IP Law Daily, TRADEMARK—C.D. Cal.: Build-A-Bear's counterclaims against former entertainment representative can move forward, (Jun 26, 2026)

By Wendy Biddle, J.D.

The court rejected arguments that the company's former entertainment representative could escape liability through nominative fair use and arm's-length contractual characterizations.

A federal district court in the Central District of California denied a counterclaim-defendants' motion to dismiss Build-A-Bear Workshop's counter-complaint, finding that allegations of alter ego liability, breach of fiduciary duty, and unauthorized trademark use were each adequately pleaded against the company’s former entertainment representative. The court noted that district courts in the Ninth Circuit apply a lenient standard to alter ego allegations at the motion to dismiss stage, and that Build-A-Bear had adequately alleged that Foundation Media Partner’s conduct was likely to deceive a reasonable consumer (Foundation Media Partners, LLC v. Build-A-Bear Workshop, Inc., No. 2:25-cv-10382-CAS-MAR (C.D. Cal. Jun. 24, 2026)).

Background. The litigation originated on October 28, 2025, when Foundation Media Partners, LLC, (FMP), a company providing representation, advisory, and consulting services in the entertainment industry, filed suit against Build-A-Bear Workshop, Inc. FMP's first amended complaint asserts four claims: breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, and an accounting.

Build-A-Bear filed its counter-complaint on April 30, 2026, asserting nine claims against FMP and its sole owner: breach of contract; breach of fiduciary duty; false advertising under 15 U.S.C. § 1125(a); federal trademark infringement under 15 U.S.C. § 1114; unfair competition and false designation of origin under 15 U.S.C. § 1125(a); federal trademark dilution under 15 U.S.C. § 1125(a)(1)(C); unfair and deceptive trade practices under Cal. Bus. & Prof. Code § 17200 and other statutes; common law trademark infringement and unfair competition; and trademark dilution and injury to business reputation under Cal. Bus. & Prof. Code § 14247.

The parties' relationship arose from an April 12, 2017, agreement under which FMP agreed to represent and advise Build-A-Bear in expanding its brands within the film, television, new media, music, and literary industries (collectively defined as the "Covered Industries"). The agreement was amended over time, with the final version providing FMP a monthly representation fee of $35,510. Build-A-Bear alleged it paid FMP millions of dollars over the agreement's duration. The agreement expired on July 31, 2025. FMP was eligible to receive commissions only on "Compensatable Transactions" (deals closed within the Covered Industries) and Build-A-Bear alleged FMP had earned no such commissions.

Build-A-Bear alleged that FMP committed numerous breaches, including negotiating with outside parties without involving Build-A-Bear's legal counsel, closing deals without first obtaining Build-A-Bear's consent, failing to communicate regularly, not providing required annual and monthly written plans, and failing to engage a full-time project manager dedicated exclusively to Build-A-Bear's account. Most significantly, Build-A-Bear alleged that FMP placed its own interests above those of Build-A-Bear, in direct violation of a contractual promise to always prioritize Build-A-Bear's needs.

Build-A-Bear further alleged that FMP's website made materially false and misleading statements about FMP's contributions to Build-A-Bear, including claims of driving the company's expansion into Walmart, securing a Harry Potter licensing deal, and executing a partnership with Varsity Spirit. Build-A-Bear alleged these statements were false and that FMP's website also displayed a fabricated photograph purporting to show a Build-A-Bear location within a Walmart store, as well as unauthorized uses of Build-A-Bear's registered trademarks and entertainment marks; including marks associated with "Honey Girls," "Glisten and the Merry Mission," "Kabu," and "Unstuffed—A Build-A-Bear Story."

FMP moved to dismiss the counter-complaint in its entirety.

Alter ego liability. FMB argued that every claim against FMP’s owner individually fail because Build-A-Bear did not plead facts demonstrating that the owner is the alter ego of FMP. The court found that Build-A-Bear's allegations met the applicable pleading standard. The counter-complaint alleged that the owner operated FMP without regard to corporate formalities, commingled funds and assets, treated business assets as personal property, failed to maintain proper records, and inadequately capitalized the business. The court noted that district courts in the Ninth Circuit apply a lenient standard to alter ego allegations at the motion to dismiss stage, permitting claims to proceed where a plaintiff has pleaded facts addressing even some of the relevant factors.

Breach of fiduciary duty. FMP argued that it could not have breached its fiduciary duty because the counter-complaint did not allege a fiduciary duty in the first place; only an arm’s length services contract. The court rejected FMP's argument that the parties' relationship was merely an arm's-length commercial arrangement incapable of giving rise to fiduciary obligations. The court acknowledged the general rule that fiduciary duties are not ordinarily imposed on commercial parties in arms' length relationships but found that the agreement's express provision requiring FMP to "always put the needs of Build-A-Bear over FMP's own needs" adequately alleged that FMP knowingly undertook to act on behalf of and for the benefit of Build-A-Bear. The court further found that the relationship imposed a fiduciary duty as a matter of law, given that Build-A-Bear alleged it placed its trust in FMP to act solely in Build-A-Bear's best interests and shared sensitive, confidential information with FMP in reliance on that relationship. The court observed that fiduciary duties may be both imposed by law and undertaken by agreement, and that the existence of a relationship founded on agreement is typically a question of fact not suitable for resolution on a motion to dismiss.

Fair use. Build-A-Bear alleged that FMP infringed and diluted its trademarks by using them on FMP’s website to show false or fabricated licensing deals. FMP argued that their website references to Build-A-Bear constituted protected nominative and descriptive references to a prior commercial relationship and production credits. The court disagreed, explaining that nominative fair use protects a defendant only where, among other requirements, the defendant does nothing to suggest sponsorship or endorsement by the trademark holder. The court found that Build-A-Bear's counter-complaint alleged conduct falling outside this protection. Specifically, that FMP made demonstrably false statements about its contributions to Build-A-Bear and used Build-A-Bear's marks in a manner likely to cause consumers to believe that Build-A-Bear was currently licensing, authorizing, endorsing, or approving FMP. The court noted that dismissal on nominative fair use grounds at the pleading stage is rare, and that Build-A-Bear had adequately alleged that FMP's conduct was likely to deceive a reasonable consumer.

Remaining claims. FMP argued that Build-A-Bear's seventh claim for unfair and deceptive trade practices and its ninth claim for state trademark dilution were impermissible "shotgun pleading" for invoking the statutes of multiple states. The court found the argument unpersuasive. The seventh claim specifically invoked Cal. Bus. & Prof. Code § 17200, and the court held that Build-A-Bear was not required to separately plead the elements of each state statute it referenced. Similarly, the state trademark dilution claim's reference to Cal. Bus. & Prof. Code § 14247 and other state statutes, considered alongside the incorporated allegations in the counter-complaint, adequately stated a claim. The court deferred any choice-of-law analysis to a later stage, finding it inappropriate to resolve without the benefit of full briefing on the differences among the states' laws and the relevant governmental interests.

The court therefore denied FMP's motion to dismiss in full.

The Case is No. 2:25-cv-10382-CAS-MAR.

Judge: Snyder, C.

Attorneys: Justin Ross Trauben (Singh Singh and Trauben LLP) for Foundation Media Partners, LLC. Michael L. Jente (Lewis Rice LLC) for Build-A-Bear Workshop, Inc.

Companies: Foundation Media Partners, LLC; Build-A-Bear Workshop, Inc.

Cases: Trademark CaliforniaNews GCNNews