Natgear Acquisition, LLC v. Mahco, Inc.
Natgear Acquisition, LLC v. Mahco, Inc.
2019 WL 13301656 (E.D. Ark. 2019)
June 27, 2019

Wright, Susan W.,  United States District Judge

Protective Order
Third Party Subpoena
Proportionality
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Summary
The Court denied NatGear's motion for judgment on the pleadings and declined to grant the relief requested in NatGear's motion to stay discovery and to quash or modify subpoenas directed to nonparties. A final scheduling order and discovery deadline was entered.
NATGEAR ACQUISITION, LLC, Plaintiff
v.
MAHCO, INC., Defendant
CASE NO. 4:18CV00691 SWW
United States District Court, E.D. Arkansas, Western Division
Signed June 27, 2019

Counsel

Gary D. Marts, Jr., Kyle Ray Wilson, Richard Blakely Glasgow, Wright, Lindsey & Jennings, Little Rock, AR, for Plaintiff.
Albert Janney Thomas, III, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Rogers, AR, Charles Cobey Kinne, Pro Hac Vice, Kinne IP Group, Castle Rock, CO, John Keeling Baker, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, AR, for Defendant.
Wright, Susan W., United States District Judge

ORDER

*1 Plaintiff NatGear Acquisition, LLC (“NatGear”) brings this trademark dispute against Defendant Mahco, Inc. (“Mahco”), seeking a declaration that Mahco owns no rights in certain tradenames, trademarks, and associated goodwill. Before the Court are (1) NatGear's motion for judgment on the pleadings [ECF Nos. 16, 17], Mahco's response in opposition [ECF No. 22], and NatGear's reply [ECF No. 26] and (2) NatGear's combined motion to stay discovery and motion to quash or for a protective order [ECF Nos. 29, 30] and Mahco's response in opposition [ECF No. 31]. After careful consideration, and for reasons that follow, the motions are denied.
I.
NatGear is an Arkansas LLC that designs and sells camouflage hunting apparel, and Mahco is an Arkansas corporation that sells outdoor products, including hunting and fishing apparel. NatGear alleges that on June 30, 2017, it entered an asset purchase agreement (“APA”) with nonparty Natural Gear LLC (“Natural Gear”) and acquired Natural Gear's trade names, trademarks, and associated goodwill (“the Marks”). Mahco and Natural Gear entered a series of four agreements that predate the APA. Based on those agreements, Mahco claims ownership of the Marks as used in connection with non-camouflage products.
NatGear submitted the four, pre-APA agreements between Mahco and Natural Gear as attachments to the complaint and seeks a declaratory judgment that “Mahco does not own any rights to the Marks.”[1] The first of the four agreements, dated August 31, 2007, generally provides that Mahco would pay specified royalty payments over a three-year period for the use of the Natural Gear and Nat Gear names and logos on non-camouflage products.[2] The initial agreement specified that Natural Gear would retain the right to use the names and logo on products that it was marketing at the time of the agreement, but at the end of the three-year period, Mahco “would own the name and logo as it relates to non-camouflage products for both the Natural Gear and Nat Gear names including the logo.”[3] The August 31 agreement specified that if, at the end of the three-year period, Mahco decided to discontinue use of the names and logo on non-camouflage products, Natural Gear would have the right to reacquire the same by paying the cost of Mahco's development cost related to a non-camouflage product line.
The second and third agreements, which are both dated April 6, 2017, specifically recognize the August 31, 2007 agreement and report that Natural Gear had entered a letter of intent to sell substantially all assets to a third-party.[4] The April 6 agreements declare that Mahco owns the name and logo as it relates to non-camouflage products for both Natural Gear and Nat Gear, and both provide that Mahco grants Natural Gear and its successors and assigns a right of first refusal to reacquire the name and logo as it related to non-camouflage products.
The fourth agreement, dated April 19, 2017, also references the August 31, 2007 agreement and states that “Mahco and Natural Gear hereby agree that Mahco is the owner of the names Natural Gear, Nat Gear and its logo and its trademarks in so far as they relate to non-camouflage products ...”[5] The fourth agreement further states that Mahco “herby grants Natural Gear and its successors and assigns a right of first refusal to reacquire the name and logo as it relates to non-camouflage products for both Natural Gear and Nat Gear, with such right of first refusal which applies to any future owner of the contract.”[6]
II.
*2 NatGear moves for judgment on the pleadings, asserting that the agreements between Mahco and Natural Gear “speak for themselves” and give Mahco no rights in the Marks. According to NatGear, the agreements establish that Mahco has no ownership rights in the Marks because they set forth no words of conveyance, such as “transfer, sell, or assign,” and they fail to transfer goodwill associated with the Marks. With its answer, Mahco agrees that the series of agreements it entered with Natural Gear “speak for themselves” but maintains that they transfer ownership of the Marks to Mahco for use in connection with non-camouflage products. Alternatively, Mahco asserts that the agreements “fairly amount to a consent/coexistence agreement that split up product categories and channels of trade....”[7]
Judgment on the pleadings is appropriate only when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law. Ashley Cty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009)(citation omitted). Like a motion to dismiss under Rule 12(b)(6), a motion under Rule 12(c) challenges the legal sufficiency of the opposing party's pleadings, but the motion comes after the pleadings have closed and may be made by either party. See Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). In assessing NatGear's motion, the Court must view the facts in a light most favorable Mahco and deny relief if the answer raises issues of fact that, if proved, would defeat recovery.
Contrary to NatGear's assertion, the absence words such as “transfer, sell, or assign” and “goodwill” does not necessarily mean that Mahco has no rights in the Marks. A trademark cannot be separated from the goodwill associated with the mark, and the transfer of a trademark without its associated goodwill is an “assignment in gross” that gives the assignee no rights in the mark. See PepsiCo, Inc. v. Grapette Co., 416 F.2d 285, 288 (8th Cir. 1969). But it does not follow that the word “goodwill” must appear in a written agreement assigning a trademark. Instead, an assignment in gross exists when the assignee uses the mark in connection with different product or service, thus divorcing the mark from its goodwill. It is simply not possible to determine the extent of Macho's rights in the Marks, if any, without more information about the facts surrounding the agreements. Accordingly, NatGear's motion for judgment on the pleadings must be denied.
III.
Having denied the motion for judgment on the pleadings, NatGear's motion to stay discovery is moot, and the Court will enter a final scheduling order and discovery deadline. NatGear also asks the Court to disallow discovery regarding document requests that Mahco previously served with subpoenas on nonparties John Lessel (“Lessel”) and BancorpSouth Bank (“BankcorpSouth”), NatGear's corporate attorney and bank.[8] NatGear asserts that the Court should disallow the requests as “wholly irrelevant and disproportionate to the needs of the case because [NatGear's] financial and business information has no bearing on whether Mahco owns any rights in the trademarks at issue.”[9] Alternatively, NatGear states that the requests seek “protected matter and confidential commercial information.”[10]
A motion to quash or modify a subpoena directed to a nonparty generally must be brought by the nonparty. “Ordinarily a party has no standing to seek to quash a subpoena issued to someone who is not a party to the action, unless the objecting party claims some personal right or privilege with regard to the documents sought.” 9A Charles Alan Wright & Arthur Miller, Federal Practice and Procedures § 2459 (3d. ed. 2008); see also Griffith v. United States, 2007 WL 1222586, at *1 (S.D.N.Y. April 25, 2007). Here, NatGear generally claims but fails to show that it has a personal right or privilege with respect to proprietary of confidential information included in documents sought. Accordingly, the Court finds no basis to grant the relief requested.
*3 IT IS THEREFORE ORDERED that Plaintiff's motion for judgment on the pleadings [ECF No. 16] and motion for to stay discovery and for a protective order [ECF No. 29] are DENIED.
IT IS SO ORDERED THIS 27TH DAY OF JUNE, 2019.

Footnotes

ECF No. 1, at ¶ 51.
ECF No. 1, at 14 (Ex. A).
ECF No. 1, at 15-19.
ECF No. 1, at 22.
ECF No. 9, ¶ 48l.
The document requests to BankcorpSouth generally seek material that describes of discusses contractual obligations of NatGear or intangible assets owned by NatGear, and the requests to Lessel generally seek nonprivileged documents related to intangible assets purchased by or conveyed to NatGear. ECF Nos. 29-1, 29-2.
ECF No. 30, at 1-2.
Id. at 2.