Opinion
CIVIL ACTION NO. 3:99-CV-0601-P
November 13, 2001
MEMORANDUM OPINION AND ORDER
Now before the Court are:
1. Plaintiff's Motion to Enforce Consent Judgment, Settlement Agreement, and License; Motion for Preliminary Injunction and for Permanent Injunction; and Brief in Support, filed August 17, 2001;
2. Defendant's Response to Plaintiff's Motion to Enforce Consent Judgment, Settlement Agreement, and License; and Defendant's Response to Plaintiff's Motion for Preliminary Injunction and for Permanent Injunction; and Defendant's Request for Declaratory Relief; and Brief in Support, filed September 7, 2001;
3. Plaintiff's Reply Brief, filed September 21, 2001;
4. Plaintiff's Response to Defendant's Motion for Declaratory Judgment and Brief in Support, filed September 27, 2001;
5. Defendant's Reply in Support of Defendant's Motion for Declaratory Relief, filed October 15, 2001.
After thorough review of the evidence, the pleadings, the parties' briefs, and the applicable law, for the reasons set forth below, the Court is of the opinion that Plaintiff's Motion for Preliminary and Permanent Injunction should be GRANTED and Defendant's Request for Declaratory Relief should be DENIED.
BACKGROUND
Plaintiffs Mountain Math, Darla M. Blodgett, and Janet D. McLean (hereinafter "Mountain Math") and Defendant Summit Educational Enterprises, Inc. (hereinafter "Summit"), now Lone Star Learning (hereinafter "Lone Star"), are in the business of distributing educational teaching tools and review kits, including products utilizing bulletin board mathematics. In 1999, Mountain Math filed suit against Summit asserting, among other things, claims for copyright, trademark and trade dress infringement. Summit denied any infringement and also asserted certain counterclaims against Mountain Math. The parties thereafter reached a settlement in July 2000, embodied in a separate Settlement Agreement, which this Court fully incorporated into its Consent Judgment and Decree with Findings of Fact and Conclusions of Law dated August 10, 2000 (hereinafter "Consent Judgment").
In the Consent Judgment, the parties agreed that Summit's products were not intentional copies, but that Summit had access to Mountain Math's products, that there were substantial similarities between the parties' competing products, and that a likelihood of confusion existed.
See Consent J. at 2-3. Thus, the Settlement Agreement provided, in pertinent part:
"1. Summit agrees to cease use of the Summit name, mark and logo on the effective date of this Agreement, provided Summit shall have a period of six months from the effective date to deplete existing inventories of its product ("TAAS Target Practice") containing the Summit name, mark and/or logo, develop new marketing and advertising materials without the Summit mark and logo, and otherwise conform to the terms of this Agreement. Summit shall adopt a new name, mark and/or logo that will not result in potential confusion with Mountain Math's name, mark and logo.
2. Summit may continue to advertise, market, and sell its product ("TAAS Target Practice") in the State of Texas utilizing the current product format. TAAS Target Practice is specifically tailored for use in connection with standardized educational testing administered in the State of Texas, and Summit agrees that it will not advertise or market for use outside of Texas the TAAS Target Practice in its current format or any colorable imitation of the Mountain Math educational review product."See App. Pls.' Mot. at 6-7 (Settlement Agreement at 2-3) (emphasis added). In return, Mountain Math agreed to grant Summit a License to market "TAAS Target Practice" educational math review kits for use in the State of Texas, subject to the conditions of Paragraph 2 above. See App. Pls.' Mot. at 6 (Settlement Agreement at 3). In exchange for this License, Summit further agreed it would not market the product or colorable imitations of the product for use outside of Texas and that it would maintain the quality of the product at a level at least equal to the then present level of quality. See App. Def.'s Mot at 15 (Licence at 1). Summit also agreed that any company in which Summit or its officers maintained an interest would also abide by Summit's promise not to market the product for use outside of the State of Texas. See Id.
Thereafter, Summit changed its name to Lone Star Learning in order to comply with the parties' Settlement Agreement. See App. Def.'s Resp. at 21 (Upton Aff. at 1); see also App. Pls.' Mot. at 21 (Blodgett Aff. at 1). Defendant also removed the Summit logo from its advertising and product packaging, replacing it with the Lone Star logo (consisting of a target with the outline of the State of Texas in the center). See App. Def.'s Resp. at 25 (Upton Aff. at 5).
Plaintiffs now move this Court to enforce its judgment and the incorporated settlement and licensing agreements between the parties, believing that Lone Star has breached the Settlement Agreement by marketing, advertising, and selling the TAAS Target Practice product outside the State of Texas. See Pls.' Mot. at 5 In addition, Mountain Math accuses Defendant of failing to "cease use of the Summit name," as was promised, due to several references to "Summit Educational Enterprises, Inc." it found on Lone Star's current website. Further, Plaintiffs charge that Lone Star's use of website violates the Settlement Agreement because it markets TAAS Target Practice for use outside Texas by being accessible from anywhere in the country or the world and because there is no disclaimer on the website stating that the product is not for sale or use outside of Texas. See Id. at 7.
More specifically, Mountain Math accuses Lone Star/Summit of:
(1) marketing TAAS Target Practice outside the State of Texas when it sold a kit to Alice Lemire in the State of New Jersey in late October or early November 2000;
(2) marketing TAAS Target Practice outside the State of Texas when it sold a kit to William Wortmann in the State of Oklahoma on or about January 30, 2001;
(3) marketing TAAS Target Practice outside the State of Texas when it sold a kit to Velma Jean Verley in the State of Arizona on or about February 27, 2001 or March 12, 2001;
(4) shipping advertising and other marketing materials (including order forms for, and sheets containing product descriptions of TAAS Target Practice kits) to Ms. Verley and Mr. Wortmann; and
(5) selling eight TAAS Target Practice kits to Linda Grant, shipped to the State of Oklahoma, on or about November 2000.See Pls.' Mot. at 5-6; see also Pls.'s Reply Br. at 8.
Examples cited by Mountain Math in its brief include:
(1) The first sentence of the "www.lonestarlearning.com" homepage states that Lone Star Learning was "formerly Summit Educational Enterprises, Inc.";
(2) As recently as June 12, 2001, the home page closed with a paragraph informing the reader that "At Summit Educational Enterprises, Inc. we are committed to helping teachers effectively meet the demands of the TAAS";
(3) The home page also featured a "header" which read: "Summit Educational Enterprises, Inc. — Creators of TAAS Target Practice, a K-12 Bulletin Board";
(4) The "Summit" header also appeared on other pages on the site at a later date; and
(5) Offering update/corrections for TAAS Target Practice for teachers to print off the website and use in their classrooms, all featuring the Summit name on the product: "(c) Summit Educational Enterprises, Inc. 2000."See Pls.'Mot at 6-7.
Meanwhile, Lone Star seeks a declaration from this Court that it is not in violation of either the Settlement Agreement or the Consent Judgment mainly because:
(1) It is not actively advertising or marketing the product TAAS Target Practice for use outside the State of Texas;
(2) TAAS Target Practice, as its name indicates, is intended only for use with standardized educational testing program of the same name (TAAS) used in the State of Texas;
(3) Lone Star's advertisements do not and are not intended to associate the former entity, Summit Educational Enterprises, Inc., with Lone Star's product. And any use of the "Summit name" on the website is to due to oversight or inadvertence;
(4) Lone Star's use of a website to advertise does not violate the Settlement Agreement, even though it may result in occasional purchases of the product outside the State of Texas; and
(5) Nothing in the Settlement Agreement prohibited the sales of the product to locations outside of Texas.See Def.'s Resp. at 1-2. Each of these arguments will be considered in turn.
Lone Star, in a letter to the Court dated since October 5, 2001, stated that it has temporarily shut down its website to make sure that all inadvertent references to "Summit Educational Enterprises" or "Summit" are removed.
DISCUSSION
I. Jurisdiction
A district court may maintain ancillary jurisdiction to enforce a dismissal-producing settlement agreement if the parties' obligations to comply with the terms of the settlement agreement have been made part of the order of dismissal — either by separate provision "retaining jurisdiction" or by incorporating the terms of the settlement agreement in the order. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380-381 (1994): see also Bell v. Schexnayder, 36 F.3d 447, 450 n. 2 (5th Cir. 1994). Here, the Court's Consent Judgment of August 10, 2000 did both. See Consent J. at 3. More specifically, the Consent Judgment in this case fully attached and incorporated the parties' Settlement Agreement, which in turn stipulated that the Court retained proper jurisdiction and venue to enforce any action regarding the terms of the settlement. See Id. at 3; see also App. Pls.' Mot. at 7 (Settlement Agreement at 3). Further, the Consent Judgment provided for this Court's "continuing jurisdiction over the parties and the subject matter of the dispute, should action be required by any party to enforce this Consent Judgment or the Settlement Agreement." See Consent J. at 3. Therefore, the Court finds that its exercise of jurisdiction is proper in these proceedings.
II. Motion to Enforce Consent Judgment
Plaintiffs here allege that Lone Star/Summit breached and has continued to breach its contracts with Mountain Math, embodied in the parties' Settlement Agreement and License, by advertising and marketing TAAS Target Practice for use outside the State of Texas and by Lone Star's continued use of the Summit name in its materials, including on its website. See Pls.' Mot. at 9-10. Having concluded that this Court is the proper forum for this action, the Court now proceeds to construe its Consent Judgment, which incorporates the settlement and licensing agreements here.
A. Claim of Breach of Contract by Defendant's "Marketing, Advertising, and Selling" of TAAS Target Practice Outside the State of Texas
Whereas consent decrees are normally compromises, in which the parties each give up something they might have won had they proceeded to litigation in exchange for the saving of cost and the elimination of risk, the Supreme Court has found it to be inappropriate to search for the "purpose" of a consent decree and to construe it on such a basis. See United States v. Armour Co., 402 U.S. 673, 681 (1971). Thus, having many of the attributes of ordinary contracts, albeit one to which a court has given its formal approval, the Supreme Court has held that its scope must be construed according to the rules of ordinary contract construction. See United States v. ITT Continental Baking Co., 420 U.S. 223, 236 (1975); see also Browning v. Navarro, 743 F.2d 1069, 1080 (5th Cir. 1984). That is, the scope of a consent decree must be discerned from within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it. See Armour, 402 U.S. at 682; see also Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561, 573(1984).
Taking this approach, it is undisputed here that Texas contract law shall govern the construction and enforcement of the parties' Settlement Agreement and License at issue in this case. See App. Pls.' Resp. at 8 (Settlement Agreement at 4) ("[the] Agreement, together with the rights and obligations of the parties hereunder shall be construed and enforced in accordance with the laws of the State of Texas"); see also North Shore Lab. Corp. v. Cohen, 721 F.2d 514, 519 (5th Cir. 1983), alt. holding rev'd by Pebble Beach Co. v Tour 18 Ltd., 155 F.3d 526, 549 n. 17 (5th Cir. 1998) (applying Texas law to construe ambiguity in consent judgment); Matter of Fender, 12 F.3d 480, 485 (5th Cir. 1994) (construing a settlement agreement). Thus, the first question for the Court to determine in this action involving contract interpretation is whether the disputed contract terms are ambiguous. See Brooks, Tarlton, Gilbert, Douglas and Kressler v, U.S. Fire Ins. Co., 832 F.2d 1358, 1364 (5th Cir. 1987). In Texas, this determination is a question of law, decided by looking at the contract as a whole, in light of the circumstances present when the contract was entered into. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).
The test for determining whether a contract is ambiguous is whether, after applying established rules of construction, the contract is reasonably susceptible to more than one meaning. Richland Plantation Co. v. Justiss-Mears Oil Co., 671 F.2d 154, 156 (5th Cir. 1982) (citing Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951)); see also Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex. 1987). If the written instrument, however, is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law. See Coker, 650 S.W.2d at 393. The contract will not be found ambiguous merely because the parties have a disagreement as to its correct interpretation. See Reo Indus., Inc. v. Natural Gas Pipeline Co. of Am., 932 F.2d 447, 453 (5th Cir. 1991). Additionally, a contract must be given its plain grammatical meaning unless that meaning would defeat the intent of the parties, interpreted in light of the circumstances present at the time the contract was executed. See Id., 932 F.2d at 453-54.
Therefore, in applying the principles of contract construction under Texas law, the Court's primary concern is to ascertain the true intentions of the parties as expressed in the instrument, considering the entire writing, and giving effect to all the provisions of the contract so that none will be rendered meaningless. See Coker, 650 S.W.2d at 393 (emphasis in original). The disputed language in the parties' Settlement Agreement here, regarding the advertising and marketing of TAAS Target Practice, centers around the provision which states:
"2. Summit may continue to advertise, market, and sell its product ("TAAS Target Practice") in the State of Texas utilizing the current product format. TAAS Target Practice is specifically tailored for use in connection with standardized educational testing administered in the State of Texas, and Summit agrees that it will not advertise or market for use outside of Texas the TAAS Target Practice in its current format or any colorable imitation of the Mountain Math educational review product."SeeApp. Pls.' Mot. at 6-7 (Settlement Agreement at 2-3) (emphasis added). Likewise, the key stipulation at issue in the License agreement executed between Mountain Math and Summit provides that:
"In exchange for this [License], Summit Agrees and Covenants that it will not market the product or colorable imitations of the product for use outside of the State of Texas"See App. Def.'s Mot at 15 (Licence at 1) (emphasis added). In construing these terms, the Court shall presume that they have their plain, ordinary, and generally accepted meanings, unless the instruments themselves show the terms were used in a technical or different sense. See Garner v. Corpus Christi Nat'l Bank, 944 S.W.2d 469, 475 (Tex.App. — Corpus Christi 1997, writ denied). Here, since the terms were not defined within the contracts, the Court looks to the plain meaning of the disputed words.
The plain grammatical meaning of the word "advertise" means "to make something known to . . . or call public attention to, esp[ecially] by emphasizing desirable qualities so as to arouse a desire to buy or patronize." See Merriam-Webster's Collegiate Dictionary 18 (10th ed. 1999). Meanwhile, the word "market" denotes "to expose for sale in a market . . . or to sell." See Id. at 712 (emphasis added). Applying these definitions into the plain language of the settlement and licensing agreements, Mountain Math argues it is clear that Lone Star/Summit has breached the parties' contracts when they (1) sold TAAS Target practice to buyers outside the State of Texas and (2) mailed materials touting the product and offering it for sale to persons outside the State. See Pls.' Mot. at 9. Lone Star, in its Response, does not suggest that "advertise" and "market" should not be given their commonly understood meanings, but argues that to focus on these terms in isolation, without reference to the agreement as a whole, does not result in a proper construction of the agreement. See Def.'s Resp. at 9.
The Court notes that in Paragraph 2 of the Settlement Agreement, there is no specific proscription against the "selling" of TAAS Target Practice included with the language prohibiting the "advertising" and "marketing" by Summit, wherein it states "it will not advertise or market [the product] for use outside of Texas." In contrast, the immediately preceding language in this clause includes the specific authorization that "Summit may continue to advertise, market, and sell its product . . . in the State of Texas." Therefore, considering that every contract term must be given effect so that none is rendered meaningless, Defendant suggests that the absence of the word "sell" when applied to its proscribed acts necessarily means that the Settlement Agreement did not prohibit it from selling TAAS Target Practice to purchasers outside of Texas, but only prohibited the product from being advertised and marketed for any use other than in connection with standardized educational testing administered in the State of Texas. See Def.'s Resp. at 5. However, as Plaintiff correctly points out, this contract was entered into by the parties under the circumstances of a lawsuit in which Mountain Math was seeking to prevent Summit from selling its TAAS Target Practice product "anywhere in the world." See Pls.' Reply Br. at 3. Thus, in settling these issues, the Agreement and its incorporated License allowed the parties to reach a compromise wherein the Plaintiffs allowed Summit to "market" their product for use only in Texas, but no where else. See Id. Additionally, the language in the parties' licensing agreement provided that:
"Mountain Math Grants to Summit a License to market for use in the State of Texas the `TAAS Target Practice' educational math review kits (the `product') in their present trade dress configuration or a substantially similar format
. . . .
In exchange for this right, Summit Agrees and Covenants that it will not market the product or colorable imitations of the product for use outside of the State of Texas. . . ."See App. Def.'s Mot at 15 (Licence at 1). Therefore, to say that "market," as the term is used here, does not also include the meaning "to sell" in addition to its definition "to expose for sale," ignores the most basic meaning behind the parties' agreement in settling their dispute: that Summit was given the right to market and sell TAAS Target Practice for use in Texas in exchange for its promise not to market or sell the product outside the State.
Looking at the contract as a whole and reading the terms of the Settlement Agreement and License together, as well as taking into account the circumstances present when these contracts were entered into, the Court finds there are no inherent ambiguities in the language used by the parties therein. Thus, where the parties' intentions are expressed unambiguously in the document, the Court construes them as a matter of law. See 46933, Inc. v. Z B Enters, Inc., 899 S.W.2d 800, 806 (Tex.App.-Amarillo 1995, writ denied); see also See Sun Oil Co. v. Madeley, 626 S.W.2d 726, 728 (Tex. 1981) (the writings alone are deemed to express the intention of the parties). As such, the Court finds the only reasonable interpretation of the contracts here is that Summit (and its successor Lone Star) agreed not to advertise, market or sell its TAAS Target Practice, in its current format, outside the State of Texas.
Nonetheless, Lone Star insists that the operative language of Paragraph 2 limits Summit's agreement to proscribe the advertising or marketing of TAAS Target Practice for use outside of the State of Texas- that is, Summit only agreed not to advertise or market the products for use in connection with standardized educational testing in states other than Texas, See Def.'s Resp. at 4 (emphasis added). However, the Court finds this reading of the Settlement Agreement to be unreasonable in light of the circumstances surrounding the execution of the writing, as discussed supra. In addition, the clause wherein this language appears in the Settlement Agreement simply states that "TAAS Target Practice is specifically tailored for use in connection with standardized educational testing administered in the State of Texas" See App. Pls.' Mot. at 6 (Settlement Agreement at 2) (emphasis added). It does not, however, say that the product is specifically limited or constrained for use solely in connection with the Texas' Assessment of Academic Skills ("TAAS") test. As such, the prohibition against its use outside of Texas goes to more than simply use with other states' standardized testing programs.
Therefore, regardless of Lone Star's subjective belief at the time of the agreement, that it would continue to be entitled to advertise, market and sell its product outside the State of Texas so long as it was not related to preparing students for standardized testing programs in other states, this interpretation is not controlling in the face of the unambiguous decree here. Moreover, as Mountain Math notes, to allow for such an interpretation would render the License and much of the Settlement Agreement meaningless since its illogical result would allow for any sale of the product outside Texas, but only so long as it was not promoted or publicized as such. Therefore, in applying the unambiguous language of these agreements, the Court finds that the compromise reached by the parties' settlement was effectively made for the purpose of terminating Summit's ability to advertise, market and sell TAAS Target Practice for any use outside of Texas. So long as both parties intended to resolve their litigation in this manner, the Consent Judgment must be enforced accordingly. See North Shore Lab. Corp., 721 F.2d at 524.
B. Claim of Breach by Defendant's Operation of a Website
The next question for the Court to decide is whether, by operation of its website, Lone Star violates the License and Settlement Agreement's bans on advertising and marketing of TAAS Target Practice for use outside the State. Mountain Math argues that Defendant's website is accessible from anywhere in the country (and presumably the world), and that nothing on the site indicates that the product is not for sale or use outside of Texas. See Pls.' Mot. at 7. Meanwhile, Lone Star contends that its advertising through the internet, without any specific intent to target non-Texas customers, is insufficient to constitute active or direct marketing for use outside the State. See Def.'s Resp. at 14-15. Moreover, Defendant point outs that its repeated reference in the product of being a specifically tailored study guide for use in connection with the "Texas Assessment of Academic Skills" (TAAS) test, as well as the absence of references on the website to the use of TAAS Target Practice for any other use, demonstrates its compliance with the Consent Judgment. See Id. at 15 Because the Court finds that the Settlement Agreement does in fact prohibit Lone Star from selling its product to customers outside of Texas, the website's general advertising, without a disclaimer or any other limitation stating the product is not for sale or for use outside of the State, as it is currently marketed, does violate the terms of the parties' agreements.
Lone Star also emphasizes in its brief that the its product and website contain other undisputed Texas targeted facts, including:
(1) The trade name "Lone Star Learning" is distinct and well-known nickname for the State of Texas;
(2) The "TAAS" term and product stands for "Texas Assessment of Academic Skills";
(3) The phrases "TAAS Target Practice" and "TAAS Problem Solving Samples" appear prominently on the website atop a bull's eye design containing the map of the State of Texas;
(4) Lone Star does not maintain a "toll-free number" and can only be reached by first dialing an (806) are code in Lubbock, Texas; and
(5) All orders are received only by fax or phone call to Lubbock, Texas, and are charged a Texas State sales tax.See to Def.'s Resp. at 15.
C. Claim of Breach for Defendant's Failure to "Cease Use of the Summit Name"
Mountain Math also correctly points out that the Settlement Agreement unambiguously required Defendant "to cease use of the Summit name, mark, and logo" on the effective date of the agreement. See App. Pls.' Mot. at 6 (Settlement Agreement at 2). Lone Star, however, argues that any reference to the term "Summit" on its website was negligible and inadvertent, and moreover, did not constitute a material breach of the Settlement Agreement. See Def.'s Resp. at 16 Because the agreement itself provided that Defendant shall cease use of the Summit name immediately upon the effective date of the contract, except for a six-month period allowing for the depletion of existing inventories of the product (now long since expired), the documented references found by Mountain Math as to Lone Star's continued reference to the word "Summit" on its website and on the updates/corrections available for purchasers to print of the site, constitutes a violation of the parties' contractual obligations in this case. See App. Pls.' Mot. at 8 (Settlement Agreement at 4) ("Mountain Math and Summit agree that this Agreement and the agreements and covenants herein contained shall be binding upon the parties to this Agreement, their heirs, assigns, administrators, executors, successors and legal representatives"). As Plaintiffs point out, the Agreement here was crafted to avoid consumer confusion between Mountain Math and Summit. See Pls.' Reply Br. at 10. As such, these continued references to "Summit,"even if resulting from negligence or inadvertence, continue to strike at the heart of the parties' compromise.
In a letter to the Court dated October 5, 2001, Lone Star has stated that it has temporarily shut down its website to make sure that all references to "Summit Educational Enterprises" or "Summit" are removed.
II. Motion for Preliminary and Permanent Injunction
In ruling on a motion for preliminary injunction, the Court must consider whether: (1) there is a substantial likelihood of success on the merits; (2) there is a substantial threat that the plaintiff will suffer irreparable injury if the relief is not granted; (3) the threatened injury outweighs the threatened harm that the relief may do to the defendant; and (4) the granting of the relief will not disserve the public interest." See Canal Authority of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir. 1974); Sierra Club, Lone Star Chapter v. F.D.I.C., 992 F.2d 545, 551 (5th Cir. 1993); Cherokee Pump Equip. Inc. v. Aurora Pump, 38 F.3d 246, 249 (5th Cir. 1994). All four of these factors are mixed questions of law and fact, and each must be considered to determine whether, on balance, they collectively favor granting the injunction. DSC Communications Corp. v. DGI Tech., Inc., 898 F. Supp. 1183, 1187 (N.D. Tex. 1995) (Kendall, J.). Additionally, the standard for a permanent injunction is the same as the standard for a preliminary injunction except that, in the case of the former, the plaintiff must actually succeed on the merits rather than merely show, as in the case of the latter, a likelihood of success. See Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531, 546 n. 12 (1987).
A preliminary injunction is an extraordinary remedy which should only be granted when the plaintiff has clearly carried his burden of proof as to all four elements, see Kern River Gas Transmission Co. v. Coastal Corp., 899 F.2d 1458, 1462 (5th Cir. 1990), and the decision is to be treated as the exception rather than the rule. See Mississippi Power Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 621 (5th Cir. 1985). In this case, having found that the Settlement Agreement does prohibit Lone Star from selling TAAS Target Practice outside the State of Texas, and that Lone Star has violated the Agreement's provisions requiring it cease use of the "Summit" name, the Court finds that Mountain Math does actually succeed on the merits of its breach of contract action here.
As to the second prong, the Court must look as to whether Mountain Math will suffer irreparable harm as a result of Lone Star's continued sales outside the State of Texas and by its use of the "Summit" name on its website and materials. In determining irreparable harm, it is not the magnitude of the harm claimed by the plaintiff but the "irreparability that counts for purposes of a preliminary injunction." Azteca Enter., Inc. v. Dallas Area Rapid Transit., No. CIV. A. 3:99-CV-0218P, 1999 WL 102803 at *2 (N.D. Tex. Feb. 23, 1999) (Solis, J.) ( citing Danden Petroleum, Inc. v. Northern Natural Gas Co., 615 F. Supp. 1093, 1098 (N.D. Tex. 1985)). In discussing the irreparable injury factor, the Fifth Circuit has found that an injury is `irreparable' only if it cannot be undone through monetary remedies. Enter. Int'l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464, 472 (5th Cir. 1985). Thus, "[t]he possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm." Id., 762 F.2d at 473. In this case, Mountain Math alleges that it will suffer irreparable injury to its good will and business reputation if Summit/Lone Star is not enjoined from advertising and/or marketing (including offering for sale and selling) TAAS Target Practice outside the State of Texas. See Pls.' Mot. at 14. More specifically, it asserts that damages from the decreased sales of all the products associated with the Mountain Math name are incalculable, and that mere dollar damages at some future date will not compensate it for such ongoing losses. See Id. at 14-15. Although there is no per se rule holding that such alleged harm is always irreparable, the Court finds that in this case the alleged injury to Plaintiffs reputation and goodwill is sufficient to satisfy the irreparable injury prong here. See Azteca Enter., 1999 WL 102803 at *3; see also LaFarge Corp. v. Cement Transp. Corp., Civ. A. No. 95-3255, 1996 WL 7042 (E.D. La. Jan. 9, 1996).
As for the third factor, Plaintiffs must show that the threatened injury outweighs the threatened harm to Defendant. In this case, as Mountain Math points out, an injunction would merely require Lone Star to do that which it is already required to do by virtue of its obligations made under the License and Settlement Agreement. That is, to stop using the Summit name in its materials and on its website, and to discontinue its advertising, marketing and sale of TAAS Target Practice, or colorable imitations thereof, for use outside the State of Texas. Lone Star argues that forcing it to shut down its website will not eradicate word-of-mouth sales, nor will these sales completely be controlled simply by telling prospective out of state purchasers they cannot buy the TAAS Target Practice product. See Def.'s Resp. at 20. However, so long as the product is sold in its current form, or in any colorable imitation of Mountain Math's educational review product, Lone Star must advertise, market and sell this product with the appropriate indicators telling the public that the product is for use or sale solely in the State of Texas. Additionally, the Court finds that any sale or offer for sale of the product to customers, whether in or outside of Texas, including but not limited to displays of TAAS Target Practice at any education conferences attended by Lone Star, must be accompanied by the conspicuous and prominent display of language informing the general public that this product is not for sale or for use outside of the State. This does not mean, however, that in every sale of TAAS Target Practice a customer must be asked from where he or she is and for what use they intend to purchase the product, so long as the sale is made in Texas. Moreover, this limitation will not destroy Lone Star's ability to continue its advertising and marketing over the website, provided that it includes a statement informing all its potential customers that the TAAS Target Practice product, as currently constituted, is not available for use or sale outside of Texas.
Finally, this Court finds that granting the requested injunctive relief limiting Lone Star's advertising, marketing and sale of TAAS Target Practice for use in the State of Texas will preserve parties' rights and expectations under the License and Settlement Agreement. Moreover, preventing the Defendant from profiting from the breach of its contractual obligations to Plaintiffs certainly will serve the public's interest in this case.
III. Motion for Civil Contempt
Mountain Math also moves this Court to impose civil contempt sanctions against Lone Star/Summit, as well as its representatives, for violating the Settlement Agreement and License which were incorporated into the Court's Consent Judgment of August 10, 2000. See Pls.' Mot. at 12-14. More specifically, Plaintiffs urge that Mary Upton, President of Lone Star Learning, and "those non-parties through whom Summit acted willfully by disobeying the Court's order" (to the extent that those non-parties were aware of the contents of the Settlement Agreement and License), should be held in contempt by this Court for violating the commands of its Consent Judgment here. See Id. at 13.
A consent order, while founded on the agreement of the parties, is nevertheless a judicial act, enforceable by sanctions including a citation for contempt. See Whitfield v. Pennington, 832 F.2d 909, 913 (5th Cir. 1987) ( citing United States v. City of Miami, 664 F.2d 435, 439-440 (5th Cir. 1981) (en banc)). A party may be held in contempt if he violates a definite and specific court order requiring him to perform or refrain from performing a particular act or acts with knowledge of that order. See Whitfield, 832 F.2d at 913 ( citing Sec. and Exch. Comm'n v. First Financial Group of Texas, Inc., 659 F.2d 660, 669 (5th Cir. 1981)).
The civil contempt is coercive rather than punitive sanction, intended to force a recalcitrant party to comply with a command of the court. Whitfield, 832 F.2d at 913 ( citing American Trucking Ass'n, Inc. v. Interstate Commerce Comm'n, 728 F.2d 254, 255 (5th Cir. 1984); see also Thyssen, Inc. v. S/S Chuen On, 693 F.2d 1171, 1173-74 (5th Cir. 1982). Intent is not an issue in civil contempt proceedings; rather, the question is whether the alleged contemnors have complied with the court's order. Jim Walter Resources v. Int'l Union, United Mine Workers of America, 609 F.2d 165, 168 (5th Cir. 1980). Proof of contempt must be "clear and convincing." United States v, Rizzo, 539 F.2d 458, 465 (5th Cir. 1976). Moreover, a district court's refusal to hold a party in civil contempt will be evaluated under an "abuse of discretion" standard. Neely v. City of Grenada, 799 F.2d 203, 207 (5th Cir. 1986).
On the record before it, the Court finds that based on the Defendant's interpretation of this Court's Consent Judgment, Lone Star/Summit believed it was in compliance with the parties' Settlement Agreement and License prohibiting them only from advertising or marketing, but not selling, TAAS Target Practice for use outside of Texas. See App. Def.'s Mot. at 23-24 (Upton Aff. at 3-4). Moreover, Defendant's have stated that any references to the "Summit" name which have persisted in its materials and/or on its website following the effective date of the Agreement were due to inadvertence and negligence, and they have sought to correct this by temporarily shutting down the site in order to correct these technical errors. See Footnote 3 supra. Therefore, the Court denies Plaintiffs' Motion for Civil Contempt Sanctions here.
IV. Motion for Declaratory Judgment
Lone Star, meanwhile, moves this Court for declaratory relief pursuant to Fed.R.Civ.P. 57 and 28 U.S.C. § 2201-2202, to clarify and construe the rights of the parties under the Consent Judgment. See Def.'s Resp. at 22. Section 2201 states that "in a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." However, having found that the Settlement Agreement does in fact prohibit Lone Star from selling its product to customers for use outside of Texas, see supra, the Court need not decide whether such a motion as made by Lone Star in this case is proper, and therefore denies Defendant's Motion for a Declaratory Judgment.
CONCLUSION
Having decided that the Defendant has violated the parties' License and Settlement Agreement by its continued advertising, marketing and sale of TAAS Target Practice for use outside of Texas, and by its continued use of the "Summit" name in its materials and on its website, Plaintiff's Motion to Enforce the Consent Judgment, as well as Plaintiffs' Motion for Preliminary and Permanent Injunction shall be, and is hereby, GRANTED. Further, Plaintiff's Motion for Civil Contempt, and Defendant's Motion for a Declaratory Judgment shall be, and are hereby, DENIED.
Accordingly, it is hereby ORDERED that Defendant is hereby restrained and enjoined from the following:
a) using the word "Summit" and/or "Summit Educational Enterprises, Inc." on any website or in any other advertising or marketing, direct or indirect;
b) advertising and marketing (including offering for sale and selling) TAAS Target Practice, or any colorable imitation of the Mountain Math educational review product, to audiences or purchasers outside the State of Texas;
c) advertising and marketing (including offering for sale and selling) TAAS Target Practice, or any colorable imitation of the Mountain Math educational review product, on its website and/or any other materials, unless it includes or prominently displays a disclaimer that this product is not for sale and/or for use outside the State of Texas; and
(d) advertising and marketing (including offering for sale and selling) TAAS Target Practice, or any colorable imitation of the Mountain Math educational review product, whether inside or outside of Texas, without being accompanied by a conspicuous and prominent display of language informing the general public that the TAAS Target Practice product is not for sale or for use outside of the State.
Further, the Court awards Mountain Math its attorneys' fees and costs incurred in bringing this motion. However, the Court will not award Mountain Math any damages for any sales of TAAS Target Practice made by Lone Star/Summit outside the State of Texas after July 25, 2000.
So ORDERED,