Team Rubicon Global, Ltd. v. Team Rubicon, Inc.

Background

Team Rubicon Global, Ltd. (TRG) and Team Rubicon, Inc. (TRI) are related nonprofit entities that provide disaster-relief services internationally and in the United States, respectively. In October 2015, TRI granted TRG an exclusive right to use and sublicense Team Rubicon’s trademarks outside the United States through a Master Trademark License Agreement (MTLA). The agreement required TRG to impose comparable restrictions on its international sublicensees, protect the trademarks’ value and goodwill, and comply with TRI’s quality-control measures.

At a 2019 leadership conference, a volunteer from TRG’s Canadian sublicensee reported that the chief executive officers of the United Kingdom and Australian sublicensees had sexually harassed her. TRI investigated and determined that the allegations were credible. TRI then sent TRG letters requesting corrective measures, including removing the executives from Team Rubicon activities, terminating them for cause, retraining staff and regular volunteers on harassment prevention, and producing harassment and whistleblower policies for inspection.

TRG did not respond to the September and October letters by indicating that it had completed the requested measures. After the 60-day cure period in the MTLA passed, TRI terminated the agreement. TRG later said it had taken some, but not all, of the requested steps and continued using the Team Rubicon trademarks, including in a way that portrayed TRI as a subsidiary of TRG.

The parties’ motions

TRG asserted claims for declaratory relief, breach of contract, and interference with prospective economic advantage. TRI asserted counterclaims including declaratory relief, interference with business relations and prospective economic advantage, trademark infringement, unfair competition, breach of contract, false advertising, and attorneys’ fees.

Both sides moved for a preliminary injunction under Federal Rule of Civil Procedure 65. TRG asked the court to prohibit TRI from representing that TRG lacked a valid license to use and sublicense the trademarks outside the United States. TRI asked the court to prohibit TRG from using the trademarks for any purpose and to require compliance with the MTLA’s termination provisions.

Court’s analysis

To obtain a preliminary injunction, a party had to show irreparable harm without an injunction, either a likelihood of success on the merits or a serious question suitable for trial combined with a hardship balance favoring that party, and that the public interest supported an injunction.

Breach of contract

The court concluded that TRI was likely to succeed on its breach-of-contract claim. The MTLA required TRG to ensure that each sublicense agreement imposed restrictions at least as protective as those in the MTLA. The court determined that this obligation required TRG to ensure that the international sublicensees followed the agreement’s quality-control standards.

The court found that TRI’s September letter adequately described the noncompliance and requested corrective action, even though it did not cite a specific MTLA provision. TRI’s October letter then notified TRG of a material breach and invoked the 60-day cure process. Because TRG did not show that it had completed the requested corrective measures during that period, the court held that TRI had properly terminated the MTLA. The court also found that TRG continued to breach the agreement by using the trademarks after termination.

The court rejected TRG’s argument that it could not take the requested measures because the international organizations were not its parent or subsidiary entities. The MTLA required TRG to structure its sublicense agreements so that the sublicensees were subject to the required quality-control obligations. The court noted that TRG had not shown that it attempted to have the executives terminated, had staff and volunteers retrained, or had the requested policies produced for inspection.

Trademark infringement

The court also concluded that TRI was likely to succeed on its trademark-infringement claim. Because the MTLA had likely been validly terminated, TRG was likely using the trademarks without permission. The court found a likelihood of confusion because the parties offered the same types of services, competed for the same donations, used nearly identical names, and had at least one fundraiser who believed she was soliciting donations for TRI when she was actually soliciting for TRG. The court also found that TRG’s communications and advertisements suggested that TRI was a subsidiary of TRG and supported an inference that the marks were adopted in bad faith.

Irreparable harm and public interest

The court found irreparable harm based on both the MTLA’s provision concerning material breaches and the likely confusion from continued trademark infringement. It found evidence that donations could be directed to TRG instead of TRI and that partner organizations might end their relationships with TRI if the misconduct was not addressed. The court also found that the public interest favored enforcing contracts and trademark laws and preventing confusion that could harm disaster-relief efforts.

Ruling and injunction

The court denied TRG’s motion for a preliminary injunction and granted TRI’s motion. Pending resolution of the action, TRG and all others acting in concert with TRG who receive notice of the injunction were barred from publishing, using, displaying, distributing, or sublicensing the Team Rubicon trademarks or confusingly similar variations in connection with products, services, advertising, marketing, social-media accounts, or sales.

The injunction also barred the enjoined parties from making false or misleading statements suggesting an association with, authorization by, or sponsorship from Team Rubicon; registering or operating confusing domain names or social-media accounts; unfairly competing with Team Rubicon; engaging in related unfair, fraudulent, or deceptive practices; or assisting others in those activities. The order resolved the two preliminary-injunction motions, while the case remained referred to Magistrate Judge Fox for general pretrial management.