Thursday, September 24, 2015

Just another lawsuit out of Boston

Scholz v. Goudreau, 2015 WL 5554012, No. 13-cv-10951 (D. Mass. Sept. 21, 2015)
Scholz and Goudreau were both members of the band Boston.  Goudreau played guitar on the band’s first two albums, performing with it from 1976-1979 before leaving it in 1981.  He sued Scholz and other band members in 1982, and the parties settled, giving Goudreau 1/5 of the royalties for the songs on the first two albums. 
Band logo
The settlement agreement provided that “the parties acknowledge that Goudreau is no longer, and he has ceased to be, a partner in Boston, and as such shall have no interest, right nor title to the name ‘BOSTON’…”  It further provided that “Goudreau may use the term ‘Formerly of Boston’ for and in conjunction with any biographical usage with respect to future performances, but, except to this extent, Goudreau shall have no other interest, right or title to the name ‘BOSTON.’ Without limiting the foregoing, Goudreau may not use the name ‘BOSTON’ for or in conjunction with any advertisement or promotion.”
Scholz sued Goudreau for trademark infringement/unfair competition, dilution, contributory and vicarious infringement, false advertising, violation of Massachusetts’ Truth in Music Statute, breach of contract, and breach of the implied covenant of good faith and fair dealing. Goudreau counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, false advertising, and abuse of process.
What triggered the lawsuit?  Goudreau continued his musical career, and Scholz’s complaint focused on ads associated with five groups: performances at the Cannery Casino Hotel, promoted by Paul Curcio; “The Best of Boston” performances, promoted by Maximus Entertainment and its Chief Executive Officer, Robert Devine; a musical revue called World Class Rockers (WCR); the James Montgomery Blues Band (JMBB); and Ernie and the Automatics (EATA). Basically, Scholz alleged that Goudreau violated the settlement agreement by using descriptive terms other than “formerly of Boston.”  This lawsuit followed numerous suits/threats of suits from 2009 on.  Goudreau’s counterclaims were basically premised on Scholz’s litigiousness and efforts to thwart Goudreau’s ability to promote himself.
One challenged ad: Best of Boston, allegedly imitating Boston logo

Another challenged ad, repeating allegedly iconic first line from Boston song "Just another band out of Boston"

Another challenged ad: "from the band Boston"

Another challenged ad: "original member of Boston," and "playing the hits of Boston" with Boston allegedly overly large

Direct trademark infringement: The court found that the infringing ads Scholz targeted resulted from the actions of third parties, and that Scholz failed to offer evidence that Goudreau was responsible for them.  For example, for the “Best of Boston” series, Goudreau testified that he didn’t perform in any shows so promoted because he concluded that the proposed promotional materials were “asking for trouble,” and he demanded that he be omitted from any ads already created. For other instances, Scholz didn’t provide evidence tying Goudreau to the ads.
Scholz argued that Goudreau’s use of metatags such as “BOSTON,” “band BOSTON” and “Tom Scholz” on his website demonstrated trademark infringement. While use of a mark is evidence of intent to use a mark, “the only relevant intent is intent to confuse.” There was no evidence that the content of the website was likely to confuse a reasonably prudent purchaser. The website identified itself as the website of “former BOSTON guitarist” and “[t]he OFFICIAL website for former BOSTON guitarist, Barry Goudreau!”  The URL was Goudreau’s name. Even if the website diverted consumers who searched for Scholz or the band Boston, “[m]ere diversion, without any hint of confusion, is not enough.”
Contributory/vicarious infringement:  For contributory infringement by a service provider, liability requires inducement or “direct control and monitoring of the instrumentality used by a third party to infringe the plaintiff’s mark.” There wasn’t evidence of inducement.  Allegedly infringing ads didn’t show that Goudreau urged the creation of such ads.  However, a dispute of material fact precluded summary judgment on the extent of Goudreau’s control and monitoring. 
For most of the examples, the facts didn’t show that Goudreau continued to perform at shows that he knew were promoted in an infringing manner. For example, Goudreau performed on the Legends of Rock Cruise 2, where he was promoted as an original BOSTON Member. But he testified that he instructed the promoters to bill him only as formerly of BOSTON, consistent with the Settlement Agreement, and there was no evidence he had control over the ads.  However, Goudreau acknowledged that he was a member of EATA. Though he insisted he was not involved in securing performances or promoting EATA and that he informed those who were that he must be promoted only as “formerly of BOSTON,” he didn’t immediately them that the Settlement Agreement prohibited any description of Goudreau other than “formerly of BOSTON.” There was at least a dispute about whether he had the requisite ability to directly control and monitor EATA’s promotions.  Given the admission that the person doing promotions did promote Goudreau as an “original” member of Boston, it could reasonably be inferred that Goudreau did not attempt to prevent Boch from promoting him as an “original” member for some period of time. When he did weigh in, the evidence showed that he was diligent in instructing on the appropriate description.  Unfortunately for Goudreau, the promoter’s responsiveness to his requests lent credence to the idea that he had direct control over EATA’s promotions.
Another instance was not evidence of contributory liability, however.  An email to Goudreau requested that he “[c]hoose a photo” and asked, “Do you want a small Boston logo?” Goudreau responded, “The color shot with the Boston logo would be great.”  But there was no evidence that the photo of Goudreau with the Boston logo was used in an infringing manner, “i.e., in connection with the sale of goods or services or in a way likely to cause confusion.”  (I applaud the district court’s care here.  Not every court would be so careful.)
Vicarious liability:  There was no evidence of an actual partnership between Goudreau and an infringer or of joint ownership of the infringing promotions, so Scholz’s case turned on apparent authority of the alleged infringers to act for Goudreau.  Goudreau noted that he had not had a manager or agent since the 1990s. The court found that, with one exception, the evidence didn’t reveal conduct by Goudreau that resulted in a third party—whether a performance venue or anyone else—reasonably believing that an alleged infringer was acting on Goudreau’s behalf.
As with contributory liability, Goudreau’s membership in the EATA band raised factual issues that prevent summary judgment in his favor. Goudreau performed with EATA in as many as 60 shows per year at the height of their popularity. A third party could thus reasonably infer that representatives of EATA acted on Goudreau’s behalf.  (Who? The ultimate consumer/audience member?  Possible.)
Trademark dilution: At a political event for then-presidential candidate Mike Huckabee, Goudreau was filmed answering a query regarding where he was from and why he was in attendance with the response, “Barry Goudreau from Boston. I like Mike.”  This was not enough to make out a claim for trademark dilution or tarnisment.  Goudreau’s statement didn’t use the Boston mark in commerce, because it was in a political context, even if it had created a false endorsement.  The court applied the federal dilution exception, but apparently assumed without further discussion that Massachusetts dilution law—which does not explicitly contain such an exception—did so by implication.
Unfair competition: Goudreau argued that Scholz lacked standing under Lexmark, which held that “a direct application of the zone-of-interests test and the proximate-cause requirement supplies the relevant limits on who may sue” for unfair competition under Section 43(a).  Goudreau argued that Scholz had no evidence of injury and thus no proximate cause.  Scholz alleged harm to his reputation, but, “at the summary judgment stage, Scholz needs to point to actual evidence of reputational injury.”  Bye-bye unfair competition claims!  (Note lack of application of this rule to the §32 claims, though it’s not clear how the parties argued it.)
Breach of contract:  Scholz argued that Goudreau wrongly used Boston in ads and promotions, despite the settlement agreement’s prohibition on use “for or in conjunction with any advertisement or promotion.”  But that prohibition is expressly limited by his right to use “formerly of Boston” in conjunction with biographical usage with respect to future performances, which includes ads and promotions of same in order to avoid making that right meaningless.  As for the use of descriptive language other than “formerly of Boston,” Scholz didn’t provide evidence that Goudreau, and not third parties, violated the agreement.
The Massachusetts Truth in Music Statute, Mass. Gen. L. c. 93, §§ 12 & 43B, bars “advertising a live musical performance or production in the commonwealth through the use of a false, deceptive or misleading affiliation, connection or association between the performing group and the recording group.” “Performing group” is defined as “a vocal or instrumental group seeking to use the name of another group that has previously released a commercial sound recording under that name.”  The statute applies only to performances in Massachusetts, so only EATA and the JMBB were implicated. Neither group sought to perform under the BOSTON name and so neither was a “performing group” under the statute.
Because Scholz’s claims for contributory trademark infringement and vicarious liability survived summary judgment as to EATA, his claim for breach of the covenant of good faith and fair dealing based upon the same facts also survived.
Chapter 93A: Unfair or deceptive acts/practices liability under Massachusetts law requires that the alleged conduct “(1) falls within the penumbra or some common-law, statutory, or other established concept of unfairness; (2) is immoral, unethical, oppressive, or unscrupulous; and (3) causes substantial injury to consumers or other business persons.”  This failed because there was no evidence of direct infringement. Scholz emphasized that Goudreau consummated his business transactions with a handshake rather than a written agreement, but that didn’t violate Chapter 93A.
Goudreau’s counterclaims: First, Goudreau argued that the settlement agreement ambiguous and that he should be able to use a broader array of terms than the language specified, “formerly of Boston.” The court disagreed; the language was clear, and Scholz had also entered into an agreement with another former BOSTON member permitting him to use the description “formerly of Boston or similar designation.”  Even if the agreement were ambiguous, there was little extrinsic evidence supporting an alternative reading.
Breach of contract: Goudreau argued that Scholz breached the Settlement Agreement by interfering with Goudreau’s right to describe himself as “formerly of Boston” and by threatening promoters and venues who wished to hire Goudreau. If a jury rejected the secondary liability claims relating to EATA, it could reasonably conclude that Scholz failed to honor his own contractual obligations “by endeavoring to deny Goudreau the right to promote himself in conformance with the Settlement Agreement.”  Although Goudreau might not be able to show damages, “[u]nder Massachusetts law, a person who is injured by a breach of contract has a right to judgment even if the breach caused no harm.” This reasoning also preserved Goudreau’s claims for breach of the implied covenant of good faith and fair dealing and for violation of Chapter 93A.
Finally, the court rejected Goudreau’s abuse of process counterclaim. An abuse of process claim requires a showing “‘that ‘process’ was used, for an ulterior or illegitimate purpose, resulting in damage.’” The alleged collateral benefits of the process must be “clearly outside the interests properly pursued in the proceeding.” The evidence didn’t support the claim that Scholz was trying to get an indirect benefit by reclaiming all royalty rights to and copyrights in BOSTON’s first two albums; that was a clear goal of his attempted remedy of recission of the settlement agreement. Goudreau didn’t explain how this purpose wasn’t properly part of the proceeding or not “a legitimate purpose of the particular process employed,” given that Scholz brought claims related to the contract between the parties.  Though it was questionable whether recission would ultimately be available as a remedy, Goudreau hadn’t challenged the general availability of recission for breach of contract.
Goudreau also suggested another ulterior motive: Scholz’s efforts to obtain discovery related to a defamation lawsuit brought by Scholz against the Boston Herald. But Massachusetts favors broad latitude in discovery of any relevant, nonprivileged matter, so that couldn’t support the abuse of process claim either.
Did all this litigation really accomplish anything other than making Goudreau wish the settlement agreement were drafted more like Scholz’s other settlement agreement?

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