AuSable River Trading Post, LLC v. Dovetail Solutions, Inc., et al., No. 17-1283 (DONALD, Sutton, Thapar).
The city of Tawas, Michigan, hosts an annual winter festival called “Perchville,” and has had a registered trademark for “Perchville” since 2003. The corporation that manages the city’s Chamber of Commerce sued an employee of AuSable to obtain an injunction against his unauthorized use of the term “Perchville” on t-shirts. The court granted an injunction against him, as well as “on those persons in active concert or participation with them who receive actual notice of this order.” AuSable filed the instant suit, challenging the city’s trademark, and the city argued that the challenge was barred by res judicata due to the litigation involving the employee. The court agreed, and AuSable appealed.
The Sixth Circuit reversed, finding that the employer and employee were not in privity. The Court noted that, while an injunction against an employer necessarily applies to its employees, the inverse is not necessarily true. The Court also found that, in this case, the employee did not raise the issue of the validity of the city’s trademark, the very issue at the heart of the case at bar. The Court ultimately held, “While there may be circumstances when an employee’s interests are so aligned with his or her employer as to be in privity for the purposes of res judicata, there is no support for that here.”