Scrum All., Inc. v. Scrum, Inc.

SCRUM ALLIANCE, INC. v. SCRUM, INC., JEFF SUTHERLAND, JJ SUTHERLAND

Civil Action No. 4:20-CV-00227

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

July 16, 2020

Judge Mazzant

MEMORANDUM OPINION AND ORDER

Pending before the Court is Plaintiff Scrum Alliance, Inc.'s First Amended Application for Preliminary Injunction (Dkt. #19). Having considered the motion, the relevant pleadings, and the arguments and evidence introduced at the July 1 hearing, the Court finds that Plaintiff's First Amended Application for Preliminary Injunction should be granted.

BACKGROUND

Factual Background¹

While the parties' factual allegations are detailed, the Court only provides those most relevant to Plaintiff's application for a preliminary injunction. This case is about two entities that teach the "Scrum framework" (Dkt. #15). "Scrum" is a framework that "can be used to put agile values and principles into practice" (Dkt. #15). By doing so, teams can allegedly "deliver products and services quickly and efficiently" (Dkt. #15). Luckily for the Court and for readers, a thorough understanding of the principles behind "Scrum" is unnecessary.

Plaintiff is a nonprofit and was founded in 2001 (Dkt. #15). Plaintiff uses certification programs as an avenue to teach and promote the Scrum framework (Dkt. #15 ¶ 15). Plaintiff has certified around one million practitioners worldwide (Dkt. #15 ¶ 15).

Plaintiff developed several valuable, registered trademarks in conjunction with its certification programs (Dkt. #15 ¶ 15). Plaintiff's three core trademarks are: "Registration Number 3,738,535 for CERTIFIED SCRUMMASTER®, Registration No. 3,510,571 for CERTIFIED SCRUM TRAINER®, and Registration Number 3,545,767 for CERTIFIED SCRUM PRODUCT OWNER®" ("Plaintiff's Marks") (Dkt. #15 ¶ 15). Plaintiff's Marks have obtained incontestable status pursuant to 15 U.S.C. § 1065 (Dkt. #15 ¶ 15).

In late 2019, Defendant Scrum, Inc. ("Defendant SI") announced a new Scrum-certification program (Dkt. #15 ¶ 20). Plaintiff alleges that Defendant SI's program is a copy of Plaintiff's programs—and even worse, Defendant SI purportedly uses names for both its program and its trainers that are virtually identical to Plaintiff's Marks (Dkt. #15 ¶ 20). As recounted by Plaintiff:

Specifically, [Defendant] SI created a Licensed Scrum Master course (to compete with [Plaintiff's] Certified ScrumMaster® course), a Licensed Scrum Product Owner course (to compete with [Plaintiff's] Certified Scrum Product Owner® course), and a Licensed Scrum Trainer certification (to compete with [Plaintiff's] Certified Scrum Trainer® certification) that each consist of training and result in credentialing with no discernible difference to [Plaintiff's] offerings.

(Dkt. #15 ¶ 22). Plaintiff claims that Defendant SI's Allegedly Infringing Marks were chosen deliberately and willfully to both confuse consumers and to trade on the goodwill and value associated with Plaintiff's Marks (Dkt. #15 ¶ 23).

For comparison's sake, the Court reproduces the marks, side by side. Plaintiff's Marks are on the left, and Defendant SI's Allegedly Infringing Marks are on the right:

CERTIFIED SCRUMMASTER

LICENSED SCRUM MASTER

CERTIFIED SCRUM TRAINER

LICENSED SCRUM TRAINER

CERTIFIED SCRUM PRODUCT OWNER

LICENSED SCRUM PRODUCT OWNER

(Dkt. #19 at pp. 10-11).

Plaintiff alleges several violations of the Lanham Act against Defendant SI, including federal trademark infringement, service mark infringement, false affiliation, false advertising, and unfair competition (Dkt. #15 at pp. 10-11). Plaintiff also asserts trademark infringement and unfair competition under Texas law against Defendant SI, along with a breach-of-contract claim against Defendants Jeff and JJ Sutherland in their individual capacities (Dkt. #15 at p. 12).

Plaintiff requests preliminary and permanent injunctions on the basis of its trademark- and service-mark infringement claims (Dkt. #15 ¶ 4).

Procedural History

Plaintiff filed suit on March 18, 2020 (Dkt. #1). The same day, Plaintiff filed its Motion for Preliminary Injunction (Dkt. #2). On April 24, 2020, Plaintiff filed its amended complaint (Dkt. #15). Plaintiff filed its First Amended Application for Preliminary Injunction a little over a month later on May 29 (Dkt. #19). On June 17, 2020, Defendants filed their response (Dkt. #31). Plaintiff filed a reply on June 24, 2020 (Dkt. #46).

While Plaintiff's First Amended Application for Preliminary Injunction was pending, Defendants filed their Motion to Dismiss or, in the Alternative, to Transfer on June 3, 2020 (Dkt. #22). In their motion to dismiss, all Defendants challenged the personal jurisdiction of this Court.

On June 19, 2020, Plaintiff filed an Emergency Motion for Temporary Restraining Order (Dkt. #35). After a telephonic hearing with the parties, the Court granted Plaintiff's motion and issued a TRO (Dkt. #43).

The Court heard argument on both Plaintiff's First Amended Application for Preliminary Injunction and Defendants' Motion to Dismiss or, in the Alternative, to Transfer on July 1, 2020 (Dkt. #71). The parties also filed additional evidence—mostly deposition testimony and the accompanying exhibits—to support their arguments (Dkt. #56; Dkt. #57; Dkt. #58). The day after the hearing, the Court—having good cause to believe that Plaintiff had carried its burden on all four of the preliminary-injunction factors—extended a modified version of the TRO for fourteen days (Dkt. #63).

LEGAL STANDARD

A party seeking a preliminary injunction must establish the following elements: (1) a substantial likelihood of success on the merits; (2) a substantial threat that plaintiffs will suffer irreparable harm if the injunction is not granted; (3) that the threatened injury outweighs any damage that the injunction might cause the defendant; and (4) that the injunction will not disserve the public interest. Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008). "A preliminary injunction is an extraordinary remedy and should only be granted if the plaintiffs have clearly carried the burden of persuasion on all four requirements." Id. Nevertheless, a movant "is not required to prove its case in full at a preliminary injunction hearing." Fed. Sav. & Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir. 1985) (quoting Univ. of Tex. v. Comenisch, 451 U.S. 390, 395 (1981)). The decision whether to grant a preliminary injunction lies within the sound discretion of the district court. Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982).

ANALYSIS

I. Plaintiff Is Entitled to a Preliminary Injunction Against Defendant SI

Plaintiff purports to request an injunction against all Defendants (Dkt. #19 at p. 4). The basis for Plaintiff's injunction is to prevent continuing trademark infringement, however (Dkt. #19at pp. 4-5).² Plaintiff asserts a trademark-infringement claim only against Defendant SI (Dkt. #15 at pp. 10-12). So in analyzing Plaintiff's application for a preliminary injunction, the Court will not consider any actions committed by the individual defendants, Defendants Jeff and JJ Sutherland, in their individual capacities.³

The scope of Plaintiff's request for preliminary-injunctive relief affects a threshold personal-jurisdiction question, too. Defendants, both in their response to this motion and in a separate motion to dismiss, challenge the Court's personal jurisdiction (Dkt. #31 at p. 11). The Court may not issue a preliminary injunction without first finding that there is at least a reasonable probability of ultimate success on the question of jurisdiction when the action is tried on the merits. But this finding must only be made as to the party "against whom the injunction runs." See infra Section I.A. Since the injunction runs against Defendant SI, the Court does not address whether Defendants Jeff and JJ Sutherland, in their individual capacities, are subject to the Court's personal jurisdiction.

On the topic of the Court's personal jurisdiction over Defendant SI, though, the Court finds that Plaintiff has established that there is at least a reasonable probability of ultimate success upon the question of jurisdiction when the action is tried on the merits. See infra Section I.A. Indeed, the Court has specific jurisdiction to hear Plaintiff's trademark-infringement claim over Defendant SI. See infra Section I.A.

After answering this jurisdictional threshold question, the Court moves on to conclude that Plaintiff is entitled to a preliminary injunction. The Court finds that Plaintiff has clearly carried the burden of persuasion on all four of the preliminary-injunction factors. See infra Sections I.B, I.C, I.D, I.E.

A. There Is At Least a Reasonable Probability Plaintiff Will Succeed on the Question of Personal Jurisdiction When Its Trademark-Infringement Claim Is Tried on the Merits

In opposing Plaintiff's application for a preliminary injunction, Defendant SI argues that Plaintiff's application should be denied because the Court lacks personal jurisdiction (Dkt. #31 at pp. 11-12).⁴ The Court is unpersuaded.

Plaintiff's trademark-infringement claim against Defendant SI is the only basis for its application for a preliminary injunction (Dkt. #19 at pp. 3-4). The Court concludes that Plaintiff has "adequately establish[ed] that there is at least a reasonable probability of ultimate success upon the question of jurisdiction when the action is tried on the merits" with regard to this claim. Enter. Intern., Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464, 471 (5th Cir. 1985) (quoting Visual Scis., Inc. v. Integrated Commc'ns Inc., 660 F.2d 56, 59 (2d Cir. 1981)). Indeed: (1) Defendant SI has purposely directed its activities toward Texas and purposely availed itself of the privileges of conducting activities here; and (2) Plaintiff's trademark-infringement claim arises out of or results from Defendant SI's forum-related contacts. And though Defendant SI claims that the Court's exercise of personal jurisdiction...