425 F.Supp.3d 1175
D. Ariz.2019Background
- Plaintiffs IOW, LLC and When Enterprises Corp. (WEC) entered a Confidentiality Agreement with Dr. Michael Breus in January 2014; IOW assigned the Agreement to WEC in February 2015.
- Miller (IOW/WEC) disclosed WHEN business concepts, proposed trademarks, and marketing materials to Dr. Breus under the Agreement.
- Dr. Breus authored and published The Power of When (domains and quiz launched 2016), asserting the work derived from independent research; he did not disclose Plaintiffs’ materials to his publisher or ghostwriter.
- Plaintiffs sued for breach of contract, breach of implied covenant, trade-secret misappropriation, unjust enrichment, trademark infringement, and state-law unfair competition; Defendants counterclaimed to cancel several WEC federal trademark registrations.
- Defendants moved for summary judgment on all Plaintiffs’ claims; Plaintiffs cross-moved on the counterclaim.
- The court granted summary judgment to Defendants on all Plaintiffs’ claims and denied summary judgment for either side on Defendants’ counterclaim to cancel trademarks (trial to follow on that issue).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of IOW to sue for breach of the Confidentiality Agreement | IOW was an "affiliate" under the Agreement and remained covered, so it can enforce confidentiality | IOW assigned the Agreement to WEC before the alleged injury and thus lacks Article III/contract standing | IOW lacks standing; summary judgment for Defendants on IOW's contract-based claims |
| WEC breach of contract | WEC: Breus used confidential WHEN materials (branding, business model, proposed marks) in the book and marketing | Breus: no evidence he disclosed Plaintiffs’ confidential info; title suggestion came from publisher; book based on independent research | WEC failed to present evidence of disclosure or breach; summary judgment for Defendants on breach claim |
| Breach of implied covenant of good faith and fair dealing | Plaintiffs: Breus engaged in bad faith/self-dealing and deprived them of contract benefits | Breus: no interference or use of Plaintiffs’ confidential materials; many book elements differ from WHEN | Plaintiffs (IOW lacked standing; WEC produced no evidence of breach); summary judgment for Defendants |
| Trade-secret misappropriation (UTSA) | Plaintiffs: WHEN materials, business structure, and proposed trademarks collectively were trade secrets and were misappropriated | Breus: Plaintiffs fail to show secrecy or reasonable efforts to maintain secrecy; trademarks cannot be secret; book cites independent sources | Plaintiffs failed to identify secret information or reasonable secrecy measures; summary judgment for Defendants |
| Lanham Act trademark infringement / unfair competition (use of "Power of When") | WEC: publication and promotion of The Power of When likely to cause confusion with WEC’s WHEN marks | Breus: book is an expressive work protected by First Amendment; Rogers test applies so Lanham Act inapplicable unless marks have zero relevance or explicitly mislead | Court: book is expressive; Rogers applies; plaintiffs failed both prongs (artistic relevance >0; no explicit false suggestion of source) — summary judgment for Defendants |
| Counterclaim to cancel WEC registrations (use-in-commerce at filing) | WEC: pre-launch commercial activities, presentations, materials, training, beta tests constitute "use" supporting federal registrations under totality-of-circumstances | Defendants: registrations void because services were not actually rendered in commerce when statements of use filed; require actual use | Court: applies Ninth Circuit totality-of-the-circumstances test for §1127; disputed factual record on whether WEC's pre-launch activities sufficed — summary judgment denied to both sides (issue for jury/trial) |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden and standards)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (genuine issue of material fact standard)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Article III standing elements)
- Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) (test limiting Lanham Act claims against titles of expressive works)
- Gordon v. Drape Creative, Inc., 909 F.3d 257 (9th Cir.) (clarifies burdens under Rogers)
- Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir.) (applies Rogers to title use)
- Brown v. Electronic Arts, Inc., 724 F.3d 1235 (9th Cir.) (Rogers threshold and promotional use)
- E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir.) (illustrates First Amendment protection for expressive works)
- Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190 (9th Cir.) (totality-of-the-circumstances test for pre-launch activities and priority/use)