Explore the legal dispute between a business buyer and a competitor over the use of a founder’s name for product promotion. Learn about the key court decision and its implications.
October 21, 2019
Introduction:
In the world of business acquisitions, the right to use a founder’s name, image, and reputation to promote a company can be immensely valuable. This blog delves into a case where a buyer aimed to secure these rights to enhance their own business prospects.
The Business Deal:
This particular case revolved around a company with a renowned founder named Joe Traeger, credited with inventing the wood pellet grill in the 1980s. Joe and his family operated this business, manufacturing and selling wood pellet grills, and they were well-known in the industry.
In 2006, the buyer acquired Joe’s company assets for $3.4 million and paid an additional $9 million for the rights to use the family’s intellectual property (IP), which included personal goodwill and various IP assets related to the business.
The Legal Dispute:
In 2018, a competitor of the buyer announced that it had hired Joe and his son Brian Traeger to endorse one of their grill brands. This announcement featured photos of Joe and Brian Traeger alongside competitor executives, prominently displaying the Traeger name. The buyer responded with a cease and desist letter, demanding the competitor cease implying any connection between them.
In early 2019, the competitor unveiled a new grill series, the Founders Series, proudly associated with Joe Traeger and another industry figure. They proceeded to promote this series on social media using images and statements featuring Joe and Brian’s names and likenesses.
As a result, the buyer filed a lawsuit in an Arizona federal district court in July 2019, seeking to prevent the competitor from using Joe and Brian’s identities to endorse their products. The buyer requested a preliminary injunction to halt these activities during the lawsuit.
Key Court Decision:
To grant a preliminary injunction, the court had to determine if the buyer likely possessed the exclusive rights to use Joe and Brian’s names and likenesses for grill promotion, known as publicity rights, and whether the competitor had probably misappropriated these rights. The court ruled in favor of the buyer, concluding that they likely held these publicity rights, leading to the issuance of the preliminary injunction.
Additional Information:
Simultaneously, the buyer also sued Joe and Brian in a Florida district court to prevent them from promoting the competitor using their identities. The Florida court, however, denied this request, expressing doubts about the buyer’s acquisition of Joe and Brian’s publicity rights. You can find more details about this aspect in a previous blog post: http://www.mk-law.com/wpblog/business-buyer-sues-seller-founder-for-using-his-personal-name-to-promote-competitor/
Case Reference:
This case is referred to as Traeger Pellet Grills, LLC v. Dansons US, LLC, No. CV-19-04732-PHX-DLR, United States District Court, D. Arizona (October 3, 2019)
By John McCauley: I help companies and their lawyers minimize legal risk associated with small U.S. business mergers and acquisitions (transaction value less than $50 million
Email: jmccauley@mk-law.com
Profile: http://www.martindale.com/John-B-McCauley/176725-lawyer.htm
Telephone: 714 273-6291
Check out my book: Buying Assets of a Small Business: Problems Taken From Recent Legal Battles
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