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

Background

The dispute concerns the trademark “ZIONESS” and arose from Amanda Berman’s employment with The Lawfare Project, Inc. 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 handling trademark applications and the formation of nonprofit entities.

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

ZMI claimed a right to use the ZIONESS trademark based on a pending trademark registration. Lawfare claimed a right to use the mark and alleged that the registration was invalid.

Earlier Proceedings and Claims

On September 3, 2021, ZMI sued Lawfare. ZMI sought a declaration that it owned the ZIONESS trademark and asserted federal trademark-infringement claims under the Lanham Act, along with a state-law unfair-competition claim. Lawfare moved to compel arbitration based on a clause in Berman’s employment agreement. On March 17, 2022, Judge Hellerstein denied that motion, finding that there was no valid agreement to arbitrate the dispute.

On April 18, 2022, Lawfare filed an amended answer and asserted counterclaims and a third-party complaint against ZMI and Berman. Lawfare sought a declaration of noninfringement of the ZIONESS mark and asserted claims for copyright infringement, violation of the Defend Trade Secrets Act, breach of contract, breach of fiduciary duty, misappropriation of trade secrets, conversion, and tortious interference.

Motion to Dismiss

ZMI and Berman moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a legal claim. They argued that all of Lawfare’s claims were time-barred or otherwise failed to state a claim. They also sought dismissal of certain affirmative defenses.

Timeliness Ruling

The court rejected the argument that Lawfare’s claims were filed too late. Lawfare alleged that it gave ZMI and Berman an oral license to use the images in April 2018 and revoked that license in May 2019. Lawfare further alleged 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, within the applicable three-year limitations period, and alleged continuing infringement, the court held that the claims were timely.

Pleading Ruling

The court also held that the motion was not based on whether the pleadings were legally sufficient while accepting their allegations as true. Instead, the court found that the motion relied largely on arguments disputing the merits and characterizing Lawfare’s claims.

Judge Hellerstein concluded that the third-party complaint contained enough factual allegations to create more than a plausible inference that Lawfare could be entitled to relief. The court therefore found that Lawfare had met its burden at the pleading stage.

Disposition

The motion to dismiss the third-party complaint and affirmative defenses was denied. The court canceled the October 12, 2022 argument, directed ZMI and Berman to answer by October 14, 2022, and scheduled a November 4, 2022 status conference. The amended order also corrected an earlier clerical instruction by directing the Clerk of Court to terminate ECF No. 45 rather than ECF No. 34.