A.V.E.L.A., Inc. v. Estate Of Marilyn Monroe, LLC

364 F.Supp.3d 291

A.V.E.L.A., INC., Plaintiff,

v.The ESTATE OF MARILYN MONROE, LLC, et al., Defendants.

The Estate of Marilyn Monroe, LLC, Counterclaimant,

v.A.V.E.L.A., Inc., Counter-Defendant,Leo Valencia, IPL, Inc., X One X Movie Archives Inc., V. International Fine Arts Publishing, Inc., Third-Party Defendants.

X One X Movie Archives Inc., V. International Fine Arts Publishing, Inc., Counterclaimants,

v.The Estate of Marilyn Monroe, LLC, Authentic Brands Group, LLC, James Salter, Counter-Defendants.

12 Civ. 4828 (KPF)

United States District Court, S.D. New York.

Signed January 30, 2019

Duane Maurice Harley, Pro Hac Vice, D. Harley PC, New York, NY, Plaintiff.

Paul Wendell Garrity, Sheppard, Mullin, Richter & Hampton, LLP, New York, NY, Gina I. Durham, Pro Hac Vice, Matthew Nicholas Ganas, Paolo Morante, Tamar Y. Duvdevani, DLA Piper US LLP, Chicago, IL, Michael Bergman, Mbergman Law, Century City, CA, Gregory Goodheart, Goodheart Law, West Hills, CA, Christopher D. Dusseault, Pro Hac Vice, Michael Lee, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, for Defendants.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

In what is becoming an annual tradition, the Court here resolves the latest claims in the long-running battle among multiple parties asserting multiple claims to the intellectual property rights of Marilyn Monroe. After a trilogy of decisions resolved the parties' various motions to dismiss, this litigation progressed to discovery and, now, to cross-motions for summary judgment. Additionally, the Court has been asked to resolve the parties' disputes as to the admissibility of expert testimony provided by the Estate of Marilyn Monroe, LLC (the "Monroe Estate" or the "Estate").

In its first opinion, A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC , 131 F.Supp.3d 196 (S.D.N.Y. 2015) (" AVELA I "), this Court granted in part and denied in part the motions of X One X Movie Archives, Inc. ("X One X") and V. International Fine Arts Publishing, Inc. ("VIFA," and together with X One X, Leo Valencia, IPL, Inc., and A.V.E.L.A., INC., the "AVELA Parties") to dismiss the First Amended Counterclaim filed by the Monroe Estate. After the Court issued AVELA I , the AVELA Parties filed their respective answers to the First Amended Counterclaim. They also brought counterclaims of their own against the Monroe Estate and related parties Authentic Brands Group LLC ("ABG"), and James Salter ("Salter," and together with the Monroe Estate and ABG, the "Estate Parties").

In response, the Estate Parties moved to dismiss X One X's and VIFA's counterclaims. In A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC , 241 F.Supp.3d 461 (S.D.N.Y. 2017) (" AVELA II "), the Court dismissed without prejudice several of X One X's and VIFA's claims. X One X and VIFA then elected to replead several of their dismissed counterclaims. These efforts begat A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC , No. 12 Civ. 4828 (KPF), 2018 WL 1273343 (S.D.N.Y. Mar. 5, 2018) ( "AVELA III "), where the Court dismissed the amended counterclaims with prejudice.

The upshot of the three decisions is that all parties to this action have some claims remaining. The Estate Parties' remaining claims are Counts I, II, III, IV, and VII of the Estate's First Amended Counterclaim, which encompass claims for trademark infringement, trademark dilution, and intentional interference with prospective economic advantage. The AVELA Parties' remaining claims are Counts II, III, V, and VI of A.V.E.L.A.'s Complaint; Counts I, II, and V of VIFA's Answer to the First Amended Counterclaim and First Amended Counterclaims; and Counts I and II of X One X's Answer to the First Amended Counterclaim and Related Second Amended Counterclaims, which in the aggregate encompass requests for a declaration of non-infringement as well as claims for trademark cancellation, tortious interference with a contractual relationship, and intentional interference with a prospective economic advantage.

As detailed in the remainder of this Opinion, the Estate Parties are successful in part in their motion, and the AVELA Parties are unsuccessful. The Court concludes easily that genuine disputes of material fact remain as to the Estate Parties' federal and state trademark claims, as well as their claim for intentional interference with prospective economic advantage. However, the Court finds that the Estate Parties are entitled to summary judgment on their claim that two of the AVELA Parties are in fact alter egos. Further, the Court finds that the Estate Parties are entitled to summary judgment as to the AVELA Parties' claims for trademark cancellation, tortious interference with contract, and intentional interference with prospective economic advantage. Conversely, the Court finds that the AVELA Parties are not entitled to summary judgment as to the remaining claims of laches, copyright law, the First Amendment, or the fair use doctrine. Finally, the Court denies the AVELA Parties' motion to exclude expert testimony.

BACKGROUND¹

The Court discusses the underlying facts only to the extent necessary to resolve the instant motions, as the Court has engaged in a disquisition of this case's history in its prior opinions. See AVELA III , 2018 WL 1273343, at *1-3, AVELA II , 241 F.Supp.3d at 468-70 ; AVELA I , 131 F.Supp.3d at 200-02.

A. Factual Background

1. The Parties

a. The AVELA Parties

Leo Valencia is in the business of licensing images and other indicia of celebrities, including Marilyn Monroe, to entities for use in connection with merchandise such as apparel and glassware. AVELA I , 131 F.Supp.3d at 201-03. Valencia owns a collection of entities, including two Nevada-based companies, A.V.E.L.A., Inc. ("AVELA") and X One X. (AVELA 56.1 ¶ 5). The Estate Parties claim that he also has an interest in IPL, Inc. ("IPL"), a Delaware limited liability company ("LLC"). (Estate 56.1 ¶ 142).

VIFA is "a corporation duly organized and existing under the laws of the State of California with its principal place of business ... [in] Carlsbad, California[.]" (AVELA 56.1 ¶ 3). It operates as a licensing agent for AVELA. (Estate 56.1 ¶¶ 133-34).

b. The Estate Parties

The Monroe Estate is a Delaware LLC with its principal place of business in New York City. (AVELA 56.1 ¶ 6). The Monroe Estate is a brand development and licensing company that maintains what it claims to be an exclusive portfolio of intellectual property rights related to Marilyn Monroe and, more specifically, a number of federal trademark registrations that are claimed to be valid and subsisting in full force, incorporating the words "Marilyn" or "Marilyn Monroe" (collectively, the "Monroe Marks"). AVELA I , 131 F.Supp.3d at 201. ABG is a separate Delaware LLC, and Salter is the Chief Executive Officer of both ABG and the Monroe Estate. AVELA II , 241 F.Supp.3d at 469.

2. The Estate's Marks

In its prior opinions, the Court has provided an exhaustive list of the trademarks, including some that the Monroe Estate alleges have become statutorily incontestable (the "Incontestable Marks"). AVELA I , 131 F.Supp.3d at 201 (internal citations omitted). The Estate owns twelve separate trademark registrations, including design marks for stylized versions of Monroe's signature in perfume; watches; posters and greeting cards; clothing; eyewear; collector plates; towels; porcelain dolls; and wine. (Estate 56.1 ¶¶ 48-56). The Estate owns wordmarks in "Marilyn Monroe" that apply to a broader class of goods including all clothing items. (Id. at ¶¶ 61-65). The Estate also owns a wordmark to "Marilyn" for wine. (Id. at ¶¶ 69-73).

As this Court previously observed:

Aside from the registered marks, the Monroe Estate has applied for a number of trademarks and service marks incorporating the words "Marilyn Monroe" or the design of a lip print. The Monroe Estate also claims substantial common law rights in the "Marilyn," "Marilyn Monroe," and lip print design marks (together with the registered marks, the "MONROE Marks"). Separately, the Monroe Estate asserts that it is "the exclusive owner of those rights in and to Marilyn Monroe's identity, persona, name and likeness arising under common law and/or statute[.]" The First Amended Counterclaim collectively refers to the MONROE Marks and the Monroe Estate's interests in Monroe's identity, persona, name, and likeness as the "Marilyn Monroe Intellectual Property," a convention the Court adopts for purposes of this Opinion.

AVELA I , 131 F.Supp.3d at 201.

3. The Alleged Infringement

While the procedural background of this case evokes the most abstruse law school examinations, the core factual dispute is quite simple: The parties contest the validity of the Estate's claim to the Marilyn Monroe Intellectual Property. In their amended pleadings, the Estate Parties claim that the AVELA Parties have no rights to any of the Marilyn Monroe Intellectual Property, and yet continue to license, design, manufacture, and distribute merchandise, including t-shirts, glassware, and posters, that incorporates said Intellectual Property. (Estate Br. 2-3). These products compete with the products designed and distributed by the Monroe Estate and its licensees. (Id. ). Thus, in the Monroe Estate's telling, the case is a simple story of a legitimate trademark holder forced to defend its rights against an intellectual property pirate and his armada of sham companies. The Monroe Estate asks the Court to recognize its trademarks and to hold the AVELA Parties responsible for stealing its intellectual property.

The AVELA Parties tell a different story: They allege that the Monroe Estate's trademarks are invalid; that the claims to the Marilyn Monroe Intellectual Property are frivolous; and that Estate has interfered with their business relationships through the strategic use of litigation. In particular, the AVELA Parties allege that the Estate has no connection to the actual person of Marilyn Monroe (AVELA 56.1 ¶¶ 7-30), and that the trademarks are mere...