Professional Documents
Culture Documents
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DISTRICT OF ARIZONA
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Plaintiff,
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v.
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Defendants.
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For its Complaint, plaintiff Whirled Music Publishing, Inc. (Whirled) alleges as
follows:
Overview of Action
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1.
ownership of the copyrights to certain music that former employee John A. Costello
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composed for Whirled and/or contributed to Whirled in exchange for shares in the
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2.
Defendants John and Jennifer Costello, husband and wife, reside in Maricopa
County, Arizona. The Costellos were acting for the benefit of their marital community at
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4.
This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331 and
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6.
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Whirled primarily to place music in television shows, televised sporting events, and films.
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The company has grown to accumulate and own a large catalogue of music spanning over
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nine decades that is marketed under several genre-specific brands, including Wild Whirled
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Music, Whirled Music, Trailerville Music, Muzik Headz, Fervor Records, Vintage
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Masters, Fervor Records Vintage Masters, and Cue Sheet Music. The company represents
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7. Whirled licenses its music in its catalogue for a fee and the right to receive
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Publishers and songwriters register with a performance rights organizations (PROs) such
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as Broadcast Music, Inc. (BMI) to collect performance royalties on their behalf. PROs
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like BMI pay the music publishing company and songwriters based on the actual use of the
compositions. Once a composition is registered with the PRO, no changes can be made to
that registration without the consent of the music publishing company and all of the
songwriters.
8. Whirleds shareholders include John Costello and David Hilker, each holding
26.323% of the companys shares and both sitting on its board. Hilker is also the
9. Hilker and Costello are longtime musical collaborators and business partners.
They received their respective shares in Whirled in exchange for contributing the
copyrights and publishing interests to certain musical compositions and related sound
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recordings they jointly held through a pre-existing co-author agreement and several pre-
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existing partnership(s). Such contribution is described in the May 20, 2002 minutes of
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10.
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recordings contributed at Whirleds formation by Hilker and Costello through their several
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songwriters, including until recently Costello; and music acquired by copyright assignment
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Costello was among the musicians who started Whirled and a full-time staff
songwriter at the company until his employment was terminated on December 31, 2014.
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Whirled paid Costello an annual salary ($64,500 in 2014) plus granted him a
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writers share of performance royalties. With respect to the writers share, Costello and
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Hilker requested that it be split equally between them for the compositions that each solely
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wrote for Whirled by listing them both as co-writers on such compositions, just as they
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shared attribution and royalties through their pre-existing co-author agreement and their
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13.
Costello and Hilker have shared attribution and royalties in this manner for
nearly thirty years, through their partnership agreements. Whirled listed Costello and
Hilker as co-writers with BMI on all songs they wrote together or separately pursuant to
their request and pursuant to their pre-existing co-author agreement and their several pre-
existing partnerships.
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Whirleds payroll and tax records, as well as Costellos own tax records,
reflect his status as an employee. Whirled paid the employers share of FICA withholdings
for Costello. Whirled also provided Costello valuable employee benefits, including a cell
phone, musical equipment stipend, vacation pay, a health insurance stipend, and
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song duration, rhythms, beats, tempos, arrangements, song formats, and other aspects of
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industry, Whirled made the difficult decision in late 2015 to eliminate Costellos
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songwriter position at the company. This did not affect his roles as a shareholder and
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Costello asserted, for the first time, that he was an independent contractor rather than an
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employee. He did this as part of claiming the copyrights to the musical works he composed
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With respect to the compositions and sound recordings Costello and Hilker
contributed for their shares in Whirled through their several pre-existing partnerships,
assignment vesting copyright ownership for such compositions and sound recordings in
Whirled, thereby placing a cloud on Whirleds rights in those compositions and sound
recordings as well.
Costellos Misappropriation of Whirleds Trademarks
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20.
Whirled owns certain federally registered trademarks and service marks that
are nationally and internationally recognized in connection with its business, as follows
(the Registered Trademarks):
MARK
VINTAGE
MASTERS
Reg. No.
4,322,455
Registered
April 16,
2013
First Used
July 1, 2007
Whirled also owns certain common law trademarks that have been used
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2002.
b. The service mark, CUE SHEET MUSIC (the Cue Sheet Music Mark).
Whirled, through Trifecta, does business under the Cue Sheet Music Mark
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setting up his own competing music publishing business (the Competing Business),
Costello purchased the URL www.jc3publishing.com and other domain name URLs
(uniform resource locators) from the ICANN Register, GoDaddy.com as indicated in the
following table. In all registrations (including Costellos main webpage for his Competing
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organization affiliated with the URL. Costello improperly used Whirleds WWM
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The websites, at almost all of the purchased URLs/domains (as indicated in the following
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Date
URL Registered by Costello
Registered
WWM listed
as affiliated
entity?
Redirected to:
1/26/15
www.whirledmusicjc3.com
Yes
http://jc3publishing.com/
1/26/15
www.jc3publishing.com
Yes
http://jc3publishing.com/
1/26/15
www.fervorjc3.com
Yes
1/26/15
www.vintagemastersjc3.com
Yes
http://jc3publishing.com/
1/26/15
www.cuesheetmusic.net
Yes
http://jc3publishing.com/
1/26/15
www.qsheetrecords.com
Yes
http://jc3publishing.com/
1/26/15
www.cuesheetrecords.com
Yes
http://jc3publishing.com/
1/26/15
www.qsheetmusic.org
Yes
http://jc3publishing.com/
1/26/15
www.whirledjohncostello.com
Yes
http://jc3publishing.com/
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1/26/15
www.qsheetmusic.net
Yes
1/26/15
www.cuesheetmusic.com
Yes
1/26/15
www.qsheetmusic.com
Yes
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http://jc3publishing.com/
http://jc3publishing.com/
Music Mark, WWM Trademark, and Whirleds name in connection with his Competing
Business.
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also contains images of film and TV posters that are intended to deceive and imply that
Costello, rather than Whirled, placed and licensed the subject compositions and recordings
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in such films and TV programs. Costello was a staff composer of Whirled and played no
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role in such licenses and placements. Such implication is made by Costello to deceive the
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users of film and TV music, including Whirleds clients and licensees, into thinking that it
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was Costello and not Whirled who was responsible for obtaining said music licenses and
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placements.
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Plaintiffs Claims
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and Costello concerning Whirleds right to license, publish, and otherwise exploit the
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musical works that Costello composed while working for Whirled, as well as the musical
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of the Amended Declaratory Judgment Order (Doc. 32) entered pursuant to the stipulation
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of the parties. The only musical works composed from January 1, 2004 through December
31, 2014 that remain at issue in terms of copyright ownership are This Woman, Time
Heals, and Celebrity. With respect to pre-2004 musical works, the copyright ownership
dispute focuses on copyright ownership of the musical works that Costello contributed to
Whirled for his shares and/or composed for Whirled after its formation through December
31, 2003.
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copyrights to the musical works that Costello composed for Whirled after its formation
through December 31, 2003 , as well as This Woman, Time Heals, and Celebrity, based on:
a. The musical works being works made for hire under an employer-
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b. Costello transferring and assigning all right, title, and interest in all musical
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works composed for Whirled in the future in the May 20, 2002 minutes of
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Whirleds first board meeting signed by Costello (see Exhibit 1); and/or
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writing and signed by Costello and/or his duly authorized agents, including
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but not limited to: (i) Production Agreement dated June 13, 2007 but
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another third party author and Whirled; (ii) Production Agreement dated
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(iii) Production Agreement dated October 21, 2013 by and between Costello,
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Hilker, and two other third-party authors and Trifecta; (iv) Production
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Agreement dated May 20, 2010 by and between Costello, Hilker, and several
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third-party author and Trifecta; and (vi) Production Agreement dated October
26, 2011 by and between Costello, Hilker, and two other third-party authors
Production Agreements.
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subsection (c) above also include the written and signed partnership agreements between
compositions and related sound recordings to the partnerships that in turn transferred them
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ultimately to Whirled. Such assignments are reflected by the custom and course of dealing
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With respect the musical works that Costello and Hilker agreed to contribute
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through their partnerships for their shares, Whirled is entitled to a judicial declaration
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against Costello that it is the sole owner of all of these compositions (whether composed by
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Costello, Hilker, or both of them) and related musical sound recordings because the May
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20, 2002 shareholder minutes signed by Costello and Hilker qualify as a note,
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In the event the Court determines that Whirled is not the sole owner of the
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musical works that Costello promised to contribute to Whirled in exchange for his shares,
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including the musical works he composed for Whirled after its formation through
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December 31, 2003, there is an actual, substantial and judiciable controversy regarding
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If the May 20, 2002 shareholder minutes signed by Costello do not qualify as
there has been a failure of consideration and Whirled is entitled to a declaration that
Costello does not own any shares in Whirled because he did not pay any consideration for
the shares.
RESTITUTION
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With respect to the musical works that Costello composed for Whirled after
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its formation through December 31, 2003, in the event the Court determines that Costello
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was an independent contractor rather than employee, then Whirled is entitled to restitution
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of the payments it made to Costello premised on Whirled receiving the copyrights to such
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employee benefits.
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benefits.
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restitution to Whirled.
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BREACH OF CONTRACT
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In the event the Court determines that Whirled is not the sole owner of the
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musical works that Costello promised to contribute to Whirled in exchange for his shares,
then Costello breached his agreement reflected in the May 20, 2002 shareholder minutes to
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With respect to the musical works that Costello composed for Whirled after
its formation through December 31, 2003, in the event the Court determines that Whirled is
not the sole owner of such musical works, then Costello breached his verbal employment
agreement with Whirled that the company would receive title to such compositions in
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In the event the Court determines that Whirled is not the sole owner of the
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musical works that are the subject of the Production Agreements, then Costello breached
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Whirleds rights in and to such Registered Trademarks, prior to adopting and using
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U.S.C. 1114(1)
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This claim arises out of contract for purposes of an attorneys fees award
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Costello purchased the URLs as listed in the table in paragraph 23 above and
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lists WWM as the name of organization affiliated with the name. The websites at these
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Trademarks in the purchased URLs to confuse and deceive customers that their goods were
associated with, approved by, or sponsored by Whirled and a part of Whirleds business.
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Business are directly competitive with Whirleds business provided under its Registered
Trademarks.
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Upon information and belief, such deception and confusion was intentional
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and designed by Costello to trade off of and capitalize on Whirleds goodwill and
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this Court will continue to cause, immediate and irreparable injury to Whirleds property
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and Business.
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rendering the present case as an exceptional case as that term is employed in 15 U.S.C.
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this Court will continue to cause, immediate and irreparable injury to Whirleds property
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and business.
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Whirled has used its Cue Sheet Music Mark in worldwide commerce in
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connection with Whirleds business since as early as 2007. Publisher trade names are
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exclusive and synonymous with identifying the source of a music catalogue in the music
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connection with Whirleds business since as early as 2002. Publisher trade names are
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exclusive and synonymous with identifying the source of a music catalogue in the music
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affiliated with those domain names. With the exception of www.cuesheetmusic.com and
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Business.
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ownership of and rights in its Cue Sheet Music Mark and WWM Trademark prior to
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Costellos infringing use of Whirleds Cue Sheet Music Mark and Whirleds WWM
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Trademark.
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Costello adopted and used in commerce Whirleds Cue Sheet Music Mark
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and Whirleds WWM Trademark in his Competing Business, with full knowledge of
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Whirleds superior rights, and with full knowledge that his infringing use of Whirleds Cue
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Sheet Music Mark and Whirleds WWM Trademark was intended to cause confusion,
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mistake and/or deception. Further, Costello wrongfully listed WWM and used Whirleds
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Costello offers his goods and services in his Competing Business under
Whirleds Cue Sheet Music Mark and Whirleds WWM Trademark in the same channels
of trade as those in which Whirleds legitimate goods and services are offered.
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Costellos infringing use of Whirleds Cue Sheet Music Mark and Whirleds
laws.
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Costellos actions were taken with the intent to trade upon the valuable
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goodwill established by Whirled in its Cue Sheet Music Mark and Whirleds WWM
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Trademark.
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damages, as well as the continuing loss of the goodwill and reputation established by
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Whirled in its Cue Sheet Music Mark and Whirleds WWM Trademark. This continuing
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loss of goodwill cannot be properly calculated and thus constitutes irreparable harm and an
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injury for which Whirled has no adequate remedy at law. Whirled will continue to suffer
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U.S.C. 1125(A)
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standing and hard-earned goodwill in its Whirleds Registered Trademarks, its Cue Sheet
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Music Mark, its WWM Trademark, and the reputation established by Whirled in
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connection with its products and services, as well as in order to confuse consumers as to
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the origin and sponsorship of Costellos services in his Competing Business and to pass off
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Costellos actions were taken with the intent to trade upon the valuable
goodwill established by Whirled in its Registered Trademarks, Cue Sheet Music Mark, and
WWM Trademark.
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attempted to change the records of BMI to reflect that Costello was the sole author of the
musical compositions, rather than sharing authorship of the compositions with Hilker,
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partnerships.
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Based on information and belief, BMI did not allow Costello to engage in
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such conduct and refused to allow Costello to undertake such false and fraudulent claim
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www.jc3publishing.com, contains images of film and TV posters that imply that Costello
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and not Whirled placed and licensed the co-authored compositions and co-authored
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recordings in such films when, in fact, Costello had nothing to do with such licenses and
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placements. Such implication is made by Costello to deceive the users of film and TV
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music into thinking Costello and not Whirled was responsible for obtaining said film and
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Further, Costello has used the services of artists and songwriters previously
Costellos unauthorized and tortious conduct has also deprived and will
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continue to deprive Whirled of the ability to control the consumer perception of its
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products and services offered under Whirleds Registered Trademarks, Cue Sheet Music
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Mark, and WWM Trademark, placing the valuable reputation and goodwill of Whirled in
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commercial damage, including without limitation the continuing loss of the goodwill and
reputation established by Whirled in its Registered Trademarks, Cue Sheet Music Mark,
and WWM Trademark. This continuing loss cannot be properly calculated and thus
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constitutes irreparable harm and an injury for which Whirled has no adequate remedy at
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law. Whirled will continue to suffer irreparable harm unless this Court enjoins Costellos
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conduct.
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infringement of Whirleds Registered Trademarks, Cue Sheet Music Mark, and WWM
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Trademark.
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Sheet Music Mark, and WWM Trademark deliberately and with the intention of
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business and other monetary losses that Whirled has suffered and will continue to suffer in
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Registered Trademarks, Cue Sheet Music Mark, and WWM Trademark. Alternatively,
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that Costello has derived and may continue to derive as a result of his unlawful
misappropriation and infringement of the Registered Trademarks, Cue Sheet Music Mark,
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malicious, and intended to injure Whirled. Therefore, Whirled is also entitled to recover
exemplary damages from Costello to punish and deter him and others similarly situated
from engaging in similar wrongful conduct in the future. Costello should also be, upon
final hearing, permanently enjoined from using the Registered Trademarks, Cue Sheet
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Sheet Music Mark, WWM Trademark, and other actions as specified herein constitutes acts
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of unfair competition through Costellos deceptive, misleading and false appropriation for
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his own use of the name, brand, trademark, reputation, and goodwill of Whirleds
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Registered Trademarks, Cue Sheet Music Mark, and WWM Trademark in violation of
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A.R.S. 44-1552.
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this Court will continue to cause, immediate and irreparable injury to Whirleds property
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and business.
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Under Fed. R. Civ. P. 38(a), Whirled requests a trial by jury of all issues so
triable.
A.
B.
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C.
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participation with them who receive actual notice of the order by personal
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(i)
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(ii)
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with Whirled;
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(iii)
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WWM Trademark;
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(iv)
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Whirled; and
(v)
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D.
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E.
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names that contain or consist of Whirleds marks, including but not limited to
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F.
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Sheet Music Mark, or WWM Trademark, in any manner, or any mark that is
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G.
Ordering Costello to take all steps necessary to cancel any state or local
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that do not include Whirleds name or marks, and to remove any references
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to any business registrations, including corporate names and dba filings, that
individuals and entities with whom they engaged in any transaction relating
to or arising from the use of the Whirleds Registered Trademarks, Cue Sheet
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The (a) forfeiture of Defendant Costellos stock and tender back to Whirled,
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K.
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L.
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M.
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N.
For such other and further relief as may be needed to provide Whirled with a
complete remedy.
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Christopher A. LaVoy
Seventh Floor Camelback Esplanade II
2525 East Camelback Road
Phoenix, Arizona 85016-4237
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Connie J. Mableson
CONNIE J. MABLESON, PLLC
1938 East Osborn Road
Phoenix, Arizona 85016
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CERTIFICATE OF SERVICE
I hereby certify that on April 21, 2016, I electronically transmitted the attached
document to the Clerks Office using the CM/ECF System for filing and transmittal of a
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Exhibit 1
WAIVEROFNOTICD
The undersigned, constituting all of tle Directors of the Board for WHIRLEI)
an Arizona corporation, do hereby waive call and notice
of call of tlre time, place, and purpose of the SpEcial Meeting of tlie Board of Directors of
slid corporation,_and do hereby consent that stid meeting be held on
at
the Corporate offrce.
MUSIC-PIIBLISHING, INC.,
E?-td-
This meetiqg will be for. the purpose oftransacting such business as may be properly
brought before the meeting.
WAIVER OF NOTICE
We, the undersigned shareholders, constituting all ofthe shareholders of
an Arizona corporation, do hereby waive
call and notice of call of the time, place, and purpose of the Initial Meeting of the
Shareholders ofsaid corporation, and do hereby consent that said meeting be held on the
following date at the corporate office for the purposes of transacting such business as may
be properly brought before the meeting.
ELAN FREYDINSON
GARY RO ERO
JOSHU FIORITO SHIMKIN
RACHEL WENSTEIN
&
the Directors named in the Articles of Incorporation waived call and notice
of call of the meeting in writing, a copy of which is filed with these Minutes, and the
following Directors were present, to wit.
All of
JEFFREY FREUNDLICH
DAVID HILKER
JOHN COSTELLO
DAVID HILKER
III
JOHN COSTELLO
III
with the
The chairman stated that the Articles of Incorporation had been filed
in accordance
Arizona Corporation Commission, would be duly and properly published
qualified
to
transact
with A.R.S.3ection 10-055, and that the corporation was now
business.
Themeetingthenproceededtotheelectionofoffrcersandthefollowingofficers
were unanimously elected:
DAVID
HILKER
JEFFREY
FREUNDLICH
JOHN COSTELLO
III
PTCSidCNt
until his/her successor shall have been duly elected and qualified'
RESOLVED, that the form of Bylaws which has been submitted to the meeting
be, and it hereby is, approved and adopted as the Bylaws ofthe corporation, and that the
Secretary be and hereby is instructed to insert the same in the corporate minute book.
The Chairman then presented a proposed form of certificate for the shares of stock
of the corporation. On motion duly made and seconded, the following resolution was
unanimously adopted:
RESOLVED, that the form of certificate representing shares ofthe capital stock of
the corporation which has been submitted to this meeting be, and the same is in all
respects, approved and adopted as the form of certificate to represent the capital stock of
this corporation.
The matter of a depository and corporate accounts was considered and thereupon,
on motion duly made and seconded, the following resolutions were unanimously adopted:
RESOL V '
be opened at
%T
e co Or On
,1
The Chairman then stated that the following individuals had offered to purchase
the following number of shares of this corporation's common stock at no-par value per
share:
DAVID HILKER
JEFFREY FREUNDLICH
JOIIN COSTELLO Hl
DANIEL GABAY
ELAN FREYDENSON
GARY ROMERO
RACHEL WEINSTEIN
TOTAL ISSUED
2,500 0 SIIARES
2,500 0 SHARES
189 0 SHARES
377 5 SHARES
377 5 SHARES
491 0 SHARES
10,000 SIIARES
WHEREAS,itisfurtherdeemedadvisablebytheBoardofDirectorsthatthe
offer, sale, and issuance of such shares be effectuated in such a manner that qualified
stockholders may receive the benefits of the Intemal Revenue code of 1954, Section
1244; and
WHEREAS,theproposedissueeshaveofferedtosubscribeforandpurchasea
total of10,000 shares of the common capital stock ofthe corporation for the
consideration as shown in Exhibit B attached hereto; and
WHEREAS, it is in the best interests of the corporation that such subscription for
its common capital stock should be accepted;
RESOLVED, that the entire dollar amount of the issued and outstanding common
stock ofthe corporation be allocated to stated capital.
The next discussion entered into by the Board involved the Medical
Reimbursement Plan contained in Exhibit c. wherefore, the Board decided that a
reimbursement plan would be desirable to the Corporation. Thereupon, the following
resolution was duly proposed and unanimously adopted:
The Board then considered a general resolution authorizing the President and
trust
Secretary to execute contracts, escrow agreements, deeds, deeds oftrust, mortgages,
ug.""-"ntr, and other forms of instruments and documents for and on behalfofthe
cirporation in order to carry out the business and business purposes ofthe corporation.
upon motion duly made and seconded, the following resolutions were unanimously
adopted:
RESOLVED, that the duly elected President and Secretary of this corporation,
including both those presently holding office and those elected in the future, are
authorized and empowered in the name of and on behalfofthis corporation to enter into
all contracts and commitments and to do any and all acts necessary for the
accomplishment of the puposes of this corporation, including the borrowing of money in
any :unount, with or without secudty therefor, and to execute any and all documents
deemed by them necessary for the conduct ofsuch business, including by way of
illustration, but not limited to, notes, deeds, mortgages, deeds of trust, bills ofsale,
conditional sales contracts, security agreements, financing statements, purchase
agreements, assignments, leases, and, in general, all instruments or documents whether
similar or dissimilar to those named by way if illustration, except that the Secretary shall
not execute any such instrument or documents except in attestation ofthe authority ofthe
President to execute the said instrument, to purchase office supplies, fumiture, and
equipment necessary to operate and maintain the business ofthe corporation, to procure
all forms of insurance as may become necessary for the protection of the corporation and
the conduct of its business, to procure all licenses that may be needed for the conduct of
the corporations business and to engage the services ofall attomeys and accountants, and
generally to conduct the business ofthe corporation as the General Manager thereof.
'?mcbtt
Secretary
EXIIIBIT A
the sum of the aggregate amount of money and other property received by the
corporation for stock, as a contribution to capital, and as paid-in surplus, does not exceed
1,000,000.00; and
whereas, there is not now outstanding any prior offering ofthe corporation to sell
or issue any of its stock,
Now therefore, it is hereby resolved that the proper officers ofthe corporation are
hereby authorized and directed to offer, payable in cash or other property (other than
stock or securities) as from time to time they deem to be in the best interests ofthe
Corporation, subject to the following:
1.
The plan as herein set forth upon its adoption by the Board of Directors
the Corporation shall become effective.
2.
of
of
3.
The corporation shall offer and issue such shares of common stock from
the date hereof until sold, or to the date when the corporation shall make a subsequent
offering of any stock, whichever shall occur sooner.
4.
During such period as set forth in paragraph 3, the corporation shall offer
and issue only such common stock.
5.
6.
Such common stock shall be issued only for money and other property
7.
Such other action shall be taken by the corporations as such quali$ the
stock offered and issued under this plan as "Section 1244 Stock", and as such term is
defined in the Intemal Revenue Code and the Regulations issued thereunder.
This plan shall be interpreted and construed in such a maru{er as will enable it to
qualifu as a plan meeting the requirements ofSection
quatify
of Section 1244 of thc Ir
Intemal Revenue Code
of 1954, as amended, and as wr.l.l
will enable the share of crymor{
cgtpofl slock
slock ilsued thereunder to
qualifu as "Section 1244 Stock", as define;\n said S{tibn. , ,
'"", ,
i-l
DAVID
Of
day
EXIIIBIT B
USIC
OF WIIIRLED
NO PAR
VALUE STOCK
PUBLISHING,INC.
ght,title,
CONTRIBUT10NS OF CAS
DANIEL GABAY
ELAN FREYDENSON
GARY ROMER0
RACHEL WEINSTEIN
S 5,000
19,000
10,000
3,320
10,000
13,000
DAMD HILKER
JOHN COSTELLO HI
JEFF FREUNDLICH
extensions.
,including