Hyperheal Hyperbarics, Inc. v. Shapiro

404 F.Supp.3d 953

HYPERHEAL HYPERBARICS, INC., Plaintiff,

v.Eric SHAPIRO, Defendant.

Civil Action No. RDB-18-1679

United States District Court, D. Maryland.

Signed August 2, 2019

Donald J. Walsh, Marc Andrew Campsen, Stephen H. Kaufman, Wright Constable & Skeen, LLP, Baltimore, MD, for Plaintiff.

John Michael Singleton, Singleton Law Group, Lutherville, MD, Jan Ingham Berlage, Gohn Hankey & Berlage, LLP, Joseph Dudek, Office of the Attorney General, Baltimore, MD, for Defendant.

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge

Plaintiff, Hyperheal Hyperbarics, Inc. ("Hyperheal") filed suit against Defendant Eric Shapiro ("Shapiro"), the initial founder of Hyperheal and a former employee, seeking to enjoin his efforts to use and trademark the Hyperheal name. (Am. Compl., ECF No. 14.) Hyperheal brought six causes of action against Shapiro, including breach of his employment contract, tortious interference with business relations, unfair competition, and Lanham Act¹ violations. (Id. ) A temporary restraining order was initially granted, followed by a Preliminary Injunction, which issued on September 6, 2018. (ECF Nos. 19, 44, 45.) Now pending before this Court are two motions for summary judgment: (1) Hyperheal Hyperbarics, Inc.'s Motion for Partial Summary Judgment (ECF No. 83); and (2) Defendant Eric Shapiro's Motion for Summary Judgment (ECF No. 91). A hearing was held on July 11, 2019. See Local Rule 105.6 (D. Md. 2018). For the reasons that follow, Hyperheal Hyperbarics, Inc.'s Motion for Partial Summary Judgment (ECF No. 83) shall be GRANTED IN PART and DENIED IN PART, and Shapiro's Motion for Summary Judgment (ECF No. 91) shall be DENIED.

Specifically, judgment as a matter of law that Shapiro breached the Employment Agreement shall be GRANTED, and the remedy of specific performance shall be GRANTED with regard to the Pre-Termination Domain Names and social media accounts. Further, a permanent injunction (Count IV) shall be GRANTED, but the geographic scope of Hyperheal's trademark protection remains pending the jury resolution of material factual disputes. Summary judgment shall be DENIED as to Tortious Interference (Count II), Unfair Competition–Misappropriation (Count III), Lanham Act claims (Count V), and Declaratory Relief Regarding Trademark Rights (Count VI). Counts II, III, and V shall proceed to trial by jury, scheduled to commence on August 19, 2019. Based on the jury's findings of fact, this Court will issue its rulings of law related to Specific Performance, Permanent Injunction, and Declaratory Relief Regarding Trademark Rights.

Shapiro's request for judgment as a matter of law regarding his ownership of the Post-Termination Domain Names and the federally-registered trademarks is DENIED.

BACKGROUND

In May 2007, Eric Shapiro formed Hyperheal Hyperbarics, LLC to provide hyperbaric oxygen therapy.² (Am. Compl. ¶ 5, ECF No. 14; ECF No. 14-1.) The LLC's corporate status was forfeited in October 2008. (Am. Compl. ¶ 7, ECF No. 14; ECF No. 14-1.) A few years later, in July 2012, Shapiro formed Hyperheal Hyperbarics, Inc. as majority owner and one of three directors. (Am. Compl. ¶ 8, ECF No. 14.) The Hyperheal name has been continuously registered in Maryland since that time. (Mem. Op. 2, ECF No. 44.) At the same time, through GoDaddy.com, a domain registrar, Shapiro purchased multiple internet domain names containing the Hyperheal name.³ (Am. Compl. ¶ 9, ECF No. 14; ECF No. 83-4 at ¶¶ 2-4.) Shapiro paid the registration fees for all the domains through June 2018. (Am. Compl. ¶ 9, ECF No. 14.) Hyperheal also created a LinkedIn webpage profile, a Facebook account, and a Twitter account. (Id. at ¶ 10.) At that time, Shapiro was one of three directors and the majority owner of Hyperheal. (Id. at ¶ 8.)

On December 18, 2013, Dr. Tommy Love ("Dr. Love"), from the state of Utah, filed a trademark application with the United States Patent and Trademark Office ("USPTO") for "Hyperheal" and "Hyperheal O2." (Pl.'s Mot. Exs. 6, 7, ECF Nos. 83-8, 83-9.) The applications included a declaration that "to the best of his[ ] knowledge and belief no other person, firm, corporation, or association ha[d] the right to use the mark in commerce ...." (Id. ) The USPTO issued a notice to Dr. Love requesting that he specifically disclaim the O2 portion of the requested marks because it is an acronym for oxygen. (Id. ) The notice to Dr. Love included what was purported to be a capture of Dr. Love's website, but it was in actuality, Hyperheal's website including its Maryland address and phone number. (Id. ) In Dr. Love's response to the USPTO disclaiming the O2 portion of the mark, he did not notify the USPTO that the website did not belong to Dr. Love and did not establish prior use. (Id. ) Ultimately, in March 2015, the USPTO issued Notices of Allowance for the Hyperheal trademark to Dr. Love, and on May 31, 2016, the USPTO issued the Hyperheal trademark and identified the first use as April 2014.⁴ (Id. )

During this same span of time, Shapiro's business was failing. (Am. Compl. ¶ 11, ECF No. 14.) On February 1, 2014, Hyperheal requested Dr. Samer Saiedy, M.D. ("Dr. Saiedy") to provide a cash infusion, which resulted in Dr. Saiedy becoming a minority owner of Hyperheal, and Shapiro's ownership was reduced to 31%. (Id. ) In September 2015, Dr. Saiedy provided another large cash infusion and became 97.62% majority owner of Hyperheal with Shapiro retaining 2.38% as a minority owner. (Id. at ¶ 12.) Shapiro was also retained as an Hyperheal employee. (Id. ) In October 2016, Shapiro was terminated from Hyperheal, although he remained a minority owner. (Mem. Op. 3, ECF No. 44.) On November 2, 2016, Shapiro filed an application with the USPTO to trademark Hyperheal Hyperbarics, Inc., stating that he had been using the mark since March 7, 2007, and the first use in commerce was at least as early as May 11, 2012. (Am. Compl. ¶ 61, ECF No. 14; ECF No. 14-11.) He used his personal contact information, although with his eric@hyperheal.org email address, and included digital images from the Hyperheal website as a specimen of the mark's use in commerce. (Id. ) On February 10, 2017, the USPTO sent Shapiro a Notice of Office Action stating that the registration of the mark was refused because it was likely to be confused with Dr. Love's existing trademark. (See Mem. Op. 4, ECF No. 44 (citing Def.'s Ex. 12).) Shapiro did not respond to the notice, and the application was ultimately considered abandoned. (Id. at 4, 6; see also Am. Compl. ¶ 62, ECF No. 14; ECF No. 14-12.)

On March 6, 2017, Hyperheal rehired Shapiro to work in the company as a technician, and they entered into an Employment Agreement. (Am. Compl. ¶ 14, ECF No. 14; ECF No. 14-3.) Under the Employment Agreement, Shapiro expressly agreed to do and refrain from doing several things, including:

You agree that you will not engage in any marketing on behalf of [Hyperheal] without the express permission of the COO or its delegate.

You will not participate on social media on behalf of [Hyperheal], including, but not limited to, email, Twitter, LinkedIn or Facebook. These social media accounts will need to be turned over to the COO, IT Director and or marketing department prior to the start of the job.

You hereby relinquish and transfer to [Hyperheal] any and all ownership or other rights, if any, that you have in any intellectual property (including without limitation trademarks, copyrights, and patents), social media accounts, ... or other property, tangible or intangible, that has ever been used in or with respect to the business operated by [Hyperheal], regardless of whether or not title to such property is currently in the name of [Hyperheal]; you will immediately take such steps (by, among other things, providing passwords and access codes) as are necessary to provide [Hyperheal] with access to and complete control over all such property; and you will, at [Hyperheal's] request, sign such documents and take such other steps as may be necessary to confirm that [Hyperheal] is the owner of all such property and accounts and to give [Hyperheal] complete control exclusive control over such property and accounts, and you will not, without [Hyperheal's] express written consent, act as [Hyperheal's] representative or agent with respect to any such property or any other matter ....

While employed by [Hyperheal], you shall not engage in any work related to hyperbarics in Maryland without the express written permission ....

You will immediately turn over, provide, and relinquish to [Hyperheal] all property, documents, and materials that have ever been used in [Hyperheal's] business and that are or may be in your possession, custody, or control....

You shall immediately turn over to [Hyperheal] and permanently relinquish control of any DME license and any other license, certificate, or other government or private right you may have related to [Hyperheal].

(ECF No. 14-3.) Under "effect of termination," the Employment Agreement provided that "[u]pon termination of this agreement for any reason, neither party shall have any further rights, duties or obligations under this agreement, except to carry out the provisions which contemplate performance after termination or expiration." (Id. )

Pursuant to the Employment Agreement, Shapiro met with Scott Hughey, Hyperheal's Director of Information Technology, on March 9, 2017 and initiated transfers of the usernames and passwords to Hyperheal's accounts at GoDaddy.com, LinkedIn, Facebook, and Twitter. (Am. Compl. ¶ 16, ECF No. 14.) Hyperheal contends that Shapiro did not mention or make any effort to assign his trademark application, nor did he mention the USPTO's Notice of Office Action or that he had spoken with various investors about the trademark. (See Mem. Op. 6, ECF No. 44.) Shapiro testified at his deposition that he discussed the trademark application with Hyperheal staff, Dr. Ziad Mirza and Jennifer Parmenter. (Def.'s Resp. Mem. 18, ECF No....