associate unauthorized 13 statements with Plaintiff itself. Furthermore, Plaintiff has come to 14 rely on the magazine for communicating with its members and the 15 general public, and loss of the publication would erode its influence 16 in print and electronic media associated with industrial interests in 17 Puerto 18 Plaintiff s members and, hence, threaten direct interference with 19 Plaintiff s relationship with its members. Plaintiff has, therefore, 20 established the likelihood of irreparable harm to its business 21 opportunities, goodwill, and capacity for effective communication 22 absent a preliminary injunction. 23 C. Rico. Lastly, Defendants As noted above, Plaintiff has promotional efforts target Balance of Equities 24 In addition to the probable harm noted above, Defendants 25 conduct is noteworthy for its flagrantly bad faith. While punitive Civil No. 09-1122 (JAF) -22- 1 damages are unavailable for contractual breach at common law, the 2 civil 3 contract. See Prado-à lvarez v. R.J. Reynolds Tobacco Co., 405 F.3d 4 36, 44-45 (1st Cir. 2005) (noting that contractual deceit (dolus or 5 dolo) is basis for recovery). The doctrine of dolus extends to pre- 6 contractual negotiations. Satellite Broad. Cable, Inc. v. Telefónica 7 de España, S.A., 807 F. Supp. 218, 220 (D.P.R. 1992) (interpreting 8 Civil Code art. 1802 to require good faith in negotiations). law of Puerto Rico penalizes deceitful performance on a 9 Defendants applications for copyright and trademark protection 10 evince steady encroachment on Plaintiff s rights to the fruits of its 11 agency relationship with MarketNext. Docket Nos. 1-17, 15-11, 44-2. 12 MarketNext should have been aware that it served at the pleasure of 13 Plaintiff, and that MarketNext published the magazine expressly for 14 Plaintiff under their Contract. See Docket Nos. 1-10, 15-6. It is 15 manifest absurdity for MarketNext to demand Plaintiff s recognition 16 of MarketNext s claim to intellectual property, i.e., Plaintiff s 17 relinquishment of its own rights, as the basis for renegotiation of 18 the Contract. Docket Nos. 1-15, 15-10. 19 In addition, MarketNext owed a duty of loyalty, first and 20 foremost, to Plaintiff. See 31 L.P.R.A. § 4442 (requiring agent to 21 follow principal s instructions). MarketNext was, thus, under a duty 22 not 23 opportunities that arose from its work on behalf of Plaintiff. See 24 id. (requiring agent to act as a good parent would for a family). to compete with Plaintiff, its principal, or to usurp Civil No. 09-1122 (JAF) -23- 1 Misla effectively confessed his disloyalty in open court when he 2 testified that he considered his advertising customers to be the 3 chief clients for MarketNext. Furthermore, MarketNext should have 4 known that any customer relations that it had developed under the 5 Contract were for Plaintiff s benefit and that it ought not wrest 6 members away from Plaintiff. In attempting to cement its usurpation 7 of Plaintiff s proprietary interests by its abuse of legal procedure, 8 and in breaching its duty of loyalty to Plaintiff, MarketNext has 9 proven itself to be a faithless servant indeed. 10 11 D. Public Interest Lastly, the public interest weighs in favor of preliminary 12 injunction. Defendants 13 publication without authorization from Plaintiff. Docket Nos. 1-32, 14 15-22. 15 Industriales in such a way as to mislead Plaintiff s members into 16 believing that MarketNext, not Media, is authorized to print the 17 magazine. Docket No. 1-29. Under these circumstances, the public 18 could be easily deceived into believing that Defendants publication 19 represents Plaintiff s views on behalf of Puerto Rico s industries. 20 Given Plaintiff s advocacy on behalf of two-fifths of Puerto Rico s 21 economy, the potential harm to the public is particularly grave. Defendants have have insisted represented upon themselves continuing as their publishers of Civil No. 09-1122 (JAF) -24- 1 III. 2 Conclusion 3 Having heard all the witnesses with relevant knowledge, and 4 examined 5 injunction 6 Defendants to show cause, on or before April 3, 2009, as to why the 7 preliminary injunction should not be converted into a permanent 8 injunction. 9 10 11 12 13 all pertinent against documents, Defendants, we Docket reinstate No. 46, the preliminary and ORDER IT IS SO ORDERED. San Juan, Puerto Rico, this 23rd day of March, 2009. s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U.S. District Judge the

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