December 2009 / January 2010 Issue
Civil Cases
Lunatrex, LLC v. Cafasso,
2009 WL 4506321 (S.D. Ind. Dec. 1, 2009)
ABSTRACT
The various parties in this case were part of a now-dissolved de facto partnership that together developed and used the LUNATREX trademark in commerce in connection with efforts to land a robot on the face of the moon. The ex-partners divided into two groups, each challenging the other’s continued right to use and register the LUNATREX trademark in connection with the lunar-landing project. In resolving the dispute, the court took the unusual step of granting each side’s motion for preliminary injunction, preventing all parties from using the mark without the consent of all other parties entitled to share control of the mark’s use.
CASE SUMMARY
FACTS
The parties in this case were members of the “LunaTrex” team competing in the Google Lunar X Prize competition, a contest that offered a prize of as much as $20 million for a private effort to land a robot on the surface of the moon. The court found that the LUNATREX trademark was in use in commerce when the team began publishing its efforts to win the prize. The parties had a falling out and, now divided into two “factions,” each side sought a PI enjoining the other party’s use of the LUNATREX trademark, particularly in the Google Lunar X Prize competition. The competition then suspended the parties from participating until the dispute was resolved. Each faction argued that its various contributions (e.g., financial, organizational, technical) were sufficient to confer trademark ownership and were superior to the other party’s contributions.
In the absence of any formal agreement as to the structure of the group and trademark-ownership rights thereof, the court first considered the relationship between the team members and found that the LUNATREX trademark was developed and used by a de facto partnership or joint venture. The court noted that, although various team members contributed comparatively more in terms of financial or technical expertise, the entire team contributed to the creation of the mark’s value and protected status. The court decided that awarding control of the mark to one party alone would ignore the contributions that the rest of the team made.
The court next noted that, typically, when a partnership breaks up, the assets are distributed among its partners. However, the court stated that a trademark is not divisible; if it were shared among the different splintered partners, the resulting confusion would destroy the value that each partner worked so hard to create. Moreover, unilateral use by either side posed a risk of confusion to the public, the avoidance of which is the principal focus of trademark law.
The court then concluded that, to prevent confusion among the public, the best solution under the law was to prevent all parties from using the mark without the consent of all other parties who were entitled to share control of its use. Thus, the court took the unusual step of granting each side’s PI motion to prevent the other from using the LUNATREX trademark without the moving side’s consent.
CONCLUSIONThis case highlights the importance of entering into ownership agreements with respect to trademark rights owned by a partnership, and clarifies the right to a jointly developed and used trademark to which each former member of such a partnership should be entitled, absent such an agreement.
