JLM Couture, Inc. v. Gutman

Background

JLM Couture sued Hayley Paige Gutman, its lead designer, asserting claims involving trademark infringement and dilution, false designation of origin, unfair competition, conversion, trespass to chattel, breach of contract, breach of fiduciary duty, breach of fidelity, and unjust enrichment. The dispute principally concerned social-media accounts using the Hayley Paige name, including the Instagram account with the handle @misshayleypaige.

Gutman’s 2011 employment contract, as amended and extended, ran through August 1, 2022. The court found that the contract did not allow Gutman to terminate it unilaterally. It also found that the contract gave JLM exclusive rights to use the Designer’s Name—including “Hayley Paige” and derivatives such as “misshayleypaige”—in specified commercial contexts, transferred trademark rights to JLM, and assigned JLM rights in designs and other work created in connection with Gutman’s employment.

The evidence showed that Gutman used the Instagram account for both personal material and JLM marketing. JLM employees helped manage the account, supplied photographs and draft captions, and used the account in advertising. Gutman later changed the account’s access credentials, withheld them from JLM, declined to post JLM-related business, and used the account to promote products from Chosen Foods and Optimum Whey without JLM’s permission.

Preliminary-Injunction Standard

The court applied the standard for a preliminary injunction: likelihood of success on the merits or sufficiently serious questions for litigation, likely irreparable harm without an injunction, a balance of hardships favoring the plaintiff, and consistency with the public interest. Because some requested relief would require Gutman to take affirmative steps, the court applied the more demanding standard for a mandatory injunction, requiring a clear showing that JLM was entitled to that relief or that very serious harm would result without it.

Contract and Trademark Findings

The court found the relevant contract language unambiguous. It held that Gutman’s resignation did not end the contract term and that the contract could prohibit conduct violating contractual restrictions, although an injunction could not force her to perform personal services.

The court found that JLM was likely to succeed on its claim that Gutman breached the contract by using the Designer’s Name and the @misshayleypaige handle to promote third-party products for compensation without JLM’s written permission. The court also found a strong likelihood that Gutman breached her duty to assist with JLM’s advertising programs by refusing to post JLM marketing content and using the account to promote unrelated goods.

The court further found that the account content was likely a work made for hire or otherwise covered by the contract’s assignment provision. In the court’s view, Gutman created and managed the account within the scope of her employment, the account promoted JLM’s bridal products, and the account’s content was sufficiently connected to her employment and JLM’s business. The court therefore found that JLM was likely to succeed on its claim that Gutman’s denial of access and unilateral commercial use violated JLM’s rights.

On the trademark claims, the court found that JLM had a registered “Hayley Paige” trademark and that Gutman’s use of “misshayleypaige” and related marks to promote third-party products was likely to confuse consumers about affiliation, sponsorship, or approval. The court found that several relevant factors favored likely confusion, including the strength and similarity of the marks, overlap in the advertising audience, evidence of actual confusion, and Gutman’s bad faith. It did not address JLM’s dilution claims because JLM sought no different or additional relief based on them.

Speech and Other Claims

The court denied the requested injunction to the extent it sought to prohibit Gutman from publicly disparaging JLM or continuing what JLM called a social-media bullying campaign. The court treated that relief as a prior restraint on speech and found that JLM had not shown clear and compelling evidence that Gutman had expressly waived her right to speak about the litigation or her experience with JLM.

The court also declined to decide the conversion, trespass-to-chattel, and breach-of-fiduciary-duty claims in the preliminary-injunction proceeding. It stated that the ultimate ownership of the account raised issues that did not need to be resolved to decide the motion. The court denied relief concerning disclosure of confidential information, solicitation of JLM employees or affiliates, and restrictions that would apply after the employment term because JLM had not shown that such relief was warranted at that stage. The request concerning certain restrictions that would begin after the contract term was also not ripe.

Order

The court granted in part and denied in part JLM’s motion for a preliminary injunction. During the case, Gutman and persons acting with her were enjoined from changing, posting to, deleting from, tagging on, transferring, or commercially using the listed JLM social-media accounts without written permission from JLM’s chief executive officer, Joseph L. Murphy. They were also enjoined from taking exclusive control of the accounts.

The order barred Gutman from using the Designer’s Name, JLM’s trademarks, confusingly similar marks, or related designs in commerce without JLM’s written permission. It also barred her from engaging in or associating with businesses competing with JLM in the specified bridal, accessory, evening-wear, and other product categories, and from using or authorizing others to use the covered designs or account content in commerce.

Gutman was required, within 24 hours of entry of the order, to provide current login credentials for the relevant Instagram, Pinterest, and TikTok accounts and take steps enabling JLM to regain access and control. The injunction was conditioned on JLM maintaining its previously posted $200,000 undertaking. The injunction remained effective until final judgment unless the court ordered otherwise, and the motion was denied in all other respects. The order superseded the earlier temporary restraining order.