Coyne’s & Co. entered into a distribution agreement with Country Artist, Ltd. in 2005.  In exchange for a 35-50% markup on products sold, CA granted Coyne’s the exclusive right to sell, distribute, market, and advertise all of their products, and use the associated copyrights and trademarks.   The agreement applied to the United States and Mexico and ran through December 2007.

CA was placed into receivership on August 10, 2007.   The receivers immediately sold Country Artist’s business assets to a third-party, Enesco LLC, which notified Coyne’s that it was terminating the distribution agreement on August 21, 2007.   A clause in the agreement had allowed a party to terminate if the counter-party became insolvent, but didn’t permit a party to terminate on their own insolvency.

Coyne’s filed suit on  August 29, 2007, alleging claims under the Lanham Act & the Copyright Act (both of which were dismissed), the Minnesota Deceptive Trade Practices Act, the Minnesota Uniform Trade Secrets Act, and Minnesota common law, and sought a temporary retraining order and preliminary injunction to prevent Enesco from distributing the Country Artist products.

The District Court denied relief, and found that Conye’s couldn’t demonstrate a likelihood of success unless the agreement with Country Artist was still in effect.  Conye’s argued that, under the Minnesota Franchise Act’s termination requirements, they had to be given a minimum 150 days before cancellation.  The District Court rejected this argument and found that Coyne’s wasn’t a franchise (and not entitled to statutory protection) because they didn’t pay CA a franchise fee.

The question on appeal was whether the minimum purchasing requirement and the 35-50% markup represented an indirect franchise fee.  The District of Minnesota had held that the mark-up on CA’s products were profit, and not an indirect franchise fee.  On appeal, Coyne’s argued that the right to use the relevant trademarks, the exclusive nature of the rights granted, and the substantial termination fee signaled that the agreement created a franchise.  The 8th Circuit denied a preliminary injunction and found that Coyne’s argument fell short of demonstrating that the district court’s factual findings were clearly erroneous.

Documents:

United States v. Kim, 07-15925, 2009 WL 59151 (11th Cir. Jan 12, 2009).

Back story on this case can be found here.  This past Monday, an 11th Circuit panel affirmed the conviction of Steve Kim, and his father, Muza Kim, for criminal copyright infringement.  The Kims were convicted for the production and distribution of shirts that included depictions of “Fat Albert,” without the permission of Bill Cosby, in violation of 17 U.S.C. § 506(a)(1) and 18 U.S.C. § 2319(b)(1).

The defendants argued that no reasonable jury could reach the finding that they were guilty beyond a reasonable doubt, given the insufficient evidence presented at trial.  The Kims forwarded that the images at issue were too dissimilar with those of “Fat Albert”: the image on their shirts wore a dew rag, jewelry, and “portray[ed] a persona very different than the clean-cut, friendly Fat Albert persona.”  The Court rejected the argument stating that the jury could find infringement even if the images differed, and the fact that Cosby was unlikely to grant the Kims a license was not a “legal-bar.”

The Kims also argued that the evidence presented at trial was insufficient to show that their infringement was “willful.”  The Panel rejected this argument, and cited the defendants’ positions in their company, Steve was Vice President and Art Director, and Muza was President, Chief Executive Officer and Chief Financial Officer.  The DOJ had also presented evidence of Steve’s 1999 conviction on criminal trademark counterfeiting, under Federal Rule of Evidence 404(b), and evidence of statements Muza made to buyers showing his awareness of the “unlawfulness” of the images.

Finally, Muza Kim forwarded that the district court abused its discretion when it refused to grant his mid-trial motion to sever his trial from that of his son.  Muza’s counsel argued that the Rule 404(b) evidence of his son’s earlier conviction for trademark counterfeiting “constituted specific and compelling prejudicial evidence that prevented the jury from making a reliable judgment about [his] guilt or innocence.”  The panel rejected the argument, stating that the motion was “untimely.” According to the Circuit, Muza was on notice of the Government’s intent to introduce the evidence of his son’s prior conviction and he couldn’t provide any reason for why he waited until the trial was three days in before he brought the motion for severance.

I’m not a criminal attorney, but given Steve Kim’s earlier conviction for counterfeiting, and the fact that, you know, Muza and Steve are father and son, how does Muza’s trial counsel not file earlier to sever?  It should be noted, lest there be any confusion, that Muza was represented by a different court-appointed attorney at trial (not the counsel listed below who conducted the appeal).

Documents:

• United States v. Kim, 07-15925, 2009 WL 59151 (11th Cir. Jan 12, 2009).