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IP/Entertainment Case Law Updates

Delorean v. Delorean Motor Co.

District court dismisses claims brought by estate of creator of DeLorean automobile featured in “Back to the Future” movie franchise, preventing estate from going back in time to undo earlier settlement agreement that barred those claims. 

Plaintiff Sally DeLorean is the widow of John DeLorean and administrator of the estate of John DeLorean, the creator of the DeLorean DMC-12, the iconic car turned time machine featured in the 1985 movie “Back to the Future” and its sequels. Sally brought suit against the DeLorean Motor Company alleging it had improperly collected royalties that were owed to the estate stemming from a 1989 licensing agreement between John DeLorean and Universal Studios. On the Motor Company’s motion to dismiss, the district court found that a 2015 settlement agreement in a previous suit initiated by Sally DeLorean against the Motor Company precluded the claims in this second suit. In essence, the court ruled that the estate could not go back in time to renegotiate the terms of the settlement agreement.

After John passed away, Sally, on behalf of his estate, initiated the first suit against the Motor Company in 2014, alleging various trademark and trade dress violations. A 2015 settlement agreement in that case included a covenant not to sue the Motor Company over use of words and trademarks relating to the name “DeLorean Motor Company,” the “DMC” logo and the stylized word “DeLorean.” The agreement also acknowledged the company’s worldwide rights to use the DeLorean trademarks. 

During that first litigation, Sally DeLorean discovered that her husband had entered into a licensing agreement with Universal in 1989 for the use of the DeLorean logo for merchandising and other commercial activities related to the “Back to the Future” film franchise. When she contacted Universal in 2018 demanding an accounting of royalties under that license agreement, she learned that Universal had been paying the royalties to the defendant Motor Company based on its claim to the royalties under the 2015 settlement agreement. Perhaps feeling a bit like the Libyan Nationalists in the “Back to the Future” film, who were duped into giving Doc Brown valuable plutonium in exchange for old pinball machine parts, the Motor Company demanded that Sally DeLorean withdraw her claim to the royalties or face suit for tortious interference. In response, Sally brought suit on behalf of John DeLorean’s estate for declaratory judgment and unjust enrichment, seeking an order that the 2015 settlement agreement did not give the Motor Company any rights under the licensing agreement with Universal, that the estate is the owner of all rights stemming from the Universal Agreement and that the Motor Company must account for royalties owed to the estate.

The court dismissed plaintiffs’ claims as a matter of law, finding that although the 2015 settlement agreement did not mention the Universal license agreement, it bars plaintiffs’ claims because “the subject matter of both agreements, and the context in which the agreements apply” are within the scope of the claims barred by the settlement agreement. The court noted the overlap of terms in both agreements. In the settlement agreement, plaintiff agreed not to sue based on defendant’s use of “the name ‘DeLorean Motor Company,’” “the DMC logo” and “the stylized word ‘delorean,’” and acknowledged the Motor Company’s worldwide rights to the DeLorean trademark. The Universal agreement similarly gave Universal the right to use the name “DeLorean” and the “DMC” logo “as it appears on the radiator grille of the DeLorean automobile,” as well as the appearance of the DeLorean car.

The court rejected plaintiffs’ argument that the subject matter of the settlement agreement did not overlap with the Universal agreement because the settlement agreement did not include the term “the appearance of the DeLorean automobile,” finding that the 2014 suit and subsequent settlement agreement contemplated claims based on the car’s appearance. Further, both the settlement agreement and the Universal license covered the use of the DeLorean names and trademarks in similar contexts — the “manufacturing and merchandizing of products displaying the DeLorean automobile’s image and brand.” (Because, to borrow a line from Dr. Emmet Brown, if you’re going to make products from the “Back to the Future” franchise, “why not do it with some style?”)

The court denied the Motor Company’s request for attorneys’ fees because it failed to include affidavits and other materials as required by the Federal Rules of Civil Procedure, but the denial was without prejudice, so the company could resubmit its request with proper support.

Summary prepared by Tal Dickstein and Peter Pottier

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