Opinion ID: 619332
Heading Depth: 2
Heading Rank: 2

Heading: The Florida litigation

Text: In the fall of 2006, Mercado ceased to provide services for new materials as provided under the Agreement and failed to appear for scheduled appearances. In November 2006, Bart halted its compensation payments to Mercado. Mercado formally attempted to terminate the Agreement by a letter dated November 22, 2006, citing Bart's failure to pay compensation. Mercado's company, Astromundo, Inc., also filed with the U.S. Patent and Trademark Office an application for the Walter Mercado trademark. See U.S. Trademark Application Serial No. 77-047157 (filed Nov. 17, 2006). This is one of the activities which ultimately caused Bart to seek injunctive relief against Mercado. On January 17, 2007, Bart filed suit against Mercado in the federal court for the Southern District of Florida, alleging breach of contract and tortious interference with Bart's third-party contracts. Mercado counterclaimed for breach of -7- contract, breach of fiduciary duty, breach of the covenant of good faith, violation of copyright and trademark laws, unjust enrichment, and requested injunctive relief and a declaratory judgment that the Agreement was invalid because its term was in perpetuity. In the meantime, on February 8, 2007, Mercado filed suit against Bart in the federal court for the District of Puerto Rico. Mercado again alleged violation of copyright and trademark laws, and sought injunctive relief and a declaration that the Agreement was invalid. In October 2008, the Puerto Rico case was transferred to the Florida district court, and on November 18, 2008, the two cases were consolidated. On cross-motions for summary judgment, the Florida district court held that the Agreement was valid. See Walter Int'l Prods., Inc. v. Mercado Salinas, No. 07-cv-20136, slip op. at 6-8 (S.D. Fla. Nov. 24, 2008). Importantly, the district court determined that the Agreement contains two different durational terms: (1) the term for which Mercado was obligated to provide services to Bart (the Additional Services Term), consisting of ten years plus optional two-year extensions; and (2) the term applicable to the assignment of the trademark and other rights (the Term), which is in perpetuity or until termination of the Agreement. Id. at 7. The district court then determined that because the trademark was irrevocably assign[ed] to Bart . . . -8- during the Term and because the Term of the Agreement ends if Bart or Mercado exercise their rights to terminate the Agreement, the trademark rights would revert to Mercado upon termination. Id. at 15-16. The district court concluded that the question of whether the Agreement was properly terminated had to be decided by a jury before the court could determine who owned the trademark. Id. at 17. The consolidated case was tried to a Florida jury in January 2009. On January 26, 2009, the jury returned a special verdict finding that Mercado had breached the Agreement by (1) failing to perform after November 22, 2006; (2) hiring another exclusive agent; and (3) improperly terminating the Agreement. The jury further found that Bart had not failed to pay any owed compensation to Mercado and thus had not breached the Agreement. On February 4, 2009, the Florida district court entered judgment in favor of Bart.3 The court did not reach the trademark infringement claim, stating that [o]nce the jury found that Mercado, not Bart, 3 The jury also found that Mercado had interfered with Bart's contracts with third parties. The jury did not find, however, that Bart had suffered any damages resulting either from this interference or from Mercado's breach of contract. Therefore, the district court awarded no damages to Bart. Bart moved for a new trial on the issue of damages, but the district court denied the motion. See Walter Int'l Prods., Inc. v. Mercado Salinas, No. 07-cv-20136 (S.D. Fla. Oct. 26, 2009). Bart appealed the district court's decision to the Eleventh Circuit Court of Appeals, which affirmed the decision not to award Bart damages. See Walter Int'l Prods., Inc. v. Salinas, 650 F.3d 1402 (11th Cir. 2011). -9- breached the contract and that Mercado had not properly terminated the contract, the claim for trademark infringement became moot because, as stated in the order on the motions for summary judgment, the trademark rights revert to Mercado upon a valid termination of the agreement. Walter Int'l Prods., Inc. v. Mercado Salinas, No. 07-cv-20136, slip op. at 22 (S.D. Fla. Oct. 26, 2009).