The opinion of the court was delivered by: Judge James B. Zagel
MEMORANDUM OPINION AND ORDER
Plaintiff record company, Aguila, seeks injunctive relief against Defendant band members of Alacranes Musical and their managers based on claims of trademark and copyright infringement. Plaintiffs seek to enjoin Defendants from (1) appearing and performing as, using and/or displaying the name or band logo "Alacranes Musical" in any advertisement and/or promotion of any commercial activity, including but not limited to Internet, radio and/or television appearances and/or any live performance; (2) using or displaying the name or logo "Alacranes Musical" in interstate commerce in the trade dress of any sound recording of any musical composition of the Defendants, including dissemination on Internet web pages or sites; (3) performing and/or recording any musical composition or sound recording of which Plaintiff enjoys copyright protection, and (4) distributing any and all promotional materials, Internet publications or presence, and/or musical records/sound recording packages in trade dress marked with any such logo, depiction or mark and/or constituting a copyrighted work of Plaintiff. For the following reasons, Plaintiff's motion is granted in part and denied in part.
In 1995, Defendants Oscar Urbina, Sr. ("Oscar Sr.") and his son Oscar Jr., formed a Duranguense band, and they began playing local dances and parties using the name Alacranes Musical. Oscar Sr., made the arrangements on the bands' behalf of where and for what fee Alacranes Musical would appear. By 1998, some of the dances the band played at each month were organized and promoted by the Urbina's family friend, Pedro Avila. As part of these promotional activities, Avila organized radio interviews and programming features involving the band. In 1999 the band signed a three-record deal with Terrazas Records. From 1999 through 2001, while with Terrazas Records, the band started performing at larger venues, ranging in capacity from 1000 to 5000 attendees, opening for larger acts, and playing out of state. Jose Luis Terrazas, owner of Terrazas Records, promoted the band on local radio stations, as well as stations in Mexico, provided record stores and distributors with band posters, and arranged for distribution and sale of other band merchandise (including CDs), all in an effort to increase the group's exposure. During this time Oscar Sr. managed the band and booked the shows. The band completed the recording of three records with Terrazas, and in 2001, made a record with Dos Records, a company owned by Danny Ortiz. Avila was not involved with any of the arrangements between Alacranes Musical and the two labels.
By 2003, Avila had started his own record company, Aguila Records, and he signed Alacranes Musical to his label. On September 9, 2003, Oscars Sr. and Jr. each executed with Aguila Records an artist agreement, which explicitly stated that the signing band member is the "sole owner of all professional names" and grants Plaintiff a license to use the name. The agreement also specifies the relationship between the signing members and Aguila to be that of independent contractors. Shortly after Oscars Sr. and Jr. signed the artist agreement, Avila advised Oscar Sr. that all the other band members would need to enter into commitment contracts with Oscars Sr. and Jr., which they did on September 12, 2003. Paragraph 3 of the commitment contract states that both Oscars Sr. and Jr. are "full owners" of the "association named Alacranes Musical[.]" On September 24, 2003, Oscars Sr. and Jr. and band member Guillermo Ibarra signed an exclusive licensing agreement with Univision Records and Aguila Records.
Once the band signed with Aguila, they were on Avila's payroll. He booked the shows, negotiated the terms and fees, made the arrangements and took care of publicity. During the recording process, Avila made mixing suggestions, decided song order, paid for the recording session, and helped the band choose their wardrobe and final CD artwork photo. During the band's time with Aguila Records, several personnel changes were made. Oscar Sr. and Avila discussed and decided on the changes together. In certain instances, Oscar Jr. would audition potential band members, and an Aguila employee present at the audition would make suggestions as to who should be hired to fill the position.
On November 14, 2006, Plaintiff's trademark in the name "Alacranes Musical" was registered by the Untied States Patent & Trademark Office under registration #3,170,684. On April 29, 2008, Plaintiff's trademark in the stylized depiction of a scorpion with the name "Alacranes Musical" was registered by the Untied States Patent & Trademark Office under registration # 3,416,668. In 2006, Plaintiff recorded and released in interstate commerce the musical composition "Por Tu Amor" on the Alacranes Musical album, A Paso Firme. Plaintiff obtained and registered its trademark in this musical composition and sound recording on July 20, 2007, under registration # PA0001374345. In 2007, Plaintiff recorded and released in interstate commerce the musical composition "Por Amarte Asi" on the album, Ahora Y Siempre. Plaintiff obtained and registered its copyright in this sound recording on August 30, 2007 under registration # SR0000610056. In 2008, Plaintiff recorded and released in interstate commerce the musical composition "Dame Tu Amor" on the album, Tu Inspiracion. The copyright on this musical composition and sound recording has not yet been registered.
Aguila now seeks to enjoin Defendants from using the Alacranes Musical name and logo, as well as certain songs recorded under the Aguila label. Aguila makes three alternative arguments in support of his assertion that it owns the mark Alacranes Musical. First, it holds trademark registrations for both the name and logo. Second, Aguila claims that Avila's involvement with the group and its promotion, and his influence over the style and content of the group's act make his company owner of the name and mark. Third, Aguila contends that even if the Urbinas owned the rights to the name at the time they signed with Aguila, Oscar Sr. orally and/or through his conduct assigned the rights to Aguila Records in September 2003.
A court may issue a preliminary injunction enjoining copyright or trademark infringement if four conditions are met. First, the party seeking a preliminary injunction must pass the threshold tests of demonstrating a likelihood that they will ultimately succeed on the merits of the case and showing that irreparable harm will result if the injunction is denied. See Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 461 (7th Cir. 2000). To satisfy "likelihood of success," movant need demonstrate only a "greater than negligible chance of winning[.]" AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 804 (7th Cir. 2002). If the movant passes those two tests, the court must then consider any irreparable harm that will result to the defendant and whether the injunction is in the public interest. See Jack Guttman, Inc. v. Kopykake Enters., Inc., 302 F.3d 1352, 1356 (Fed. Cir. 2002); Eli Lilly, 233 F.3d at 461. Finally, the court should use a sliding scale approach to weigh all four of the factors against each other, so that the more likely that a plaintiff will succeed on the merits, the less the balance of harms needs to weigh in the plaintiff's favor. Eli Lilly, 233 F.3d at 461; see also Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001).
Likelihood of Success on the Merits
To prevail in a trademark infringement action, Plaintiff must establish: "(1) that it has a protectable trademark, and (2) a likelihood of confusion as to the origin of the Defendant's product." Ty, Inc. v. Jones Group, 237 F.3d 891, 897 (7th Cir. 2001) (quoting Int'l Kennel Club of Chicago, Inc. v. Mighty Star, Inc., 846 F.2d 1079, 1084 (7th Cir. 1988)). Defendants do not dispute that Alacranes Musical is a protectable trademark, nor do they dispute the question of the likelihood of confusion where there are two separate groups performing under the same name. They do, however, challenge Plaintiff's ownership over the mark. Because trademark registration creates a presumption of validity, it is Defendants' burden to rebut Plaintiff's claim of ownership. 15 U.S.C. § 115(a).
In support of its claim of ownership, Aguila first maintains that the mark in dispute is protected by a valid trademark registration. However, rights in a mark are acquired "through appropriation and use of the mark in commerce." Rick v. Buchansky, 609 F. Supp. 1522, 1531 (S.D.N.Y. 1985); 15 U.S.C. § 1065. The Urbinas maintain that they are senior users of the mark and the first to use it in commerce. Under 15 U.S.C. § 1065, a senior user'sright to use the mark is preserved notwithstanding registration by a junior user. See 2 J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION, § 16:18.50 (4th ed.) (West 2009). The Urbinases began performing as Alacranes Musical in 1995, and they had made four albums prior to signing with Aguila Records. During that time, they did radio promotions and sold ...