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Exploring the Latest in Intellectual Property Law
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Seeking Harmony: Supreme Court to Consider Retrospective Relief for Timely Copyright Claims Under Discovery Rule

by | Oct 5, 2023 |

The Supreme Court of the United States agreed to consider whether a copyright plaintiff’s timely claim under the discovery rule is subject to retrospective relief for infringement occurring more than three years before the suit was filed. Warner Chappell Music, et al. v. Nealy, Case No. 22-1078 (Supr. Ct., Sept. 29, 2023) (certiorari granted). The specific question presented is as follows:

Whether, under the discovery accrual rule applied by the circuit courts and the Copyright Act’s statute of limitations for civil actions, 17 U. S. C. §507(b), a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.

Music Specialist and Sherman Nealy (collectively, Nealy) filed a copyright infringement suit against Warner alleging that Warner was using Nealy’s musical works based on invalid third-party licenses and in violation of 17 U.S.C. § 501. The alleged copyright infringement occurred as early as 10 years before Nealy filed the lawsuit. The district court denied Warner’s motion for summary judgment on statute of limitation grounds, finding that there was a genuine dispute of material fact regarding when Nealy’s claim accrual occurred. In a separate order, the district court certified for interlocutory appeal whether “damages in this copyright action are limited to the three-year lookback period as calculated from the date of the filing of the Complaint pursuant to the Copyright Act and Petrella.” Warner appealed.

The US Court of Appeals for the Eleventh Circuit agreed with the district court, issuing a decision that where a copyright plaintiff has a timely claim for infringement occurring more than three years before the filing of the lawsuit, the plaintiff may obtain retrospective relief for that infringement.

The Eleventh Circuit’s approach specifically disagreed with the Second Circuit’s approach to the application of the discovery rule, thereby creating a circuit split.



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Back to the Future: Prior Third-Party Settlement Doesn’t Impact Future Trademark Licensees

by | Sep 7, 2023 |

The US Court of Appeals for the Eleventh Circuit ruled that under certain circumstances a trademark licensee can bring a claim against a third party for unfair competition under the Lanham Act even if the licensing agreement does not expressly authorize it to do so. Overhead Door Company of Kansas City v. OGD Equipment Company, LLC, Case No. 22-10985 (Fed. Cir. Aug. 22, 2023) (Branch, Brasher, JJ.; Winsor, Dist. J., sitting by designation).

This appeal involved three parties: D.H. Pace Company, Overhead Door Corporation and Overhead Garage Door (OGD). All three companies are involved in selling and servicing garage doors. Pace is a licensee of Overhead. Under its license, Pace is permitted to advertise and promote the trade name OVERHEAD DOOR COMPANY. OGD is a competitor of Overhead and Pace. Prior to the current appeal, Overhead and OGD had been involved in litigation involving OGD’s alleged trademark infringement and unfair trade practices, which resulted in a settlement. As a part of the settlement, OGD and Overhead could not bring suits against each other. However, the settlement terms were not expressly binding on any current or future licensees of Overhead.

In the current litigation, Pace filed suit against OGD for unfair competition in violation of § 43(a) of the Lanham Act, deceptive trade practices and various state trademark infringement violations. Pace alleged that OGD was leading consumers to believe that it was the same company as, or was affiliated with, Overhead (Pace’s licensor). In response, OGD moved for summary judgment, which the district court granted. The district court ruled that the licensing agreement between Pace and Overhead was a contractual bar to relief because the agreement did not affirmatively give Pace the right to sue. The district court also ruled that as a non-exclusive licensee, Pace lacked standing to bring its suit. The district court held that because Pace’s trademark rights were derived from a licensing agreement with Overhead, by discharging rights in the prior settlement with OGD, Overhead also discharged Pace’s right to sue.

Through a de novo review, the Eleventh Circuit disagreed with the district court’s grant of summary judgment against Pace. As the district court recognized, under § 43(a) of the Lanham Act, parties other than the owner of the mark can bring suit, but here the district court barred Pace’s claims based on the licensing agreement, Pace’s status as a non-exclusive licensee and the settlement agreement between OGD and Overhead. In reversing, the Eleventh Circuit held that none of these reasons was sufficient to bar Pace’s claims.

According to the Eleventh Circuit, the licensing agreement did not bar Pace from suing since there were no contractual term imposing a bar. While a licensee’s right to sue can be restricted, there was nothing in the licensing agreement at issue that limited Pace’s right to sue. The license agreement did not address trademark enforcement or either party’s ability to sue.

The Eleventh Circuit explained that the district court misread the Eleventh Circuit’s 2019 decision in Kroma Makeup v. Boldface [...]

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Out of Tune: Eleventh Circuit Permits Retrospective Relief for Timely Copyright Claims under Discovery Rule

by | Mar 9, 2023 |

The US Court of Appeals for the Eleventh Circuit furthered a circuit split in holding that, as a matter of first impression, a copyright plaintiff’s timely claim under the discovery rule is subject to retrospective relief for infringement occurring more than three years before the suit was filed. Nealy v. Warner Chappell Music, Inc., Case No. 21-13232 (11th Cir. Feb. 27, 2023) (Wilson, Jordan, Brasher, JJ.)

Section 507(b) of the Copyright Act includes a three-year statute of limitations that runs from the time the claim accrues, and a claim may only accrue one time under the discovery rule. In 2014, the US Supreme Court held in Petrella v. Metro-Goldwyn-Mayer, Inc., that the equitable doctrine of laches does not bar copyright claims that are otherwise timely under the three-year limitations period set forth in § 507(b). The circuits are split on Petrella’s application—the Second Circuit strictly limits damages from copyright infringement to the three-year period before a complaint is filed, whereas the Ninth Circuit permits retrospective relief for infringement occurring more than three years before the lawsuit’s filing as long as the plaintiff’s claim is timely under the discovery rule.

Music Specialist and Sherman Nealy (collectively, Music Specialist) filed a copyright infringement suit against Warner alleging that Warner was using Music Specialist’s musical works based on invalid third-party licenses and in violation of 17 U.S.C. § 501. The alleged copyright infringement occurred as early as 10 years before Music Specialist filed the present lawsuit. The district court denied Warner’s motion for summary judgment on statute of limitation grounds, finding that there was a genuine dispute of material fact regarding when Music Specialist’s claim accrual occurred. In a separate order, the district court certified for interlocutory appeal whether “damages in this copyright action are limited to the three-year lookback period as calculated from the date of the filing of the Complaint pursuant to the Copyright Act and Petrella.” Music Specialist appealed.

The Eleventh Circuit concluded that where a copyright plaintiff has a timely claim for infringement occurring more than three years before the filing of the lawsuit, the plaintiff may obtain retrospective relief for that infringement. The Court found that Petrella focused on the application of 17 U.S.C. § 507(b) to claim accrual under the injury rule, not the discovery rule, and was therefore inapplicable. The injury rule precludes recovery for harms occurring earlier than three years before the plaintiff files suit. On the other hand, the discovery rule permits damages recovery for infringing acts that copyright owners reasonably become aware of years later. Therefore, the discovery rule permits timely claims for infringement that occurred more than three years before the suit. The Eleventh Circuit found that the Supreme Court expressly reserved application of the discovery rule’s propriety for a future case and that, in the Eleventh Circuit’s opinion, the plain text of the Copyright Act does not place a time limit on remedies for an otherwise timely claim.

Practice Note: The Eleventh Circuit disagreed with the Second Circuit’s [...]

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All the Benefits of a Reverse Triangular Merger, None of the IP Merger Mess

by | Mar 2, 2023 |

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s summary judgment dismissal of plaintiff’s claim that the defendant failed to provide a payment conditioned on the sale, merger or transfer of certain intellectual property since ownership was not transferred via the merger. GSE Consulting, Inc. v. L3Harris Techs., Inc., Case No. 22-10647 (11th Cir. Feb. 8, 2023) (Rosenbaum, Lagoa, Wetherell, JJ.)

L3Harris specializes in defense and information technology and until recently was known as Harris Corporation. The name change from Harris to L3Harris was the result of a reverse triangular merger it executed over 2018 and 2019 whereby its subsidiary, Leopard Merger Sub, merged with its target, L3 Technologies.

In 2008, Harris and GSE combined forces to develop an oil sands heavy oil recovery process. In addition to yielding intellectual property relating to the process’s corresponding radio frequency heating technology, the collaboration resulted in a consulting agreement that would have extended through December 31, 2022. Under the consulting agreement, GSE provided its specialized infrastructure and energy consulting services on call and assigned all its rights to intellectual property developed under the agreement to Harris. In return, GSE received base pay and the right of first refusal for 10% of the direct labor workshare of Harris’s radio frequency heating projects.

The consulting agreement also included several payment conditions to benefit GSE or mitigate its risk. GSE believed that the Harris-L3 merger triggered the following condition to the tune of $4 million:

6.b. Payments calculation for the following to be 3% of market capitalization, capped at $4M:

 

  1. in the event the IP is sold, merged or transferred and the primary basis of the sale is not the IP.

GSE argued that the intellectual property relevant to the consulting agreement had “merged” because the Harris-L3 plan of merger addressed that intellectual property and included it in the merger. GSE therefore issued a $4 million invoice to L3Harris.

L3Harris rejected the invoice, arguing that while the plan of merger addressed the relevant intellectual property, the relevant language declared that the merger would have no effect on Harris and L3’s respective ownership interests: “all such rights will survive unchanged after the consummation of the [merger].” According to L3Harris, ownership of the relevant intellectual property did not change through the merger. Not long after rejecting GSE’s invoice, L3Harris also shut down its radio frequency heating program.

GSE subsequently filed a lawsuit alleging breach of contract, and the parties filed competing summary judgment motions. GSE maintained its position that it was owed $4 million but also argued that if the district court found the payment provision ambiguous then it should consider testimony from those who brokered the agreement demonstrating that a corporate merger was sufficient to trigger payment. L3Harris argued that the provision was unambiguous and thus Florida law prohibited considering extrinsic evidence. L3Harris also argued that its merger didn’t involve anything that triggered payment (i.e., the relevant intellectual property was not sold, merged or transferred).

The district court granted [...]

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I Know That Brand . . . Or Do I? Reviewing the Eleventh Circuit’s Likelihood of Confusion Analysis

by | Jan 26, 2023 |

The US Court of Appeals for the Eleventh Circuit reversed and remanded a district court’s summary judgment ruling finding no likelihood that consumers might be confused as to any relationship between competitors operating in the same state, in similar trade channels and using a mark having the same primary word component. The Court held that a reasonable factfinder could determine that there was a likelihood of confusion between the parties’ marks as used in commerce. FCOA LLC v. Foremost Title & Escrow Services LLC, Case No. 19-13390 (11th Cir. Jan. 12, 2023) (Branch, Grant, Tjoflat, JJ.)

FCOA is an insurance company that has been selling and marketing insurance policies using FOREMOST marks since 1952. Foremost is a shell company selling title insurance on behalf of a law firm. Both parties operate in Florida. Seven months after Foremost started using its FOREMOST mark, FCOA sent Foremost a cease-and-desist letter. Foremost disputed the trademark infringement allegations and denied having any knowledge of FCOA or FCOA’s FOREMOST marks. The district court denied FCOA’s summary judgment motion and granted Foremost’s cross-motion for summary judgment, holding that FCOA failed to show a likelihood of confusion between the marks. FCOA appealed.

The Eleventh Circuit reviewed the district court decision de novo. Since there was no dispute that FCOA’s marks were valid, the Court focused its trademark infringement analysis on whether Foremost’s FOREMOST mark was likely to cause consumer confusion. It did so by analyzing its eight likelihood of confusion factors:

  • Actual confusion is the most important factor in the analysis. The Eleventh Circuit found no evidence that consumers actually confused the parties’ marks in the period between Foremost’s allegedly infringing acts and the lawsuit filing. Therefore, this factor weighed against a likelihood of confusion.
  • A mark’s strength/distinctiveness is the second most important factor because it analyzes the scope of the mark’s protection. The Eleventh Circuit found that FCOA’s FOREMOST mark was distinctive because, although the word mark in isolation is descriptive, it achieved secondary meaning through consumer recognition and commercial strength. The Court did not find Foremost’s list of likely inactive businesses using FOREMOST to be compelling rebuttal evidence. Therefore, this factor weighed in favor of a likelihood of confusion.
  • Similarity of the marks is relevant because the likelihood of confusion increases as the marks share more overall similarities. The Eleventh Circuit focused on the distinctive parts of the marks, noting that both logos feature FOREMOST prominently in bold, have two lines of text and are similarly centered and stylized. While there are differences in the logo fonts and colors, the Court determined that this factor still weighed in favor of confusion because consumers are unlikely to be discerning about these differences.

  • Similarity of the products that the marks represent is relevant in determining whether consumers think the marks originate from a single source. The Eleventh Circuit determined that [...]

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On the Border of Art and Trademark: First Amendment Trumps the Lanham Act

by | Dec 8, 2022 |

The US Court of Appeals for the Eleventh Circuit weighed trademark rights against free speech considerations and found that the First Amendment protected use of an artistic work that was not deliberately misleading. MGFB Properties Inc. et al. v. 495 Productions Holdings LLC et al., Case No. 21-13458 (11th Cir. Nov. 29, 2022) (Luck, Brasher, Hull, JJ.) (Brasher, J., concurring).

The suit was brought by MGFB Properties, Flora-Bama Management and Flora-Bama Old S.A.L.T.S. (collectively, the plaintiffs). The plaintiffs own and operate the Flora-Bama Lounge, Package and Oyster Bar on the Florida-Alabama border. The lounge has been in business since 1964 and is well known in the region. The plaintiffs registered their trademark FLORA-BAMA in 2013.

Viacom and 495 Productions (collectively, the defendants) produce reality television series, such as the hit 2009 series Jersey Shore. In light of Jersey Shore’s success, the defendants produced several spinoffs. In 2016 the defendants decided to develop a new spinoff based on “southern beach culture” and chose the term “Floribama” to describe “relaxing Florida beaches with the down-home Southern vibe of Alabama.” The defendants were aware of the name’s connection to the Florabama Lounge but used the term regardless to identify a specific stretch of the Gulf Coast (the Florida and Alabama coasts) and inserted dialogue into the show to explain the term. The show’s logo emphasized its connection to the Jersey Shore franchise:

The plaintiffs argued that the defendants’ use of “Floribama” was a violation of the Lanham Act and caused unfair confusion and damage to their brand. The district court granted summary judgment for the defendants. Plaintiffs appealed.

The Eleventh Circuit upheld the district court’s judgment that the defendants’ First Amendment rights as the creators of an artistic work outweighed the plaintiffs’ interest in their trademark and in avoiding confusion around their brand: “[c]reative works of artistic expression are firmly ensconced within the protections of the First Amendment.” In reaching its outcome, the Court applied the 1989 Rogers v. Grimaldi test.

Under the first prong of the Rogers test, “an artistically expressive use of a trademark will not violate the Lanham Act unless the use of the mark has no artistic relevance to the underlying work whatsoever.” Here, the Eleventh Circuit found that the defendants’ use of the term “Floribama” to describe the geographic area featured in Floribama Shore and the subculture of that region satisfied the first element of the Rogers test. The Court held that it was sufficient for the defendants’ use of “Floribama” to be relevant to their show, even if the term was not “necessary” to production of the show.

Under the second prong of the Rogers test, the Eleventh Circuit found that the defendants’ use of “Floribama” was not explicitly misleading “as to the source or content of the work” [...]

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Too Quick to Be Lit—Need to Serve That Complaint First

by | Sep 22, 2022 |

The US Court of Appeals for the Eleventh Circuit reversed a default judgment and monetary award in favor of the plaintiff, which was issued in a case where the plaintiff filed (but never served) an amended complaint in a copyright infringement action. The Court concluded that the amended complaint stated a new claim for relief but was not properly served on the defendants in accordance with the Federal Rules of Civil Procedure. Anthony Campbell v. Rayshawn Bennett et al., Case No. 21-10978 (11th Cir. Sept. 7, 2022) (Wilson, Branch, Lagoa, JJ.) (Lagoa, J. concurring)

In 2015, Anthony Campbell (professionally known as Rackboy Cam) wrote and recorded a song called “Everything Be Lit,” and registered his copyright with the US Copyright Office in February 2017. Later, in 2018, Rackboy Cam filed suit against June James, Rakim Allen, Rayshawn Bennett (professionally known as YFN Lucci) and Think It’s a Game Records (TIG) for copyright infringement based on Bennett’s 2016 recording and release of a similar song, “Everyday We Lit.” The complaint alleged infringement under 17 U.S.C. §§ 106 and 501 and sought “an award of … actual damages, trebled, as well as all profits Defendants derived from infringing the Plaintiff’s Copyright in the Work,” statutory damages and injunctive relief.

James and Allen failed to respond to the initial complaint and the district court entered a default against them. Rackboy Cam later filed an amended complaint, requesting for the first time an award of actual damages in the form of “all profits Defendants derived, jointly and severally,” from the infringing work. In the amended complaint, Rackboy Cam did not request statutory damages. As before, James and Allen did not respond. Rackboy Cam ultimately settled with the other defendants, and they were dismissed from the action.

The district court ultimately entered a default judgment against James and Allen, awarding almost $1.5 million in profits, jointly and severally, as well as prejudgment interest, a permanent injunction, a perpetual 50% running royalty against future infringement and costs to Rackboy Cam.

James moved the district court to set aside the default, arguing that he was not properly served with the initial complaint—an argument rejected by the district court. The district court concluded that because James defaulted prior to the filing of the amended complaint, and since the amended complaint did “not allege or request new or additional relief from Allen and James,” the plaintiff was not required to have served it on James under Fed. R. Civ. P. 5. Rackboy Cam then moved for entry of a default judgment and requested the above award. The district court granted the motion and James appealed.

The issue before the Eleventh Circuit was whether the amended complaint contained a new claim for relief—joint and several liability for profits—and whether Rackboy Cam was therefore required to serve the amended complaint.

Under Rule 5, service of a pleading filed after the initial complaint is not required on a party who is in default for failing to appear, unless the pleading asserts a [...]

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Play It Again and Again (Sam): Meanwhile No Injunction, No Fees

by | Sep 15, 2022 |

In its third opportunity to review the district court’s decision in this trade secret case involving flooring, the US Court of Appeals for the Eleventh Circuit again reversed, this time vacating a permanent injunction and an award of attorneys’ fees. The Eleventh Circuit noted that the district court failed to make the findings required to support an injunction and abused its discretion in awarding full fees notwithstanding prior reversal of relief awarded. AcryliCon USA, LLC v. Silikal GmbH, Case No. 21-12853 (11th Cir. Aug. 29, 2022) (Newsom, Marcus, JJ.; Middlebrooks, Distr. J.)

In an earlier appeal in this case, the Eleventh Circuit reversed a ruling on trade secret misappropriation rendered by the district court in favor of AcryliCon USA (AC-USA) and vacated the damages award. An aspect of the Court’s ruling was that the “permanent” injunction entered by the district court was only preliminary in nature (not permanent) and was, as a matter of law, dissolved because the district court did not include it in the original final judgment. On remand, the district court was ordered to determine the appropriate amount of attorneys’ fees the prevailing party should receive. However, the district court just entered the same amount of attorneys’ fees it had originally awarded and again entered a “permanent” injunction barring the use of the trade secret at issue, concluding that it was obliged to do so by the Eleventh Circuit’s ruling in the first appeal.

In the second appeal, the Eleventh Circuit held that AC-USA failed, as a matter of law, to prove its misappropriation claim and reversed the judgment entered in favor of AC-USA on that count. The Court also reversed the district court’s judgment that its $1.5 million damages award could be sustained on the basis of the contract claim once the misappropriation claim was reversed. The Court ruled that, as a matter of law, since AC-USA had failed to prove actual damages on its consequential damages theory, it could only recover nominal damages based on its breach of contract claim. Finally, the Court concluded that AC-USA was entitled to attorneys’ fees only on its breach of contract claim because, under Georgia law, even a nominal damages award would still materially alter the legal relationship between the parties.

In the second remand, the district court awarded essentially the same amount of attorneys’ fees ($1.3 million) to AC-USA but acknowledged that, since Silikal prevailed in vacating the award of compensatory and punitive damages, Silikal “was the prevailing party on the appeal under the terms of the [agreement]” and was entitled to almost $500,000 in attorneys’ fees for its successful appeal. The district court also awarded $100 in nominal damages to AC-USA for its successful appeal on the breach of contract claim. The district court then entered a permanent injunction enjoining Silikal “from disclosing or using in any way, directly or indirectly, the [ . . . resin . . . ] to anyone other than Plaintiff.”

Both parties appealed. AC-USA appealed the award of [...]

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DMCA Scienter Requirement Not Satisfied without Evidence of Knowledge of Inducement or Concealment

by | Sep 1, 2022 |

Interpreting a provision of the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1202(b), for the first time, the US Court of Appeals for the Eleventh Circuit affirmed a summary judgment ruling that the plaintiff failed to satisfy the second scienter requirement of § 1202(b) by not showing that the defendant knew, or had reasonable grounds to know, that its actions would induce, enable, facilitate or conceal a copyright claim. Victor Elias Photography, LLC v. Ice Portal, Inc., Case No. 21-11892 (11th Cir. Aug. 12, 2022) (Newsom, Marcus, JJ; Covington, Distr. J.)

Victor Elias is a professional photographer who takes photographs for hotels and resorts throughout the United States, Mexico and the Caribbean. Between 2013 and 2017, Elias took pictures for Starwood Hotels & Resorts and Wyndham Hotel & Resorts. As part of his process, Elias embedded copyright management information (CMI) into the image files.

During this period and into 2018, Starwood and Wyndham contracted with Ice Portal (a division of Shiji at the time of the appeal) to process thousands of images, including 220 images taken by Elias, and make them available to online travel agents. This processing included converting the images to JPEG format, making copies in various industry-standards sizes and optimizing the files for faster display. The processing sometimes resulted in the loss of an image file’s metadata. In 2016, Elias discovered infringing online uses of his images that lacked the embedded CMI. He filed suit against Ice Portal, contending that the stripping of metadata resulted in loss of his embedded CMI, which violated two sections of the DMCA: 17 U.S.C. §§ 1202(a) and 1202(b).

Following discovery, the district found that Elias could not “satisfy the ‘second scienter requirement’ of the statute” and granted Shiji’s motion for summary judgment. Relying on the 2018 Ninth Circuit case Stevens v. Corelogic, the district court found that Elias had not established that Shiji “knew or had reason to know that its action would induce, enable, facilitate, or conceal infringement.” The court determined that Elias failed to demonstrate that the removal of CMI “is the reason, or even the likely reason, for the infringing use of the images,” or that “Shiji was even aware that searching for terms embedded in the extended attributes was a method used by copyright holders to find infringement on the internet.” Elias appealed.

Because this was a novel issue for the Eleventh Circuit, the Court interpreted § 1202(b) as an issue of first impression. After considering the plain terms of the statute and the opinions of sister circuits, the Court agreed with its sister circuits that to satisfy the scienter requirement of §1202(b), a plaintiff “must make an affirmative showing . . . [that] the defendant was aware [of] or had reasonable grounds to be aware of the probable future impact of its actions.”

Elias urged the Eleventh Circuit to adopt a standard that would only require a plaintiff to demonstrate that CMI was knowingly removed without consent and that the defendant either “knows, or has [...]

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Veil Piercing Under Lanham Act Requires Specific Showing of Liability

by | Aug 18, 2022 |

The US Court of Appeals for the Eleventh Circuit reversed a district court decision granting summary judgment of liability under the Langham Act, finding that the plaintiffs failed to apply the correct standards for piercing the corporate veil and individual liability in a false advertising and false endorsement dispute. Edmondson et al. v. Velvet Lifestyles, LLC, Case No. 20-11315 (11th Cir. Aug. 4, 2022) (Jordan, Pryor, Marcus, JJ.)

Miami Velvet operated as a swingers’ nightclub in Miami, Florida. Miami Velvet was owned, operated and managed by Velvet Lifestyles, LLC. Joy Dorfman was the president, manager and a salaried employee of Velvet Lifestyles. My Three Yorkies, LLC, was the managing member of Velvet Lifestyles, and Dorfman was, in turn, the managing member of Yorkies. She was also the president of Yorkies and received the management fees that Velvet Lifestyles paid Yorkies. Approximately 30 individuals sued Velvet Lifestyles, My Three Yorkies and Dorfman for false advertising and false endorsement under the Lanham Act. The individuals alleged that Velvet Lifestyles, My Three Yorkies and Dorfman used the individuals’ images in advertisements without their consent, without any compensation and in such a way that implied they were affiliated with and endorsed Miami Velvet.

The district court granted the plaintiffs’ motion for summary judgment, finding that Velvet Lifestyles, My Three Yorkies and Dorfman’s use of the plaintiffs’ images constituted false advertising and false endorsement. The plaintiffs’ motion treated all three defendants as effectively a single entity, and the district court made no finding that either My Three Yorkies or Dorfman had any direct involvement in the advertising. The district court did not apply the individual liability standard to Dorfman and instead treated all three defendants as a single entity as the plaintiffs’ motion had done. A jury awarded damages at trial. After post-trial motion practice, My Three Yorkies and Dorfman appealed.

The plaintiffs argued on appeal that My Three Yorkies and Dorfman had not properly preserved these issues for review on appeal. The Eleventh Circuit rejected the plaintiff’s argument, finding that because the plaintiffs did not properly plead the standards for piercing the corporate veil and individual liability, My Three Yorkies and Dorfman were not obligated to raise or respond to those issues and, therefore, any procedural failures on their part were inconsequential.

Turning to the merits, the Eleventh Circuit reversed the finding of liability on summary judgment. The Court explained that in order for My Three Yorkies to be liable for the actions of Velvet Lifestyles, the plaintiffs had to show that My Three Yorkies was directly involved in the violation of the Lanham Act. The Court found that the plaintiffs failed to show that My Three Yorkies took any action regarding the management of the club or the advertisement in question, and that therefore the plaintiffs had failed to establish that the corporate veil should be pierced. The Court further explained that in order for Dorfman to be liable as an individual, the plaintiffs had to show that she actively participated as the [...]

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