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AFL Philadelphia LLC v. Krause

June 4, 2009


The opinion of the court was delivered by: Baylson, J.


In sports, as in legal battles, there are winners and there are losers, and the case before this Court tells the tale of both. In the instant matter, the local arena football team the Philadelphia Soul-partially owned by rock icon Jon Bongiovi (also known as Bon Jovi)-rose in a "Blaze of Glory"*fn1 to win the 2008 national championship Arena Bowl and then was "Shot Through the Heart" when its 2009 season was cancelled by the League due to financial problems. The team and League remain "Living on a Prayer" that they will return in the 2010 season and beyond. In the meantime, the Philadelphia Soul and a former employee are trading accusations concerning the fall-out of the season's cancellation, in which they each experienced a taste of "Bad Medicine."

To "kick off" this legal battle, Plaintiffs AFL Philadelphia LLC and Bongiovi brought copyright infringement, trademark infringement, and other assorted actions against Defendant Joseph Krause, Jr. Responding with a "turnover," Defendant brought Counterclaims under the Lanham Act and for misappropriation of name. In the "first quarter" of what will undoubtedly be a hard fought battle, this Court will declare Defendant the winner and DENY Plaintiffs' Motion to Dismiss Defendant's Counterclaims.

I. Background

A. Facts

1. Complaint

AFL Philadelphia LLC owns and operates the Philadelphia Soul, an arena football team based in Philadelphia and playing in the Arena Football League since 2004. (Compl. ¶¶ 8, 10.) In 2008, the Philadelphia Soul won the arena football national championships. (Compl. ¶ 10.)Bongiovi is co-owner of the Philadelphia Soul and holds multiple copyrights and trademarks for Philadelphia Soul merchandise. (Compl. ¶¶ 12-21.)At issue as the original basis for this lawsuit is a copyright allegedly held by Bongiovi for a 2008 Championship Ring designed to commemorate the Philadelphia Soul's national championship victory and to be distributed to the team's players, coaches, and executives. (Compl. ¶ 11.)

2. Counterclaim

Defendant Krause is the former Director of Sales for the Philadelphia Soul, which included responsibility for game and season ticket sales. (Countercl. ¶ 6.) Defendant alleges as follows: he was hired for the position because of his well-known and favorable reputation in the sports and entertainment business as an energetic personality and public relations specialist who brought ongoing personal and business relationships to his position (Countercl. ¶ 7);he utilized his solid reputation and ongoing relationships to promote the team in general and to sell game and season tickets, therefore enhancing his solid reputation in the industry amongst fans and season ticket holders (Countercl. ¶¶ 8-9); and the team's record-breaking ticket sales were due directly to his efforts (Countercl. ¶ 11).

In mid-December 2008, the Arena Football League suspended its 2009 season. (Countercl. ¶ 11.) Defendant and other employees were given a one-week notice of termination. (Countercl. ¶ 12.) Defendant claims that the decision to cancel the 2009 season was hugely unpopular among the team's fans, especially 2009 season ticket holders. (Countercl. ¶ 13.) The season ticket holders publicly criticized the team's failure to immediately issue season ticket refunds, and there were media reports of complaints filed with the Pennsylvania Attorney General's Office. (Countercl. ¶ 14-15.)At about this time, the Philadelphia Soul owners and/or management set up an e-mail notification system to its fans about the cancellation of the season. (Countercl. ¶ 16.)

Defendant further alleges the following: after his termination, the Philadelphia Soul sent an email to its fans about the season's cancellation that falsely designated the origin of the email as having been sent from Defendant's Philadelphia Soul email address*fn2 (Countercl. ¶ 17, Ex. A);Defendant did not send the email, had no role in notifying fans of the season's cancellation, and never authorized the Philadelphia Soul to use his name or email address for such a notification (Countercl. ¶ 18);by this false designation, the Philadelphia Soul sought to cause confusion amongst fans as to Defendant's association with the unpopular decision to cancel the 2009 season and the resulting controversy over season ticket refunds (Countercl. ¶ 19); and the Soul traded on his good name and reputation amongst the fan base (Countercl. ¶ 20).

B. Procedural History

Plaintiffs filed their Complaint for copyright infringement, trademark infringement, false advertising and designation of origin, unjust enrichment, and violations of the Anticybersquatting Consumer Protection Act on February 12, 2009 (Doc. No. 1).*fn3 Defendant answered and asserted counterclaims under the Lanham Act and for misappropriation of name on March 6, 2009 (Doc. No. 6). Plaintiffs filed their Motion to Dismiss Defendant's Counterclaims on March 25, 2009 (Doc. No. 9). Defendant responded on April 16, 2009 (Doc. No. 15), and Plaintiff replied on April 24, 2009 (Doc. No. 16).

II. Jurisdiction

Jurisdiction is proper on the basis of 28 U.S.C.A. § 1331, § 1338, and § 1367. Plaintiffs' and Defendant's claims arise under the copyright laws, 17 U.S.C. §§ 101 et. seq; the Lanham Act, 15 U.S.C. § 1051 et seq; the Anti-cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d); and the common law. This court has supplemental jurisdiction over Plaintiffs' and Defendant's common law claims.

III. Parties' Contentions

A. Plaintiffs

Plaintiffs argue that both of Defendant's counterclaims must be dismissed as a matter of law for the following reasons. As to Defendant's Lanham Act claim for false designation of origin of the Philadelphia Soul email, Plaintiffs claim that it must fail for three reasons. First, Plaintiffs argue that Defendant does not have prudential standing under the Lanham Act because he has not alleged competitive harm, which they argue is the only type of harm protected by the Lanham Act. Second, Plaintiffs claim that Defendant's name is not a legally protected mark under the Lanham Act because Defendant has not alleged that his name has acquired the requisite secondary meaning. Third, Plaintiffs assert that Defendant has not alleged that false designation of origin of the email caused the requisite likelihood of confusion of the team's goods or services, as required by caselaw.

As to Defendant's invasion of privacy claim, specifically misappropriation of name, Plaintiffs argue that Defendant has failed to allege that his name was appropriated for commercial advantage, as required to sustain a valid claim. Further, Plaintiffs assert that Pennsylvania requires a showing that the appropriated name has acquired secondary meaning, and as it argued for the Lanham Act claim, Defendant has failed to allege this.

B. Defendant

Defendant argues that he has sufficiently pled the required elements of his counterclaims. As to his Lanham Act claim, Defendant argues that he has alleged facts to establish prudential standing, specifically that he has a commercial interest in his name which was harmed by Plaintiffs' falsely designated email. Second, Defendant claims that he has pled facts to show that his name has the necessary secondary meaning in the sports and entertainment industry to be a valid and legally protected mark under the Lanham Act. Third, Defendant argues that he specifically alleged that the emails were intended to and did cause customer confusion.

As to his misappropriation of name claim, Defendant argues that he pled that the misappropriation of his name was done for commercial advantage. He further claims that secondary meaning is not required for a misappropriation of name claim, but that he sufficiently pled such secondary meaning regardless.

IV. Legal Standard

When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1251, 1261 (3d Cir. 1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985).

A valid complaint requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "To survive a motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Iqbal clarified that the Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which required a heightened degree of fact pleading in an anti-trust case, "expounded the standard for 'all civil actions.'" 129 S.Ct. at 1953.

The Court in Iqbal explained that although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, pleadings must include factual allegations to support the legal claims asserted. Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice." Id. (citing Twombly, 550 U.S. at 555); see also Phillips v. County of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) ("We caution that without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only 'fair notice,' but also the 'grounds' on which the claim rests." (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3 (2007))). Accordingly, to ...

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