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JL Powell Clothing LLC v Powell

JL Powell Clothing LLC v Powell

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Published by propertyintangible
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Published by: propertyintangible on Feb 13, 2014
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03/19/2014

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UNITED STATES DISTRICT COURT DISTRICT OF MAINE
JL POWELL CLOTHING LLC and JL POWELL LLC, Plaintiffs, v. JOSHUA L. POWELL
, Individually and doing business as
THE FIELD,
doing business as
FIELD OUTFITTING,
doing business as
 FIELD OUTFITTING COMPANY, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Civil No. 2:13-CV-00160-NT
ORDER ON
PARTIES’ COMPETING M
OTIONS FOR PRELIMINARY INJUNCTION
 AND ON DEFENDANT’S
MOTION TO SUPPLEMENT THE RECORD
 This case comes before the Court on the
parties’
competing motions for preliminary injunction pursuant to Federal Rule of Civil Procedure 65. (ECF Nos. 3 and 66).
 Also before the Court is the Defendant’s
motion to supplement the record. (ECF No. 59). For the reasons that follow
, the Court GRANTS the Defendant’s
motion to supplement the record and GRANTS IN PART and DENIES IN PART
both parties’
 motions for injunctive relief.
Case 2:13-cv-00160-NT Document 80 Filed 01/30/14 Page 1 of 40 PageID #: 1319
 
 2
FACTUAL BACKGROUND
1
 
This case requires the Court to sort the rights and duties of former business partners who parted ways and who now compete with one another in the same line of business.
 
In 2006, Joshua L. Powell
(“
Powell
” or the “
Defendant
”)
began selling high-
end men’s sportswear and accessories
 through the J.L. Powell catalog. Powell
was the catalog’s sole model, and most
 catalog issues contained a personal message from Powell signed by Powell. In 2007, Powell began seeking out investors for his
company, JL Powell Inc. (“
JLP
”). In 2010, a group of investors
 formed Blue Highways III
LLC (“
Blue Highways
”) to invest in and acquire JLP.
 The acquisition was accomplished in two steps. First, Blue Highways contributed $2.5 million to a new entity, JL Powell LLC, a Delaware limited liability company, of which it was the sole member. Second, JLP contributed all of its assets to JL Powell LLC pursuant to two agreements
 – 
 a Contribution  Agreement,
Pls.’ Ex. 42,
2
 
(the “
Contribution Agreement
”)
, and a Bill of Sale and  Assignment Agreement,
Pls.’ Ex. 44,
 
(the “
Bill of Sale
”). In exchange for JLP’s
contribution of assets, JLP received a 43% interest in JL Powell LLC. Contribution  Agreement § 3.2.
 
The assets JLP conveyed included intellectual property, defined to include,
among other things, “trade names, trade marks, service marks, [and] logos.”
 Bill of
1
 The names in this case are confusingly similar. The Court will refer to the Plaintiffs by their full names: JL Powell Clothing LLC and JL Powell LLC. The Defendant, Joshua L. Powell, will be
referred to as “Powell”
 
or the “Defendant.”
 
Powell’s former company, JL Powell
Inc. will be referred to as JLP. The catalog
 – 
 once distributed by JLP and now distributed by JL Powell Clothing LLC
 – 
 
will be referred to as “J.L. Powell.”
 
2
 The
Plaintiffs’ exhibits
 were admitted in hard copy into evidence at the June 13, 2013
hearing on the Plaintiffs’ motion for preliminary injunction.
 
See
 Ct. Ex. List (ECF No. 53).
Case 2:13-cv-00160-NT Document 80 Filed 01/30/14 Page 2 of 40 PageID #: 1320
 
 3
Sale § 1 and Contribution Agreement § 4.10(a). The Bill of Sale allows JL Powell LLC to assign its rights, interests, and obligations under that agreement without
JLP’s consent if the transfer is made to an “A 
ffiliate
or
 
“to any successor to all or
substantially all of its business (whether by sale of ownership interests or assets,
merger, consolidation or otherwise).”
 Bill of Sale § 6. In addition to
the transfer of JLP’s property to JL Powell LLC
under the Bill of Sale, Powell personally conveyed the right to use his name and endorsement to JL Powell LLC, and agreed not to use or convey the right to use his name and endorsement in any business competitive with JL Powell LLC: In connection with this Agreement and the transfer and assignment by JLP of all JLP Intellectual Property to [JL Powell LLC], Joshua L.
Powell, (the “
Founder 
”) hereby grants to [JL Powell LLC] throughout
the world the sole and exclusive right, license, and permission to use his name and endorsement to exploit, turn to account, advertise, and
otherwise profit from [JL Powell LLC’s] goods and services bearing
such name, image, and/or endorsement. The grant made hereunder shall be exclusive to [JL Powell LLC], and the Founder agrees that he shall not, on behalf of himself or any other person or entity, grant any similar right of any kind in connection with any business competitive in any respect with [JL Powell LLC] or any of its affiliates and/or subsidiaries. The Founder further agrees that he will not use his name or permit any other person or entity to use his name, and otherwise will not assert any right to use his name, including but not limited to any right to use his name under the doctrine of fair use, in connection with any business competitive in any respect to [JL Powell LLC] or any of its affiliates and/or subsidiaries. Contribution Agreement § 7.1(b). In contrast to the Bill of Sale, the Contribution  Agreement prohibits JL Powell LLC from assigning its rights, interest, and obligations under that
agreement without JLP’s written consent.
Contribution  Agreement § 12.8. The Contribution Agreement was signed
by “J. L. Powell”
both in
Case 2:13-cv-00160-NT Document 80 Filed 01/30/14 Page 3 of 40 PageID #: 1321

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