IP Law Daily, TRADEMARK—E.D. Pa.: PAW Patrol brand infringement claim subject to licensing agreement forum selection clause, (Aug 20, 2024)

By Linda O’Brien, J.D., LL.M.

The forum selection clause in the licensing contract for popular children’s characters represented the parties’ agreement as to the proper forum that should control for any disputes arising out of the contract.

The infringement claims of a Canadian children’s entertainment company against a character event provider for continuing to use its licensed brands after the expiration of a licensing agreement were subject to a forum selection clause requiring any lawsuit relating to the agreement be filed in Canada, the federal district court in Philadelphia, Pennsylvania, has held. The private interests of the parties were irrelevant to any transfer analysis where the parties agreed to a forum selection clause and the company provided no overwhelming public factor to support overriding the parties’ own choice of venue. Thus, the event provider’s motion for judgment on the pleadings was granted and the case was dismissed (Spin Master Ltd. v. Entertainment Business, LLC, No. 2:23-cv-04074-CFK (E.D. Pa. Aug. 15, 2024)). Spin Master Ltd., founded in 1994 in Toronto, Canada, develops toys, entertainment, and digital games for children, including creating characters such as PAW Patrol. In 2019, Spin Master entered into a contract with The Entertainment Business LLC (“TEB”), which provides live licensed costume character events and shows, to license the use of its PAW Patrol and other brands to TEB in exchange for 20% of the gross revenue from any TEB character events. The contract began on January 1, 2019 and expired on December 31, 2020. The contract contained a forum selection clause, stating that the parties agreed that any suit, action, or proceeding arising out of or relating to the contract must be instituted in Ontario, Canada, and any rights to object or challenge the appropriateness of the forum were waived. The contract also contained a force majeure clause stating that, while the licensee’s performance for extraordinary events beyond its control was excused, the clause did not excuse any payment obligations of the licensee.

In May 2021, Spin Master learned that TEB was continuing to use its intellectual property and costumes for live events, informed TEB that the agreement had expired, and demanded TEB cease using its works. TEB demurred, contending that the COVID-19 pandemic triggered the force majeure provision, allowing TEB to continue providing live events to recoup time lost during the pandemic. In October 2023, Spin Master filed suit against TEB, asserting claims for trademark infringement, unfair competition and false designation of origin, copyright infringement, conversion, breach of contract, and requested injunctive relief. TEB’s answer to the complaint included the affirmative defense of improper venue and lack of jurisdiction due to the forum selection clause. Before the court was TEB’s motion for judgment on the pleadings, requesting dismissal since the forum selection clause mandated any case arising out of the contract be heard in Ontario, Canada.

Forum selection clause. The court found that, since the forum selection clause controlled, the clause specified a non-federal forum and the sole remedy was dismissal of the action rather than transferring the case so it could be filed in the appropriate forum. Spin Master’s contention that most of TEB’s conduct at issue occurred after the contract expired and therefore could not be subject to the forum selection clause was rejected as the language of the claim and alleged facts contradicted the contention. The dispute arose from TEB’s continued use of Spin Master’s licensed products after the contract had expired, with TEB’s claiming it could unilaterally extend the contract indefinitely. Whether the contract was in force was the critical issue of the case and, interpreting the forum selection clause in accordance with its plain meaning, the trademark, copyright, and unfair competition claims along with the breach of contract claim arose out of the contract.

The private interests of the parties were not considered in determining whether to transfer the case. Spin Master’s arguments that TEB’s location, business operations, books and records, and witnesses were located in Pennsylvania as well as its contentions regarding the distance, costs, and inconvenience of litigating in Canada were rejected as Spin Master was aware of those facts when it made the contract and nonetheless included a forum selection clause locating the mandatory forum in Canada, the court noted.

Spin Master had asserted that relevant public interests weighed in favor of the case remaining in Pennsylvania since the conduct occurred in Pennsylvania, an adjudication involved determination of issues under U.S. federal copyright and trademark laws, a judgment in Pennsylvania would more easily be enforced than a judgment from a Canadian court, the court was more competent to address state law claims than a Canadian court, and applying forum selection to only some of the claims would result in duplicative litigation. However, the assertions were rejected as generally unsupported and mostly attributable to Spin Master’s own conduct. As contemplated by the forum selection clause, Spin Master could bring its claims in Ontario, Canada, the court concluded.

The Case is No. 2:23-cv-04074-CFK.

Judge: Kenney, C.

Attorneys: Sarah D. Boutros (Eckert Seamans Cherin & Mellott, LLC) for Spin Master Ltd. Paul David Woosley (Woosley Naragon LLC) for The Entertainment Business, LLC.

Companies: Spin Master Ltd.; The Entertainment Business, LLC

Cases: Trademark PennsylvaniaNews