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WD Encore Software, LLC v. The Software Mackiev Co.

United States District Court, D. Massachusetts

August 3, 2017

WD ENCORE SOFTWARE, LLC, Plaintiff,
v.
THE SOFTWARE MACKIEV COMPANY, Defendant, and HOUGHTON MIFFLIN HARCOURT PUBLISHING COMPANY and HMH IP COMPANY UNLIMITED COMPANY, Nominal Defendants. HOUGHTON MIFFLIN HARCOURT PUBLISHING COMPANY and HMH IP COMPANY UNLIMITED COMPANY, Cross-Claim Plaintiffs,
v.
THE SOFTWARE MACKIEV COMPANY, Cross-Claim Defendant.

          MEMORANDUM & ORDER

          WILLIAM G. YOUNG, DISTRICT JUDGE

         I. INTRODUCTION

         In this action for trademark infringement and false designation of origin under the Lanham Act, WD Encore Software, LLC (“WD Encore”) sued The Software MacKiev Company (“MacKiev”) for unauthorized use of trademarks relating to certain software products. WD Encore moved for partial summary judgment on its trademark infringement claim, as well as on MacKiev's counterclaim for quantum meruit. After denying WD Encore's motion on its trademark infringement claim from the bench, this Court now denies summary judgment as to MacKiev's counterclaim for quantum meruit.

         A. Procedural History

         WD Encore filed a complaint against MacKiev on September 18, 2015, in the Western District of New York, seeking injunctive relief and damages for trademark infringement. Compl. 1, ECF No. 1. MacKiev moved to dismiss the complaint. Notice of Mot., ECF No. 6. The case was instead transferred to the District of Massachusetts, ECF No. 14, where MacKiev renewed its motion to dismiss, The Software MacKiev Company's Renewed Mot. Dismiss WD Encore Software, LLC's Compl., ECF No. 25. After a hearing on September 13, 2016, this Court denied MacKiev's motion. Electronic Clerk's Notes, ECF No. 36.

         The Amended Complaint includes three counts: federal trademark infringement under 15 U.S.C. § 1114 (count I), false designation of origin under 15 U.S.C. § 1125(a)(1)(A) (count II), and unfair competition under New York law (count III). Am. Compl. ¶¶ 34-50. In response, MacKiev asserted eight affirmative defenses, and also filed counterclaims for: implied contract/quantum meruit (count I), false designation of origin under 15 U.S.C. § 1125(a)(1)(A) (count II), unfair competition under Massachusetts law (count III), and violation of M.G.L. ch. 93A (count IV). Def. Software MacKiev Co.'s Answer Am. Compl., Affirmative Defenses, and Countercls. (“Answer”), ECF No. 47.

         WD Encore has now filed a motion for partial summary judgment on: 1) liability on WD Encore's trademark infringement claim and 2) MacKiev's counterclaim against WD Encore alleging quantum meruit/implied contract. Mot. Pl. WD Encore Software, LLC Partial Summ. J., ECF No. 71. The parties have briefed the issues and submitted accompanying statements of fact. Pl.'s Mem. Law Supp. Mot. Partial Summ. J. (“Pl.'s Mem.”), ECF No. 72; Pl.'s Local Rule 56.1 Statement (“Pl.'s Facts”), ECF No. 73; Def. Software MacKiev Co.'s Mem. Law Supp. Opp'n WD Encore Software, LLC's Mot. Partial Summ. J. (“Def.'s Opp'n”), ECF No. 83; Def. Software MacKiev Co.'s Resp. Pl.'s Local Rule 56.1 Statement (“Def.'s Resp. Facts”), ECF No. 84. After a hearing, the Court denied WD Encore's motion as to the trademark infringement claim, but took the quantum meruit claim under advisement. Electronic Clerk's Notes, ECF No. 92.

         B. Factual Background

         1. The Parties

         WD Encore is a New York limited liability company with its principal place of business in Syracuse, New York. Am. Compl. ¶ 1; Answer ¶ 1. The company is a developer and wholesale and retail distributor of software products. Pl.'s Facts ¶ 1. From its formation in June 2014 to the present, WD Encore has been a wholly-owned subsidiary of WYNIT Distribution, LLC (“WYNIT”). Id. WD Encore came about as part of an Asset Purchase Agreement effective July 9, 2014 (“Asset Purchase Agreement”), between WYNIT and certain of its subsidiaries, including WD Encore, as buyers, and Speed Commerce, Inc. and certain of its subsidiaries, including Encore Software, Inc. (“ESI” or “Encore”[1]), as sellers. Id. ¶ 2. As part of the transaction, WD Encore acquired certain of ESI's assets, including specific licensing agreements between ESI and third parties. Id.

         The Asset Purchase Agreement provides for the purchase of “substantially all of the assets used by the Sellers in connection with” certain aspects of the sellers' business, including the “manufacture, development, license or distribution . . . of software products developed by [ESI] or licensed from Third Parties.” Id. ¶ 3. It also provides that the buyers assume the liabilities specified in the “Assumed Liabilities” section, which include all liabilities under the enumerated “Assumed Contract, ” as well as other liabilities relating to taxes, trade payables, transferred employees, and other specified items. Id. The “Assumed Contracts” are set forth in an Assignment and Assumption Agreement effective July 9, 2014 (“Assignment and Assumption Agreement”). Id. ¶ 6. ESI was dissolved in March 2016. Id. ¶ 8.

         MacKiev is a Nevada corporation with its principal place of business in Boston, Massachusetts. Am. Compl. ¶ 2; Answer ¶ 2. MacKiev is the owner and operator of the website www.mackiev.com and sells software products. Pl.'s Facts ¶ 25.

         2. The Channel License Agreement

         On July 1, 2008, Riverdeep, Inc., HMH Consumer Company, and ESI entered into a Channel License Agreement, which was amended from time to time, with the latest amendment (Amendment No. 5) dated July 2, 2013. Id. ¶ 10. Pursuant to the Assignment and Assumption Agreement, WD Encore became a licensee under the Channel License Agreement. Id. Houghton Mifflin Harcourt Publishing Company (“HMH”) is the successor licensor to the Channel Licensing Agreement. HMH IP owns the federal trademark registrations for a number of trademarks related to software (the ...


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