The famous Coachella Music Festival is held every April in Indio, California. This year Beyoncé, Radiohead, Lorde and several DJs (including DJ Snyder, DJ Kahleel, DJ Shadow) performed.
The Coachella Music Festival, LLC and Goldenvoice, LLC (collectively “Coachella Parties”) sued Urban Outfitters, Inc. (“Urban Outfitters”) and its subsidiary Free People of PA LLC (“Free People”) for trademark infringement, unfair competition, dilution, and violation of various state law claims based on the clothiers Urban Outfitters’ and Free People’s use of COACHELLA marks. One of the allegations at issue was Urban Outfitters and/or Free People the use of one or more of the COACHELLA marks as a “keyword” to trigger the clothiers’ online advertising.
The Coachella Music Festival LLC owns eight (8) registrations for COACHELLA marks (including: COACHELLA alone; COACHELLA VALLEY MUSIC AND ARTS FESTIVAL and CHELA). The Coachella Parties sell their own apparel with the COACHELLA marks and also licenses the COACHELLA marks to the popular inexpensive fashion store H&M Hennes & Mauritz AB.
The Coachella Parties allege that Urban Outfitters and Free People should both be held liable under an alter ego theory. Urban Outfitters and Free People have the same: (1) principal places of business; (2) headquarters; (3) consolidated financial reports discuss pooling finances; (4) legal department; (5) IT department; (6) construction department; (7) sourcing department; (8) production department; and (9) in-house attorney reporting to SEC. Moreover, all of Urban Outfitters’ subsidiaries are grouped together in SEC filings and are referred to as “brands” of Urban Outfitters rather than separate companies.
Parent company Urban Outfitters moved to be dismissed from the lawsuit. Urban Outfitters contends that the Coachella Parties fail to allege facts that show Urban Outfitters exerts control over every facet of Free People’s business or that Free People is a sham company that exists only to protect Urban Outfitters from liability. In other words, Urban Outfitters is not the alter ego of Free People.
Will Urban Outfitters be dismissed from the lawsuit? Will its subsidiary Free People be held liable for trademark infringement, unfair competition or dilution?