Hoopla Sports and Entertainment v. Nike, Inc.

• Decision Date: 19 November 1996
• Docket Number: No. 96 C 1642.,96 C 1642.
• Citation: 947 F.Supp. 347
• Parties: HOOPLA SPORTS AND ENTERTAINMENT, INC., Plaintiff, v. NIKE, INC. and Columbia Broadcasting Systems, Defendants.
• Court: U.S. District Court — Northern District of Illinois

947 F.Supp. 347

HOOPLA SPORTS AND ENTERTAINMENT, INC., Plaintiff, v. NIKE, INC. and Columbia Broadcasting Systems, Defendants.

No. 96 C 1642.

United States District Court, N.D. Illinois, Eastern Division.

November 19, 1996.

COPYRIGHT MATERIAL OMITTED

Thomas William Flannigan, Law Office of Thomas Flannigan, Chicago, IL, Edward J. Moran, Chicago, IL, David Peter Cudnowski, David Cudnowski, Ltd., Chicago, IL, for Hoopla Sports and Entertainment, Inc.

Bart Allen Lazar, Alan S. Dalinka, Michael Levinson, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for Nike, Inc. and Columbia Broadcasting Systems.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

Plaintiff Hoopla Sports and Entertainment, Inc. sues defendants Nike, Inc. and Columbia Broadcasting Systems ("CBS"), claiming that they wrongfully usurped his creation, a "U.S. versus the world" basketball game involving all-star teams of high school age boys. Hoopla seeks $2,000,000 in compensatory damages and punitive damages for trademark infringement, copyright infringement, breach of contract, intentional interference with prospective economic advantage, violations of the Illinois Deceptive Business Practices Act, and fraud. The defendants' motion to dismiss the complaint is presently before the Court. For the reasons that follow, the motion is granted.

RELEVANT FACTS

The following recital of facts is drawn from the allegations of the complaint and its exhibits, which we take as true when considering a motion to dismiss. Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir.1996). John Walsh, President of Hoopla, conceived of the idea to stage a "U.S. versus the world" basketball game involving all-star teams of high school age boys, ultimately titled the "Father Liberty Game" (FLG).¹ Although all-star games, international "U.S. versus the world" games, and high school age basketball games had all been played before, this was the first time all of these elements had been combined into one event. The theme of the event was international peace and freedom, and a special feature of the game was the involvement of players from different ethnic areas in the former Yugoslavia, to promote understanding among these individuals and direct attention to the war in Bosnia.

The proposed game was described in an Event Profile bearing the title "1994 Father Liberty Game™." See Compl. Ex. 2. The Event Profile generally described the FLG, which was to be played on June 18, 1994 on the eve of Father's Day, noting that the game was being played to promote international peace and freedom, with special recognition for the contributions of the men and women of the armed services toward those goals. The Event Profile also listed the tentative line-up of the U.S. team ("Team Liberty USA") and the international team ("Nations United For Peace"). The Event Profile expressed the hope that the game would become an annual event. The second and third pages of the Event Profile bore the notation "©1994 John Walsh ALL RIGHTS RESERVED" on the bottom of each page.

Walsh first contacted a representative of the United States Army in Germany in October 1993 about staging the FLG. Walsh faxed an Event Profile to the Army in January 1994. Meanwhile, Walsh continued with preparations for the game, contacting international and American players and coaches to request their participation. On March 18, 1994, Walsh sent a letter to Rich Sheubrooks, the Sports Marketing Director for defendant Nike, soliciting Nike's sponsorship for the FLG and enclosing a copy of the Event Profile. Id. Ex. 3. The letter described the current status of Walsh's efforts to recruit various all-star-level high school players, and stated, "We have attempted to keep the announcement secretive until all arrangements have been finalized and sponsors selected. However I have already received calls from USA Today and several television producers about this event." The letter explained that "As you will not be putting on the all-star game in Chicago this year, I thought you might be interested," and asked Sheubrooks to "look it over and call me with any questions." The letter concluded, "I wanted to bring it to your attention first. If you are not interested then please advise me so I can make other arrangements." Id. The letter did not directly describe what was being asked of Nike. Although it appears from its tone that the letter may not have been the first communication between Walsh and Nike, no prior communications appear in the complaint.

About May 8, 1994, Walsh was notified by the Army that it could not stage the FLG. Walsh immediately decided to stage the game in Chicago under other sponsorship. Walsh solicited corporate sponsorship for the FLG in Chicago by writing letters to many companies, including Kodak Company and Lufthansa Airlines. Walsh wrote a second time to Nike on May 26, again enclosing a copy of the Event Profile and "a description of sponsorship opportunities." Id. Ex. 5. The letter concluded, "Steve, please review this proposal and call John Walsh ... if you have any questions or Nike, Inc. has any interest in this unique opportunity." Id.

Nike agreed to sponsor the June 1994 FLG, and provided uniforms for both teams. Hoopla alleges that Nike also agreed to sponsor the FLG the following year, and on a yearly basis after that. Hoopla notes that the FLG was "granted sanction" by U.S.A. Basketball, "a not for profit corporation that purports to regulate some aspects of basketball" in this country. Compl. ¶ 23.

The FLG took place on June 18, 1994 at Alumni Hall at DePaul University in Chicago. Walsh put considerable effort as well as funds of his own into staging the FLG. After the conclusion of the FLG, Walsh began making preparations for the second annual FLG. These preparations ended when Walsh learned that Nike was planning to stage a nearly exact replica of the FLG in Springfield, Massachusetts on May 13, 1995, to be known as the Nike Hall of Fame Hoop Summit ("Hoop Summit"). Hoopla's attorneys wrote Nike, noting that "Mr. Walsh brought the game to Nike for sponsorship," and that he "has invested thousands of hours of hard work and tens of thousands of dollars and his reputation as a promoter in high school basketball tournaments developing the Father Liberty Game.... The event profile of the ... Hoop Summit smacks of misappropriation, tortious interference and breach of an implied contract by Nike." Compl. Ex. 10.

On May 13, 1995, CBS broadcast the Hoop Summit. During the broadcast, CBS, through its play-by-play announcing and its color commentary and through an interview of one of the Hoop Summit coaches, made certain statements:

For the first time ever U.S. Basketball has fielded a team of 12 high school All-Americans and today they'll take on a team of international young stars representing 10 different countries from 5 continents.

Well, it is the first time ever that the United States has put together a select team for this level of competition which I think is great. We have the Dream Team coming up in Atlanta and now we have this in the under 19 age group.

In my personal recollection, I can never remember anything like this having been done before.

Compl. ¶¶ 37-39 (emphasis supplied). Hoopla alleges that these statements were false, as the event was in fact an identical copy of the FLG, down to the theme of international peace and the game's particular focus on Bosnia, including the participation of players from different Bosnian ethnic backgrounds. Nike and CBS planned to, and did, stage a second annual game in April, 1996, known as the "Nike-Naismith Hoop Summit."

Hoopla brought suit against Nike and CBS on March 22, 1996, alleging a variety of claims against them. The defendants have moved to dismiss all claims.

LEGAL STANDARDS

A motion to dismiss tests the sufficiency of the complaint, not the merits of the suit. Triad Assocs., Inc. v. Chicago Hous. Auth., 892 F.2d 583, 586 (7th Cir.1989). When considering a motion to dismiss, the court views all facts alleged in the complaint, as well as any inferences reasonably drawn therefrom, in the light most favorable to the plaintiff. Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir.1996). A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 101, 2 L.Ed.2d 80 (1957). In short, the only question is "whether relief is possible under any set of facts that could be established consistent with the allegations." Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir.1992) (citing Conley, 355 U.S. at 45-46, 78 S.Ct. at 101-02).

ANALYSIS

I. TRADEMARK INFRINGEMENT

Count I asserts that Nike and CBS infringed the Father Liberty Game trademark in violation of section 43(a) of the Lanham Act by holding and promoting the nearly identical Hoop Summit. Hoopla does not argue that defendants infringed its trademark by using the "Father Liberty Game" mark without authorization. Defendants never attached or used that mark in association with the 1995 game called the Hoop Summit. Rather, Hoopla's trademark claim asserts that the defendants took Hoopla's product, the international high school age all-star basketball game it created in 1994, removed the trademark "Father Liberty Game," and presented the game to the basketball-consuming public as their own creation.

This theory, which has been variously referred to as "reverse passing off," "reverse palming off," "rebranding," and the like, is a recognized variant of the "false designation of origin" prohibited by § 43(a) of the Lanham Act. The relevant portion of that section states:

(1) Any person who, on or in connection with any goods or services, ... uses in commerce ... any false designation of origin, false or misleading description of fact, or false or misleading...