Performance Unlimited v. Questar Publishers

James Leininger owned the copyrights and trademarks to Dovetales, a series of children’s books. Leininger used an agreement to license the publishing rights to Performance Unlimited, Inc. (Performance) (plaintiff), who sublicensed with Questar Publishers, Inc. (Questar) (defendant) to publish a book containing all of the compiled Dovetales stories. Performance had a separate licensing agreement with Questar. Performance and Questar’s licensing agreement contained a provision mandating arbitration or mediation of all disputes. Performance allegedly granted another company publishing rights in addition to Questar, in violation of the licensing agreement. As a result of Performance’s actions, Questar refused to pay royalties to Performance for the Dovetales stories, also in violation of the licensing agreement. Dovetales was the single most significant royalty-producing licensing agreement for Performance, and without the funds from the agreement, Performance would likely collapse. Questar initiated arbitration proceedings with Performance. Performance filed a complaint in federal district court, alleging breach of contract. Performance also petitioned the court to grant a preliminary injunction to compel Questar to make the royalty payments. The district court denied the injunction, finding that under the Federal Arbitration Act (FAA), it could not issue a preliminary injunction pending arbitration. Performance appealed to the Sixth Circuit.