Is "Uniqueness" Getting A Revival?

• Published date: 24 March 2022
• Subject Matter: Employment and HR, Intellectual Property, Media, Telecoms, IT, Entertainment, Contract of Employment, Trade Secrets, Trademark, Social Media
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Justin Beyer

As is often true in fashion, what once was old is now new again. But for famed wedding dress designer, Hayley Paige Gutman, she certainly is ruing the Second Circuit's recent decision to revive its 1999 holding of Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999). In JLM Couture, Inc. v. Gutman, 24 F.4th 785 (2d Cir. 2022), the Second Circuit held that JLM Couture's non-compete was enforceable through New York's oft-overlooked "uniqueness" exception. But the real question to me as a litigator is whether this doctrine should become part of the tool bag going forward. Upon analysis, the answer is somewhat mixed and going to be exceedingly fact dependent.

Background of Case

In 2011, Hayley Paige Gutman¹ entered into an employment agreement with JLM Couture, Inc. ("JLM"), to serve as a wedding, bridesmaid, and evening gown dress designer for JLM. JLM Couture, Inc. v. Gutman, 24 F.4th 785, 788 (2d Cir. 2022). Included within the JLM contract were certain restrictive covenants, including a non-competition agreement, as well as various intellectual property assignment provisions. While the contract was originally to run through 2016, the parties extended the agreement through August 1, 2022. Id.

As part of Hayley Paige's responsibilities for JLM, she was tasked with growing the "Hayley Paige" brand for the company, including "assisting with advertising programs." Id. at 790. In so growing that business, Hayley Paige used a series of social media accounts that she curated, but on which she posted a number of JLM-related content, including numerous posts dedicated to JLM dresses Hayley Paige designed. While Hayley Paige argued that the accounts were personal in nature, the trial court found that JLM was heavily involved in the content and messaging of at least one of those accounts, and Hayley Paige shared access at one point with another JLM employee, who "shared responsibility for managing the account." JLM Couture, Inc. v. Gutman, No. 20 CV 10575-LTS-SLC, 2021 WL 827749, at *4 (S.D.N.Y. Mar. 4, 2021). These accounts became exceedingly well-followed, with the court noting that at least one had over a million followers as of January 2022. JLM Couture, 24 F.4th at 789. Because of this, control over the accounts was also a hotly contested issue, with one expert opining that a single post on the Hayley Paige account was worth "nearly $30,000." JLM

In 2019, JLM and Hayley Paige engaged in negotiations over the terms of her employment agreement, with JLM proposing additional responsibilities relating to monetizing the Hayley Paige social media accounts. Hayley Paige rejected the proposal and, in response...