[Note: The facts set forth in the complaint are a little disorganized. The following details were pieced together from the complaint as well as the correspondence attached thereto.]
Kelly is the developer of a unique high intensity exercise method that he has marketed under the name ISOFITNESS since 2003. He obtained two federal registrations for the mark ISOFITNESS (one for physical exercise and strength training on July 12, 2005 and another for providing fitness and exercise facilities on May 2, 2006).
In the fall of 2004, Kelly was pitched the idea of licensing his ISOFITNESS mark and exercise method outside of Las Vegas by a man named Bob Alexander. As Kelly describes it, the two entered into an “at will” agreement to allow Alexander to market Kelly’s ISOFITNESS system in other markets. Alexander formed a company named Isofitness Systems International, Inc. (“ISI”) for this purpose. In November 2004, ISI lined up its first licensee, a man named Al Coppola who opened an ISOFITNESS location in Conroe, Texas.
Sometime in early 2005, Alexander sold the Defendants on the ISOFITNESS business venture. According to Kelly, he had reservations about the Defendants becoming an ISOFITNESS licensee when Alexander first presented the Defendants to Kelly. Nonetheless, the Defendants formed Isofitness of Texas, Inc. in March 2005 and a license agreement was entered into between the Defendants and ISI in April 2005. While it is not clear if Kelly’s signature was on that license agreement, Kelly maintains that that any signature of his on such an agreement is a forgery. In addition, while Kelly asserts that he had no knowledge of the Defendants involvement in the ISOFITNESS business, he was cc’d on an May 9, 2005 e-mail from Alexander to one of the Defendants regarding the Defendants’ involvement in the ISOFITNESS business
Sometime in May 2005, Kelly and Alexander had a falling out. According to Kelly, Alexander indicated that he wanted to work with Coppola and the Defendants on his own, to which Kelly consented so long as Coppola stopped using the ISOFITNESS name and exercise system and Alexander (or ISI) did not try to sell the ISOFITNESS name or exercise system to anyone else. Kelly removed all references to ISOFITNESS locations in Texas from his website soon after (a fact that Kelly maintains should have been evidence to the Defendants that they were not authorized to use the ISOFITNESS name and system).
Kelly maintains that he did not discover that the Defendants were in business until December 2005 when he came across the website http://www.isofitnessoftexas.com/ owned by Coppola and the Defendants and which resembled Kelly’s own website. At that time, Kelly sent an e-mail to Coppola outlining his complaints about ISI’s actions and demanding that Coppola and the Defendants change their names and stop using any references to the ISOFITNESS mark or training protocol. Kelly asserted that Coppola and the Defendants had been the victims of fraud by ISI and Alexander (ISI as a corporation went into default in November 2005 and its charter was revoked a year later by the Nevada Secretary of State).
Kelly and Coppola (acting for himself and supposedly on behalf of the Defendants) began taking steps to negotiate a resolution to allow all of the parties to use the ISOFITNESS mark and exercise system. The negotiations apparently dragged on for two years during which time Coppola and the Defendants continued to operate their ISOFITNESS locations. During this time, the Defendants’ website (isofitnessoftexas.com), by using a search engine optimization company named Magnetiks, displaced Kelly’s own website as the number one hit for a search for ISOFITNESS -- much to the displeasure of Kelly.
On or about October 2007, the parties reached an interim agreement for use of the ISOFITNESS name at a rate of $400 per month (per party) while Coppola and the Defendants worked to change the name of their businesses, which they had done by December 2007 to the name One 30 Fitness (and the Defendants change their corporate name to TM Wellness, Inc.). The agreement, however, did not address any past infringement before October 2007.
On January 31, 2008, Coppola and Kelly reached an agreement settling any past and future claims arising from Coppola’s use of Kelly’s ISOFITNESS marks and intellectual property. The parties also worked out specific differences between the fitness techniques that Coppola would promote compared to Kelly’s ISOFITNESS techniques.
On or about early March 2008 (the dates on Kelly’s letter and the Defendants’ response are a little inconsistent), Kelly wrote a letter to the Defendants (his first ever contact with the Defendants directly) outlining his position on their trademark infringement and terms for resolving the dispute. The Defendants wrote back stating that, after seeking legal counsel, they did not believe they were under any obligation to Kelly. Kelly’s final e-mail to the Defendants on April 14, 2008 expressed his intent to move forward with a lawsuit against the Defendants.
Kelly’s causes of action are for federal trademark infringement, federal trademark dilution, state dilution and unfair competition, common law trademark infringement, cybersquatting, false advertising, and common law trademark infringement.
A good illustration of the importance of choosing your business partners wisely and of taking both preemptive and proactive steps to protect your trademarks and other intellectual property.
I find it a little strange that Kelly allowed Alexander to promote ISOFITNESS through an entity over which he admittedly had no control without a clearer delineation of each party’s rights. At a minimum, there should have been some kind of license agreement between Kelly and ISI, which then could have allowed ISI to sublicense ISOFITNESS with Kelly’s express consent. Such arrangement would have more clearly outlined to any potential licensees (like the Defendants) who owned the rights to the ISOFITNESS mark and exercise system. Instead, by allowing Alexander to hold himself out as someone with apparent authority to license the ISOFITNESS system to interested parties, Alexander (through ISI) was able to accomplish the fraud that Kelly maintains Alexander perpetrated on Coppola and the Defendants.
Another curious part of this case is the delay from December 2005, when Kelly first took steps to stop Coppola and the Defendants from using ISOFITNESS, to August 2007, when Coppola first presented Kelly with some kind of proposal to be the exclusive worldwide licensee of ISOFITNESS – a proposal that Kelly ultimately rejected. The complaint lacks any examples of the good faith negotiations that took place during those 20 months – during which time Kelly never contacted the Defendants directly or otherwise put them on notice (even though Kelly acknowledges having the Defendants’ home address back in December 2005). Kelly seems to rely on his discussions with Coppola as putting the Defendants on constructive notice because Coppola served as some kind of trainer and sponsor for Defendants’ ISOFITNESS business.
As for the complaint itself, while not bad for a non-lawyer plaintiff representing himself, it does suffer from some obvious errors although nothing so erroneous as to make the complaint entirely frivolous. The heart of the dilution cause of action is the aforementioned “dilution” caused by the Defendants’ website and their use of Magnetiks to throw off Kelly’s first place listing among search engine listings. There is no discussion of the all-important “fame” of his mark. In addition, Kelly’s cause of actions for dilution and unfair competition under Nevada law cite to Nevada’s law making the use of a Nevada registered mark a misdemeanor, not to N.R.S. §600.435 (for Nevada’s dilution law) or N.R.S. § 598.0915 (Nevada’s Deceptive Trade Practice law).
If Kelly desires to continue to fight this lawsuit himself, he may want to start researching how to oppose a Motion to Dismiss under Rule 12(b)(2) of the Federal Rules of Civil Procedure.