ETDO Productions, LLC v. Cruz

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ETDO PRODUCTIONS LLC CIVIL ACTION

VERSUS NO. 19-13184

ALFREDO CRUZ, ET AL SECTION "B"(3)

ORDER AND REASONS

Plaintiff ETDO Productions, LLC and Third-Party Defendants

Jerry Lenaz and Francois Camenzuli filed a motion for summary

judgment. Rec. Doc. 47. Defendant timely filed an opposition. Rec.

Doc. 51.

For the reasons discussed below,

IT IS ORDERED that the motion (Rec. Doc. 47) is DENIED.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On October 18, 2019, Plaintiff ETDO Productions, LLC (“ETDO”)

filed this suit, seeking declaratory relief to be named as rightful

holder of the trademark “Disco Amigos” and logo and to request an

injunction to stop further use of the trademark and logo by

Defendants Alfredo Cruz, Michelle Rossi, Michelle Hudak, Marisa,

Naquin, Sonya Bourgeois, Lisette Bayle, Renee Pastor, and Disco

Amigos Social Aid and Pleasure Club (“The Non-Profit”). Rec. Doc.

1. ETDO brings additional claims against Disco for trademark

infringement and dilution, unfair competition, and unfair business

practices. Rec. Doc. 1.

On January 10, 2020, the Non-Profit filed its answer and

counterclaim, asserting therein federal and state claims for

unfair competition, false advertisement, injury to business

repetition and negligent interference against ETDO. Rec. Doc. 30.

Moreover, the Non-Profit asserted counterclaims against third-

party defendants Francois Camenzuli (“Camenzuli”) and Jerry Lenaz

(“Lenaz”) as members of the Non-Profit’s Board of Directors and

Executive Committee for breach of fiduciary duty and breach of the

duty of care. Rec. Doc. 30. Specifically, with respect to the

breach of fiduciary duty, Defendant alleged that Third Party

Defendants (1) failed to step down after their term, (2) did not

act on board resolutions, and (3) threatened to dissolve the board

if an agreement was not reached on the trademark. Rec Doc. 47-1 at

10. With respect to the breach of duty of care claim, Defendant

alleged that Third Party Defendants (1) failed to present a budget,

(2) profited from the non-profit, (3) did not timely address

financial matters, and (4) made payments to ETDO without board

authorization. Rec. Doc. 30 at 41.

ETDO purports that Camenzuli coined the phrase “Disco Amigos”

on November 16, 2011, and Lenaz designed the accompanying logo of

a disco ball with horns and a nose ring on February 15, 2012. Rec.

Doc. 1 at 6.

On May 16, 2012, Disco Amigos Social Aid and Pleasure Club

was formed with Camenzuli and Lenaz as principal officers and board

members – both of whom continue to serve in this role. Rec. Doc.

1 at 7. According to ETDO, Camenzuli and Lenaz granted implied

licenses to the Non-Profit on May 16, 2012, allowing the latter to

use the trademarked phrase and logo. Rec. Doc. 1 at 8; Rec Doc.

47-4 at 3.

In 2015, Camenzuli and Lenaz founded and transferred their

intellectual property rights to ETDO to manage the Non-Profit’s

assets and to ultimately maintain control over the Disco Amigos

Brand. Rec. Doc. 1 at 2.

As the number of participating groups increased within the

Non-Profit, both ETDO and the Non-Profit began to contemplate

restructuring the organization and the use of the intellectual

property. Rec. Doc. 1 at 3. Thus, according to ETDO, a proposal to

sign a formal license agreement between ETDO and the Non-Profit

was presented to the Non-Profit’s Board of Directors. Rec. Doc. 1

at 8. However, the discussion came to a deadlock as five members

of the Board - namely the defendants in the matter - found the

agreement improper. Rec. Doc. 34-1 at 3. According to the Non-

Profit, this was the first instance in which ETDO and the third-

party defendants ever claimed ownership of the intellectual

property. Rec. Doc. 51 at 6. Believing that the trademark belonged

to the Non-Profit, the dissenting board members claimed that such

a proposal was unnecessary. Rec. Doc. 34-1 at 3. The remaining

three members disagreed and attempted to prevent the Non-Profit

from further use of the trademark until the license agreement could

be resolved. Rec. Doc. 1 at 3. After an unsuccessful attempt to

resolve the deadlock, ETDO asserts that Lenaz and Camenzuli revoked

the implied licenses previously granted to the Non-Profit. Rec. 1

at 3. Nevertheless, the Non-Profit proceeded to use the

intellectual property without ETDO’s approval. Rec. Doc. 1 at 3.

Plaintiff and Third Party Defendants filed the instant motion

for summary judgment, alleging that ETDO is the rightful owner of

the “Disco Amigos” trademark and logo and the Non-Profit’s

unauthorized use of the trademark has caused a likelihood of

confusion. Rec. Doc. 47-1 at 2, 6. Defendant filed a response in

opposition, arguing that Camenzuli and Lenaz’s mere “creative

contributions” and single use of the mark is insufficient to

establish ownership. Rec. Doc. 51 at 10. Moreover, as a result of

the third party defendants’ failure to respond to the Non-Profit’s

counterclaims, Defendant asserts that its allegations set forth

against Camenzuli and Lenaz have been admitted as true. Rec. Doc.

51 at 10.

LAW AND ANALYSIS

a. Summary Judgment Standard

Pursuant to Federal Rule of Civil Procedure 56, summary

judgment is appropriate when “the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as

a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986) (quoting Fed. R. Civ. P. 56(c)). A genuine issue of material

fact exists if the evidence would allow a reasonable jury to return

a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). As such, the court should view all facts

and evidence in the light most favorable to the non-moving party.

United Fire & Cas. Co. v. Hixon Bros. Inc., 453 F.3d 283, 285 (5th

Cir. 2006).

When the movant bears the burden of proof, it must

“demonstrate the absence of a genuine issue of material fact” using

competent summary judgment evidence. Celotex, 477 U.S. at 323.

However, “where the non-movant bears the burden of proof at trial,

the movant may merely point to an absence of evidence.” Lindsey v.

Sears Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994). Should the

movant meet its burden, the burden shifts to the non-movant, who

must show by “competent summary judgment evidence” that there is

a genuine issue of material fact. See Matsushita Elec. Indus. Co.,

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Lindsey, 16

F.3d at 618. However, “a party cannot defeat summary judgment with

conclusory allegations, unsubstantiated assertions, or only a

scintilla of evidence.” See Sec. & Exch. Comm’n v. Arcturus Corp.,

912 F.3d 786, 792 (5th Cir. 2019).

b. Lanham Act Trademark Infringement Claim

Title 15 U.S.C. § 1125 prohibits any person from using in

commerce “any word, term, name, symbol, or device. . .that is

likely to cause confusion, or to cause mistake, or to deceive. .

.as to the origin, sponsorship or approval of his or her goods. .

.by another person See 15 U.S.C. § 1125(a). To successfully assert

an infringement claim under the Lanham Act, the plaintiff must (1)

establish ownership in a legally protectible mark and (2) prove

infringement by demonstrating a likelihood of confusion. Amazing

Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 235-36 (5th Cir.

2010) (citing Bd. Of Supervisors for La. State Univ. Agric. and

Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 474 (5th Cir.

2008)).

The pertinent issue in this case is the ownership of the

“Disco Amigos” trademark and logo. In Hana Financial, the Court

stated, “rights in a trademark are determined by the date of the

mark’s first use in commerce. The party who first uses a mark in

commerce is said to have priority over other users.” Hana Fin.,

Inc. v. Hana Bank, 574 U.S. 418, 419 (2015); see also Union Nat.

Bank of Texas, Loredo, Tex. V. Union Nat. Bank of Texas, Austin,

Tex., 909 F.2d 839, 842-43 (5th Cir. 1990) (“the first one to use

a mark is generally held to be the ‘senior’ user and is entitled

to enjoin other ‘junior’ users from using the mark”). To establish

ownership, the party must prove it has (1) adopted the mark and

(2) was used in a sufficiently public way that the public may

identify the party as the adopter of the mark. Blue Bell, Inc. v.

Farah Mfg. Co., Inc., 508 F.2d 1260, 1265 (5th Cir. 1975). The use

requirement demands more than a party’s mere conception or

advertisement of the mark, but its sale of services to the public

that was actually rendered. Id; see also 15 U.S.C. § 1127. The

Fifth Circuit further provided, “even a single use in trade may

sustain trademark rights if followed by continuous commercial

utilization.” Id; see also Airs Aromatics, LLC, v. Victoria’s

Secret Stores Brand Management, Inc., 744 F.3d 595, 599 (9th Cir.

2014) (“the owner [of the common law trademark] must establish not

only that he or she used the mark before the mark was registered,

but also that such use has continued to the present”).

In the instant case, Plaintiff believes itself to be the owner

of the trademark because its alleged assignors Lenaz and Camenzuli

were the first to use the mark at the Krewe of Muses Parade. Rec.

Doc. 47-1 at 3. Plaintiff further argues that Lenaz and Camenzuli

publicized “Disco Amigos” using the trademark on social media and

merchandise to solicit gigs and membership dues all prior to the

Non-Profit’s formation. Rec. Doc. 47-1 at 3. By contrast,

Defendant’s argument is based on its contention that Lenaz and

Camenzuli’s sole use of the trademark is insignificant to establish

ownership because they failed to continuously use the mark

thereafter. Rec. Doc. 51 at 11.

Because the Fifth Circuit has not spoken on trademark

ownership disputes among board members of the same

organization, Defendant relies on the Lyons case, which shares

similar facts to the instant case. The relevant trademark in

Lyons was used to name a veterinary specialist organization, and

the plaintiff, who was an active member of its organizing

committee, sought ownership of the mark by alleging first use

through her various educational programs. Lyons v. American

College of Veterinary Sports, 859 F.3d 1023, 1024-25 (Fed. Cir.

2017). Upon review of the plaintiff’s claim, the Trademark

Trial and Appeal Board established a three-part framework to

determine ownership: “(1) the parties’ objective expectations;

(2) who the public associates with the mark; and (3) to whom the

public looks to stand behind the quality of goods or services

under the mark.” Id. at 1026. The court affirmed the board’s

decision to reject the plaintiff’s claim, finding that it was

never the parties’ collective intent to render the plaintiff’s

personal services under the trademark and that the public only

associated the mark with the defendant’s services and quality

control. Id. at 1030-31.

Plaintiff offers the declarations of both Lenaz and

Camenzuli, who both claim as prior owners of the mark to have

granted and later revoked an implied non-exclusive license to the

Non-Profit to use the “Disco Amigos” logo. Rec. Doc. 47-4 at 3;

Rec. Doc. 47-5 at 3. Plaintiff also provided the Court with a

collection of invoices issued by ETDO, containing a description of

what appears to be “Disco Amigos” services to various customers.

See Rec. Doc. 47-4 at 10-17.

By contrast, Defendant disputes the existence of the implied

license and offers the declarations of individuals, who were both

members of the Non-Profit and its board of directors, to support

its argument. See Rec. Doc. 51-2; Rec. Doc. 51-3; Rec. Doc. 51-5.

In the declarations, the members individually attested that they

joined the Non-Profit “with the understanding that [they were]

joining a social aid and pleasure club called ‘Disco Amigos’ as a

performer.” See Rec. Doc. 51-2 at 3; Rec. Doc. 51-3 at 3; Rec.

Doc. 51-4 at 3; Rec. Doc. 51-5 at 3. During their respective terms

as board members, they claimed that they were never made aware of

Lenaz and Camenzuli’s ownership claim, the alleged implied license

to the Non-Profit, and the alleged assignment agreement to ETDO.

See Rec. Doc. 51-2; Rec. Doc. 51-3; Rec. Doc. 51-5. They further

stated that it was not until September 3, 2019 when they were first

informed of the ownership claim in a membership email. Rec. Doc.

51-2 at 3; Rec. Doc. 51-3 at 4; Rec. Doc. 51-4 at 3; Rec. Doc. 51-

5 at 4. Rather, Defendant argues that by virtue of being the true

trademark owner, the Non-Profit was solely responsible for

providing “club services”, including arranging performances and

organizing events. Rec. Doc. 51 at 12.

The foregoing conflicting evidence show an existing material

factual dispute, i.e. whether Plaintiff and Third Party

Defendants continuously used the trademark in a manner that

clearly informed the Defendant of their rights and established

ownership of the “Disco Amigos” trademark and logo. Therefore,

a genuine issue of material fact exists regarding the issue

of trademark ownership that would preclude summary judgment.

New Orleans, Louisiana this 28th day of September, 2020

___________________________________

SENIOR UNITED STATES DISTRICT JUDGE