Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE DISTRICT OF OREGON
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`KAWHI LEONARD,
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`Plaintiff/Counter-Defendant,
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`v.
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`NIKE INC.,
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`MOSMAN, J.,
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`Defendant/Counter-Claimant.
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`Case No. 3:19-cv-01586-MO
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`OPINION AND ORDER
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`On April 22, 2020, I heard oral argument on Defendant Nike’s Motion for Judgment on
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`the Pleadings [ECF 54]. Min. [ECF 75]. At the hearing, I granted Nike’s motion with respect to
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`its ownership of the “Claw Design” logo and, as a result, I dismissed Plaintiff Kawhi Leonard’s
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`claims with prejudice. Id. I took under advisement Nike’s motion with respect to Nike’s
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`remaining counterclaims. Id. The following opinion briefly supplements my analysis on the
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`ownership question and resolves the issues I took under advisement.
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`LEGAL STANDARD
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`Under Federal Rule of Procedure 12(c), “[j]udgment on the pleadings is proper when the
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`moving party clearly establishes on the face of the pleadings that no material issue of fact
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`remains to be resolved and that it is entitled to judgment as a matter of law.” Hal Roach Studios,
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`1
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`– OPINION AND ORDER
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`Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989) (citation omitted). In
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`resolving the motion, the allegations of the non-moving party are credited as true, while the
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`allegations of the moving party which have been denied are deemed false. Id. The court,
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`however, is “not required to accept as true conclusory allegations which are contradicted by
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`documents referred to in the complaint.” See Steckman v. Hart Brewing, Inc., 143 F.3d 1293,
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`1295-96 (9th Cir. 1998) (citation omitted).
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`DISCUSSION
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`I.
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`Supplemental Discussion of Nike’s Ownership of the “Claw Design.”
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`As I stated at oral argument, ownership over the Claw Design turns on the “Men’s Pro
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`Basketball Contract” (“Nike Contract”) entered into by Mr. Leonard and Nike.1 Tr. [ECR 76] at
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`6-7. The relevant provision is Paragraph 8(a) of the Standard Terms, which states:
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`8. OWNERSHIP OF NIKE MARKS, DESIGNS & CREATIVES.
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`(a) [Leonard] acknowledges that NIKE exclusively owns all rights, title and
`interest in and to the NIKE Marks and that NIKE shall exclusively own all
`rights, title and interest in and to any logos, trademarks, service marks,
`characters, personas, copyrights, shoe or other product designs, patents, trade
`secrets or other forms of intellectual property created by NIKE . . . or
`[Leonard] in connection with this Contract;
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`Nike Contract [16-1] at 7 (emphasis added).2
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`I held that the Nike Contract established Nike’s ownership of the Claw Design because
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`the Claw Design is (1) a new piece of intellectual property (2) created “in connection with” the
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`Nike Contract. Tr. [76] at 39-40. The following supplements my analysis on these two points.
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`A copy of the Nike Contract is attached as Exhibit A to Nike’s Answer [ECF 16-1].
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`I cite to the ECF page number for this source.
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`2
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 3 of 12
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`A. Whether the “Claw Design” constitutes new intellectual property.
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`The “Claw Design” is Nike’s terminology for the following image:
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`Nike Answer [ECF 16] at 2.
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`Both Nike and Mr. Leonard have registered copyrights for the Claw Design. Id. ¶ 3; Nike
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`Countercl.3 [16] ¶¶ 40-41; Leonard Answer to Countercl. [ECF 26] ¶¶ 40-41. The dispute over
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`who is the proper owner of the Claw Design is the core issue in this case.
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`The other image relevant to this case is what Nike terms the “Leonard Sketch”:
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`Nike Answer [16] at 2.
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`Nike’s counterclaims begin on Page 11 of its Answer & Counterclaim [ECF 16], and the
`numeration of paragraphs restarts at 1.
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`– OPINION AND ORDER
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 4 of 12
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`While Nike asserts that this case is a tale of two images, Mr. Leonard refers throughout
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`the pleadings and his briefings to a singular “Leonard Logo.” See, e.g., Resp. [ECF 57] at 5. As
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`discussed extensively at oral argument, this is because Mr. Leonard’s theory is that no new
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`intellectual property was created during the term of the Nike Contract; rather, the “Claw Design”
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`is a mere modification of a preexisting logo that Mr. Leonard designed and created independent
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`of Nike and the Nike Contract. See id. I rejected that theory at oral argument and do not retread
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`my analysis here. See Tr. [76] at 39-40. I supplement my remarks only to demonstrate that Mr.
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`Leonard’s own pleadings—which I must accept as true for the purposes of this motion—reveal
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`that, as a factual matter, the above two images are the relevant images in play.4
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`Mr. Leonard’s pleadings, accepted as true and read in the light most favorable to him,
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`demonstrate the following: (1) at some point before entering the Nike Contract, Mr. Leonard had
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`the idea to create a logo which incorporated his initials and the number “2” into a drawing of his
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`hand; (2) Mr. Leonard, also before entering the Nike Contract, created the “Leonard Sketch” as a
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`draft of that idea; (3) during the period of the Nike Contract,5 Mr. Leonard sent the Leonard
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`Sketch to Nike’s design team; and (4) after an iterative design process involving Mr. Leonard
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`and the Nike design team, the “Claw Design” logo was created in the summer of 2014. Below, I
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`walk through how each of the preceding points can be readily discerned from the pleadings.
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`First, there is no dispute that Mr. Leonard conceived of the idea for a logo involving his
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`initials and his hand prior to entering the Nike Contract. Compl. [ECF 1] ¶ 17.
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`The factual existence of the two separate images, as discerned from the pleadings, is a
`separate matter from the legal question of whether those two images should be treated as the
`same piece of intellectual property.
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`The Nike Contract ran from October 2011 to September 2018. Compl. [1] ¶¶ 20-21.
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 5 of 12
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`Second and third, Mr. Leonard describes that “[i]n late December 2011 or January 2012,
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`Leonard refined a logo he had been creating for several years that encompassed his large and
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`powerful hands, his initials and his jersey number” and that, at some point prior to Spring 2014,
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`he sent this logo design to Nike. Id. ¶¶ 18, 25-26. This logo design is the only physical
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`expression of Mr. Leonard’s idea that Mr. Leonard alleges he sent to Nike. While Mr. Leonard
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`refers to this logo design as the “Leonard Logo,” his answers to Nike’s counterclaims reveal that,
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`at this point, the factual image we are talking about is the “Leonard Sketch” copied above. Nike
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`Countercl. [16] ¶ 26; Leonard Answer [26] ¶ 26 (admitting that during the term of the Nike
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`Contract, Mr. Leonard sent Nike the “Leonard Sketch”).
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`Fourth, after Mr. Leonard sent Nike the Leonard Sketch, the Nike design team reviewed
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`the Sketch and sent Mr. Leonard proposals for a “modified” version of the Leonard Sketch in
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`Spring 2014. Compl. [1] ¶ 26. Mr. Leonard rejected those proposals. Id. ¶ 27. “In early Summer
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`2014, Nike provided additional proposals to Leonard using the [Leonard Sketch].” Id. ¶ 28.
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`“Leonard accepted one of the June 2014 proposals and granted Nike permission to affix that
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`logo, based upon the [Leonard Sketch], on Nike merchandise during the term of the Nike
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`Agreement.” Id. ¶ 29 (emphasis added). “[T]hat logo” is the “Claw Design.” Nike Countercl.
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`[16] ¶ 28-29; Leonard Answer [26] ¶ 29 (admitting that the “Claw Design” was affixed to Nike
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`merchandise that was worn and endorsed by Mr. Leonard). And for the reasons stated at oral
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`argument, the Claw Design constitutes a new, distinct piece of intellectual property. Tr. [76] at
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`6-9, 39-40.
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 6 of 12
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`B. Whether the Claw Design was created “in connection with” the Nike
`Contract.
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`If the Claw Design was created “in connection with” the Nike Contract, Nike owns it.6
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`As I stated at oral argument, Mr. Leonard’s argument that the contractual language “in
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`connection with” is ambiguous is unconvincing. Tr. [76] at 16; see also Hoffman Constr. Co. of
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`Alaska v. Fred S. James. & Co. of Or., 836 P.2d 703, 706 (Or. 1992). Thus, whether the Claw
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`Design was created “in connection with” the Nike Contract is a straightforward matter of
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`contract application.
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`The general purpose of the Nike Contract is to pay Mr. Leonard for “the use of
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`[Leonard]’s personal services and expertise in the sport of professional basketball and
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`[Leonard]’s endorsement of the NIKE brand and use of NIKE products.” Nike Contract [16-1] at
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`2. According to Mr. Leonard’s complaint, “[a]t some point during the term of the [Nike
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`Contract], Nike began discussions with Leonard about creating a unique logo to affix to
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`merchandise to be sold under the [Nike Contract].” Compl. [1] ¶ 23. As discussed above, the
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`Claw Design is the “unique logo” that was created and affixed to Nike merchandise, which in
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`turn was worn and endorsed by Mr. Leonard while he was under contract with Nike. See Nike
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`Countercl. [16] ¶¶ 28-29; Leonard Answer [26] ¶ 29. In short, Nike collaborated with Mr.
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`Leonard to create the Claw Design which it affixed to new Nike merchandise, which Leonard
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`wore and endorsed, and which Nike sold. Not only was this activity done “in connection with”
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`the Nike Contract, it represents the whole point of the Nike Contract.
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`Therefore, for the reasons stated at oral argument and herein, Nike owns the Claw Design
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`and the right to register a copyright for it.
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`As Paragraph 8(a) of the Nike Contract makes clear, this is true whether Nike or Mr.
`Leonard created the Claw Design, or whether they worked together in doing so.
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`– OPINION AND ORDER
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 7 of 12
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`II.
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`Nike’s Remaining Counterclaims
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`In its motion, Nike moves for judgment on the pleadings on all six of its counterclaims.
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`The six counterclaims are:
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`1. Declaratory Judgment of Copyright Ownership
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`2. Copyright Infringement against Leonard
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`3. Copyright Right Cancellation for Fraud on the Copyright Office
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`4. Breach of Contract, Paragraph 8
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`5. Breach of Contract, Paragraph 13(b)
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`6. Breach of Contract, Paragraph 21
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`Nike Countercl. [16] at 22-27.
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`As already discussed, at the hearing I granted Nike’s motion with respect to its first
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`counterclaim and took under advisement its remaining counterclaims. I now resolve the
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`remainder of Nike’s motion and I GRANT in part and DENY in part as follows.
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`2. Copyright Infringement against Leonard—DENIED.
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`With its ownership of the Claw Design copyright established, Nike moves for judgment
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`on the pleadings on its counterclaim for copyright infringement against Mr. Leonard. Nike
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`alleges that Mr. Leonard infringed its copyright by (1) using the Claw Design logo in the past (on
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`non-Nike merchandise, for charity events, etc.) and (2) by stating his intention to use it for his
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`own commercial and non-commercial purposes in the future. See Mot. [54] at 21-22 (citing
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`Compl. [1] ¶¶ 4, 34, 44).
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`As to Mr. Leonard’s purported unauthorized past use of the Claw Design, Nike cites to
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`the complaint where Mr. Leonard states that: “Leonard, without dispute or challenge from Nike,
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`continued to use the [Claw Design] on non-Nike goods, including apparel and merchandise used
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`– OPINION AND ORDER
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`for basketball camps, appearances and charity events, even while Nike was affixing [the Claw
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`Design] to Nike merchandise,” Compl. [1] ¶ 34. Mot. [54] at 22.
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`I DENY Nike’s motion as it pertains to Mr. Leonard’s past use of the Claw Design
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`because I think the pleadings establish a dispute of fact about whether this past use was permitted
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`or tacitly encouraged by Nike, which would implicate Mr. Leonard’s asserted affirmative
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`defenses of waiver or estoppel.7 See Leonard Answer [26] at 16 (Fourth Affirmative Defense);
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`Resp. [57] at 6.
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`I also DENY Nike’s motion insofar as it seeks injunctive relief for future violations of
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`Nike’s copyright. While Mr. Leonard states in his complaint that he intends to use the Claw
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`Design for his own purposes in the future, that intent was undoubtedly premised on his belief
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`that he was the rightful owner of the Claw Design. In light of this court’s holding that Mr.
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`Leonard does not own the Claw Design, I find the likelihood of future harm to be significantly
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`reduced such that injunctive relief would be inappropriate at this time.
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`3. Copyright Cancellation for Fraud on the Copyright Office—DENIED.
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`Nike moves the court to find that “by Leonard’s own admissions, the Leonard Copyright
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`Registration was fraudulently obtained and is therefore invalid.” Mot. [54] at 24. Nike argues
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`that “there is no question that Leonard knew that he was not, in fact, the author of the Claw
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`Design, but knowingly lied to the Copyright Office in order to obtain a registration anyway.” Id.
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`I disagree. I think that Mr. Leonard’s pleadings, viewed in the light most favorable to
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`him, do not establish that he “knowingly lied” to the copyright office in registering his copyright
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`for the Claw Design. In his eyes, Mr. Leonard is the author of the Claw Design: it was his idea
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`To be clear, there are no allegations in the pleadings that plausibly suggest that Nike
`abandoned its copyright of the Claw Design and I reject such an argument. See Resp. [57] at 26-
`27.
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`– OPINION AND ORDER
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 9 of 12
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`and he provided a preliminary design to the Nike design team who “modified” the design at his
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`direction to produce the resulting Claw Design. Moreover, Mr. Leonard states in his Response
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`that: “Discovery will show that, in applying for his copyright application for the Leonard Logo,
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`Mr. Leonard disclosed to the Copyright Office that Nike was also claiming copyrights in the
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`Logo.” Resp. [57] at 27 n.18. This is a fact which, if true, would significantly undermine Nike’s
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`fraud claim.
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`Therefore, I DENY Nike’s motion for judgment on the pleadings on its third
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`counterclaim.
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`4. Breach of Contract, Paragraph 8—DENIED.
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`To prevail on a breach of contract claim, Nike must establish: (1) the existence of a
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`contract, (2) its relevant terms, (3) Nike’s full performance and lack of breach, and (4) Leonard’s
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`breach and resulting damages. Slover v. Or. State Bd. Of Clinical Soc. Workers, 927 P.2d 1098,
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`1101 (Or. Ct. App. 1996).
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`As described above, Paragraph 8(a) of the Nike Contract gives Nike ownership over the
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`Claw Design. Paragraph 8(b) requires that Leonard: “shall completely cooperate with NIKE in
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`its efforts to obtain and maintain protection for [the created IP’s] right, title and interest,
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`including by promptly executing any documents as may be required by NIKE in connection
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`therewith.” Nike Contract [16-1] at 7.
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`Nike argues that Leonard breached Paragraph 8(b) by registering a copyright and other
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`trade protections for the Claw Design. Mot. [54] at 25-27.
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`I DENY Nike’s motion as to this counterclaim for reasons similar to why I denied its
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`motion with respect to its second counterclaim.
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`– OPINION AND ORDER
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`Mr. Leonard alleges in his complaint that Nike, in essence, repeatedly assured Mr.
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`Leonard that he was the owner of the “Leonard Logo.” See Compl. [1] ¶¶ 31, 33. As I stated at
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`oral argument, while those allegations and associated evidence would be inadmissible under
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`Oregon’s parol evidence rule for the purpose of interpreting the Nike Contract, they would be
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`potentially admissible as evidence supporting Mr. Leonard’s affirmative defenses such as
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`estoppel. Thus, the potential viability of an affirmative defense to this counterclaim turns on a
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`dispute of fact that cannot be resolved at this stage.
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`5. Breach of Contract, Paragraph 13(b)—DENIED.
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`Paragraph 13(b) of the Nike Contract states that: “[Leonard] shall [not] permit, or
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`authorize (except as permitted under the foregoing clause (a)), any third-party licensee of theirs
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`to use any NIKE Marks or condone any licensee’s unauthorized use thereof.” Nike Contract
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`[16-1] at 9.
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`Nike argues that (1) the Claw Design is a “Nike Mark” and thus (2) Leonard violated
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`Paragraph 13(b) by (i) using the Claw Design on non-Nike goods in the past, and (ii) by stating
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`an intent to use the Claw Design on non-Nike goods in the future. Mot. [54] at 27-28.
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`Assuming arguendo that the Claw Design is a “Nike Mark,” I DENY Nike’s motion on
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`this counterclaim for the same reasons I denied the motion with respect to Nike’s second
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`counterclaim.
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`6. Breach of Contract, Paragraph 21—GRANTED.
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`Finally, Nike moves for judgment on the pleadings on its sixth counterclaim, alleging
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`breach of the Nike Contract’s forum selection clause, which requires that any dispute arising
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`under the contract be litigated in an Oregon court. Mot. [54] at 2; see also Nike Contract [16-1]
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`at 11.
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`– OPINION AND ORDER
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`Case 3:19-cv-01586-MO Document 77 Filed 05/18/20 Page 11 of 12
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`Mr. Leonard filed this action in the Southern District of California, where it was handled
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`by Judge Bashant. [ECF 1]. In granting Nike’s motion to transfer the case to this court, Judge
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`Bashant held that:
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`[T]he dispute is clearly over the use and ownership of the finalized
`copyrighted logo….[T]he Court finds that this suit ‘arises under’ the Nike
`[Contract], as the whole point of the Complaint is to seek a declaration as to who
`owns the copyrighted logo, which was ultimately created and copyrighted during
`the term of the Nike [Contract]. Leonard is disputing that Nike had the right to
`copyright the logo, and Nike believes it had the right per the Nike [Contract]. This
`dispute cannot be resolved without reference to the Nike [Contract] and its
`intellectual property provision.
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`Order [ECF 30-1] at 6.
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`I agree with Judge Bashant that the underlying dispute here obviously involves and
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`“arises under” the Nike Contract. Thus, I hold that Mr. Leonard breached Paragraph 21 of the
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`Standard Terms of the Nike Contract by failing to file this suit in an Oregon court. As it is
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`undisputed that Nike performed its obligations under the Nike Contract, and the contract’s
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`existence and underlying terms are also not in dispute, I hold that Nike has carried its burden to
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`prevail on its counterclaim for breach of Paragraph 21 as a matter of law and I GRANT its
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`motion to that effect. It may pursue relief accordingly. See Digimarc Corp. v. Verance Corp.,
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`No. 10-cv-1489-JE, 2011 WL 7077315, at *12 (D. Or. Sept. 19, 2011) (recognizing that breach
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`of a forum selection clause is an actionable claim).
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`– OPINION AND ORDER
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`CONCLUSION
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`For the reasons stated at oral argument and herein, I GRANT in part and DENY in part
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`Nike’s Motion for Judgment on the Pleadings [54]. I GRANT judgment on the pleadings in favor
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`of Nike on its first and sixth counterclaims. I DENY judgment on the pleadings on Nike’s second
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`through fifth counterclaims. I DISMISS Mr. Leonard’s claims with prejudice.
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`IT IS SO ORDERED.
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`DATED this ____ day of May, 2020.
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`__________________________________
`MICHAEL W. MOSMAN
`United States District Judge
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`12
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`– OPINION AND ORDER
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`18th
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