JLM Couture, Inc. v. Gutman, 24 F.4th 785

Background

Hayley Paige Gutman was employed by JLM Couture under a 2011 contract (extended through Aug. 1, 2022) to design and develop the "Hayley Paige" bridal brand; the contract included noncompete, name-assignment, trademark, and "work for hire" provisions.
Gutman operated several "Miss Hayley Paige" social media accounts (Instagram, TikTok, Pinterest among them), with the Instagram account exceeding one million followers and significant monetization value.
After failed renegotiations in 2019, Gutman changed Instagram credentials, posted independently, and made third‑party promotional deals; JLM sued for breach of contract, trademark dilution, conversion, and trespass to chattels.
The district court entered a preliminary injunction (PI) barring Gutman from competing through the Term, forbidding use of her name and derivatives in commerce, and ordering Gutman to turn over credentials and cede control of three disputed social accounts to JLM.
On appeal, the Second Circuit affirmed enforcement of the noncompete and the name‑rights provisions, rejected Gutman’s argument that JLM’s purported nonpayment precluded injunctive relief, but vacated the PI provisions transferring exclusive control of the three disputed social accounts and remanded for further proceedings.

Issues

Issue	Plaintiff's Argument (JLM)	Defendant's Argument (Gutman)	Held
Enforceability of noncompete through Term	Contract bars Gutman from competing during the Term; remedy is proper to prevent irreparable harm and protect JLM’s investment	Gutman says she resigned and is no longer "employed," so section 9(a) no longer binds her; noncompete is overbroad	Affirmed — noncompete enforceable under plain contract terms; injunction as lesser remedy was appropriate because she consented to injunctive relief on breach and her services are unique.
Scope of name/right assignment (use of "Hayley Paige" in commerce)	Contract §10(b) assigns Designer’s Name and trademarks to JLM and bars Gutman from using the Designer’s Name in trade or commerce without JLM’s consent	Gutman argues §10(a) limits JLM’s rights to clothing she substantially participated in designing and §10(b) should be read as a trademark‑only limit	Affirmed — plain language of §10(b) transfers exclusive rights in the Designer’s Name and prohibits use in trade or commerce; §10(a) and §10(b) are complementary, not contradictory.
Transfer/control of disputed social media accounts (Instagram, TikTok, Pinterest)	JLM sought immediate control to prevent further conversion/trespass and to protect brand/trademarks and JLM’s asserted property interests	Gutman contends the accounts are her personal property (created/maintained in personal capacity) and PI improperly awards her property to JLM without adjudicating ownership	Vacated in part — court exceeded discretion by granting JLM indefinite exclusive control over accounts without deciding (or making findings about) JLM’s likelihood of success on conversion/trespass ownership claims; remand required.
JLM’s alleged breach (nonpayment) as defense to injunctive relief	JLM contends its payment obligations were conditioned on Gutman’s faithful performance; no breach by JLM that would bar equitable relief	Gutman argues JLM stopped paying after she resigned and that JLM cannot seek equitable relief while breaching contract	Held against Gutman — court found no showing that JLM likely breached; payment was conditioned on faithful performance, so JLM’s nonpayment did not bar injunctive relief at preliminary stage.

Key Cases Cited

Oneida Nation of N.Y. v. Cuomo, 645 F.3d 154 (2d Cir. 2011) (standard of review for preliminary injunctions and abuse of discretion framework)
Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999) (injunctive relief available where noncompete is reasonable and services are unique)
BDO Seidman v. Hirshberg, 712 N.E.2d 1220 (N.Y. 1999) (reasonableness factors for restraints on post‑employment competition)
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (preliminary injunctions require showing of likelihood of success and irreparable harm)
Madrigal Audio Labs., Inc. v. Cello, Ltd., 799 F.2d 814 (2d Cir. 1986) (assignment or sale of name must be clearly shown; interpretation depends on terms of sale)
Tom Doherty Assocs. v. Saban Entm’t, Inc., 60 F.3d 27 (2d Cir. 1995) (mandatory injunctions altering status quo require a clear showing and are disfavored)
Forschner Grp., Inc. v. Arrow Trading Co., 124 F.3d 402 (2d Cir. 1997) (equitable relief must be no broader than necessary to cure harm)
Kelly v. Honeywell Int’l, Inc., 933 F.3d 173 (2d Cir. 2019) (contract interpretation avoids rendering provisions superfluous)