M2 Software, Inc. v. Madacy Entertainment

I. OVERVIEW

Plaintiff-Appellant M2 Software, Inc. (“M2 Software”) is the owner of M2, a federally registered trademark that is used in conjunction with business management and interactive media application goods and services for the film and music industry. Defendants-Appellees Madacy Entertainment, Handleman Company, and SFX Entertainment (collectively, “Mada-cy”) began using M2 Entertainment as a trademark for their new record label venture. Following failed licensing negotiations between the parties, M2 Software filed suit against Madacy in early 2000. A week after M2 Software filed its suit against Madacy, Madacy began phasing out the use of its M2 Entertainment mark.

M2 Software argued that Madacy’s use of the M2 Entertainment mark infringed M2 Software’s M2 trademark and would cause a likelihood of confusion. Specifically, M2 Software’s complaint alleged Mada-cy had committed: (1) federal trademark infringement, false designation and description of origin, and trademark dilution; (2) state trademark dilution, injury to business reputation, and unfair trade practices; and (3) common law trademark infringement, passing off, and unfair competition.

On January 8, 2002, the…