Trademark license at the heart of the dispute.
Law360, New York (May 17, 2013, 3:16 PM ET) -- An Illinois federal judge Wednesday denied Playboy Enterprises International Inc.'s bid for a preliminary injunction against a beverage company alleged to have infringed Playboy's famous "bunny" mark, and stayed the case pending the resolution of a parallel state-court lawsuit.
U.S. District Judge Robert Gettleman said the complaint between Playboy and Play Beverages LLC was similar to a lawsuit involving the same parties filed last year in Cook County, Illinois. Both lawsuits revolve around the same disputed terms of a licensing agreement that Play Bev said allowed it to use the "bunny" mark, the court said.
Since "substantial overlap" of facts exist in the federal lawsuit and the state court lawsuit, inconsistent rulings potentially could contradict each other, Judge Gettleman said. If both lawsuits proceed at the same time, the dueling courts adjudicating the actions would be pitted in a "destructive race" to see which forum could resolve litigation first," the ruling said.
Playboy sought a court order barring Play Bev from using the rabbit head design or any similar marks on its products, as well as an order halting it from using the domain name PlayboyEnergy.com.
"At the heart of both cases is the status of the license agreement," Judge Gettleman said in the order. "The determination of whether defendants are entitled to continue to use the marks is crucial to the outcome of both actions."
The ruling puts the federal complaint on ice until the state court litigation is resolved. Playboy in February filed the federal lawsuit and moved for injunctive relief against Play Bev. The dispute relates to an underlying licensing deal Playboy and Play Bev struck seven years ago.
The companies in 2006 signed a license agreement granting Play Bev a limited right to manufacture and sell Playboy-branded energy drinks. The agreement was set to expire March 31, 2012, and contained a renewal term of five years.
When the beverage company went into Chapter 11 bankruptcy in August 2011, it agreed with Playboy to extend the existing license agreement while negotiations for a new one were still pending, the complaint said. But Play Bev allegedly failed to meet the conditions for the new license agreement after it didn't obtain investment funds to capitalize the reorganized business and confirm its Chapter 11 reorganization plan.
Subsequently, Play Bev in October 2012 sued Playboy in Illinois state court — months before Playboy filed the parallel federal lawsuit. Play Bev claimed Playboy had refused to renew the license agreement despite its good-faith obligation to do so.
Playboy said Friday that, with the ruling, the company will still be able to pursue its claims against Play Bev and CirTran Beverages Corp., which markets and distributes Playboy Energy Drink.
"Playboy looks forward to pursuing and demonstrating that PlayBev, CirTran and their principals are unauthorized in conducting the Playboy energy drink business and in unlawfully making money from the Playboy brand," the company said in an email.
