Zioness Movement, Inc. v. The Lawfare Project, Inc.

Background

The dispute concerns the “ZIONESS” trademark and arose from The Lawfare Project, Inc.’s employment of Amanda Berman. Lawfare hired Berman in March 2015 as its Director of Legal Affairs. Her duties included working with clients and managing Lawfare’s relationship with outside counsel, including counsel handling trademark applications and assistance with forming nonprofit entities.

Berman’s employment agreement was nonexclusive. In about 2017, she began building a Zioness Movement organization, which was formally incorporated as Zioness Movement, Inc. in April 2018. The court stated that it was unclear whether the parties intended Zioness Movement to be an independent organization controlled by Berman or a subsidiary of Lawfare. Berman left Lawfare in December 2018 to work full-time for Zioness Movement.

Both Zioness Movement and Lawfare claimed a right to use the ZIONESS mark. Zioness Movement relied on a pending trademark registration, while Lawfare alleged that the registration was invalid.

Claims and Motion

Zioness Movement originally sued Lawfare for a declaration that it owned the ZIONESS trademark, federal trademark-infringement claims, and a state-law unfair-competition claim. Lawfare later filed an amended answer asserting counterclaims and a third-party complaint against Zioness Movement and Berman.

Lawfare sought a declaration that it had not infringed the ZIONESS mark and asserted claims involving copyright infringement, the federal Defend Trade Secrets Act, breach of contract, breach of fiduciary duty, misappropriation of trade secrets, conversion, and interference with contractual or business relationships.

Zioness Movement and Berman moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim. They argued that Lawfare’s claims were time-barred or otherwise inadequately pleaded. They also challenged certain affirmative defenses.

Court’s Analysis

The court rejected the argument that Lawfare’s claims were untimely. Lawfare alleged that it gave Zioness Movement and Berman an oral license to use the disputed images in April 2018, revoked that license in May 2019, and that they continued using the copyrighted works after the revocation and after receiving a cease-and-desist letter. Because Lawfare filed its third-party complaint in April 2022, the court held that the claims were filed within the applicable three-year limitations period. The court also relied on Lawfare’s allegation of continuing infringement.

The court further concluded that the motion did not properly challenge whether Lawfare had pleaded enough facts. Instead, the court characterized the motion as relying on arguments about the claims’ merits and on statements that the claims were “specious and spiteful.” Applying the rule that factual allegations must be accepted as true at the motion-to-dismiss stage, the court found that Lawfare’s third-party complaint contained enough factual allegations to raise a plausible inference that Lawfare was entitled to relief.

Disposition

The court denied the motion to dismiss the third-party complaint and affirmative defenses. The court canceled the argument scheduled for October 12, 2022, directed Zioness Movement and Berman to answer by October 14, 2022, and ordered the parties to attend a status conference on November 4, 2022, at 10:00 a.m. The court also directed the clerk to terminate ECF No. 34.