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Vanderbilt University v. Scholastic, Inc.

United States District Court, M.D. Tennessee, Nashville Division

May 28, 2019

VANDERBILT UNIVERSITY, Plaintiff,
v.
SCHOLASTIC, INC., et al., Defendants.

          MEMORANDUM OPINION

          WAVERLY D. CRENSHAW, JR. CHIEF UNITED STATES DISTRICT JUDGE

         “Money tends to make people suspicious, if there's any money floating around.”[1] This case arises from just such a suspicion. By means of a License Agreement executed in 1997 (“License”), Vanderbilt University (“Vanderbilt”) and Defendant Scholastic, Inc. (“Scholastic”) joined forces to develop, market, and distribute an educational literacy program called Read 180 based on the cutting-edge work of Vanderbilt Professor Ted S. Hasselbring. Pursuant to the License, Scholastic used certain copyrightable software and related instructional materials, along with other materials it both obtained and created, to develop the “Read 180” program. It was wildly successful. Scholastic distributed Read 180 and paid Vanderbilt royalties under the License until 2015, when Scholastic sold that part of its business and assigned the License to Defendant Houghton Mifflin Harcourt Publishing Company (“HMH”). However, Defendants' public exuberance about their success with Read 180 in connection with this sale led Vanderbilt to became suspicious that it was being exploited by Defendants. Vanderbilt conducted an investigation and now claims that it was deceived by the Defendants and has not been properly compensated for (1) components of Read 180 that are royalty-bearing under the License; (2) programs other than Read 180 that may be royalty-bearing because they are based on Vanderbilt-owned materials (“Derivative Products”); and (3) additional learning products that may have been surreptitiously developed by Hasselbring and Scholastic in violation of the License and Hasselbring's duties to Vanderbilt (“Ancillary Products”).

         Vanderbilt brings claims for trademark infringement in violation of § 32(1) of the United States Trademark Act, 15 U.S.C. § 1114(1); unfair competition, in violation of § 43(a) of the United States Trademark Act, 15 U.S.C. § 1125(a); declaratory judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201; as well as numerous Tennessee state law claims. Before the Court are (1) Scholastic and HMH's Motion to Dismiss the Second Through Fourth and Seventh Through Eleventh Counts of the Complaint (Doc. No. 87); and (2) Hasselbring's Motion to Dismiss Counts Nine and Ten of the Complaint (Doc. No. 89).[2] Vanderbilt has filed responses in opposition (Doc. Nos. 96; 97), and Defendants have filed replies (Doc. Nos. 100; 101.) For the following reasons, both motions will be granted in part and denied in part.

         I. Factual Allegations[3]

         A. Vanderbilt, Faculty Research, and Professor Hasselbring

         Vanderbilt is a private, non-profit Tennessee university known in part for bringing research innovations into the world marketplace. (Doc. No. 85 at ¶¶ 1, 7.) Tenure-track faculty are expected and encouraged to research, write, and create, and these activities fall within the scope and purpose of their employment. (Id. at ¶ 8.) Vanderbilt contends that the technology and other creative works that its faculty create in their areas of study and research are “works for hire” under Tennessee law and federal copyright law. (Id.) Accordingly, as part of their employment, Vanderbilt faculty are subject to a written policy (“Technology Policy”), that provides, among other things, that almost all innovations in technology as defined by Vanderbilt (“Vanderbilt Technology”) created by faculty members are assigned to and owned by Vanderbilt. (Id. at ¶ 9.) Under the Technology Policy in effect until 2016, “[a]ll rights in non-scholarly Literary and Artistic Works created with the use of University funds or facilities, or that capitalize on an affiliation with the University, are granted to the University, and income distribution shall be handled in the same manner as technology. Commercial use of the University's name and marks requires prior University approval.” (Doc. No. 85-2 at 10.) A superseding Technology Policy further explains that “Vanderbilt Technology” is broader than patentable intellectual property, and “includes tangible or intangible inventions, in the patent sense, whether or not reduced to practice, and research results whether or not patentable or copyrightable. These research results include, for example, computer programs, integrated circuit designs, industrial designs, databases, technical drawings, biogenic materials, and other technical creations.” (Doc. No. 85-1 at 4.)

         Vanderbilt relies upon its Center for Technology, Transfer and Commercialization (“CTTC”) to protect and commercialize, as appropriate, the intellectual property developed at the University. (Doc. No. 85 at ¶ 10.) The CTTC is responsible for negotiating, on behalf of Vanderbilt, license agreements with commercial entities that are positioned to develop and commercialize the intellectual property advancements that Vanderbilt's faculty and staff create in the course and scope of their intellectual pursuits at the University. (Id.) Faculty members receive a significant share - between 40 and 50 percent - of royalties received by Vanderbilt. (Id. at ¶ 11.) The remainder is invested in the university. (Id.)

         To facilitate this process and safeguard Vanderbilt's rights, faculty are subject to Vanderbilt's Conflict of Interest Policy (“COI Policy”). (Doc. No. 85-4.) Under the COI Policy, Vanderbilt faculty are required, prior to undertaking consulting or any other activity or commitment that may create a potential conflict of interest, to disclose the activity or commitment in writing to the appropriate dean (and department chair), in sufficient detail and with appropriate documentation such that the dean and the department chair can determine whether a potential conflict exists. (Doc. No. 85 at ¶¶ 20, 51.) In addition, faculty members are required to file annual reports disclosing consulting and other outside business relationships that they engage in during the year, including the number of days devoted to the activities. (Id. at ¶¶ 21, 52.)

         Hasselbring, a Tennessee resident, is currently an Emeritus Professor of Special Education in the Department of Special Education at Vanderbilt.[4] (Id. at ¶ 2.) The Letter Agreement (“Hasselbring Employment Agreement”) between Hasselbring and Vanderbilt dated December 27, 2005 concerning his employment specifies that the above “[p]olicies set forth in the Faculty Manual constitute part of the contractual relationship between [Hasselbring] and the University.” (Id. at ¶ 19; Doc. No. 85-3.) Accordingly, Vanderbilt alleges that at all times during his employment, Hasselbring was subject to Vanderbilt's Faculty Manual, COI Policy, and Technology Policy. (Id. at ¶¶ 19-22.)

         B. Hasselbring's Development of Read 180 and Vanderbilt's License to Scholastic

         Hasselbring's area of research and study at Vanderbilt was, among other things, the use of technology to enhance learning for students with disabilities. (Id. at ¶ 23.) Beginning in 1985, Hasselbring and members of the Learning and Technology Center at Vanderbilt developed software that used student performance data to individualize and differentiate the path of computerized reading instruction in order to identify and help elementary and middle school students reading below grade level. (Id. at ¶ 24.) According to the Complaint, this software, which became the prototype for Read 180, was owned by Vanderbilt pursuant to the Technology Policy. (Id.)

         Between 1994 and 1998, Hasselbring and his Vanderbilt team tested their work in Orange County, Florida. (Id. at ¶ 25.) The Orange County Literacy Project successfully used the Read 180 prototype with more than 10, 000 struggling students. (Id.) Vanderbilt alleges that, at that time, the Read 180 intellectual property consisted of (1) a software-based multimedia instructional program designed to provide daily computer-based compensatory instruction for middle school aged students (the “Software”); (2) an interactive multimedia CD-ROM containing instruction materials in middle school literacy consisting of software, a library of terms and sentences, video, text, and graphics, all of which were designed to be used in conjunction with the software (the “Literacy Unit”); and (3) certain confidential key academic concepts and techniques that formed the pedagogical basis for the Literacy Unit (all collectively, the “Read 180 Materials”). (Id. at ¶ 26.) Because the Read 180 Materials were created within the course and scope of Hasselbring and his Vanderbilt team's employment, Vanderbilt considered all of the components to be works for hire assigned to Vanderbilt pursuant to the Technology Policy. (Id. at ¶ 27.)

         Scholastic is a for-profit New York corporation that describes itself as the world's largest publisher and distributor of children's books and a leading provider of children's print and digital instruction materials sold throughout the United States. (Id. at ¶ 3.) The positive results with Read 180 in Orange County, Florida, led Scholastic to partner with Vanderbilt to license the software and launch Read 180 as a commercial product. (Id. at ¶ 25.) Accordingly, Vanderbilt and Scholastic entered into the License effective January 1, 1997. (Id. at ¶ 28.) Vanderbilt granted Scholastic an exclusive, royalty-bearing license to the Read 180 Materials for the purpose of producing and marketing a literacy program (the “Read 180 Literacy Program”) throughout the world that would embody the Read 180 Materials. (Id. at ¶ 29.) In exchange, Scholastic was to pay Vanderbilt escalating royalties on net sales as defined in the License. (Id. at ¶ 30.) According to the Complaint, Vanderbilt and Scholastic recognized that Scholastic's development of the Read 180 Materials to a marketable state would likely result in the future creation of Derivative Products that were unknown and unforeseen at the time of contracting. (Id. at ¶ 31.) So that Vanderbilt could receive royalties on the Derivative Products, the parties agreed to the following language in Paragraph 6.2 of the License:

The parties recognize and agree that future improvements may result in products different in form, content, or medium from the [Read 180] Materials delivered to Scholastic under this Agreement. It is the express intent of the parties that regardless of the form of future improvements or derivative works, Vanderbilt shall receive royalties pursuant to Section 9 [of the License] on all software products based on or derived from the [Read 180] Materials, pro rata, pursuant to the future mutual agreement of the parties as to the amount of the Materials incorporated into such products.

(Id.)[5] Through the License, Scholastic launched the Read 180 Literacy Program in 1999, and it became the foundation of Scholastic's highly-successful Education Technology and Services business. (Id. at ¶ 33.) There have been several versions, updates, and new iterations of Read 180 produced since 1999, and, according to the Complaint, Read 180 continues to be the largest selling digital curriculum in the marketplace. (Id.)

         The Complaint alleges that, according to internal marketing materials, a number of other products have been based on or derived from Read 180, including, but not limited to, System 44, FASTT Math, MATH 180, iRead, Expert 21, and Scholastic U. (Id.) Vanderbilt claims that these are Derivative Products or, if not, then Ancillary Products. (Id.) According to the Complaint, Scholastic and HMH have repeatedly marketed these Derivative and Ancillary Products in a way that leaves “little doubt” that they “are derived from and related to Read 180 [or that] Hasselbring authored them while in Vanderbilt's employ. Vanderbilt alleges that Scholastic and HMH's marketing extensively promotes Hasselbring and emphasizes his Vanderbilt connection in an effort to falsely imply to consumers that Vanderbilt is either a source of, affiliated with, or sponsors these products. (Id. at ¶¶ 60-61.) In addition, Vanderbilt alleges that Hasselbring has consistently held himself out as the author of the Derivative or Ancillary Products. (Id. at ¶ 62.) In any event, Vanderbilt alleges that Hasselbring, Scholastic, and HMH knowingly failed to disclose Hasselbring's authorship of the Derivative or Ancillary Products to Vanderbilt and did not pay appropriate royalties to Vanderbilt based on the use of Vanderbilt Technology and intellectual property therein. (Id. at ¶ 63.)

         C. Sale to HMH and Vanderbilt's Audit

         HMH is a for-profit Massachusetts corporation engaged in the business of publishing, marketing and selling pre-kindergarten through grade 12 educational content and related services. (Id. at ¶ 4.) On May 15, 2015, Vanderbilt received a letter from Scholastic announcing the sale of Scholastic's Education Technology and Services business to HMH and requesting Vanderbilt's consent to the assignment of the License to HMH. (Doc. No. 85-5.) Vanderbilt consented to the assignment on May 27, 2015, under which HMH would assume all rights and obligations under the License. (Doc. No. 85 at ¶ 34.) According to the Complaint, in connection with the sale, Scholastic and HMH made certain public representations about total sales and value of Read 180 products that were extremely surprising to Vanderbilt. (Id. at ¶ 35.) Specifically, press reports indicated that sales of the Read 180 Literacy Program exceeded one billion dollars, far greater than the sales figures for which Vanderbilt had been paid royalties under the License. (Id.) In 2016, after reviewing publicly-available financial information concerning the sale of Scholastic to HMH and the value of Read 180, Vanderbilt exercised its right under Paragraph 9.4 of the License to have the books and records of Scholastic/HMH audited with respect to performance under the License, and it retained the accounting firm RSM U.S. LLP (“RSM”) for this task. (Id. at ¶ 36.)

         In June 2016, RSM produced an initial audit report that covered the period of June 1, 2010 through May 31, 2015. (Id. at ¶ 37.) RSM first estimated that Vanderbilt had been underpaid by at least $5.5 million for this five-year period for products that Scholastic and HMH had already agreed were royalty-bearing. (Id. at ¶¶ 37-38.) Second, RSM estimated that as much as $25 million in royalties could be owed on the Derivative and Ancillary Products - specifically, on sales of products derived from the Vanderbilt's licensed materials, including, but not limited to, System 44, FASTT Math, MATH 180, iRead, Expert 21, and Scholastic U. (Id. at ¶¶ 37, 39.) RSM also reached several additional conclusions: (1) Scholastic and HMH failed to pay Vanderbilt for any royalties generated by Canadian sales of Read 180; (2) Scholastic and HMH failed to pay royalties for the complete Read 180 Literacy Program as required by the License because they impermissibly carved out sales of certain Read 180 components that they dubbed to the “non-software” components[6] while advertising the full Read 180 family of products, including the non-software components, as a single literacy program; and (3) Scholastic and HMH made improper deductions from Vanderbilt's royalty payments for supposed shipping and handling costs associated with Read 180 products. Vanderbilt therefore concluded that Scholastic/HMH owed it in excess of $30, 000, 000 under the License for all of these categories. (Id. at ¶ 43.)

         D. Vanderbilt's Review of Hasselbring's Conduct

         Given RSM's audit findings, Vanderbilt (1) reviewed Hasselbring's conduct regarding his relationship with Scholastic and HMH, the License, the Read 180 Literacy Program, and the Derivative/Ancillary Products, and (2) evaluated Hasselbring's compliance with Vanderbilt's Technology Policy, COI Policy, and fiduciary obligations to the University. (Id. at ¶ 45.) According to the Complaint, Vanderbilt discovered that Hasselbring had negotiated and entered into a number of undisclosed agreements with Scholastic or HMH for the sharing or creation of intellectual property and Vanderbilt Technology, most of which, if not all, Vanderbilt claims that it owns pursuant to the Technology Policy (collectively the “Undisclosed Hasselbring/Scholastic/HMH Agreements”). (Id. at ¶¶ 46-50.) In addition, Vanderbilt alleges that it discovered that, in 2012, 2013, and 2014, Hasselbring incorrectly answered “no” when asked on his Vanderbilt COI Disclosure if he had a relationship with a business that had a contractual relationship with Vanderbilt or that paid royalties to him directly. (Id. at ¶ 51.) Vanderbilt claims Hasselbring knew those representations were false and that Vanderbilt would rely upon them. (Id.) According to Vanderbilt, Hasselbring also answered “no” when asked if he was involved in an activity or relationship directly or indirectly involving Vanderbilt that created a conflict of interest/commitment or the appearance of a conflict of interest/commitment under Vanderbilt's COI Policy. (Id. at ¶ 52.) Once again, Vanderbilt claims Hasselbring knew that representation was false and that Vanderbilt would rely upon it. (Id.) Vanderbilt alleges that these attempts by Defendants to circumvent Vanderbilt's policies, obtain title to Vanderbilt Technology, and avoid paying a royalty to Vanderbilt, were on-going and continued even after HMH purchased Scholastic. (Id. at ¶ 54.)

         In addition, the Complaint alleges that the Undisclosed Hasselbring/Scholastic/HMH Agreements (1) contained warranties representing that Hasselbring had the right to convey the Vanderbilt Technology he was supplying; (2) contained non-compete language preventing Hasselbring from otherwise monetizing the Vanderbilt Technology by creating similar products; (3) were styled as “consulting agreements” in order to hide the fact that Hasselbring was authoring technology that belonged to Vanderbilt under its Technology Policy or because the Technology was related to or derived from Read 180 Materials, and despite that Scholastic, HMH, and Hasselbring all knew that Hasselbring was not permitted under Vanderbilt's employment policies to directly convey intellectual property in exchange for a royalty; and (4) directed millions of dollars in on-going royalty payments to Hasselbring without providing any payment to Vanderbilt for the use of the Vanderbilt Technology or other intellectual property. (Id. at ¶¶ 55, 56.) Vanderbilt claims Hasselbring continues to improperly earn millions of dollars in royalties directly from the other Defendants. (Id. at ¶ 58.)

         E. Trademarks

         The Complaint also alleges that Scholastic and HMH improperly used Vanderbilt's intellectual property, registered name, logo, and associated goodwill in the design, development, marketing, and promotion of the products discussed above, for the purpose of falsely implying to consumers that Vanderbilt was a source of or sponsor of the products or was in some way affiliated with the products. (Id. at ¶ 65; see also id. at ¶ 66 (listing family of registered trademarks).)

         II. Legal Standard

         To survive a Rule 12(b)(6) motion, “‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). “If the plaintiffs do not nudge their claims across the line from conceivable to plausible, their complaint must be dismissed.” Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir. 2013) (citation and brackets omitted). Dismissal is likewise appropriate where the complaint, however factually detailed, fails to state a claim as a matter of law. Mitchell v. McNeil, 487 F.3d 374, 379 (6th Cir. 2007). In deciding a motion to dismiss, the court is not required to accept summary allegations, legal conclusions, or unwarranted factual inferences. Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999); Lillard v. Shelby Cty. Bd. of Educ., 76 F.3d 716, 726 (6th Cir. 1996).

         III. Analysis

         A. Trademark Infringement Claim under the Lanham Act (Count Three)

         The Lanham Act makes any person who uses “any word, term, name, symbol, or device” in a way that is “likely to cause confusion, or to cause mistake, or to deceive as to . . . affiliation, connection, or association” liable to a senior trademark owner. Sazerac Brands, LLC v. Peristyle, LLC, 892 F.3d 853, 856-57 (6th Cir. 2018) (quoting 15 U.S.C. § 1125(a)(1)(A)); see also 15 U.S.C. § 1114. The “touchstone of liability [for trademark infringement] is whether the defendant's use of the disputed mark is likely to cause confusion among consumers regarding the origin of the goods offered by the parties.” Daddy's Junky Music Stores, Inc. v. Big Daddy's Family Music Ctr., 109 F.3d 275, 280 (6th Cir. 1997). “To frame it another way, the ultimate question is whether relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way.” Champions Golf Club, Inc. v. The Champions Golf Club, Inc., 78 F.3d 1111, 1116 (6th Cir. 1996) (internal quotation marks omitted). “Trademark law's likelihood-of-confusion requirement . . . is designed to promote informational integrity in the marketplace. By ensuring that consumers are not confused about what they are buying, trademark law allows them to allocate their capital efficiently to the brands that they find most deserving.” Oaklawn Jockey Club, Inc. v. Kentucky Downs, LLC, 687 Fed.Appx. 429, 431-32 (6th Cir. 2017) (quoting Groeneveld Transp. Efficiency, Inc. v. Lubecore Int'l, Inc., 730 F.3d 494, 512 (6th Cir. 2013)).

         Generally, the courts evaluate whether a plaintiff has demonstrated a likelihood of consumer confusion by means of “an eight-factor, nothing-is-off-the-table, totality-of-the-circumstances test.” Sazerac Brands, 892 F.3d at 857 (citing Frisch's Rests., Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 648 (6th Cir. 1982)); Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d. Cir. 1961) (Friendly, J.)). Before employing this test in this Circuit, however, courts must first ask whether the defendant is actually using the plaintiff's trademark to identify the source of the defendant's product. Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 610 (6th Cir. 2009). “If defendants are only using [the] trademark in a ‘non-trademark' way - that is, in a way that does not identify the source of a product - then trademark infringement and false designation of origin laws do not apply.”[7] Interactive Prods. Corp. v. a2z Mobile Office Sols., Inc., 326 F.3d 687, 695 (6th Cir. 2003); see also Oaklawn Jockey Club, 687 Fed.Appx. at 432; Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 793-94 (6th Cir. 2015). “Only if the plaintiff clears this threshold test, ” does a court eventually reach the full likelihood-of-confusion analysis and any defenses. Sazerac Brands, 892 F.3d at 859; Grubbs v. Sheakley Grp., Inc., 807 F.3d 785, 793 (6th Cir. 2015).

         The threshold “trademark use” inquiry is the sole basis for Scholastic and HMH's argument to dismiss Count III. They contend that any references to “Vanderbilt” in the context of the Derivative or Ancillary Products are made in a “non-trademark” way, primarily for the innocent purpose of identifying Hasselbring. Vanderbilt responds that, by using Vanderbilt's trademarks, Scholastic and HMH create the type of consumer confusion that is actionable under the Lanham Act. Factual statements about the past experience of an employee are not per se barred by the Lanham Act. See, e.g., Review Directories Inc. v. McLeodUSA Publ'g Co., 236 F.Supp.2d 810, 813 (W.D. Mich. 2001) (“Thus, the use of a trademark in a non-trademark sense, where the trademark is used fairly and accurately as a way to identify an individual working for a company or the nature of the goods or services being offered are not prohibited by the Lanham Act.”); Bus. Trends Analysts, Inc. v. Freedonia Grp., Inc., 700 F.Supp. 1213, 1233 (S.D.N.Y. 1988) (“It has long been settled that the trademark laws do not prohibit the use of a company name or trademark in a non-trademark sense where the trademark is used fairly and accurately as a means of identifying either an individual working for a company or of describing the nature of goods or services being offered by that company.”). Rather, the Lanham Act comes into play when a plaintiff's trademark is used in such a manner that “a consumer is likely to notice [the plaintiff's trademark] . . . and then think that the [defendant's product] may be produced by the same company[.]” Interactive Prods. Corp., 326 F.3d at 696. A professor like Hasselbring is, of course, identified with his or her university employer in some ways, and the research that a professor conducts over the course of his or her career will always inform things that he or she may do outside that forum. The Court must therefore consider whether Vanderbilt has sufficiently alleged that Scholastic and HMH have used Vanderbilt's trademarks in connection with the Derivative or Ancillary Products in such a manner that goes beyond mere identification - that is, so that consumers might think that the Derivative or Ancillary Products are affiliated with or were made by Vanderbilt.

         The Complaint lists a family of trademarks that Vanderbilt has registered “for numerous classes of goods and services.” (Doc. No. 85 at ¶ 66.) The list is comprised of twelve marks - nine of which are stylized Vanderbilt logos and three of which are “Vanderbilt” or “Vanderbilt University.” (Id.) Vanderbilt sets forth several alleged improper uses of those trademarks in marketing and promotional materials for Derivative or Ancillary Products, as follows:

a. The website for the System 44 program states that “at the heart of this adaptive technology” is the FASTT algorithm developed by Hasselbring “in partnership with his team at Vanderbilt University.” (Doc. No. 85 at ¶ 61(A)(a).)
b. That System 44 “grew out of seminal research on cognition and technology . . . conducted by Dr. Hasselbring at Vanderbilt University.” (id. at ¶ 61(A)(a)(ii).)
c. That “System 44 has relied on the research-based design of Dr. Hasselbring and his work through Vanderbilt University” and “leverages the power of research-based instructional practices and adaptive, personalized technology driven by the FASTT algorithm Dr. Hasselbring helped to pioneer with READ 180.” (Id. at ¶ 61(A)(a)(iii).)
d. Advertising for the FASTT Math program states that “FASTT Math is the result of over two decades of research conducted by Dr. Ted Hasselbring, Co-Director of the Learning Technology Center at Vanderbilt University. This research on using technology to provide instruction and intervention is the basis of the FASTT algorithm." (Id. at ¶ 61(B)(b).) Until December 2017, this statement was also accompanied by a version of the Vanderbilt "V" logo as illustrated below:
(Image Omitted)
Id.
e. The website for the Math 180 program lists Hasselbring as Lead Author and states that he is a professor at Vanderbilt who used "his expertise" earned from twenty-five (25) years of research. (Id. at ¶ 61(C)(b).)

         Vanderbilt alleges that, for a significant period of time, Scholastic and HMH marketed Derivative or Ancillary Products by means of these and other advertisements and promotional materials. That is an alleged business use in an effort to sell products that Scholastic and HMH, not Vanderbilt, created. The Complaint further alleges that Scholastic and HMH not only used Vanderbilt trademarks, but did so in a manner that suggested the substantial involvement of Vanderbilt. This is most evident in the marketing of the FASTT Math program. (Doc. No. 85 at ¶ 61(B)(b).) Scholastic and HMH promoted that "FASTT Math is the result of over two decades of research conducted by Dr. Ted Hasselbring, Co-Director of the Learning Technology Center at Vanderbilt University. This research on using technology to provide instruction and intervention is the basis of the FASTT algorithm.” Id. (emphasis added). Until December 2017, this language was accompanied by an oversized Vanderbilt “V” logo as seen above, which served no informational purpose because the text already identified Hasselbring's association with Vanderbilt. (Id. at ¶ 61(B)(c).) Vanderbilt is entitled to the favorable inference that the purpose of the logo was to reinforce the idea that Vanderbilt was affiliated with, directly contributed to, or created the FASTT Math program.

         The Court finds that, on a robust reading of the Complaint and drawing all inferences in favor of the plaintiff, Vanderbilt has stated a Lanham Act trademark infringement claim. Direct references to twenty years of Vanderbilt research as the basis for specific Derivative or Ancillary Products, taken together with Hasselbring's well-known position at Vanderbilt and his Vanderbilt team, constitute plausible allegations that Defendants created a likelihood of confusion in the mind of consumers regarding whether Vanderbilt approved or produced the Derivative or Ancillary products.[8] The Court's conclusion is bolstered because Vanderbilt further alleges that Scholastic and HMH have “traded on Vanderbilt's extensive goodwill and reputation in an attempt to misrepresent to consumers that Vanderbilt sponsors or endorses Defendants' products, which is not true and is likely to cause confusion in the marketplace.” (Doc. No. 85 at ¶ 67.) Confusion giving rise to a claim of trademark infringement includes confusion as to “source, sponsorship, affiliation, connection, or identification.” Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 383 (2d Cir. 2005) (citation omitted). In other words, “[t]he public's belief that the mark's owner sponsored or otherwise approved the use of the trademark satisfies the confusion requirement.” Id. at 384 (citation omitted); see also id. (“‘Affiliation confusion' exists where use of a ‘unique and recognizable identifier' could ...


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