Opinion ID: 619332
Heading Depth: 2
Heading Rank: 3

Heading: The Puerto Rico litigation

Text: Despite the ruling against him by the Florida court, on March 20, 2009, Mercado sent Bart a letter demanding payment within fifteen days of $25,000 per month for the twenty-seven months that had elapsed between November 2006 and January 2009, amounting to a total of $675,000. Mercado's letter asserted that the $25,000 per month [is] due and payable pursuant to clause 6(c)(i) of the Agreement, and that [t]he obligation to pay such amounts is independent of any service provided by Mr. Mercado. Mercado stated he reserved the right to declare the Agreement null and void pursuant to the termination clause if Bart did not make payment within fifteen days. On March 30, 2009, Bart notified Mercado by letter that it would not pay the requested compensation. Bart asserted that no compensation was due because, as the Florida court had held, Mercado had ceased to provide services and thus had breached the Agreement. Bart also asserted its right to the Walter Mercado -10- trademark and requested that Mercado stop using the mark to unilaterally create new psychic and astrological materials. On May 15, 2009, Mercado sent Bart a letter declaring the Agreement null and void pursuant to the termination clause of the Agreement because Bart had not paid the requested compensation. Having done so, Mercado also declared that the trademark and publicity rights reverted back to him. Mercado ordered Bart to cease and desist from using the trademark or Mercado's name or likeness. Three days later, on May 18, 2009, Mercado4 brought suit against Bart5 in the Puerto Rico Court of First Instance. Mercado alleged breach of contract, trademark infringement, and infringement of publicity rights. Upon Bart's motion, the case was removed to the Puerto Rico federal district court. The parties filed cross-motions for preliminary injunctive relief, each seeking to prevent the other from using the Walter Mercado trademark. The district court referred the motions to a magistrate judge for a report and recommendation. The magistrate judge determined that because the provisions granting trademark and 4 Plaintiffs are Mercado and Astromundo, Inc., a Puerto Rico corporation. Mercado is the president of Astromundo, Inc. We refer to the plaintiffs collectively as Mercado. 5 Defendants are seven business concerns and their principal, Guillermo Bakula. All of the defendants in the case are citizens of Florida, except Bart Enterprises International, Ltd., which is a citizen of the Bahamas. We refer to the defendants collectively as Bart. -11- publicity rights contain limiting language such as in connection with Mercado's astrological and psychic activities, Bart's trademark and publicity rights are limited to those materials developed by or with Mercado during the Additional Services Term. Once the Additional Services Term ended and Mercado ceased providing services, the magistrate judge concluded, Bart could no longer create new products using the trademark. The magistrate judge recommended that the court grant Mercado's motion for a preliminary injunction against Bart's use of the trademark or Mercado's name or likeness in connection with any product that was created after the end of the Additional Services Term without Mercado's contribution or approval. Bart could, however, continue to use the trademark in connection with products or materials created with Mercado's approval during the Additional Services Term. Both parties filed objections to the report and recommendation. On review, the district court denied Mercado's motion for a preliminary injunction because Mercado had not established that he was entitled to trademark protection. MercadoSalinas, 747 F. Supp. 2d at 274. First, based on the plain text of the contract, the district court concluded that Mercado had perpetually assigned to Bart full rights to the trademark. Id. at 271-72. Applying the doctrine of collateral estoppel, the district court acknowledged the Florida district court's determination that -12- Mercado's assignment of rights was subject to reversion upon termination of the Agreement. Id. at 272-73. Next, the district court determined that Mercado did not validly terminate the Agreement. Id. at 273-74. Because Mercado had ceased to provide services, Bart had no obligation to pay him compensation and he therefore had no basis for terminating the Agreement. Id. The court denied Mercado's request for injunctive relief against Bart's use of the trademark and Mercado's request for injunctive relief regarding his publicity rights. Id. at 274. Finding a likelihood of success regarding Bart's claim to the trademark, the district court granted Bart's motion for preliminary injunctive relief. Id. at 275. The injunction prohibited Mercado from using the Mark, 'Walter Mercado,' in relation to all forms of business enterprise, and from representing to third-parties that Plaintiffs own the Mark. Id. This injunction was further narrowed. On motion for reconsideration, the district court amended the preliminary injunction to bar Mercado from (1) using the Mark, 'Walter Mercado,' in relation to all forms of business enterprise, except for business arrangements that commenced prior to June 7, 1995, and (2) representing to third parties that Plaintiffs own the Mark. Mercado-Salinas v. Bart Enters. Int'l, Ltd., 747 F. Supp. 2d 275, 279 (D.P.R. 2010). The district court's opinion and order expressly states that the court's injunctive order relates only to -13- commercial use of the trademark.6 Id. It is this more limited injunction, with that understanding, which is before us on appeal. Mercado has appealed from the grant of this preliminary injunction and from the denial of his request for preliminary injunctive relief.