Case On Point
JLM Couture, Inc. v. Gutman
(2d Cir. Ct. of App. 2023)
Hailey Paige Gutman, known professionally as Hailey Paige, is a talented designer of wedding gowns that were featured on Say Yes to the Dress. In this latest page from the saga of her litigation with JLM Courture, Inc., her former employer, the Court of Appeals considered Gutman's appeal from the district court's grant of a preliminary injunction in the employer's favor.
While employed by JLM. Gutman created social media accounts on her own initiative, using her own name, email address and cell phone number . She did use the accounts to publicize the designs she created by JLM. The Court of Appeals found that the district court erred in concluding that the employer had superior rights in the social media accounts without determining first who owned them. Based on traditional property law rules, Gutman owned them. The Court remanded this issue to the district court to determine whether the employment agreement effected a transfer of ownership to JLM.
The Court of Appeals also determined that the district court erred in ruling that JLM was likely to prevail on its claim for breach of the restrictive covenant, without first determining whether the covenant was enforceable under New York law.
On remand, the district court should consider:
- whether Paragraph 10(e)’s five-year term is reasonable in duration;
- whether JLM has made a sufficient showing that it has a legitimate interest warranting enforcement of a restrictive covenant; and
- whether its interpretation of the prohibition in Paragraph 10(e) is reasonable in scope and not overly burdensome on Gutman.