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Social Media Ownership Disputes Part II: Bridal Wear Company Takes Back Control of Instagram Account from Ex-Employee – Technology & Marketing Law Blog

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This is Part II of a evaluation of current social media possession disputes. In Part I, I checked out how the Satanic Temple of Washington couldn’t use the CFAA or ACPA to get its Facebook accounts again. Part II includes a bridal put on enterprise’ (JLM Couture) profitable reclaim of its Instagram and different social media accounts. In this case, a New York federal choose granted a preliminary injunction in opposition to the defendant, Hayley Paige Gutman, prohibiting her from interfering with plaintiff’s use of the account, which usually gave management over the account to JLM.

[Eric’s comment: if you’re like me and you have no idea who Hayley Paige Gutman is, this Cornell alumni magazine spotlight might help. Also, this Business Insider story provides a chronology of this high-profile and messy dispute, featuring an unfortunately public war of words.]

The large distinction between the instances: JLM and Gutman had an agreement that addressed JLM’s proper to make use of Gutman’s title. The agreement, which the events entered into in 2011 (and which was prolonged at JLM’s choice via 2022), additionally allowed JLM to register a spread of logos utilizing Ms. Gutman’s title, had strong work-for-hire language, and included a non-compete. The court docket’s opening paragraph of the findings of truth tells you ways that is prone to go:

In the Contract, Ms. Gutman agreed, inter alia, to carry out sure duties and granted Plaintiff sure unique rights to make use of and trademark the title “Hayley Paige” and variations thereof. . . . Ms. Gutman additionally granted Plaintiff “the exclusive world-wide right and license to use her name ‘Hayley’, ‘Paige’, ‘Hayley Paige Gutman’, ‘Hayley Gutman’, ‘Hayley Paige’ or any derivative thereof ([defined] collectively [as] the ‘Designer’s Name’)” for sure functions through the acknowledged time period of the Contract and for 2 years thereafter. . . .  Explicitly in change “for the assignment to the Company of the Designer’s Name and the Trademarks,” JLM agreed to pay Ms. Gutman as consideration, along with her base pay and extra gross sales volume-related compensation, and for ten years following the termination of her employment with the corporate, an additional share of “net revenues derived from the sale of goods under the Designer’s Name and Trademarks based on the Designer’s [N]ame.” . . .  The events engaged in “rounds of negotiations” over the phrases of the Contract, throughout which Ms. Gutman referenced a “Kenneth Pool example” and requested to “add perpetuity language.” . . .  Ms. Gutman represented to Plaintiff through the negotiations that she had an legal professional evaluation the Contract through the negotiations, a press release she now claims was unfaithful. . . .

JLM efficiently obtained registrations in varied “Hailey Paige” related marks. Ms. Gutman consented to those registrations, because the agreement required.

Ms. Gutman had a Facebook page previous to becoming a member of JLM, and she or he opened an Instagram page after she signed the agreement. She testified that since “Hailey Paige” was taken, she went with “@misshayleypaige”. She used the account to put up each private {and professional} objects, however she intertwined JLM in lots of facets of managing the account. She sought JLM’s assist and proposed hiring the Social Media Director to supervise the Instagram account. The court docket cites a number of examples what place she discusses JLM’s posts to the account. JLM additionally used the account in its off-line advertising and marketing efforts, akin to together with the account deal with on “hang tags” of physical clothes. In different phrases, issues had been very intertwined by way of JLM’s use of an Instagram account bearing Ms. Gutman, an worker’s, title. (It seems that Ms. Gutman was additionally working with JLM on a wedding-focused “emoji app,” though this was indirectly pertinent within the preliminary injunction ruling.)

Separately, whereas she continued to work with JLM, Ms. Gutman additionally entered into so-called “influencer” agreements with non-bridal put on manufacturers akin to Chosen Foods (a salad dressing business) and Optimum Whey (a complement). The latter association was indirectly with the kind however was via her then-fiancé.

The employment contract may very well be prolonged by JLM and will solely be terminated by JLM. In 2019, JLM prolonged the contract and the events engaged in unsuccessful negotiations concerning Ms. Gutman’s ongoing social media duties.

In November 2020, the account had 1+ million followers. Ms. Gutman knowledgeable JLM that she would now not put up “JLM related business” to the account.

JLM sued in December 2020. The court docket issued a TRO requiring Ms. Gutman to show over management of varied accounts to JLM. Now earlier than the court docket is JLM’s request for a preliminary injunction. It’s granted largely.

Breach of contract: The court docket involves the next conclusions with respect to the breach of contract declare and probability of success on that declare:

  • Term: Ms. Gutman remained certain by the agreement through the time period, however her voluntary resignation by way of YouTube video.
  • Scope: The agreement broadly conveys to JLM the best to make use of Ms. Gutman’s title and “any derivative thereof” in reference to merchandise Gutman was intertwined in. This “unambiguously encompasses ‘misshayleypage’ and ‘@Misshayleypaige’.”
  • Breach: The contract prohibits Ms. Gutman from utilizing her title or related marks to advertise third social gathering services or products. Her separate influencer agreements violated this restriction. Ms. Gutman’s refusal to help JLM with posting content material to the account can also be a breach. (While Ms. Gutman famous the then-ongoing negotiations concerning her future help on social media as proof that the present agreement didn’t embody these duties, the court docket rejects this try, discovering the language unambiguous.)
  • Account content material: The court docket additionally finds that any JLM-related thing she posted to the account is owned by JLM. The court docket says “the contents of the account are a work for hire.”
  • Non-competition: The court docket additionally offers its preliminary stamp of approval to the non-compete provisions of the agreement and finds that Ms. Gutman’s February 2021 announcement that she would take part nearly at a bridal expo probably violates the non-compete.

Trademark infringement: The trademark infringement declare seems premised on Ms. Gutman’s use of the account “as her personal influencer platform.” Here’s the court docket’s abstract:

elements one, two, three, 5, and 6 weigh in favor of client confusion, issue 4 weighs in opposition to, and elements seven and eight are impartial. Ms. Gutman’s dangerous religion in utilizing her trademarked title in commerce separate from her work for Plaintiff weighs notably closely within the Court’s balancing, given the proof that she sought to take advantage of her work for Plaintiff whereas avoiding a direct contractual relationship with the Optimum Whey enterprise till after she had renegotiated the Contract. In assessing the totality of the doubtless impression on a client, the Court additionally notes that the “misshayleypaige” time period has been used to establish the Account in reference to each Plaintiff’s items and the third-party items. The use of an an identical mark on an Account what place shoppers had beforehand seen Plaintiff’s items and likewise started to see promotion of third-party items, will increase the probability of confusion as to affiliation ought to Ms. Gutman be capable to proceed to make use of the deal with and Designer’s Name in industrial actions on social media. Accordingly, the Court finds that client confusion is prone to outcome from Ms. Gutman’s use of the Designer’s Name, its registered logos, or related variations in commerce to advertise different merchandise or to advertise Ms. Gutman herself as an influencer capable of promote different distributors’ merchandise.

Non-disparagement: JLM additionally sought injunctive aid prohibiting Gutman from talking on the litigation and about JLM’s ways. The court docket is fearful about prior restraints and doesn’t enjoin Ms. Gutman from talking usually about JLM and this litigation.

Irreparable Harm: While contract instances don’t usually concern irreparable hurt, this case includes a trademark declare, and never giving JLM management over the account runs the danger of undermining JLM’s goodwill and advertising and marketing efforts (to which it has contributed vital assets). Additionally, the agreement in place between the events says {that a} breach can lead to irreparable hurt, which is one thing courts can contemplate when figuring out whether or not to award injunctions in contract instances. Ultimately, the court docket decides, it’s a superb case for injunctive aid (after contemplating the remaining preliminary injunction elements). [Eric’s note: a reminder that the Trademark Modernization Act reinstituted the rule that trademark violations create a rebuttable presumption of irreparable harm.]

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This is a superb case that covers a whole lot of floor. The docket is overflowing and price digging into. The large takeaway after all is that there’s a written agreement between the litigants, which distinguishes this case from different social media possession instances on the market. The agreement isn’t particularly good (no agreement is), however it does a pleasant job of defending JLM’s rights. Unfortunately, the agreement seems to be filed under seal, though given the docket’s quantity, I can’t say I combed via it rigorously. In any occasion, the court docket liberally quotes from the agreement and it has many useful provisions. It’s price noting that the agreement doesn’t expressly cowl the social media accounts in query.

The trademark declare additionally differentiates this case. The incontrovertible fact that the kind in query is an individual’s title complicates issues. There are particular necessities for registrations of surnames however these didn’t come into play right here. JLM obtained specific rights to register the title and variations of it, which places JLM in a superb place vis a vis the social media accounts. Interestingly, the contract seems to permit JLM to own the marks in perpetuity, which raises the query of whether or not Ms. Gutman faces the sensible danger of not with the ability to use her own title in future bridal wear-related endeavors. (Per the agreement, Ms. Gutman did obtain some form of portion of the revenues from the gross sales of merchandise to which her title was hooked up.)

The non-compete was not central to JLM’s argument and thus the court docket didn’t scrutinize it rigorously. Non-competes are more and more topic to particular restrictions. In 2020, the State of Washington handed laws with limitations when and the way non-competes may be enforced.

There are dueling consultants who provide testament on whether or not the account was a “mega influencer” account or one thing much less. The court docket labels this a semantic dispute. Data concerning the monetary preparations concerning influencers don’t at all times make their approach into court docket data, so from that standpoint it’s fascinating to see consultants weigh in on this. (It can be fascinating to return and see whether or not the non-bridal put on influencer posts complied with the FTC’s endorsement tips.)

The large query is what occurs with the account going ahead. Does Ms. Gutman have to help in its operation, or does she have to only hand it off to JLM? Would the court docket enable her to put up some form of private (or agreed-to) message to followers within the occasion she had been to create a separate private account?

Other protection of the dispute:

Hayley Paige and Bridal Company Are at War Over Use of Her Name, Instagram Handle (The Fashion Law)

‘Say Yes To The Dress’ star suffers legal setback in Instagram account case

Case quotation: JLM Couture v. Gutman, No. 20 CV 10575-LTS-SLC (S.D.N.Y. March 4, 2021)

Part I: Social Media Ownership Disputes, Part I: the Satanic Temple of Washington Can’t Get Its Facebook Pages Back

Related posts:

Creating Parody Social Media Accounts Doesn’t Violate Computer Fraud & Abuse Act – Matot v. CH

When Does A Parody Twitter Account Constitute Criminal Identity Theft?–Sims v. Monaghan

Trademark Owner Sues Over Alleged Twittersquatting–Coventry First, LLC v. Does

Steps Brand Owners Can Take to Deal With Brandjacking on Social Networks

Battle Over LinkedIn Account Between Employer and Employee Largely Gutted–Eagle v. Morgan

“Social Media and Trademark Law” Talk Notes

Court Denies Kravitz’s Motion to Dismiss PhoneDog’s Amended Claims — PhoneDog v. Kravitz

An Update on PhoneDog v. Kravitz, the Employee Twitter Account Case

Another Set of Parties Duel Over Social Media Contacts — Eagle v. Sawabeh

Employee’s Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward–Maremont v. SF Design Group

Courts Says Employer’s Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed–PhoneDog v. Kravitz

Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer–Ardis Health v. Nankivell

Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account — Deck v. Spartz, Inc.

Employee’s Twitter and Facebook Impersonation Claims Against Employer Move Forward — Maremont v. Fredman Design Group

MySpace Profile and Friends List May Be Trade Secrets (?)–Christou v. Beatport

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