Three-on-three basketball has rapidly increased in popularity, with tournaments popping up across the country. So it is not surprising that more than one fledgling league has launched in an effort to monetize that popularity. One start-up – 3BA International LLC (“3BA”) – hopes to create a faster-paced game through the use of a 72 by 50 foot court (which is shorter than an NBA court), an 18-second shot clock, four 11-minute quarters, and other altered rules. And by all public accounts, 3BA has enjoyed a successful run of exhibition games, celebrity franchisees and high-profile participants. It now appears that 3BA’s success is not limited to three-on-three basketball courts; in a recent dispute with two of 3BA’s former employees – Kevin LuBahn and Kevin Ellis – 3BA took it strong to the hole and first obtained a temporary restraining order, then a preliminary injunction, to prevent LuBahn, Ellis and their almost identically titled start-up league, 3BA Properties LLC (“3BA Properties”), from hindering 3BA’s development efforts.
3BA’s suit against 3BA Properties, LuBahn and Ellis – 3BA International LLC v. Kevin LuBahn – was filed in the U.S. District Court for the Western District of Washington and stated eleven interrelated causes of action, including breach of the duty of loyalty, misappropriation of trade secrets in violation of the Uniform Trade Secrets Act, Chapter 19.108 RCW, tortious interference, copyright infringement, and trademark infringement in violation of the Lanham Act, 15 USC § 1125. 3BA sought damages, as well as equitable and injunctive relief aimed at prohibiting the defendants from damaging 3BA’s relationships with potential franchisees and investors, and from developing 3BA Properties using 3BA’s intellectual property and information.
After a hearing, Judge Richard A. Jones granted 3BA a preliminary injunction, finding, among other things, that 3BA owned all of 3BA’s intellectual property, including trademarks, copyrights and domain names, some of which 3BA had initially acquired from LuBahn’s bankruptcy estate (after which 3BA hired LuBahn and Ellis as board members of the 3BA). The judge also found that, while employed by 3BA, the defendants formed plans to create their own three-on-three basketball league, using 3BA’s proprietary information and documents. Further, they met with potential 3BA franchisees, persuaded some of them not to invest in 3BA, and attempted to convince them to invest instead in 3BA Properties. The defendants also apparently used 3BA passwords to take over 3BA’s Web site and e-mail systems once their employment was terminated.
Judge Jones found that there was “ample evidence” to demonstrate that 3BA’s expectations of entering into franchise agreements with potential franchisees were being thwarted by the defendants. Further, he found that the activities also demonstrated that the defendants were not interested in fair competition, and that “there [was] no reason to expect that they [would] compete fairly absent injunctive relief.” Thus, the court held that that 3BA was likely to succeed on its claim for tortious interference and granted the requested preliminary relief.
The defendants, like “Clyde, Rick Barry, and Pistol Pete, continue to believe that they can’t be beat.” Recently, LuBahn filed a response to 3BA’s complaint in which he categorically denies and disputes all of the allegations. Further, the granted injunction is only a preliminary one, so the substantive allegations of the complaint have yet to be proved on the merits. In short, the buzzer has not yet sounded.