A.V.E.L.A., Inc. v. Estate of Marilyn Monroe, LLC, No. 12 Civ. 4828(KPF).

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: KATHERINE POLK FAILLA, District Judge
• Citation: 131 F.Supp.3d 196
• Parties: A.V.E.L.A., INC., Plaintiff, v. The ESTATE OF MARILYN MONROE, LLC, et al., Defendants. The Estate of Marilyn Monroe, LLC, Counterclaimant, v. A.V.E.L.A., Inc., Counter–Defendant, Leo Valencia, IPL, Inc., X One X Movie Archives Inc., V. International Fine Arts Publishing, Inc., Third–Party Defendants.
• Docket Number: No. 12 Civ. 4828(KPF).
• Decision Date: 18 September 2015

131 F.Supp.3d 196

A.V.E.L.A., INC., Plaintiff,
v.
The ESTATE OF MARILYN MONROE, LLC, et al., Defendants.

The Estate of Marilyn Monroe, LLC, Counterclaimant,
v.
A.V.E.L.A., Inc., Counter–Defendant,

Leo Valencia, IPL, Inc., X One X Movie Archives Inc., V. International Fine Arts Publishing, Inc., Third–Party Defendants.

No. 12 Civ. 4828(KPF).

United States District Court, S.D. New York.

Signed Sept. 18, 2015.

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Michael Ray Adele, Anaheim, CA, for Plaintiff.

Paul Wendell Garrity, Sheppard, Mullin, Richter & Hampton, LLP,

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Tamar Y. Duvdevani, DLA Piper U.S. LLP, New York, NY, Gina I. Durham, DLA Piper U.S. LLP, Chicago, IL, Michael Bergman, Mbergman Law, Century City, CA, Gregory Goodheart, Goodheart Law, West Hills, CA, for Defendants.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

This litigation is but another skirmish in a long-running war over the intellectual property rights inhering in deceased celebrities—here, Marilyn Monroe. Plaintiff A.V.E.L.A., Inc. ("AVELA") preemptively filed a complaint against the Estate of Marilyn Monroe, LLC (the "Monroe Estate") and its licensee, Bioworld Merchandising, Inc. ("Bioworld"), seeking a declaratory judgment concerning federal and state intellectual property rights in Ms. Monroe. AVELA also asserted a claim against the Monroe Estate and Bioworld for tortious interference with a contract.

In response to the AVELA complaint, the Monroe Estate and Bioworld filed counterclaims against AVELA and third-party claims against Leo Valencia, AVELA's purported owner. Thereafter, upon obtaining leave from the Court, the Monroe Estate filed the First Amended Counterclaim against AVELA and Valencia, as well as other reputed Valencia entities IPL, Inc. ("IPL"), X One X Movie Archives Inc. ("X One X"), and V. International Fine Arts Publishing, Inc. ("V. International") (with AVELA and Valencia, the "Counter–Defendants"). The First Amended Counterclaim alleges seven causes of action, including: (i) false association and unfair competition in violation of 15 U.S.C. § 1125(a); (ii) trademark infringement in violation of 15 U.S.C. § 1114; (iii) trademark dilution in violation of 15 U.S.C. § 1125(c)and New York General Business Law § 360–l ; (iv) common law unfair competition; (v) deceptive business practices proscribed by New York General Business Law § 349; (vi) tortious interference with existing contractual relationships; and (vii) intentional interference with prospective economic advantage.

Counter–Defendants X One X and V. International (collectively, the "Movants") have moved to dismiss all seven causes of action against them in the First Amended Counterclaim. In addition, V. International has moved to dismiss any claim of liability premised on the theory that it was an alter ego of Valencia and/or AVELA. For the reasons set forth in this Opinion, the motions to dismiss are granted with respect to the Monroe Estate's deceptive business practices cause of action. Further, any claim for alter-ego liability against V. International is dismissed. The motions are denied in all other respects.

BACKGROUND ¹

A. Factual Background

1. Marilyn Monroe and the Monroe Estate

Marilyn Monroe was an actress, singer, and model who remains an enduring

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American cultural icon more than 50 years after her death; indeed, it is a measure of her continuing fame that the Court could have dispensed with this description. (FAC ¶ 12). The Monroe Estate is a brand development and licensing company that maintains an exclusive portfolio of intellectual property rights related to Monroe. (Id. at ¶ 13). Specifically, the Monroe Estate owns a number of federal trademark registrations that are purportedly valid and subsisting in full force incorporating the words "Marilyn" or "Marilyn Monroe." (Id. at ¶¶ 16–17). The U.S. Trademark Registration Numbers for these marks are 1,509,758 (the "′758 Mark"), 1,889,730 (the "′730 Mark"), 2,180,950 (the "′950 Mark"), 2,223,599 (the "′599 Mark"), 2,985,935 (the "′935 Mark"), 4,040,943 (the "′943 Mark"), 4,419,275 (the "′275 Mark"), and 4,336,364 (the "′364 Mark"). (Id. at ¶ 16). According to the Monroe Estate, the ′758, ′730, ′950, and ′599 Marks have been registered for a sufficiently long period of time to have become statutorily incontestable (collectively the "Incontestable Marks"). (Id. at ¶ 17).

Aside from the registered marks, the Monroe Estate has applied for a number of trademarks and service marks incorporating the words "Marilyn Monroe" or the design of a lip print. (FAC ¶ 16). The Monroe Estate also claims substantial common law rights in the "Marilyn," "Marilyn Monroe," and lip print design marks (together with the registered marks, the "MONROE Marks"). (Id. ). Separately, the Monroe Estate asserts that it is "the exclusive owner of those rights in and to Marilyn Monroe's identity, persona, name and likeness arising under common law and/or statute[.]" (Id. at ¶ 18).² The First Amended Counterclaim collectively refers to the MONROE Marks and the Monroe Estate's interests in Monroe's identity, persona, name, and likeness as the "Marilyn Monroe Intellectual Property," a convention the Court adopts for purposes of this Opinion.

The Monroe Estate alleges that, along with its predecessors, it has invested substantial efforts in acquiring, enforcing, promoting, and advertising the Marilyn Monroe Intellectual Property. (FAC ¶ 19). It further alleges that these efforts have borne success: As a result of Monroe's celebrity status, the significant sales of licensed products, and substantial publicity, it is alleged that the Marilyn Monroe Intellectual Property is not only famous, but also highly distinctive throughout the United States. (Id. at ¶ 21). This distinctiveness is evidenced by the secondary meaning that the Marilyn Monroe Intellectual Property has achieved in the marketplace. (Id. at ¶ 19).

For decades, the Monroe Estate, along with its predecessors, has monetized its interests in the Marilyn Monroe Intellectual Property by licensing these rights to third parties for use in connection with various goods and services. (FAC ¶ 20). The licenses extend to products like clothing, accessories, perfume, posters, wine, collectibles, and other novelty items. (Id. ).

2. The Counter–Defendants

a. Valencia, AVELA, IPL, and X One X

Leo Valencia is in the business of licensing images and other indicia of celebrities, including Marilyn Monroe, to entities for use in connection with merchandise such as apparel and glassware. (FAC ¶ 22).

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Valencia purportedly conducts business through a collection of entities, including AVELA, IPL, and X One X. (Id. at ¶¶ 23–24). The Monroe Estate claims that these companies are alter egos of Valencia, rather than truly independent businesses. (Id. at ¶ 24). In support of this contention, the Monroe Estate asserts not only that AVELA, IPL, and X One X are undercapitalized, but also that Valencia is their sole shareholder, director, and employee. (Id. at ¶ 25). Valencia also purportedly disregards corporate formalities with respect to AVELA, IPL, and X One X by, for example, failing to maintain separate books and records for each company. (Id. at ¶ 26). Instead, Valencia blends the records of various entities on a single computer and utilizes a single cell phone to operate his businesses. (Id. ). Corporate formalities are further disregarded as the assets of AVELA, IPL, X One X, and Valencia are freely comingled. (Id. at ¶ 27). Ultimately, the Monroe Estate alleges that AVELA, IPL, and X One X are sham companies designed to dissipate any liability that Valencia incurs in connection with his licensing operations. (Id. at ¶¶ 23–24).

b. V. International

According to the First Amended Counterclaim, V. International purports to serve as licensing agent for Valencia, but is in fact a vehicle to provide administrative support to Valencia and his alter egos. (FAC ¶¶ 29–30). To this end, it is further alleged that: (i) V. International employees use email addresses bearing AVELA domain names; and (ii) prior counsel of record for AVELA and Valencia operated from the V. International payroll. (Id. at ¶¶ 3031). Even Valencia's licensees believe that V. International's employees work for Valencia or one of his other companies. (Id. at ¶ 30). In the face of this evidence, Valencia purportedly doctored financial documents in order to create an appearance of independence between himself and V. International. (Id. at ¶ 32). The Monroe Estate contends that, taken together, these allegations demonstrate that V. International is another, albeit slightly more populous, alter ego of Valencia. (Id. at ¶ 33).

3. The Alleged Infringement

The First Amended Counterclaim asserts that the Counter–Defendants hold no rights in any of the Marilyn Monroe Intellectual Property. (FAC ¶ 35). Nevertheless, they continue to license, design, manufacture, and distribute merchandise that incorporates the Marilyn Monroe...