Ultra Records, LLC v. Ultra International Music Publishing, LLC

Background

Ultra Records, LLC and Ultra International Music Publishing, LLC are described as separate corporate siblings founded by Patrick Moxey. Records operates in music recording, production, and promotion. Publishing operates in music publishing and composition licensing. After Records was partly sold in 2012, Records purportedly granted Publishing a license to continue using the Ultra trademark. The buyer later exercised an option to purchase the rest of Records and terminated the license. Publishing continued using the mark, and Records sued.

The Motion

Publishing sought partial summary judgment—a ruling that no reasonable jury could find otherwise—on two issues: whether Publishing owned the Ultra mark in the music-publishing industry before 2012, and whether Records could carry its burden to obtain disgorgement of Publishing’s profits.

Trademark Ownership

The court rejected Publishing’s framing of the ownership issue. For Records’ infringement claim, Records needed to show that it owned a valid mark that Publishing infringed; Records did not need to own a valid mark specifically in the music-publishing industry. The court explained that infringement turns on whether consumers are likely to be confused, and that marks can be confusingly similar even when the businesses operate in technically different industries.

The court applied the eight-factor test used in the Second Circuit, including the proximity of the parties’ products. Evidence that companies sometimes handle both recording and publishing, along with the overlap in the parties’ operations and resources, supported Records’ position that the industries might be sufficiently related. Publishing’s evidence that another company used the Ultra mark for music festivals did not resolve the issue. The court held that product proximity, as part of a fact-intensive test, was genuinely disputed and therefore could not be resolved on summary judgment.

Disgorgement

Publishing argued that Records could not obtain profits because Records could not show profits “flowing directly from the infringement.” The court rejected that argument. Under 15 U.S.C. § 1117(a), a trademark plaintiff initially must prove the defendant’s sales, while the defendant must prove claimed costs or deductions. The court held that the Supreme Court’s decision in Lexmark did not change this burden-shifting framework. The court also noted that later Second Circuit decisions continued applying the same framework.

The court did not decide whether a plaintiff might sometimes have to apportion sales by product, time period, or another measure. Publishing raised that issue only in its reply brief and did not argue that its sales should be limited in any particular way. Publishing also did not seek summary judgment on the grounds that Records lacked evidence of gross sales or that Publishing’s costs and deductions were undisputed. The court therefore rejected the direct-causation argument and denied the motion on disgorgement.

Disposition

The court denied Defendant’s motion. It held the three motions to exclude for decision with the motions in limine because they would not affect the outcome of the summary-judgment motion. The court also ordered the parties to meet, confer, and submit their trial availability for October, November, and December 2024 by August 15, 2024.