MARSHAK v. TREADWELL

OPINION

POLITAN, District Judge.

This matter comes before the Court on cross-motions for judgment as a matter of law and for a new trial pursuant to Federal Rules of Civil Procedure 50(b) and 59. The Court heard oral argument on April 9, 1999. For the reasons explained below, plaintiff Marshak's motions are DENIED and defendant Treadwell's motions are GRANTED IN PART.

FACTUAL BACKGROUND

I. The Litigation

This lawsuit arises out of a trademark dispute involving the musical group "The Drifters." The plaintiff Larry Marshak owned a federal trademark registration for the name "The Drifters," which he acquired through a 1976 assignment from three former Drifters singers, Charlie Thomas, Elsbeary Hobbs, and Dock Green. Since the assignment, Marshak has continuously used the mark in connection with his promotion of Drifters performances. In 1995, Marshak filed the instant Complaint alleging that Faye Treadwell had infringed and disparaged Marshak's federal trademark registration.1

As a defense to Marshak's infringement action, Treadwell alleged, and ultimately proved, that Marshak's federal registration had been obtained by fraud. Treadwell also proved that she and her late husband George Treadwell had owned and managed the original Drifters group since 1955. With regard to Treadwell's infringement counterclaim, however, the jury found that she had abandoned her trademark rights in or about 1976, when her group stopped performing regularly in the United States. Because Marshak's Drifters group has performed continuously since the early 1970s, the jury found that Marshak acquired common law trademark rights in 1976.

II. The Drifters: 1954 to 1969

The Drifters first appeared in New York in 1953. Shortly thereafter, in 1954, the group came under the management of George Treadwell, who had previously managed other musicians, including Sammy Davis, Jr., Billie Holiday, and Sarah Vaughn. Mr. Treadwell managed the group through The Drifters, Inc., a New York corporation that he formed in 1954. He married the defendant Faye Treadwell in March of 1955.

Although Mr. Treadwell owned all of The Drifters, Inc. stock, he managed the company with his two partners, Irving Nahan and Lewis Lebish.2 Mr. Lebish acted as the accountant and bookkeeper for The Drifters, Inc. Treadwell, assisted by his wife Faye and Irving Nahan, managed the entertainment side of the business. Together, they exercised complete artistic control over The Drifters: they hired and fired Drifters singers; they paid the singers a weekly salary; they selected the music and arrangements; and they made all musical and business decisions relating to both live performances and recording contracts.

Since the group's inception, The Drifters has always been comprised of a constantly changing cast of singers, including Ben E. King, Rudy Lewis, and Johnny Moore. During George Treadwell's stewardship, each Drifters singer was an employee of The Drifters Inc., and each of them signed a written employment contract and received a weekly salary.

In about 1959, Treadwell hired several singers from a group called "The Crowns." Three of these replacement singers were Charlie Thomas, Elsbeary Hobbs, and Dock Green. Thomas, Hobbs, and Green signed employment contracts with The Drifters, Inc. and they performed and recorded as members of The Drifters under Treadwell's exclusive management. Hobbs left the group less than two years later in 1961. Green left in 1964.

The Drifters continued to perform live concerts and record new music through most of the 1960s. The Drifters recorded dozens of original songs, many of which were "Top Ten Hits" on Billboard's Rhythm and Blues Charts. These included "There Goes My Baby" (1959), "Save the Last Dance for Me" (1960), "Some Kind of Wonderful" (1961), "Up on the Roof" (1962), "On Broadway" (1963), and "Under the Boardwalk" (1964). All Drifters records were recorded pursuant to recording contracts negotiated and signed by The Drifters, Inc. and the Atlantic Recording Company. The majority of royalties were paid to The Drifters, Inc. and its shareholders. It was undisputed that Mr. Treadwell exercised exclusive managerial control over the group, without interruption, from 1954 until his death in 1967.

After Mr. Treadwell's death, his widow Faye succeeded him as The Drifters' principal manager and shareholder. Charlie Thomas left The Drifters shortly after Faye Treadwell assumed control, but the remaining group members, including Johnny Moore, continued to sing and perform under the management of Mrs. Treadwell and as employees of The Drifters, Inc.3

It appears that the demand for live Drifters performances had substantially declined by the late 1960s. Although the Drifters shareholders continued to receive royalties from the sale of previously recorded albums, the Drifters' style of music had fallen out of favor in the United States. Treadwell began to focus the group's touring efforts in Europe, where The Drifters' popularity was growing.

II. The Reunited Drifters: 1970 through 1995

In 1969, CBS Radio Network adopted an "oldies format" for their FM radio station. At about the same time, CBS also formed a partnership with Rock Magazine, a subsidiary company, to produce live concerts featuring reunited singing groups from the fifties and sixties. Larry Marshak was an editor at Rock Magazine at the time. Although he had never met George or Faye Treadwell or any of their singers, Marshak was given the task of reuniting some of the old groups, including The Drifters.

Marshak first called former-Drifter Ben E. King. King declined Marshak's invitation to participate in a Drifters reunion tour, but he suggested that Marshak contact Charlie Thomas. Charlie Thomas accepted the offer, as did Elsbeary Hobbs and Dock Green. They began performing under the name "The Drifters" in 1970, and then appeared regularly at concerts promoted by CBS Radio and Rock Magazine.4 Shortly thereafter, Treadwell's attorney sent a letter informing Marshak that, pursuant to employment contracts signed by Thomas, Hobbs, and Green, Treadwell and The Drifters, Inc. owned the rights to the group's name.

In 1971, Treadwell brought an infringement action in the Supreme Court of New York against Marshak, Thomas, Hobbs, and Green, seeking to enjoin them from using the name "The Drifters" in connection with their performances. The court denied Treadwell's application for a preliminary injunction based upon its finding that Treadwell had not established a likelihood of success on the merits. The suit was dismissed the following year as a result of Treadwell's failure to provide adequate discovery.

Shortly after the dismissal of Treadwell's lawsuit in 1972, Marshak signed an exclusive management contract with his Drifters singers. Marshak's group toured extensively, and according to Marshak's testimony, he employed an aggressive litigation strategy to prevent any other groups from performing as "The Drifters." During this time, Treadwell became either unwilling or unable to compete with Marshak's superior resources. Since 1972, Treadwell's Drifters have performed primarily in Europe.5

Marshak testified that he later learned that a federal trademark registration would likely simplify his litigation strategy. After discussing the idea with Thomas, Hobbs, and Green, Marshak hired a trademark lawyer to draft the necessary documents. On December 15, 1976, Thomas, Hobbs, and Green executed an assignment of all of their rights to The Drifters mark to Larry Marshak.6 Two days later, on December 17, 1976, Thomas, Hobbs, and Green, acting through a partnership, filed an application in the United States Patent & Trademark Office to register "The Drifters" as a service mark for use in connection with a musical group. In support of their application, the registrants signed a declaration certifying that: (1) they believed themselves to be the rightful owners of "The Drifters" mark, and (2) to the best of their knowledge and belief, no other person or company had the right to use "The Drifters" mark in commerce.

On January 3, 1978, The Patent & Trademark Office issued a service mark, Registration Number 1,081,338, for "The Drifters." Marshak has owned that federal registration since 1978, and it has achieved incontestible status under the Lanham Trademark Act.

Marshak subsequently expanded his operation to include two, and sometimes three, separate groups of Drifters. Marshak testified that he coordinated his groups' performances so that there would never be more than one Drifters group in a particular geographic area. There was also evidence that Marshak signed a recording contract with Musicor Records and that some of his singers recorded new songs under the name "The Drifters," although Marshak testified that none of these recordings ever achieved the "Top Ten" status enjoyed by the original Drifters songs.

At the conclusion of the trial in this case, the jury found that Marshak and his assignors had never owned any rights to the name "The Drifters," and that they had defrauded the Patent and Trademark Office into issuing a federal trademark registration. Although the jury found that Marshak later acquired common law rights in the Drifters mark, he has lost the benefits of his incontestible federal registration. The jury's verdict leaves Treadwell in essentially the same position from which she started. Both parties now move before this Court for relief from the jury's verdict.

DISCUSSION

I. Standards of Review

Federal Rule of Civil Procedure 50 directs trial courts to enter judgment as a matter of law when "there is no legally sufficient evidentiary basis for a reasonable jury to find" in favor of the nonmoving party on an essential issue. In deciding a renewed motion for judgment as a matter of law, the Court must grant all reasonable inferences in favor of the jury's verdict. See Barna v. City of Perth Amboy, 42 F.3d 809, 812 (3d Cir.1994). This Court may not consider either the credibility or weight of the evidence. See Motter v. Everest & Jennings, Inc., 883 F.2d 1223, 1228-29 (3d Cir.1989). Rather, this Court must "confine [itself] to ascertaining whether the party against whom the motion is made adduced sufficient evidence to create a jury issue." Id. at 1229 (quoting Fireman's Fund Ins. Co. v. Vide-freeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976), cert. denied, 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977)).

Motions for a new trial are governed by the less exacting standards embodied in Rule 59. Under this Rule, a court may, in an exercise of its discretion, grant a new trial if the jury's verdict is against the clear weight of the evidence or if substantial errors occurred in the admission or rejection of evidence or the giving or refusal of instructions. See Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251, 61 S.Ct. 189, 85 L.Ed. 147 (1940); see also 12 MOORE'S FEDERAL PRACTICE § 59.13[1]. However, errors committed during the course of a trial cannot justify the grant of a new trial unless they affected the substantial rights of the parties. See Fed.R.Civ.P. 61.

A Rule 59 motion may also be granted upon a finding that the jury's verdict was against the great weight of the evidence. However, the Third Circuit has instructed that trial courts have an "obligation to uphold the jury's [verdict] if there exists a reasonable basis to do so." Motter v. Everest & Jennings, Inc., 883 F.2d 1223, 1230 (3d Cir.1989). Therefore, this Court must "search the record for any evidence which could have led the jury to reach its verdict, `drawing all reasonable inferences in favor of the verdict winner.'" Nissim v. McNeil Consumer Prod. Co., Inc., 957 F.Supp. 600, 601 (E.D.Pa.1997)(quoting Blum v. Witco Chemical Corp., 829 F.2d 367, 372 (3d Cir.1987)); see also 12 MOORE'S FEDERAL PRACTICE § 59.13[2][a].

II. Plaintiff Marshak's Motions

A. Renewed Motion for Judgment as a Matter of Law

1. Sufficiency of Evidence

The Lanham Act requires every trademark applicant to sign an oath declaring that the applicant believes himself to be the owner of the mark sought to be registered and "that no other person, firm, corporation, or association, to the best of [the applicant's] knowledge and belief, has the right to use such mark in commerce." 15 U.S.C. § 1051(a)(1)(A). Fraud in procuring a trademark "occurs when an applicant knowingly makes false, material representations of fact in connection with an application." Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed.Cir.1997)(citing 15 U.S.C. § 1064(3)). Fraud also occurs when an applicant willfully fails to correct an originally innocent misrepresentation after learning the true facts, knowing that the Patent & Trademark Office ("PTO") relied upon the misrepresented facts in granting the registration.

There has been no dispute that Marshak stands in the shoes of his assignors and that Marshak can have no greater trademark rights than they had. See Hyosung America, Inc. v. Sumagh Textile Co., 934 F.Supp. 570, 576-77 (S.D.N.Y.1996), aff'd in part, reversed in part, 137 F.3d 75 (2d Cir.1998). Nor has there been any dispute that the assignors — Thomas, Hobbs, and Green — acted through a partnership when they filed their federal trademark application. See Trans. at 144; see also Pretrial Order, Stip. Fact No. 25. Therefore, fraud may be established by evidence that either Charlie Thomas, Elsbeary Hobbs, or Dock Green knowingly made material misrepresentations in connection with their trademark application.7

In this case, the jury concluded that Marshak's federal trademark registration had been obtained by a fraud on the Patent and Trademark Office. He now asks this Court to set aside the jury's verdict on the ground that no reasonable jury could have found that the trademark registrants acted with fraudulent intent.8

After reviewing the evidentiary record, this Court is unable to see the merit in Marshak's motion. In this Court's judgment, the evidence of fraud was overwhelming.

Charlie Thomas' Employment Contract

First, there was the written employment agreement executed by Charlie Thomas and The Drifters, Inc.9 See Trial Exh. D-19. By its terms, the contract was executed during April of 1960 "between THE DRIFTERS, INC., a New York corporation, hereinafter called the `EMPLOYER' and CHARLES THOMAS ... hereinafter the `ARTIST.'" The contract contains numerous clauses regarding Thomas' obligations to perform and record songs at the sole direction of his employer, The Drifters Inc., and also forbidding Thomas from making any musical recordings without the express written consent his employer. What was most decisive in this case, however, was paragraph seven of the agreement, which provides:

Id.; see Trans. at 440-56.

Thomas' employment contract, standing alone, was sufficient for the jury to conclude that Thomas had made a knowing and material misrepresentation in his trademark application.

Continuous Commercial Use of Original Drifters Recordings

Next, the jury heard uncontroverted testimony regarding the continuous commercial use of original Drifters recordings, which have been played on the radio and sold in record stores since the 1950s. See Trans. at 597. Moreover, the following stipulated facts were read into evidence:

Trans. at 274-75; see also Pretrial Order at 5; Marshak v. Green, 505 F.Supp. at 1060 ("Drifters' records have been continuously available").

In sum, Marshak and his assignors applied for a trademark that was already being used in connection with the original Drifters records. Those records have been continuously marketed and sold under the name "The Drifters" and they contain the same songs that Marshak's group sings at its performances. In this Court's judgment, the applicants' failure to disclose this fact to the PTO is strong evidence of fraudulent registration and it was wholly uncontroverted at trial. There was simply no suggestion in this case that Thomas, Hobbs, Green, or Marshak were unaware, at the time of their trademark application, that Atlantic's recordings of original Drifters songs were being marketed, sold, and played on the radio throughout the United States. The jury was therefore free to conclude that they knew.

Atlantic Records' continuous commercial use of the original Drifters recordings provided clear and convincing evidence that Thomas, Hobbs, and Green committed a fraud upon the Patent and Trademark Office when they certified in 1976 that no other person, firm, corporation or association had the right to use The Drifters trademark in commerce. See Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed.Cir.1997)(holding that third party may petition to cancel fraudulently obtained trademark registration).

Charlie Thomas' Depositions

The jury also heard deposition testimony given by Charlie Thomas in two prior lawsuits, Marshak v. Arista Records, Civ. Index No. 96-3032(JBW)(S.D.N.Y.), and Marshak v. Green, Civ. Index No. 79-3458(EW)(S.D.N.Y.). Portions of these depositions were read into the record during Marshak's cross-examination in this case. See Trans. at 347-51, 388-94.11

In the Arista deposition, Thomas testified that he had joined The Drifters during the late 1950s at the request of George Treadwell. See id. at 347. Thomas also testified that Treadwell was the manager of the group and that Treadwell made all final decisions relating to performances, costumes, appearance bookings, musical content, travel arrangements, and personnel changes.12 See id. at 347-51, 389; see also Rick v. Buchansky, 609 F.Supp. 1522 (S.D.N.Y.1985)(holding that, in the absence of written contracts, the manager of a singing group may own the rights to the name if he or she remains continuously involved with the group and is in a position to control the quality of its services). Thomas further stated that he considered himself an "employee" of The Drifters and that he signed an employment contract to that effect. See id. at 348. He also stated that he was compensated in the form of a weekly salary. See id. at 389. Finally, Thomas testified that George Treadwell owned the rights to the name "The Drifters." See id. at 348.

In the Green case, Thomas testified that, after George Treadwell's death in 1967, he continued to sing as a member of The Drifters under the management of Faye Treadwell. See Trans. at 393. He also stated that Mrs. Treadwell made all final decisions affecting the group. See id. Finally, Thomas testified that he later quit Treadwell's Drifters and pursued a solo career singing under his own name, "Charlie Thomas." See id. at 390-91.13

Marshak offered no evidence to rebut Thomas' admission that he did not own the name "The Drifters" when he applied for his trademark registration. The Thomas depositions therefore provided sufficient evidence to support the jury's verdict.

Johnny Moore's Testimony

Johnny Moore sang lead vocal on the original Drifters recording of "Under the Boardwalk" in 1963 and "Saturday Night at the Movies" in 1964. See Trans. at 605. He testified that he joined George Treadwell's Drifters in 1954 and that he stayed with the group until he was drafted into the Army in 1957. See id. at 602. When Moore returned to the group in 1963, he was required to sign an employment contract with The Drifters, Inc. See id. at 606-07. Moore testified that he worked for George Treadwell's Drifters until Mr. Treadwell died in 1967. See id. at 608. Moore also testified that, when Mrs. Treadwell succeeded her husband as the group's manager in 1967, both Moore and Charlie Thomas continued to perform as members of The Drifters under Mrs. Treadwell's management. See id. Thomas quit the group within a year of Mr. Treadwell's death; Moore stayed until 1979. See id. at 603, 608-09.

Larry Marshak's Testimony

In addition to Charlie Thomas' employment contract and deposition testimony, as well as evidence regarding the continuous commercial use of original Drifters recordings, the jury also heard Mr. Marshak's live testimony and two of his prior depositions.

In the Green case, Marshak admitted that he knew that Thomas, Hobbs, and Green had previously been managed by Faye Treadwell.14 Mr. Marshak was then asked, "If someone had been with George Treadwell's Drifters and been part of the Drifters, would he have had the right to use the name Drifters?" Trans. at 387-88. Marshak answered:

Trans. at 388 (emphasis added); see also Trans. at 235-43, 711; Rick v. Buchansky, 609 F.Supp. 1522 (S.D.N.Y.1985).

Marshak's live testimony was also telling. In describing how he came to manage his Drifters group, Marshak told the jury that the first ex-Drifter he solicited regarding the 1970 reunion was Ben E. King, who declined the offer. See Trans. at 90-92. Marshak also testified that, shortly after he had reunited Thomas, Hobbs, and Green in 1970, he received a letter from Mrs. Treadwell's attorney claiming that The Drifters Inc. had superior rights to the name of the group. See Trans. at 96-98. Marshak also admitted that, several years prior to his federal trademark application, he had seen copies of the employment contracts between The Drifters Inc. and Marshak's assignors. See id. at 98-102, 104, 108, 288. Finally, Marshak testified that it had been his idea to file the trademark application in 1976, and that he handled all of the necessary details. See Trans. at 711-14; see also footnote 1, supra.

In addition to Marshak's sworn testimony, the jury also watched a video-tape of a television interview in which Marshak gave the following description of Charlie Thomas' connection with the original Drifters:

Stipulated Transcription of Video Tape (Trial Exh. D-100), attached as Exhibit A to June 21, 1999 Stipulation; see Trial Trans. at 256-65.

In the end, Marshak offered no explanation for how Thomas, Hobbs, and Green alone possessed the exclusive rights to the name "The Drifters" in 1976; nor did Marshak testify that he subjectively believed that they possessed such rights.15 Indeed, all of the evidence on this point was unequivocal: Marshak knowingly and intentionally helped his assignors defraud the Patent & Trademark Office into issuing a registration for a name that none of them owned.

Alleged Bases for J.N.O.V.

In this Court's judgment, the foregoing evidence provides ample support for the jury's finding that Marshak's federal trademark registration had been fraudulently obtained. Nevertheless, Marshak contends that no reasonable jury could have found fraud in light of the following three facts: (1) Marshak relied on the fact that Treadwell's 1971 lawsuit against him had been dismissed; (2) Marshak and his assignors consulted with a trademark attorney prior to submitting their federal trademark application; and (3) even if the application failed to disclose other users of the mark, such omissions were not fraudulent because Marshak and his assignors reasonably believed that those users were trademark infringers rather than trademark owners.16

Turning first to the 1971 lawsuit, this was an action brought by The Drifters Inc. against Marshak and his assignors in the Supreme Court of New York. See The Drifters, Inc. v. Thomas, et al., Index No. 27336/1971; Trial Exh. D-B. In that case, the court denied Treadwell's application for a preliminary injunction, and later dismissed the complaint because of Treadwell's failure to provide discovery. Marshak contends that he and his assignors reasonably believed, on the basis of this dismissal, that Treadwell had no rights in the name "The Drifters."17

Of course, any claim of reasonable reliance first requires proof of actual reliance. In this case, Marshak has cited no testimony or other evidence that he or his assignors subjectively believed that the dismissal of Treadwell's 1971 lawsuit constituted a final adjudication of their trademark rights. But even assuming that there was evidence of reliance, the jury clearly rejected it as unreasonable.

The jury also rejected Marshak's claim that he and his assignors had relied on the advice of a trademark attorney when they applied for their federal registration. There was simply no testimony that Marshak or his assignors discussed with the attorney either The Drifters Inc. employment contracts or Atlantic Records' continuous commercial sale of original Drifters recordings. Moreover, the evidence of the registrants' knowing misrepresentations was legion in this case. The jury surely could conclude that any claim of reliance was insincere or unreasonable.

Finally, the jury rejected Marshak's suggestion that the registrants' failure to disclose other users of the mark could not have been fraudulent because they had a colorable claim that those other users were infringers. The jury properly rejected this argument because there was no evidence that the registrants had a colorable claim of infringement against both Treadwell's Drifters and Atlantic Records prior to the 1976 trademark registration.18 Moreover, there was no testimony that Marshak or his assignors subjectively believed that both Treadwell and Atlantic Records were infringers. In the absence of such testimony, there is simply no factual basis for Marshak's argument.

In the end, there was more than sufficient evidence to support the jury's verdict that Marshak's trademark registration had been fraudulently obtained. Indeed all of the evidence led to the same conclusion: Thomas, Hobbs, Green, and Marshak knowingly and unabashedly took possession of a valuable trademark to which they had no colorable claim and then sought to register that mark with the PTO. The evidence also showed that they knew, but failed to disclose, that Atlantic Records was using the mark in connection with its marketing and sale of original Drifters records. Indeed, Marshak never really disputed that the 1976 trademark application contained these two material misrepresentations, and he utterly failed to adduce any evidence in support of his claim that these misrepresentations were innocent rather than fraudulent.19 In this Court's view, the jury's verdict reflected the only reasonable conclusion supported by the evidence; there was fraud as a matter of law.

2. Legal and Equitable Bases for J.N.O.V.

a) Res Judicata and Related Doctrines

Marshak has always contended in this case that Treadwell's counterclaim for cancellation is precluded by prior litigations. This Court has repeatedly rejected this argument because Marshak has cited only one prior case in which Treadwell was a party-in-interest, The Drifters, Inc. v. Thomas, et al., Index No. 27336/1971 (N.Y.Sup.Ct.), which was dismissed because of Treadwell's failure to provide adequate discovery. See Trans. at 435-38. No issue was actually litigated in that case and there was no judgment on the merits. See Maitland v. Trojan Electric & Machine Co., Inc., 65 N.Y.2d 614, 491 N.Y.S.2d 147, 480 N.E.2d 736 (1985)(holding that, under New York law, a dismissal for failure to comply with discovery obligations is not a judgment on the merits and does not bar a subsequent suit involving the same parties and issues); see also 7B N.Y. C.P.L.R. (McKinney's) § 5013 ("a judgment dismissing a cause of action before the close of the proponent's evidence is not a dismissal on the merits unless it specifies otherwise").

Treadwell was not a party-in-interest in any of Marshak's other lawsuits and she is therefore not bound by them. Indeed, in the two published opinions relied upon by Marshak, both district judges expressly declined to consider whether Marshak and his assignors had defrauded the PTO when they failed to disclose Treadwell's superior rights in their trademark application:

Marshak v. Sheppard, 666 F.Supp. 590, 598-600 (S.D.N.Y.1987); see also Marshak v. Green, 505 F.Supp. 1054, 1060-61 (S.D.N.Y.1981)(holding that Dock Green was estopped from asserting a claim of fraudulent registration because "Green swore to and signed the application").20

For these same reasons, this Court rejects Marshak's related contention that "the rule of stare decisis requires that a prior finding that Larry Marshak's mark is valid compels a finding of validity in the second action." Plaintiff's Memorandum in Support of Post-Trial Motions at 52-53. Treadwell's claim of fraud had not been previously litigated; she was entitled to her day in court.

This Court also rejects Marshak's assertion that Treadwell should be judicially estopped from claiming rights in the name "The Drifters" based upon her recent settlement of a royalty dispute in Thomas v. The Drifters, Inc., Index No. 25930/92 (N.Y. Sup.Ct., Queens Cty.). This Court has examined the transcript of that settlement; it reflects nothing more than Treadwell's agreement to make certain royalty payments to former members of The Drifters. She did not, as Marshak argues, disavow any rights or claims to the name "The Drifters." Indeed, the transcript contains no factual findings or representations of any kind. See Transcript of Proceedings, Jan. 6, 1999, attached as Exhibit E to Supp. Cert. of Mark J. Ingber in Further Support of Plaintiff's Post-Trial Motions.

b) Statute of Limitations

Marshak next argues that Treadwell's counterclaim for cancellation is barred by New York and New Jersey's six-year statute of limitations. However, Marshak simply cites no authority in support of his claim that this Court must borrow a state-law limitations period. Treadwell's counterclaim was brought pursuant to 15 U.S.C. § 1064(3), which, by its terms, permits such an action to be brought "at any time."

c) Subject Matter Jurisdiction

Marshak next contends that a petition to cancel a fraudulently procured trademark registration pursuant to 15 U.S.C. § 1064 may not be litigated in a federal district court. Although Marshak has never before raised this issue, this Court has considered the objection and finds it to be without merit.

Marshak cites no case in support of this argument. To the contrary, the cases Marshak has most heavily relied upon in this litigation show that "in general, neither opposition to registration nor a petition for cancellation under 15 U.S.C., section 1064, is a prerequisite to a cancellation counterclaim in an infringement action." Marshak v. Green, 505 F.Supp. at 1060; see also Orient Express Trading Company, Ltd. v. Federated Department Stores, Inc., 842 F.2d 650 (2d Cir.1988).

d) Equitable Relief

In light of the overwhelming evidence of fraud presented in this case, the Court declines to exercise its equitable powers on Marshak's behalf. This Court therefore rejects Marshak's invocation of the doctrine of laches. See Bausch & Lomb, Inc. v. Leupold & Stevens, Inc., 1 U.S.P.Q.2d 1497, 1499, 1986 WL 83320 (TTAB 1986)(holding that equitable defense of laches is inapplicable to claims of fraud).

The Court also declines to grant Marshak injunctive relief. First, the jury found that Treadwell did not infringe on Marshak's common law trademark rights; second, this Court will not consider alleged acts of infringement that occurred subsequent to the jury's verdict; and third, Mr. Marshak has unclean hands.

B. Motion for New Trial

1. Jury Instructions

Marshak contends that this Court's charge to the jury contained two legal errors that warrant a new trial. First, Marshak argues that it was error, in light of Marshak's incontestible trademark registration, to instruct the jury on the question of trademark ownership. Second, Marshak argues that it was error for this Court to instruct the jury that a verdict of fraudulent registration could be based upon a finding that the trademark registrants "knew or reasonably should have known" that their representations to the PTO were materially false.

a) Ownership Instruction

There was no question in this case that Marshak had an incontestible trademark registration for the name "The Drifters" as used in connection with a singing group. An incontestible mark is conclusive evidence of the registrant's ownership and exclusive right to use the mark. See 15 U.S.C. § 1115(b). However, "[e]ven where the mark has become incontestible, the statute allows challenge to the trademark on the basis that `the registration or the incontestible right to use the mark was obtained fraudulently.'" Marshak v. Sheppard, 666 F.Supp. 590, 598 (S.D.N.Y.1987)(quoting 15 U.S.C. § 1115(b)(1)).

In this case, Marshak initiated an infringement action against Treadwell. As a defense to that lawsuit, Treadwell alleged that the registrants of the trademark — Dock Green, Elsbeary Hobbs, and Charles Thomas — committed a fraud on the PTO when they misrepresented that they owned the rights to the name "The Drifters" and that "to the best their knowledge and belief no other person, firm, corporation or association has the right to use said mark [`The Drifters'] in commerce."

Accordingly, the Court gave the jury the following instructions:

Trans. at 751-52 (emphasis added). Later in the charge, the jury received more detailed instructions regarding the incontestible status of plaintiff's trademark:

Trans. at 754-55 (emphasis added).

At the charge conference, counsel for Marshak insisted that the incontestible status of his mark should preclude any instruction regarding ownership of the rights to the name "The Drifters." Marshak's objection was misplaced, however, because this Court did not instruct the jury to decide Marshak's infringement suit on the basis of who owns or owned the mark. Indeed, the Court gave the jurors detailed instructions regarding Marshak's incontestible registration and its preclusionary effects. The Court also instructed the jury that fraud requires "clear and convincing evidence [of a] deliberate attempt to mislead the Patent & Trademark Office into registering the mark." Trans. at 756.

However, in order to reach a verdict on Treadwell's defense of fraudulent registration, the jury had to determine whether the registrants knew it was false when they swore under oath that they owned the mark and that no other person had a right to use the mark in commerce. Without any instruction about how people can acquire or lose legal rights in a name, the jury would have had no standard by which to determine whether the registrants made a knowing misrepresentation to the PTO.

b) Fraudulent Intent Instruction

Marshak next contends that this Court erroneously instructed the jury that they could find fraud based upon evidence that the registrants "knew or reasonably should have known" that their trademark application contained materially false statements. See Trans. at 634-35. The relevant portion of the charge stated:

Trans. at 755-58 (emphasis added).

Marshak's counsel objected to the "reasonably should have known" language on the basis of the Tenth Circuit's decision in Stanfield v. Osborne Industries, Inc., 52 F.3d 867, 874 (10th Cir.1995). In that case, the plaintiff had granted to the defendant a "naked license" to use the name "Stanfield Products" and the defendant subsequently obtained a federal trademark registration for that name in 1978. See 52 F.3d at 872. Sixteen years later, the plaintiff-licensor sought to have the licensee's registration canceled because it was obtained by fraud in violation of 15 U.S.C. § 1120.

In affirming the district court's grant of summary judgment, the Tenth Circuit reasoned that the plaintiff had the burden of proving that the defendant had "signed the [trademark] oath knowing that it was false" and that, "therefore, [it is] the applicant's subjective belief that is at issue." 52 F.3d at 874. Significantly, however, the court did not suggest that this requires proof of actual knowledge.21 Nor did the Stanfield court suggest that a sincere but unreasonable belief could defeat a claim of fraud. Indeed, when the Tenth Circuit turned to the facts presented in that case, the court stated only that the registrant "could have reasonably believed that plaintiff had waived his rights to the trademark in that [license] agreement." 52 F.3d at 874.

This Court is not persuaded that the Tenth Circuit's Stanfield decision, if adopted by the Third Circuit, would require an instruction materially different than the one actually given to the jury in this case.22 Moreover, this Court found clearer guidance from the Federal Circuit, which has frequently confronted this issue.

In Torres v. Cantine Torresella, 808 F.2d 46 (Fed.Cir.1986), which involved an allegedly fraudulent trademark renewal application, the court stated that "[t]he problem of fraud arises because [the applicant] submitted a label that he knew or should have known was not in use that contained a mark clearly different from the one in use." 808 F.2d at 49. In affirming the PTO's decision to cancel the registration, the court held that "when [a registrant] knows or should know that he is not using the mark as registered ... he has knowingly attempted to mislead the PTO." Id.; see also G.H. Mumm & Cie v. Desnoes & Geddes, Ltd., 917 F.2d 1292, 1296 (Fed.Cir.1990)(quoting Torres, 808 F.2d at 49).

In short, this Court has found no support for Marshak's proposed instruction that a sincere but unreasonable belief in a statement's truth defeats a claim of fraud. But even assuming that such an instruction was warranted, any error was harmless because there was no testimony or other evidence that Marshak or his assignors actually believed that their trademark application was truthful. Moreover, there was direct evidence that the registrants knew that their representations to the PTO were false.

First, Charlie Thomas testified in a prior deposition that he considered himself an employee of The Drifters Inc. and that George Treadwell owned the group and its name. Second, Thomas' employment contract expressly stated that the name "The Drifters" belonged to his employer, The Drifters Inc. Finally, Larry Marshak stated, in a television interview, that Charlie Thomas had "joined the Drifters as an employee." Stipulated Transcription of Video Tape (Trial Exh. D-100), attached as Exhibit A to June 21, 1999 Stipulation; see Trial Trans. at 256-65.

There was also circumstantial evidence of knowledge. For example, every witness who testified about the original Drifters group, including Mr. Marshak, stated that the members of the original group changed frequently, and that no fewer than 30 different singers had performed and recorded original records under the management of George Treadwell and The Drifters, Inc. See Trans. at 711. It was also undisputed that Thomas, Hobbs, and Green were replacement singers hired by the Drifters in 1959 — five years after George Treadwell started managing the group in 1954. See Pretrial Order, Stip. Fact Nos. 4, 6, 7-12, 18; see also Trans. at 601-08. Moreover, there was no dispute that The Drifters continued to perform and record hit records after Hobbs left the group in 1961, and after Green left in 1964.23 See id. The evidence also showed that Johnny Moore joined Treadwell's Drifters in 1954 and that, after his military service, he worked for Treadwell's Drifters, without interruption, from 1963 until 1979. See Trans. at 602-03; see also Robi v. Reed, 173 F.3d 736 (9th Cir.1999)(holding that departed members of The Platters had no rights to the group's name because the original manager continued to use the name and manage the remaining Platters members). These facts support a reasonable inference that Marshak's assignors knew that they did not own the exclusive rights to the name "The Drifters" when they filed their trademark application in 1976.

In response, Marshak produced no testimony that he or his assignors ever believed — reasonably or unreasonably — that they owned the exclusive rights to the name "The Drifters;" nor was there any evidence that they were unaware of the prior and continuous use of the mark in connection with the marketing and sale of original Drifters records.

In light of Marshak's utter failure to adduce any evidence, or even a plausible theory, to rebut Treadwell's overwhelming showing of fraud, any error in the Court's instructions to the jury was harmless. As a matter of law, the evidence permitted only one conclusion: Marshak's trademark registration was obtained by a fraud on the Patent & Trademark Office.

2. Objections to Evidence

a) Charlie Thomas' Deposition in the Arista Case

Marshak contends that this Court erroneously admitted into evidence Charlie Thomas' deposition testimony from a prior lawsuit between Mr. Marshak and Arista Records. Marshak must first overcome the threshold issue of waiver, because his lawyer did not make a timely objection at trial. An objection is untimely, and thus waived, if it is not made as soon as the grounds for the objection could reasonably have been known. See Gov't of Virgin Islands v. Archibald, 987 F.2d 180, 184 (3d Cir.1993).

During Marshak's cross-examination, Mr. Flynn asked whether he knew that "Charlie Thomas was deposed in the Arista case." Trans. at 347. Marshak answered "yes," and also stated that he had been present during the deposition and represented by counsel.24 See id. A copy of the deposition was given to Mr. Marshak and his trial counsel, Mark Ingber, and then marked for identification. Mr. Ingber did not object. Mr. Flynn then asked Marshak 28 questions regarding the Thomas deposition. Mr. Ingber still made no objection. See Trans. at 347-51. Mr. Flynn then went on to cross-examine Marshak about a different subject, and shortly thereafter the Court took a recess. See id. at 351-52.

After the morning recess, Mr. Ingber made his first objection to the admission of Charlie Thomas' Arista deposition. This Court overruled the objection first on the basis of waiver. See Trans. at 359-61. Second, the Court also ruled that Thomas' deposition was admissible to show the state of mind of Thomas and Marshak. See id.

Mr. Ingber claims that his objection was timely because he had not had an opportunity to review the deposition transcript until it was introduced at trial. In this regard, Mr. Ingber made the following representation:

Trans. at 360. In addition, Mr. Ingber's post-trial certification states:

Supplemental Certification In Further Support of Plaintiff's Post-Trial Motions at ¶ 3 (emphasis in original).

As an initial matter, this Court finds that Marshak's claim of surprise was itself untimely.26 However, this Court is more troubled by Mr. Ingber's admission that, during the discovery phase of this litigation, he had "objected to [Treadwell's request to produce the Thomas deposition] on the basis of relevance." Plaintiff's Reply Brief In Support of Plaintiff's Post-Trial Motions at 2. Indeed, in response to Treadwell's specific requests for production of the Larry Marshak and Charlie Thomas deposition transcripts from the Arista case, Mr. Ingber wrote:

June 16, 1998 Letter of Mark J. Ingber, attached as Exhibit C to Supp. Cert. of Mark J. Ingber In Further Sup. of Post-Trial Motions; see also id. at Exhibit B (June 12, 1998 Letter of James P. Flynn).27

This Court will not comment further on Mr. Ingber's conduct. He has made representations to this Court that are patently inconsistent, and he is now precluded from claiming surprise. But even if Mr. Ingber's claim of surprise were timely and credible, it could not excuse his failure to make an objection that should have been obvious. See Gov't of Virgin Islands v. Archibald, 987 F.2d 180, 184 (3d Cir.1993). Charlie Thomas was neither a party nor a witness in the instant litigation and his deposition transcript from a prior lawsuit was therefore objectionable, on its face, as hearsay.

b) Charlie Thomas' Deposition in the Queens Case

Marshak contends that this Court erroneously prevented him from cross-examining Mrs. Treadwell with a transcript of Charlie Thomas' deposition in Thomas v. The Drifters, Inc., Index No. 25930/92 (N.Y. Sup.Ct., Queens Cty), which is a recently settled royalty dispute between Treadwell and several former Drifters singers. However, Marshak's brief contains no citation to an exhibit or other document that contains a transcript of the deposition he sought to use at trial. See Plaintiff's Memorandum of Law in Support of Post-Trial Motions at 30-32. In addition, this Court has scoured Marshak's voluminous submissions, in vain, to find a copy of the deposition transcript. This Court is therefore unable to evaluate the proffered testimony and must rely solely on the trial transcript, which reflects the following colloquy during Mr. Ingber's cross-examination of Mrs. Treadwell:

Trans. at 540-46.

This Court is satisfied that its ruling was correct. Charlie Thomas' out-of-court statement that he did not sign an employment contract with Treadwell's Drifters was inadmissible hearsay.

c) Charlie Thomas' Employment Contract

The Court is satisfied that the photocopy of Charlie Thomas' employment contract with The Drifters Inc. (Trial Exh. D-19) was properly admitted into evidence.

As an initial matter, it was a stipulated fact in this case that "Dock Green, Elsbeary Hobbs and Charles Thomas each signed employment contracts with The Drifters, Inc." Pretrial Order, Stip. Fact No. 9. Mr. Marshak also testified that, by 1971, he had seen copies of this and other employment contracts between The Drifters, Inc. and his assignors. See Trans. at 98-102, 104, 108, 288.

At trial, this Court admitted the photocopy pursuant to Federal Rule of Evidence 1004, which provides: "The original is not required, and other evidence of the contents of a writing ... is admissible if — (1) All originals are lost or have been destroyed, unless the proponent lost or destroyed them in bad faith." See Trans. at 451-53.

Mrs. Treadwell testified that she had seen an original at one time, but that it was lost years ago.28 See Trans. at 426-29, 451-53. She testified that she was able to get a copy, Exhibit D-19, from Atlantic Records.29 See id. at 442. Marshak's lawyer conducted a vior dire of Mrs. Treadwell, and this Court also examined portions of her deposition taken in the recently settled Queens royalty case. See id. at 444-52. After considering Mrs. Treadwell's live and deposition testimony on this subject, the Court concluded that she no longer had the original contract and that she did not lose it or destroy it in bad faith. See id. at 451-53. The photocopy was therefore admissible as "other evidence" under Rule 1004.

The photocopy was also admissible under Rule 1003, which provides: "A duplicate is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original."

With respect to the first requirement, there was no genuine question of authenticity. Mrs. Treadwell identified Exhibit D-19 as a second-generation copy of the original contract that she had seen years earlier. She also testified that she recognized Charlie Thomas' signature. See id. at 426-29. Marshak did not challenge the authenticity of Charlie Thomas' signature; nor did he challenge the accuracy of the photocopy. Indeed, Marshak's sole objection to the admission of D-19 was that, in his opinion, Treadwell had not sufficiently established that all of the original contracts were lost or destroyed. But Marshak never disputed that D-19 was what Treadwell claimed it to be — i.e., a copy of an employment contract between Thomas and The Drifters, Inc. Marshak therefore failed to raise a genuine question as to the document's authenticity.

It was not unfair to admit the photocopy in this case because: (1) Marshak testified that he had seen copies of this and other similar contracts on several occasions since 1971; and (2) Marshak did not dispute the accuracy of the photocopy or the authenticity of Charlie Thomas' signature. See Trans. at 98-102, 104, 108, 288.

This Court is therefore satisfied that the photocopy was admissible to the same extent as the original under Rule 1003,30 and also admissible as "other evidence" of the contract under Rule 1004.

3. Newly Discovered Evidence

In support of his motion for a new trial, Marshak cites "newly discovered evidence" that Charlie Thomas once denied having signed an employment contract with The Drifters, Inc. The purported denial is contained in a pleading filed on behalf of Charlie Thomas in the recently settled royalty dispute. See Thomas v. The Drifters, Inc., Index No. 25930/92 (N.Y. Sup.Ct., Queens Cty.), Charley [sic] Thomas's Response to Drifters Inc.'s Notice to Admit, attached as Exhibit 11 to Decl. of Mark J. Ingber. However, this Court has not considered the proffered document because it is not evidence and it is not new.

The Response to the Notice to Admit is not admissible evidence because the document is not signed or certified as true by Charlie Thomas; indeed it is signed only by Mr. Marshak's attorney, Lowell Davis.

The proffered document is not "new" within the meaning of Rule 59 because Marshak provides no reason why he could not with due diligence have located the pleading prior to trial. Moreover, the document is dated July 1, 1994 and it was written by Mr. Davis, who was in the courtroom during portions of this trial.

4. Comments by the Court

Marshak contends that this Court improperly instructed the jury that Treadwell's 1971 New York suit had been dismissed on a "technical ground." This remark was made during the Court's limiting instruction:

Trans. at 721.

This instruction was proper because the New York court's decision was admissible only as it related to Marshak's claim that he and his assignors sincerely believed that no other person or entity had legal rights in the name "The Drifters" when they filed their trademark application in 1976. Moreover, this instruction was necessary in light of Mr. Ingber's improper opening statement, which quoted extensively from the New York court's ruling on Treadwell's 1971 preliminary injunction application. See Trans. at 42-43. Indeed, Mr. Ingber quoted the court's description and characterization of the evidence, and then quoted its conclusion: "Finally, the Court said, `In fact, the evidence submitted apparently indicates that it is the defendants, Mr. Thomas, Mr. Hobbs, Mr. Green and Mr. Marshak, who have established such reputation and notoriety [in the name The Drifters].'" Trans. at 43 (opening statement by Mr. Ingber).

This Court is satisfied that its limiting instruction to the jury was both appropriate and necessary.

III. Defendant Treadwell's Motions

A. Motion to Set Aside Jury's Finding of Abandonment

Although the jury found that Marshak's trademark had been obtained by fraud, and that Treadwell was the true owner of the mark, the jury also found that Treadwell had abandoned her rights.31 Treadwell argues that a finding of abandonment is precluded, as a matter of law, by the uncontroverted evidence that she and her predecessors-in-interest have continuously received royalties from the commercial use of original Drifters recordings.32

The doctrine of "related use" was described for the jury as follows:

Trans. at 766; see 2 McCarthy on Trademarks and Unfair Competition § 17:15. Marshak did not object to this instruction and he did not dispute that a musical group's recordings and live performances are parts of a single business enterprise in the public mind. See Turner v. HMH Publishing Co., Inc., 380 F.2d 224, 228-29 (5th Cir.1967); see also Giammarese v. Delfino, 197 U.S.P.Q. 162, 163 (N.D.Ill. 1977).

Treadwell cites The Kingsmen v. K-Tel International, Ltd., 557 F.Supp. 178 (S.D.N.Y.1983). In that case, former members of the rock group "The Kingsmen" sought to enjoin another former member, Jack Ely, from suggesting to the public that his recent re-recording of the famous song "Louie, Louie" was performed by the original Kingsmen. Although there was no dispute that Ely was the lead vocalist on the original recording of "Louie, Louie," he had left the Kingsmen in 1964, before either the song or the group became popular. See 557 F.Supp. at 179-80.

Ely argued that his use of name "The Kingsmen" was permissible because, among other things, the mark had been abandoned to the public domain when the group disbanded in 1967 and ceased touring and recording songs. The district court rejected Ely's defense of abandonment because the other group members had continued to use the Kingsmen mark in connection with the sale of the group's original recordings. The court reasoned:

557 F.Supp. at 183 (emphasis supplied); see also HEC Enterprises, Ltd. v. Deep Purple, Inc., 213 U.S.P.Q. 991, 993 (C.D.Cal.1980)(holding that the original members of the musical group "Deep Purple" had not abandoned the name because they continued to receive royalties from the sale of their original recordings).

This Court is persuaded by the Kingsmen case and subsequent cases that have adopted its reasoning. See Robi v. Reed, 173 F.3d 736 (9th Cir. 1999)("adopt[ing] the holdings of HEC Enterprises, Ltd. and Kingsmen"). A successful musical group does not abandon its mark unless there is proof that the owner ceased to commercially exploit the mark's secondary meaning in the music industry. It is insufficient merely to prove that the group stopped performing and recording new songs. In this case, Marshak had the burden to prove that Treadwell stopped using the mark in connection with the continued sale of original Drifters recordings. Marshak adduced no such evidence; indeed, it was stipulated that the original Drifters recordings have been played on the radio and sold in record stores, without interruption, for the past 40 years. See Pretrial Order, Stip. Facts 13-15; see also Trans. at 464. Therefore, the name "The Drifters" could never have passed into the public domain.

In this Court's judgment, there was no evidence in the record from which a reasonable jury could infer that Treadwell stopped using the mark in commerce. As a matter of law, there was no abandonment. The Court will therefore vacate the jury's finding that Treadwell abandoned her trademark rights in 1976.33 Because The Drifters mark never passed into the public domain, it is clear that neither Marshak nor his assignors could ever have acquired common law trademark rights. The jury's verdict will be modified accordingly.

IV. Remedies & Attorneys Fees

Treadwell's trademark rights date back to 1954, when George Treadwell first acquired ownership and control of The Drifters. Larry Marshak has no legal rights in the mark.

The Court will permit the parties to file supplemental briefs so that they can address the issues of remedies and attorneys fees in light of today's decision. Plaintiff and defendant are to submit their respective briefs in accordance with the Order that accompanies this Opinion.

CONCLUSION

For the foregoing reasons, Marshak's motions are DENIED. Treadwell's motion to set aside the jury's finding of abandonment is GRANTED.

An appropriate Order accompanies this Opinion.

ORDER ON POST-TRIAL MOTIONS

THIS MATTER having come before the Court on cross-motions to set aside the jury's August 5, 1998 verdict; and the Court having heard oral argument on April 9, 1999 and having considered the parties written submissions; and for the reasons set out in the Court's Letter Opinion in the above-captioned matter;

IT IS on this 30th day of July, 1999,

ORDERED that Marshak's motion for judgment as a matter of law or, in the alternative, for a new trial be and hereby is DENIED; and it is further

ORDERED that Treadwell's motion for judgment as a matter of law or, in the alternative, for a new trial be and hereby is GRANTED; and it is further

ORDERED that this Court's FINAL JUDGMENT AND ORDER, entered September 30, 1998, be and hereby is MODIFIED as follows:

ORDERED that the jury's verdict and this Court's FINAL JUDGMENT AND ORDER remain unchanged in all other respects; and it is further

ORDERED that each party submit one supplemental brief as follows: