Foundation v. Hart

PLANET DRUM FOUNDATION, Plaintiff, v. MICKEY HART, et al., Defendants.

Case No. 17-cv-02676-JCS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

September 24, 2017

ORDER DENYING MOTION TO DISMISS

Re: Dkt. No. 12

I. INTRODUCTION

Plaintiff Planet Drum Foundation is the owner of U.S. Trademark Registration No. 343732, issued on March 5, 1996, for the mark PLANET DRUM ("the Mark" or "the Planet Drum mark"). Planet Drum Foundation brings a trademark infringement action against Defendants Mickey Hart and 360° Productions ("360") based on their alleged infringement of the Mark. Presently before the Court is Defendants' Motion to Dismiss Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Motion"). A hearing on the Motion was held on Friday, September 22, 2017 at 2:00 p.m. For the reasons stated below, the Motion is DENIED.¹

II. BACKGROUND

A. The Complaint

Planet Drum Foundation is a California 501(c)(3) nonprofit corporation based in San Francisco California. Compl. ¶ 4. It was founded in 1973 under the name "Planet Drum." Id. According to the Complaint, Planet Drum Foundation's "mission has always been to provide aneffective grassroots approach to ecology that emphasizes sustainability, community self-determination and regional self-reliance." Planet Drum Foundation further alleges that it "encourages local organizations and individuals to find sustainable ways to live within the natural confines of their bioregions, and identifies cultural diversity as an integral component of biodiversity." Id. Planet Drum Foundation has published and distributed over fifty publications and conducts workshops and presentations all over the world. Id. ¶ 5. It also "sponsors projects and activities related to ecology education, watershed consciousness, restoration ecology, green cities, sustainable agriculture, and renewable energy." Id. The Planet Drum mark was issued on March 5, 1996 and is "used for 'books, and newsletters in the field of ecology, maps and posters' in Class 16 and for 'educational services, namely organizing seminars, conferences and workshops in the field of ecology' in Class 41." Id. ¶ 6.

Defendant Mickey Hart "is an American percussionist and musicologist" who "was a member of the Grateful Dead for many years." In addition, he has "had a successful career as a solo artist, percussionist, and author of several books" and "has pursued a lifelong interest in ethnomusicology and in world music." Id. ¶ 7. Hart has "participated in recording global musical traditions on the verge of possible extinction and has worked with archivists and ethnomusicologists toward that end." Id. 360 is a "musical production and management company that owns and/or holds certain rights in recordings by Mickey Hart and musicians he collaborates with" and "is the owner of the copyrights and the master recordings to a musical album of approximately 13 song titles collectively released under the album name 'Planet Drum' in the year 1991, and a 2-CD album, 'Planet Drum - Supralingua,' released in 1998." Id. ¶ 8.

Planet Drum Foundation alleges that it has used the Mark continuously since 1973 in connection with the services described above, and that its use of the Mark has been "continuous and uninterrupted." Id. ¶ 9. It further alleges that in 1991, Hart began using the mark "Planet Drum" in connection with live performances and the release of his Planet Drum album. Id. According to Planet Drum Foundation, "[p]rior to adopting the Planet Drum mark, Hart approached Peter Berg, Founder and Director of Planet Drum Foundation, and requested permission to use the mark 'Planet Drum' for a series of concerts and a book." Id. ¶ 10. Berg"informally consented" but required that "an explanation distinguishing the parties . . . be included" with Hart's products. Id.

In the "1997-1998 time frame," the parties began to discuss a formal trademark license agreement and entered into such an agreement in 1998. Id. & Ex. 1. Under the license agreement ("License Agreement"), Planet Drum Foundation is the "Licensor" and 360 is the "Licensee." Id., Ex. 1 (License Agreement), Section 1 (definitions). Section 2 of the License Agreement describes the scope of the license, stating as follows:

2. License Grant. Licensor hereby grants to Licensee and Licensee hereby accepts from Licensor, an exclusive, nontransferable, license for the Territory, subject to the terms and conditions of this Agreement, to use the Marks in the name of its musical group, in connection with sale and distribution of related Merchandise bearing the Marks, and for related advertising of such uses. The exclusivity of this License shall extend only to musical groups but Licensor agrees that it shall not issue licenses nor engage in uses of the Marks which may cause confusion with respect to the source of Merchandise authorized for production under this Agreement. Licensor and Licensee agree that certain other uses of the Marks by Licensee have been informally approved by Licensor in the past including, without limitation, use of the Marks in connection with musical performances, and a book and sound recording entitled: "Planet Drum." This License memorializes Licensor's approval of all such past uses by Licensee and its predecessors in interest.

Id., Section 2.

Section 3 addresses ownership of the Mark, providing as follows:

3. Ownership of Marks. Licensee acknowledges that, as between the Parties, Licensor owns the Marks and Licensee agrees that it will do nothing inconsistent with such ownership during or subsequent to the Term hereof or any Option period and that all use of the Marks by Licensee shall inure to the benefit of and be on behalf of Licensor. In the event the initial Term or any extension thereof expires without renewal, or in the event of termination for any reason, Licensor agrees that it shall not extend a license for use of the Marks to any other musical group at any time.

Id., Section 3.

Although Hart is not a party to the License Agreement, he signed the agreement on behalf of 360 and the license grant is contingent on Hart "retaining a controlling interest" in 360. Id., Section 4. In particular, the "Quality Control" section of the License Agreement provides as follows:

4.1 Mickey Hart. During the term of this Agreement, Licensee may utilize the Marks in connection with future materials related to the musical group 'Planet Drum' and world rhythm and music publications and events without the necessity of seeking express approvals for such uses; provided, however, that Licensor may object to any such use and Licensee agrees to discuss any such use claimed to be objectionable with Licensor in good faith to resolve any objection raised. Licensee's right to utilize the Marks in any manner not previously approved by Licensor, or to which Licensor has not objected within a reasonable time, is expressly contingent upon Mickey Hart retaining a controlling interest in Licensee.

4.2 Form of Use. Licensee agrees to use the Marks in the general form and manner in which the Marks have historically been used by Licensee and, to the extent practical, with appropriate legends as prescribed from time to time by Licensor. The design of the Planet Drum logo created and used by Licensee and other uses by Licensee may change from time to time.

4.3 Notification of Uses of the Marks. Although prior approval is not necessary for use of the Marks, as long as Mickey Hart is exercising control of such usage, Licensee shall annually provide Licensor with a list of the items and samples or photographs of items on which it has used or intends to use the Marks.

Id., Section 4.

Under the License Agreement, 360 was to pay $5,000 in royalty fees for use of the Mark through March 31, 1999 and thereafter make an annual royalty payment of $5000, payable on April 1, for "so long as the initial Term continues, provided the [License] Agreement has not been terminated." Id., Section 6. The term of the License Agreement was five years "unless terminated earlier under the provisions of this Agreement." Id., Section 8.1. The License Agreement could be terminated "for convenience" (Section 8.3), "for cause" (Section 8.4) and "termination for insolvency (Section 8.5). Section 8.6 sets forth the "Effects of Termination," providing as follows:

8.6 Effect of Termination. In the event of termination, Licensee shall be permitted to continue utilizing the Marks as the name of a performing musical group and to liquidate any existing inventory of pre-approved materials bearing the Marks which use and liquidation may continue for a period of one hundred eighty (180) days following termination, subject to payment of any License Fees due pursuant to section 6 hereof.

Any materials bearing the Marks which were approved prior to the Effective Date and which are produced pursuant to contractual arrangements with third parties which provide for continued production including, without limitation, the book and record albums bearing the title: "Planet Drum," may continue in productionand distribution until such time as the third party contracts, including options thereto, have been fulfilled. Licensee shall also be permitted to fulfill any contractual commitments to perform as a musical group using the Planet Drum name which exist on the date of termination.

Id., Section 8.6.

Section 10.4 of the License Agreement governs waiver and provides as follows:

10.4 Waiver. No delay, omission, or failure to exercise any right or remedy provided for in this Agreement shall be deemed to be a waiver thereof or an acquiescence in the event giving rise to such remedy, but every such right or remedy may be exercised, from time to time, as may be deemed expedient by the Party exercising such right or remedy.

Id., Section 10.4.

Hart and 360 made a series of payments under the License Agreement, the last of which was in June 1999 for $5,000. Compl. ¶ 14. After Planet Drum Foundation did not receive a payment on April 1, 2000, it sent a...