MJ & Partners Restaurant Ltd. Partnership v. Zadikoff
10 F. Supp. 2d 922, 1998 WL 242613, 1998 U.S. Dist. LEXIS 7073 (1998)
Rule of Law:
An exclusive trademark licensee cannot bring a Lanham Act infringement claim against a party authorized by the trademark owner, as there is no consumer confusion regarding the source of the goods. However, an exclusive licensee does possess a proprietary interest in the licensor's right to publicity and has standing to sue for common law misappropriation.
Facts:
- Jump (Michael Jordan's company) and 23 Food entered into a license agreement in 1990 granting 23 Food the exclusive right to use Michael Jordan's name and likeness for restaurants in the Chicago metropolitan area.
- Plaintiffs MJ & Partners (a sublicensee) and 23 Food opened 'Michael Jordan's Restaurant' in Chicago in 1993.
- Defendant Zadikoff served as the chief executive for the restaurant, with duties including hiring, budgeting, and menu selection, gaining access to confidential financial and supplier information.
- While managing Plaintiffs' restaurant, Zadikoff conspired with Jordan to open a competing establishment, the 'Loomis restaurant,' also using Jordan's name and likeness.
- Zadikoff recorded an easement for the new location and engaged in a 'whispering campaign' to media outlets about the new venture.
- Zadikoff and Jordan planned to feature Jordan's personal items, such as a humidor and his vehicles, at the Loomis restaurant to promote it.
- Plaintiffs did not consent to the use of the Jordan name in connection with the Loomis restaurant.
Procedural Posture:
- Plaintiffs filed a complaint against Zadikoff in the United States District Court for the Northern District of Illinois alleging trademark infringement, misappropriation, and breach of fiduciary duty.
- Defendant Zadikoff filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.
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Issue:
Does an exclusive licensee of a celebrity's name have a valid claim for trademark infringement against a third party authorized by the celebrity to use that name, and does such a licensee have standing to sue for misappropriation of the right to publicity?
Opinions:
Majority - Judge Moran
No, regarding trademark infringement; but Yes, regarding misappropriation. The court reasoned that the core function of the Lanham Act is to prevent consumer confusion regarding the source or sponsorship of goods. Because Jordan (the owner of the mark) actually authorized the Loomis restaurant, the public would not be confused about his sponsorship of it, even if that authorization violated a contract with the Plaintiffs. A 'genuine' product authorized by the mark owner cannot cause consumer confusion as to source. However, regarding the misappropriation claim, the court held that the 'right to publicity' is a proprietary economic right, distinct from the emotional right of privacy. Therefore, an exclusive licensee has a property interest in that publicity right and has standing to sue a third party who misappropriates it, even if that third party is working with the celebrity.
Analysis:
This case creates a critical distinction between contract law and trademark law. The court establishes that a breach of an exclusive licensing agreement does not automatically constitute trademark infringement. If the trademark owner (Jordan) approves the competing use, the consumer is getting exactly what they expect—a Jordan-endorsed product—so the Lanham Act does not apply. The remedy for the licensee lies in contract or tort, not trademark infringement. Additionally, the case reinforces the modern legal view that the 'right to publicity' is an assignable property right, allowing licensees to sue for its misappropriation, distinguishing it from the non-transferable right to privacy.
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