MarbleLife, Inc. v. Stone Resources, Inc.
759 F. Supp. 2d 552
E.D. Pa.2010Background
- MarbleLife granted Stone Resources a franchise in 2000 with rights to MarbleLife's marks and system in a defined Territory.
- The Franchise Agreement had a 10-year term and post-termination restraints, including a two-year noncompete and prohibition on using MarbleLife’s trademark and system information.
- Upon expiration, rights terminated and MarbleLife could transfer customers, facilities, and data back to MarbleLife; Stone Resources was to cease using MarbleLife materials.
- Plaintiff alleges Stone Resources continued to operate in the Territory, use MarbleLife’s mark, and rely on MarbleLife’s system, causing confusion and direct competition.
- Arbitration was initiated April 9, 2010 in Dallas; MarbleLife sued in district court May 21, 2010 seeking a preliminary injunction; court held a hearing December 7–10, 2010 and granted injunctive relief.
- Plaintiff sought emergency relief to protect Territory interests while arbitration proceeded and to prevent further irreparable harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the noncompete is enforceable under Texas law | MarbleLife argues the covenant is ancillary and reasonable | Stone Resources contends the covenant is unenforceable due to alleged misrepresentations | Yes; enforceable, reasonable two-year scope and territory. |
| Whether MarbleLife is likely to prove Lanham Act infringement | MarbleLife will show likelihood of confusion from Stone Resources’ use of the MarbleLife mark | Stone Resources allegedly ceased use or disputed the extent of confusion | Yes; likelihood of infringement established. |
| Whether MarbleLife is likely to prove FTDA dilution | MarbleLife’s mark is famous; continued use by Stone Resources dilutes it | Stone Resources disputes dilution impact | Yes; likelihood of dilution established. |
Key Cases Cited
- Meineke Discount Muffler v. Jaynes, 999 F.2d 120 (5th Cir.Tex. 1993) (ancillary reasonableness of covenants; context for enforceability under §15.50(a))
- Vais Arms, Inc. v. Vais, 383 F.3d 287 (5th Cir.Tex. 2004) (geographic scope of covenants can be nationwide where business is national in character)
- Weatherford Oil Tool Co. v. Campbell, 340 S.W.2d 950 (Tex. 1960) (reasonableness of restraint in noncompete agreements)
- Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 329 (5th Cir.Tex. 2008) (framework for Lanham Act likelihood of confusion)
- First Keystone Fed. Sav. Bank v. First Keystone Mortgage, Inc., 923 F.Supp. 693 (E.D. Pa. 1996) (likelihood of confusion standard in trademark matters)
- Opticians Ass'n of America v. Independent Opticians of America, 920 F.2d 187 (3d Cir.1990) (irreparable harm and public interest considerations in injunctions)