Drifters Servicemark Legal History

Jury Findings

Further Orders of the Court

The Marshak Appeal

The Treadwell Drifters Answer

Jury Findings

UNITED STATES DISTRICT COURT

FOR THE DISTRICT

OF NEW JERSEY

_________________________________
LARRY MARSHAK, :
Plaintiff- : Civ. No. 95-3794 (NHP)

Counterclaim Defendant,

: O P I N I O N

FAYE TREADWELL,

TREADWELL'S DRIFTERS, INC., and : FOR PUBLICATION

THE DRIFTERS, INC.

: July 30, 1999

Defendants-

Counter claimants. :

_________________________________
Appearances:
Mark J. Ingber, Esq.

WATERS McPHERSON McNEILL

300 Lighting Way

Secaucus, NJ 07096

Attorney for Plaintiff
James P. Flynn, Esq.

EPSTEIN BECKER & GREEN

One Riverfront Plaza

Newark, NJ 07102

Attorneys for Defendants-

Counterclaimants

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.

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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 trademarkregistration.See footnote 11

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.See footnote 22 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 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.See footnote 33

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 thesale 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.

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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.See footnote 44 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.See footnote 55

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.See footnote 66 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" infavor of the non-moving 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. Videfreeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976), cert. denied, 429 U.S. 1053 (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 (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 theregistration.

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.See footnote 77

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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.See footnote 88

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.See footnote 99 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:

The Artist agrees that the name of THE DRIFTERS belongs exclusively to the Employer and that he will not at any time use the name of The Drifters or any name similar thereto or any name incorporating The Drifters. In the event the employee leaves the employ of The Drifters he will not in any way advertise or attempt to publicize the fact that he had been a member of a singing group known as The Drifters and will not associate his name in any manner with The Drifters; and he further acknowledges that the name, The Drifters, is a valuable property and any violation of this paragraph could not be adequately compensated by money damages and he therefore agrees that the Employer shall be entitled to an injunction in any Court of competent jurisdiction to enjoin any violation or threatened violation of this contract by the Artist.
Id.; see Trans. at 440-56.

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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:

13. Treadwell's Drifters performed and recorded a number of songs throughout the United States under the name The Drifters, each of which are original works of authorship.
14. Amongst the most popular of these songs are "There Goes My Baby," "Up on the Roof," "Under the Boardwalk," "Save the Last Dance for Me," and "On Broadway," each of which were "Top-10" hits on Billboard's Rhythm and Blues charts.
15. Each of these songs have [been] publicly performed on the radio throughout the United States, sold on singles records and albums, and continue to be played and sold in the United States to this day.See footnote 1010

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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.See footnote 1111

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.See footnote 1212 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.See footnote 1313

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 andCharlie 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.See footnote 1414 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:

In the music business, continually there are people coming and going in groups. . . . The only person who has the right to the name is the person that develops it and keeps it in the public's eye. I might be one person, but the whole act, it is a continuing situation. People die and new people is a hundred people. That's what it looks like. I don't know what that means. Continually four or five of them are changing every day and it's a common _- certainly someone who sang with the Drifters, just by virtue of having sung with the Drifters, didn't develop a right to the name when he left voluntarily or even when he was dismissed from the Drifters.
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:

They already had had three top ten records by the time [Charlie Thomas] joined the Drifters in the 1950's. He joined the Drifters as an employee. He got a job. He was now a sideman.

Can a sideman in Les Mis go around saying he is Les Mis? Of course not.

He got a job. He worked then under somebody's direction, who told him what to do. . . .

None of the original members, not from the Drifters, the Platters, the Marvelettes, ever wrote those songs, ever arranged those songs, ever chose the materials, chose the singers to perform. They had nothing to do with what made them hit records, except their voices.

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.See footnote 1515 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.See footnote 1616

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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."See footnote 1717

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.See footnote 1818 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.See footnote 1919 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.

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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., 480 N.E.2d 736 (N.Y. 1995)(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:

These arguments miss the mark, however, because they could only accrue, if at all, to Treadwell's benefit, not to Sheppard's. Sheppard argues that the rights to "The Drifters" were lodged in the group's manager, Treadwell, and the corporation he set up to control the group's assets. In this case, however, when only Marshak's and Sheppard's rights are at stake, these arguments are irrelevant.

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").See footnote 2020

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 toregistration 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 (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:

The defense of fraud will turn upon whether you believe that the persons who registered the mark knew or reasonably should have known that someone else had legal rights to the name "The Drifters." This will require you to consider the ways in which people acquire and lose legal rights in a name. You will have to determine who in fact owned the rights to the name "The Drifters" at the time Mr. Marshak's trademark was registered with the Patent and Trademark Office. And you will have to determine whether the persons who registered the mark made a fraudulent misrepresentation to the Patent and Trademark Office.
Trans. at 751-52 (emphasis added). Later in the charge, the jury received more detailed instructions regarding the incontestible status of plaintiff's trademark:

Larry Marshak's registration for the service mark "The Drifters" has achieved incontestable status under the Lanham Trade Mark Act. The registration of an incontestable mark is conclusive evidence of the validity of the registered mark and of the registration of the mark, and of Larry Marshak's ownership of the mark, and of Larry Marshak's exclusive right to use the registered mark in commerce. Indeed, incontestable status also protects a registrant from having his mark canceled by one merely claiming superior rights based on prior usage.

Since Larry Marshak's mark is federally registered and has achieved "incontestable" status, the first element necessary to prove trademark infringement, validity and legal protectability, is conclusively established. The second element, Larry Marshak's ownership of his mark, is also admitted and conclusively established.

However, despite the term "incontestible," Marshak's incontestible mark may be canceled if defendants prove either that the federal registration was obtained fraudulently or that Marshak's registered mark is being used so as to misrepresent the source of the goods or services of Treadwell.

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:

When considering whether the servicemark Mr. Marshak possessed was obtained through fraud, the following factors must be proven by clear and convincing evidence:
1. a false representation was made to the Patent and Trademark Office regarding a material fact;
2. the registrant's knowledge or belief that the representation was false;
3. the intention to induce action or refraining from action in reliance on a misrepresentation;
4. reasonable reliance on the misrepresentation; and
5. damages proximately resulting from such reliance

The defendants, who allege such fraud, bear a heavy burden of proof. Fraud must be shown by clear and convincing evidence in order to provide a basis for either cancellation or damages and you may find fraud only when there is a deliberate attempt to mislead the Patent and Trademark Office into registering the mark.
Clear and convincing, as a standard of proof, requires a quantum of evidence somewhere beyond a mere preponderance, but well below that of 'beyond a reasonable doubt,' and such that it will produce in your mind as the trier of fact a firm belief as to the facts sought to be established. Honest mistake, inadvertence, erroneous conception of rights and negligent omission does not constitute fraud. . . .
. . . [T]he applicant [has] a duty to disclose those users whom the applicant reasonably should know have legal rights to use the mark. In other words, if the applicant had a reasonable and good faith belief that no other person or entity had legal rights to use the mark, then the registration was not obtained by fraud.
Fraud against a registrant will not lie where a statement was a false misrepresentation occasioned by honest misunderstanding, inadvertence, negligent omission, or the like. Rather, fraud requires proof of a willful intent to deceive. However, fraud may be found if the applicant or registrant knew or reasonably should have known that the fact represented was not true.
A person may also commit fraud by willfully failing to correct his or her own originally innocent misrepresentation to the Patent and Trademark Office if that person later learns of the true facts, knowing that the Trademark Office has relied upon the misrepresented facts in granting the trademark registration.

If you merely find that Larry Marshak's assignors signed an application for trademark rights which stated that no others had the right to use The Drifters mark in commerce, this is insufficient to establish that Larry Marshak's assignors committed fraud in procurement of federal trademark, absent evidence that such assignors actually knew , or reasonably should have known that others had legal, contractual right to use mark.
Trans. at 755-58 (emphasis added).

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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.See footnote 2121 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.See footnote 2222 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.See footnote 2323 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.

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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.See footnote 2424 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:

I also want to note on the record that I was not the attorney at this Arista deposition. I had no idea about it. I was not familiar with any aspect of it . . . .
Trans. at 360. In addition, Mr. Ingber's post-trial certification states:

I received [the Thomas deposition] for the first time [at trial]. Notwithstanding opposing counsel's false assertions that I had my own copy of the Thomas deposition transcript in advance of trial, I did not. Nor was I aware of its contents. Obviously, had I previously seen the unswornSee footnote 2525 and incomplete Thomas deposition transcript . . . I would have immediately objected.

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.See footnote 2626 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:

In response to your letter dated June 12th, I wish to reiterate that the information you are requesting is not relevant to any issue involved in the pending action nor is it reasonably calculated to lead to the discovery of admissible evidence. Accordingly, my client is not obligated to participate in your fishing expedition.

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).See footnote 2727

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:

Q: Now, I'd like you to show you a deposition transcript of Charlie Thomas --
MR. FLYNN: Objection.
Q: -- in connection with --
THE COURT: Show it.

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Q: -- with the case of Charlie Thomas and Elsbeary Hobbs against your company, The Drifters, Inc., and Atlantic Recording. I'd like to show that to you.
(Exhibit shown to the witness.)
THE COURT: What is the question?
MR. INGBER: Your Honor, this is --
THE COURT: What is the question.
MR. INGBER: I'd like you to turn to page 121.
THE COURT: What are you going to do?
MR. INGBER: Pardon?
THE COURT: What are you going to do?
MR. INGBER: Read.
THE COURT: Read her a portion of Charles Thomas' deposition?
MR. INGBER: Yes, your Honor.
THE COURT: Fine. I'll see you at sidebar.
. . .
(The following occurs at sidebar:)
MR. INGBER: Your Honor, this is the same deposition that both sides were reading earlier in the case, which I think came in --
THE COURT: Came in when you all were sleeping around.
MR. INGBER: We both agreed we could both use the deposition transcript without any different kind of objections.
MR. FLYNN: I beg to differ on that. First of all, the deposition testimony [I] confronted Mr. Marshak with was the Arista case. The only time this case, a case in New York, in the New York Supreme Court [w]as referred to, was when Ms. Treadwell was confronted on voir dire with her deposition. This is hearsay. The fact that Mr. Ingber didn't object when I used Thomas -- there was no agreement. This can't come in. It is objectionable.
THE COURT: I don't know how it comes in evidence.
MR. INGBER: Your Honor, this is a statement against her interest, here.
THE COURT: By a person who is against her interest.
MR. INGBER: Not necessarily, your Honor. This is a case where she was involved in a lawsuit. She is a named party here. The Drifters, Inc. The other side is allowed to use Charlie Thomas' deposition testimony.
THE COURT: You are totally missing the point. First of all, the other testimony that was permitted, number one, went to two things. Number one, it was -- the horse was out of the box and you never objected to the testimony.

Secondly, that testimony went to the state of mind and the knowledge of your client, Mr. Marshak, at the time he filed this application for trademark registration. It went to the element of his knowledge and whether he was aware of certain things at that time. I permitted that because of those two factors.

To come in now to seek to use a deposition from someone who is -- actually, a non-party -- well, he's a party in one sense. But he's a non-party. Although Mr. Marshak's rights are derivative.
MR. INGBER: Exactly.
THE COURT: To suggest that his testimony in a prior proceeding can be used or admitted into evidence either to cross-examine this witness or on its own is absolutely wrong. I will not permit it. You have an exception.

MR. INGBER: I wasn't going to say that. I'd like to read it out on rebuttal.
THE COURT: You can't read it.
MR. INGBER: Why, your Honor? Based on my client's reliance. My client steps into his shoes, your Honor.
THE COURT: What theory is that? April 5th, 1995?

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MR. INGBER: Right. She testified he's a liar already, your Honor.
THE COURT: That has nothing to do with the admission of a deposition of a non-party to this proceeding. These are sworn -- what is his name? Mr. Thomas. Bring him in. Bring him in to testify.
MR. INGBER: You let them use it.
THE COURT: Don't say I let. You let, sir. Number one. You let it in. You never objected to it. Had you objected to it, I would have permitted it in anyway, dealing with the state of mind of the plaintiff, Mr. Marshak, who against him the defense has raised there was a fraud committed on the Trademark Office.

His state of mind becomes very important with the jury assessing whether or not this defendant can prove, as they have the obligation to prove and they have the burden of proving, fraud. That is a different subject matter.
MR. INGBER: I can't ask her if she's aware whether or not Charlie Thomas has denied signing any contracts?
THE COURT: No. You cannot. You cannot do that, sir. Because this is out-of-court statements by a declarant who is not present for cross-examination.

You have every right to subpoena Mr. Thomas and bring him in here and let him say whatever he wants to say. You can bring in Mr. Hobbs, if he's still alive. He's passed on, hasn't he?
MR. FLYNN: As Mr. Green.
THE COURT: You can bring Charles Thomas in here to testify as to anything he wants to say. He can get on the stand and testify that he had an absolute right --
MR. INGBER: I --
THE COURT: Listen to me. He can come in here and testify he had an absolute right to transfer that to your client. He can tell us the reasons for those rights. But to read his deposition is improper.
MR. INGBER: I won't read the deposition. I don't see why I can't even ask her whether or not she is aware of whether Charlie Thomas has denied signing any contracts.

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THE COURT: Doesn't matter.
MR. INGBER: It goes to her state of mind, your Honor.
THE COURT: Not her state of mind. Hers is not a state-of-mind question. Your client's state of mind is because he is being charged with fraud. His state of mind is an issue in the case. Her state of mind is not an issue in the case.
MR. INGBER: It also goes as to abandonment, your Honor. That is a state of mind issue [as] well.
THE COURT: It doesn't.
MR. INGBER: Abandonment is a state of mind. It is intent.
THE COURT: Intent to abandon. Done by objective facts. Not done by the testimony of Charlie Thomas.

That is my ruling.
(End of sidebar conference)

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.See footnote 2828 See Trans. at 426- 29, 451-53. She testified that she was able to get a copy, Exhibit D-19, from Atlantic Records.See footnote 2929 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.

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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,See footnote 3030 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:

It [the dismissal] is not binding upon you. But it is introduced into evidence to show circumstances that Mr. Marshak has presented here concerning what he did and why he did certain things. It is not binding upon you. You should not accept it as binding upon you in your determination of the issues in this case. . . . [It was] dismissed . . . on a technical ground. It has nothing to do with the merits of the case.

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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.See footnote 3131 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.See footnote 3232

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

There is no abandonment or break in the chain of priority of use merely because use of the mark is shifted from one line of goods or services to another similar line. A change in the kind of goods or services marketed under the trademark is not an abandonment of the trademark owner's priority if prospective purchasers are likely to perceive the new product as originating from the same source as the former product.
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:

We find that defendants have failed to show either non-use or intent to abandon. Even though plaintiffs disbanded their group in 1967 and ceased recording new material, there is no evidence suggesting that they failed to use the name Kingsmen during the period from 1967 to the present to promote their previously recorded albums. Moreover, the fact that these individuals continue to receive royalties for Kingsmen recordings flies in the face of any suggestion of an intent to abandon use of the name Kingsmen. These plaintiffs have no more abandoned their right to protect the name of Kingsmen than have The Beatles, The Supremes or any other group that has disbanded and ceased performing and recording, but continues to collect royalties from the sale of previously recorded material.

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.See footnote 3333 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.

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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.

__________________________

NICHOLAS H. POLITAN

U.S.D.J.
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Footnote: 1 1The Drifters, Inc. and its successor corporation, Treadwell's Drifters, Inc., are also named as defendants. Faye Treadwell was the sole shareholder of The Drifters, Inc. in 1976, when she transferred the company's assets to her new corporation, Treadwell's Drifters, Inc., and allowed The Drifters, Inc. to lapse as a corporate entity. All record royalties previously being paid to The Drifters, Inc. are now paid to Treadwell's Drifters, Inc. or to Faye Treadwell.

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Footnote: 2 2In 1959, The Drifters, Inc. amended its Certificate of Incorporation to make George Treadwell, Lewis Lebish, and Irving Nahan equal owners of The Drifters, Inc. Faye Treadwell inherited her husband's stock in 1967. She later purchased Nahan and Lebish's shares and, in or about 1970, Faye Treadwell became the sole shareholder of The Drifters, Inc.

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Footnote: 3 3Johnny Moore first joined The Drifters in 1954. He then served in the United States Army from 1957 to 1963. After leaving the Army, Moore rejoined The Drifters and signed an employment contract in 1963. He sang lead vocals on many original Drifters recordings, including "Under the Boardwalk" and "Saturday Night at the Movies" in 1964.

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Footnote: 4 4Following their respective departures from the original Drifters, neither Thomas, Hobbs, nor Green had performed as "Drifters" until they were reunited by Marshak in 1970.

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Footnote: 5 5According to Mrs. Treadwell's testimony, she had brought her group to England because of the demand for Drifters concerts that existed there, and also to avoid costly litigation with Mr. Marshak.

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Footnote: 6 6It appears that Marshak's consideration for the assignment was his promise to continue to employ and manage his assignors as Drifters singers in a fair and reasonable manner.

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Footnote: 7 7Mr. Marshak's knowledge that the trademark application contained material misrepresentations was also relevant, in addition to his assignors' knowledge, because Marshak plainly testified that he was more than a purchaser or assignee of the trademark registration; he conceived, coordinated, and executed the entire plan.

Marshak testified that he got the idea of filing a trademark registration from an article he had read about the group "The Platters" and how they had been able to protect their name by obtaining a trademark. See Trans. at 712. Marshak said that he "thought maybe this would be a way for us to simplify the litigation process." Id. Marshak further testified that he discussed the idea with Charlie Thomas, Doc Green, and Elsbeary Hobbs. See id. at 711-14. Marshak then discussed the matter with his personal attorney, and he subsequently retained a lawyer who specialized in trademark law. See id. After several subsequent meetings with the trademark attorney, Marshak, Thomas, Hobbs, and Green agreed to pursue the federal registration. See id. at 140 ("we came to the conclusion we would file for trademark"). Marshak also testified that he was present while the trademark documents were drafted. See id. at 144. Finally, it is a stipulated fact in this case that Thomas, Hobbs, and Green executed the assignment to Marshak two days before they filed the trademark application. See Pretrial Order, Stip. Fact Nos. 27-29.

To the extent that Marshak and his assignors acted in concert and pursuant to an agreement to defraud the Patent and Trademark Office, the jury was free to impute Marshak's knowledge to his assignors. Marshak's knowledge was also relevant to the extent that he wilfully failed to correct material misrepresentations during the 23 years following the initial application and assignment.

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Footnote: 8 8Marshak does not argue that the representations made to the PTO were true or immaterial.

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Footnote: 9 9At trial, Marshak objected to the admission into evidence of photocopies of the Thomas contract, but he never disputed the fact that Thomas had signed an employment contract with The Drifters, Inc. Indeed, it was a stipulated fact that "Dock Green, Elsbeary Hobbs and Charles Thomas each signed employment contracts with The Drifters, Inc." Pretrial Order, Stip. Fact No. 9. Marshak's evidentiary objection is discussed in connection with his motion for a new trial, infra.

As to Marshak's claim that there was confusion between Charlie Thomas' employment contract (Trial Exh. D-19) and a different contract signed by singer Charles "Don" Thomas (Trial Exh. P-QQQ), the jury was able to examine and compare both contracts.

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Footnote: 10 10These stipulations were reaffirmed by Mr. Marshak during his cross-examination. See Trans. at 274-75; see also id. at 68- 70. The evidence showed that the famous Drifters songs listed in Stipulated Fact 14 were recorded pursuant to recording contracts between The Drifters, Inc. and Atlantic Records. See Trans. at 413, 419-20.

It is worth repeating that Marshak testified that he had no connection with The Drifters when they recorded any of the Top Ten songs for which the group became famous; indeed, Marshak stated that he was in high school at the time. See Trans. at 274-82. Marshak's Drifters have not recorded any original Top Ten songs while under his management.

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Footnote: 11 11Marshak argues that it was error for this Court to permit Thomas' Arista deposition to be read into the record_- notwithstanding his failure to make a timely objection. This issue is discussed below, in connection with Marshak's motion fora new trial pursuant to Rule 59.

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Footnote: 12 12Faye Treadwell and Ruth Bowen, a booking agent, also testified that George Treadwell made all final decisions regarding the group's performances and personnel. See Trans. at 400-07 (Ruth Bowen), Trans. at 463 (Faye Treadwell).

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Footnote: 13 13All of the evidence at trial, in addition to the stipulated facts, established that Charlie Thomas performed as a member of Treadwell's Drifters until at least the end of 1967, after Faye Treadwell had succeeded her husband as the group's manager. See Pretrial Order, Stip. Fact No. 11; see also Trans. at 608-09.

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Footnote: 14 14When asked if he knew a person named Abdul Samad, Mr. Marshak answered that "he [Samad] arranged music for Charlie, Doc and Barry [Hobbs] when they were with Faye. I don't know who it was for." Trans. at 387 (emphasis added). Indeed, it is a stipulated fact in this case that "Charles Thomas was a singer with Treadwell's Drifters from 1959 to 1967." Pretrial Order, Stip. Fact No. 11.

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Footnote: 15 15The only evidence that even remotely touched on this issue was a remark in Mrs. Treadwell's 1993 book:
Following the departure of Gerhart Thrasher and company in May 1958, Treadwell transferred the name Drifters to a group previously called the Crowns. When George died in 1967, all rights to the Drifters name passed to his widow Faye . . . .
Tony Allan with Faye Treadwell, Save the Last Dance for Me: The Musical Legacy of the Drifters, 1953-1993, at 123 (Popular Culture, Ink. 1993)(Trial Exh. D-58); see also Trans. at 496-98.

Obviously, the foregoing passage is not substantive evidence of a 1958 transfer of trademark rights. See Trans. at 777-79. The quoted passage does not suggest or imply that The Crowns or its members ever received any legal rights in the name "The Drifters." This was confirmed by the evidence at trial, which established that George Treadwell, who had become dissatisfied with his Drifters singers, asked Lover Patterson to "sign[] over the contracts of the [] Crowns to George Treadwell." Save the Last Dance for Me, at 79; see id. at 71 (Treadwell decided "to replace the Drifters with the Crowns"). Finally, it was stipulated in this case that:
The members of Treadwell's Drifters varied over the years. Three of these replacement singers, Dock Green, Elsbeary Hobbs, and Charles Thomas, were from a group previously performing as "The Crowns."
Pretrial Order, Stip. Fact Nos. 7-8.

This Court finds that the book's reference to a "transfer to the Crowns" was insufficient to create an issue of fact for the jury. Marshak presented no substantive evidence that George Treadwell or The Drifters, Inc. had ever sold, assigned, or otherwise transferred any trademark rights to Hobbs, Green, Thomas, Marshak, or The Crowns.

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Footnote: 16 16Marshak also argues that the jury "should have accepted" the expert testimony given by Jeffrey Samuels. Pl. Mem. In Support at 19. However, Mr. Samuels merely testified generally about the PTO's application procedures. Although Mr. Samuels also stated that Marshak and his assignors had complied with the PTO's filing procedures, he did not express an opinion about whether the application contained any fraudulent misrepresentations. His testimony may have provided background information that was helpful to the jury, but it was not substantive evidence.

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Footnote: 17 17Under 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 Maitland v. Trojan Electric & Machine Co., Inc., 480 N.E.2d 736 (N.Y. 1995); 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").

The jury was instructed to consider the 1971 New York decision only as it related to the registrants' knowledge or belief that no other person had legal rights to use the name "The Drifters" in commerce. It was not admitted as substantive evidence of trademark rights. See Trans. of Proc. at 720-21.

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Footnote: 18 18Marshak's counsel does not state a factual basis for this defense, but presumably he is referring to the 1971 New York case. However, Thomas, Hobbs, and Green were defendants in that case, which was later dismissed because of the plaintiff's failure to answer interrogatories. Such a dismissal could not, by itself, confer upon the registrants a colorable claim of infringement.

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Footnote: 19 19Even assuming, arguendo, that the misrepresentations were innocent when made in 1976, Marshak's failure to correct these material falsehoods during the subsequent 23 years also requires a finding of fraud.

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Footnote: 20 20Notwithstanding Marshak's objection, this Court finds no error in its refusal to publish the Green and Sheppard decisions to the jury. These materials were irrelevant under Rule 401. In addition, any probative value was substantially outweighed by the danger of unfair prejudice. See Fed. R. Civ. P. 403.

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Footnote: 21 21This is also consistent with the black letter rule, applicable in both civil and criminal cases, that knowledge may be established by proof of reckless disregard for the truth. See United States v. Coyle, 63 F.3d 1239, 1243 (3d Cir. 1995)(holding that, in a criminal mail fraud prosecution under 18 U.S.C. § 1341, where "proof of specific intent is required, [it] may be found from a material misstatement of fact made with reckless disregard for truth").

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Footnote: 22 22Marshak also cites Orient Express Trading Company, Ltd. v. Federated Department Stores, Inc., 842 F.2d 650, 653 (2d Cir. 1988) for the proposition that "[t]he allegedly fraudulent statements may not be the product of mere error or inadvertence, but must indicate a deliberate attempt to mislead the PTO." This language is nearly identical to the instructions given to the jury in this case. See Trans. at 756, lines 5-17.

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Footnote: 23 23Significantly, the evidence showed that, following their respective departures from Treadwell's Drifters, neither Thomas, Hobbs, nor Green performed under the name "The Drifters" until they were hired by Larry Marshak during the early 1970s. See Trans. at 92-94, 390-91.

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Footnote: 24 24Marshak's lawyer at that time was Lowell Davis. Mr. Davis did not cross-examine Mr. Thomas because he had represented him in a prior lawsuit. See Trans. at 347

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Footnote: 25 25This Court is puzzled by Mr. Ingber's repeated references to the "unsworn" deposition of Charlie Thomas. The subject deposition transcript begins: "CHARLES THOMAS, the witness herein, having first been duly sworn by Tracey Vargas, a Notary Public in and for the State of New York, was examined and testified as follows . . . ." Feb. 27, 1998 Deposition of C. Thomas at 4, Marshak v. Arista Records, attached as Exhibit D to Supp. Cert. of James P. Flynn.

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Footnote: 26 26At oral argument, Mr. Ingber suggested that he had declined to object for tactical reasons:
THE COURT: You didn't say: Your Honor, I object. I've been surprised. I never saw this document before.

MR. INGBER: Because I wanted to hear it, your Honor.
Trans. of Proc., August 11, 1998, at 46.

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Footnote: 27 27Mr. Flynn and Mr. Ingber sent simultaneous copies of their letters to this Court.

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Footnote: 28 28The record is not clear on this point, but it appears that the 1960 contract was either lost or destroyed in an office fire.

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Footnote: 29 29Treadwell testified that Atlantic Records' files contained copies of Drifters Inc. employment contracts, and that Exhibit D- 19 was a photocopy of one of Atlantic's copies. See Trans. at 442-44.

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Footnote: 30 30Exhibit D-19 was a copy of a document retrieved from Atlantic Records' files. That document was itself admissible under Rule 1003. It was also admissible under Rule 901(b)(8), because it was more than 20 years old and found in normal condition and in a place where it would likely be.

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Footnote: 31 31The Court instructed the jury that a trademark owner "abandon[s] his rights to exclusive use of [a] trademark if he discontinues its use with an intent not to resume it. . . . The party asserting abandonment, here Mr. Marshak, has the burden of proving that abandonment occurred by a preponderance of the evidence. Under the Lanham Act, proof of non-use for two years creates a presumption that the mark has been abandoned." Trans. at 763-64.

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Footnote: 32 32At oral argument on the instant motions, Marshak argued for the first time that Treadwell's royalties are merely a "manager's share" and that she had granted a "naked license" to Atlantic Records. However, Marshak does not cite any evidence in the record in support of these contentions, and this Court has found none. Moreover, neither of these arguments were raised at trial and they are therefore waived.

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Footnote: 33 33This Court also makes the alternative finding, as required by Rule 50(c)(1), that the jury's finding of abandonment was against the great weight of the evidence and warrants a new trial. See Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 296 (3d Cir. 1991).

Further Orders of the Court

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CHAMBERS OF MARTIN LUTHER KING JR.

NICHOLAS H. POLITAN FEDERAL BUILDING &

U.S. COURTHOUSE

JUDGE 50 WALNUT ST., ROOM 5076

P.O. BOX 999

NEWARK, N.J. 07101-0999

NOT FOR PUBLICATION
August 16, l999

LETTER OPINION

ORIGINAL ON FILE WITH CLERK OF THE COURT

Mark J. Ingber, Esq.

WATERS McPHERSON McNEILL

300 Lighting Way

Secaucus, NJ 07096

Attorney for Plaintiff
James P. Flynn, Esq.

EPSTEIN BECKER & GREEN

One Riverfront Plaza

Newark, NJ 07102

Attorneys for Defendants
Re: Larry Marshak

v. Faye Treadwell, et al.

Civil Action No. 95-3794 (NHP)
Dear Counsel:
This matter comes before the Court on the parties' supplemental submissions addressing the issues of attorneys fees and final remedies. These issues were previously resolved by the Court in a September 25, 1998 Letter Opinion, which was filed shortly after the jury's verdict but well before the July 30, 1999 Opinion and Order on Post-Trial Motions. Today's decision and the accompanying order will supercede the September 25, 1998 Letter Opinion to the extent that they are inconsistent.

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Because the facts of this case are fully set out in this Court's July 30, 1999 Opinion, they are not restated here. See Marshak v. Treadwell, ___ F. Supp.2d ___, 1999 WL 561984 (D.N.J. July 30, 1999).
DISCUSSION
I. Molding the Judgment to Reflect Marshak's Infringement

Although this Court's July 30, 1999 Order on Post-Trial Motions did not enter a judgment of trademark infringement against Marshak, the necessity of such a judgment follows from the jury's verdict and this Court's Opinion on J.N.O.V.

At common law and under the Lanham Act, trademark infringement requires proof that: "(1) the mark is valid and legally protectable; (2) the mark is owned by the plaintiff; and (3) the defendant's use of the mark to identify goods or services is likely to create confusion concerning the origins of the goods or services." Fisons Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466, 472 (3d Cir. 1994).

In this case, there has been no dispute that the name "The Drifters" is legally protectable. First, both parties agree, as they must, that the name "The Drifters" is associated in the public mind with the group of singers who in the 1950s and 1960s recorded such songs as "Under the Boardwalk" and "On Broadway." In addition, notwithstanding the cancellation of Marshak's federal registration, the Drifters mark has repeatedly been found to have acquired a secondary meaning in the music industry. See, e.g., Marshak v. Green, 505 F. Supp. 1054 (S.D.N.Y. 1981).

The second element of infringement--Treadwell's ownership of the mark--was established by this Court's July 30, 1999 Opinion on post-trial motions, which held that Treadwell and her predecessors have owned the mark continuously since 1954.

The third element has also been proven. First, the jury expressly answered "Yes" to the fourth question on the Verdict Sheet, which asked:

Having determined that Mr. Marshak's registered mark should be canceled, do you nonetheless find that plaintiff Larry Marshak has proven by a preponderance of the evidence that he owns a valid trademark in the name Drifters by virtue of his use of such mark in commerce in this country in the period since 1976?

(Emphasis supplied). In addition, Marshak plainly testified that his Drifters have performed continuously since the early 1970s, and that they continue to perform. See Trial Transcript (hereinafter "Trans.") at 90-98. Marshak's continued use of the mark is also stipulated in the Pretrial Order.

Similarly, with respect to the likelihood of confusion, there can be no dispute that Marshak's use of the Drifters mark is confusing to the public: Marshak's group performs under the name "The Drifters" and sings the same hit songs that were recorded and made famous by the original Drifters in the fifties and sixties. There is surely a likelihood of confusion because the public is misled to believe that Marshak's singers and the famous Drifters records originate from the same source. As this Court stated in the July 30, 1999 Opinion, Marshak has never had any connection with the original Drifters. Treadwell's Drifters, Inc., on the other hand, is the direct successor to The Drifters, Inc., which was formed by George Treadwell in 1954.

Although the jury never reached the question of whether Marshak has been infringing, the record contains conclusive proof of the elements of infringement. In light of the jury's response to Question Four on the Verdict Sheet, and this Court's July 30, 1999 Opinion, and the uncontroverted evidence presented at trial, Marshak's infringement is patent. The material facts are not disputed, and, therefore, another trial would be unnecessary. The Court will mold the judgment to reflect Marshak's infringement of Treadwell's trademark rights.
II. Injunctive Relief

Any further use of the Drifters mark by Marshak would injure Treadwell and Treadwell's Drifters, Inc. in a way that could not adequately be compensated by money damages. This Court will therefore enter an order permanently enjoining Marshak from using the Drifters name. See 15 U.S.C. § 1116.

The Court rejects Marshak's invocation of the doctrine of laches for several reasons. First, Marshak has unclean hands: As this Court stated in the July 30, 1999 Opinion, Marshak and his assignors "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 [Patent and Trademark Office]." 1999 WL 561984, *9. The record contains overwhelming evidence of Marshak's deliberate fraud, which is reflected in the jury's verdict.

Second, although Marshak's infringement began as early as 1970, it has continued for nearly thirty years. At trial, Marshak admitted that he promoted, on average, between 200 and 240 Drifters performances a year during each of the previous six years. See Trans. at 722-23. Indeed, Marshak's infringement continues to this day. See August 4, 1999 Letter of Mark J. Ingber (responding to Treadwell's August 2, 1999 "cease and desist" demand), attached as Exhibit C to the August 5, 1999 Supplemental Post-Trial Brief of James P. Flynn.

Third, a denial of injunctive relief would be injurious to the public, which surely would be confused and misled if this Court were to permit both Marshak and Treadwell to use the Drifters mark simultaneously. This is particularly true where, as here, both Marshak and Treadwell wish to promote live performances of the hit songs that made the group famous.

Finally, a denial of injunctive relief would be fundamentally unfair because Marshak has no rights in the Drifters mark. Although the Court is mindful of the substantial resources Marshak has expended in promoting his business and the Drifters mark, his entire Drifters operation was born in a pernicious fraud. It may be harsh to enjoin Marshak from continuing in the business that he has cultivated during the past three decades, but it is nonetheless fair. This Court will not permit Marshak to retain that which he acquired by a deliberate fraud.
III. Monetary Relief

In a case where the defendant engaged in fraud or infringement, a district court may award an accounting of profits for three purposes: (1) as a rough measure of the plaintiff's damages; (2) to prevent the defendant's unjust enrichment; and (3) to deter the defendant from engaging in similar conduct in the future. See George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1537-38 (2d Cir.), cert. denied, 506 U.S. 991 (1992); Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 149 (4th Cir. 1987); see also 5 McCarthy on Trademarks and Unfair Competition, § 30:59.

In this case, an accounting might be awarded as a measure of Treadwell's damages pursuant to 15 U.S.C. § 1120, which provides that "any person who shall procure registration . . . of a mark by false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof." The Court declines to invoke § 1120, however, because the jury was not asked to determine whether Treadwell should recover such damages, and Treadwell did not press the issue.

Similarly, the Court will not award compensatory damages flowing from Marshak's infringement because the parties did not argue, and the jury did not find, that there was either direct competition or actual confusion. See International Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749 (2d Cir. 1996); see also McCarthy on Trademarks §§ 30:73-74.

Moreover, it is not clear that Marshak's infringement, as distinguished from his fraudulently obtained trademark registration, induced Treadwell to refrain from promoting live Drifters performances in the United States.

Notwithstanding the unavailability of damages, however, an accounting is clearly warranted in this case to prevent Marshak's unjust enrichment.See footnote 11 First, Marshak directly profited by his fraudulently obtained trademark registration and his infringement. Second, he acted with the requisite state of mind.

Courts have used a variety of terms to describe the intent required for an accounting based upon unjust enrichment, including bad faith, deliberate, knowing, willful and fraudulent. See, e.g., AFL-CIO v. Marshall, 671 F.2d 636 (D.C. Cir. 1979), aff'd in part and vacated in part, 452 U.S. 490 (1981)(bad faith or willful infringement); W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664 (2d Cir. 1970)(deliberate and fraudulent); see also McCarthy on Trademarks § 30:62. In this Circuit, an award of profits requires "[k]nowing or willful infringement[, which] involves an intent to infringe or a deliberate disregard of a mark holder's rights." Securacomm Consulting, Inc. v. Securacom Inc., 166 F.3d 182, 187 (3d Cir. 1999)(citing W.E. Bassett, 435 F.2d at 662).

An accounting of profits is warranted in this case because: (1) Marshak's infringement was willful, knowing and deliberate; (2) Marshak's infringement, as well as his fraudulent trademark application and renewal, manifest his deliberate disregard for Treadwell's rights; and (3) Marshak committed an outright fraud.

The period of accounting should be co-extensive with the period of infringing or fraudulent conduct. See W.E. Bassett, supra, 435 F.2d at 664 (2d Cir. 1970); Wolfe v. National Lead Co., 272 F.2d 867, 871 (9th Cir. 1959); see also McCarthy on Trademarks § 30:70. In this case, Marshak's willful and deliberate infringement began when he first started promoting Drifters concerts in 1970; his fraud dates from the filing of his federal trademark application in 1976. See footnote 1, supra. The Court will therefore order Marshak to account to Treadwell for the profits he earned in each year, beginning with the first act of infringement in 1970 and ending with the first day of trial testimony in this case. See Coca-Cola Co. v. Dixi-Cola Laboratories, Inc., 155 F.2d 59, 63 (4th Cir.), cert. denied, 329 U.S. 773 (1946).See footnote 22 Marshak will bear the burden of proving any deductions or allowances.

A full accounting covering some twenty-nine years may seem harsh, but as this Court stated above, it is fair and equitable in this case. Such relief is also necessary to completely disgorge Marshak of his fraudulently obtained profits and, in this Court's judgment, to deter him from engaging in similar conduct in the future.
IV. Attorneys Fees

The Lanham Act permits the award of attorneys fees to a "prevailing party" in an "exceptional case[]." 15 U.S.C. §1117(a). The Third Circuit has held that "a district court must make a finding of culpable conduct on the part of the losing party, such as bad faith, fraud, malice, or knowing infringement, before a case qualifies as 'exceptional'" within the meaning of section 1117(a). Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir. 1991); see also S.Rep. No. 1400, 93d Cong., 2d Sess. 2 (1974), reprinted in 1974 U.S.C.C.A.N. 7132, 7133. A "plaintiff 'prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." D.R. v. East Brunswick Bd. of Educ., 109 F.3d 896, 902 (3d Cir. 1997)(quoting Farrar v. Hobby, 506 U.S. 103, 112 (1992)).

In light of the jury's verdict of fraud and this Court's post-verdict rulings, there can be no doubt that Treadwell is a prevailing party in an exceptional case. The Court will therefore order Marshak to pay reasonable attorneys fees incurred by Treadwell in this action, as well as the consolidated action that was transferred here from the Eastern District of New York. See Marshak v. Treadwell, Civ. No. 94-2297, 1995 WL 428639 (E.D.N.Y. 1995). The Court declines, however, to award fees incurred in the course of proceedings before the Trademark Trial and Appeal Board.
V. Corrective Advertising Costs

The Court will not, at this time, order Marshak to reimburse Treadwell for such corrective advertising costs that she may incur. Treadwell may renew this request in an application for supplemental relief when the accounting is complete.
V. Stay Pending Appeal

Following the jury's verdict, this Court stayed enforcement of the judgment canceling Marshak's federal trademark registration, such judgment having been based upon the jury's verdict of fraudulent procurement of a federal trademark registration. Marshak seeks a continuation of that stay pending appeal.

The factors regulating the issuance of a stay pending appeal are: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits of the appeal; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. See Hilton v. Braunskill, 481 U.S. 770, 776 (1987).

With regard to this Court's order that Marshak's federal trademark Registration No. 1,081,338 be canceled, Marshak has failed to show any likelihood of success on the merits of his appeal. This case was tried before a jury and the jury found that Marshak's federal registration had been obtained by fraud. After reviewing the jury's verdict on post-trial motions, this Court has held that the finding of fraud was supported--indeed required--by the evidence presented at trial. See 1999 WL 561984, *4-*9.

The Court also declines to issue a stay with respect to injunctive and monetary relief. As this Court stated above, Treadwell's common law rights in the Drifters mark date to 1954; Marshak has no rights in the mark. It would be unfair to Treadwell, and confusing to the public, if Marshak were permitted to continue using the Drifters mark. For these reasons, any previously-granted stay will now be dissolved, and no stay pending appeal shall issue.

An appropriate order accompanies this Letter Opinion.

__________________________

NICHOLAS H. POLITAN

U.S.D.J.
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Footnote: 1 1Treadwell's counterclaim, asserted in September of 1997 in response to Marshak's Amended Complaint, specifically requested that this Court declare a constructive trust and order an accounting.

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Footnote: 2 2The Court will deny Treadwell's application for an appointment of a special master pursuant to Rule 53 because the accounting will not be complicated or exceptional. See Apex Fountain Sales, Inc. v. Kleinfeld, 818 F.2d 1089, 1096 (3d Cir. 1987.

The Marshak Appeal

STATEMENT OF RELATED CASES
1. No other appeal from the civil action below was previously before this or any other appellate court.

2. Counsel for appellant, Marshak, is not aware of any related cases currently pending in this Court. Appellant and Appellee have litigated the rights to the ìDriftersî mark previously. Treadwell sued Marshak along with three performers of The Drifters, Thomas, Hobbs and Green, in 1971 in New York Supreme Court, New York County, for infringing her supposed rights to The Drifters name. The court denied her request for a preliminary injunction and later dismissed the Complaint and awarded Marshak costs. (See discussion, infra, at 13-14).

Marshakís rights in the service mark ìThe Driftersî(including the federal Trademark Registration No. 1,081,338 for the mark) have been at issue in over one hundred proceedings brought by Marshak to enforce his rights ñ all resulting in Marshakís favor. Appellee Treadwell testified in one of these proceedings to sponsor (unsuccessfully) the fraudulent service mark procurement affirmative defense and cancellation claim pending here. Marshak v. Sheppard, 666 F. Supp. 590 (S.D.N.Y. 1987), discussed, infra, at 15-20.

A proceeding brought in the United States Patent and Trademark Office by Ms. Treadwell in 1989 has been stayed pending this litigation.
STATEMENT OF JURISDICTION
The district court had subject matter jurisdiction over the action giving rise to this appeal pursuant to 28 U.S.C. ß 1338.

The statutory basis for jurisdiction of this Court to hear this appeal is 28 U.S.C. ß 1291.

The Notice of Appeal was timely filed on August 17, 1999.

This appeal is from a Final Judgment and Order entered September 30, 1998, an Order entered July 30, 1999, and an Order Modifying Final Judgment, Entering Permanent Injunction and Ordering An Accounting entered August 16, 1999.
ISSUES ON APPEAL

1. Did the District Court commit error in denying Marshak's motion for Judgment as a Matter of Law that Treadwellís defense and counterclaim of fraud on the Patent and Trademark Office are barred by the statute of limitations?

2. Did the District Court commit error in granting Treadwell's motion for Judgment as a Matter of Law that Treadwell had not abandoned any rights she had to The Drifters service mark, and in overturning the juryís decision that Treadwell currently has no enforceable Drifters rights, since:

a. Reasonable jurors could (and did) find that Treadwell had abandoned the service mark under the correct and correctly charged "all circumstances" standard;

b. The per se rule applied by the Court in granting Treadwellís JMOL, viz., that residual record royalties require a finding of non-abandonment as a matter of law, is in error ;
c. Fraud by Marshakís assignors in obtaining the federal Registration on his Drifters rights, even if it occurred, does not vitiate Marshakís common law service mark rights;

d. Reasonable jurors could (and did) find that Treadwell had abandoned any Drifters rights she had, and reasonable jurors could (and did) find that Treadwell had no common law Drifters rights to be enforced here; and

e. The new trial conditionally ordered on point by the District Court is not warranted on the Treadwell abandonment issue.

Did the District Court commit error in denying Marshak's pretrial Summary Judgment motion and post trial motion for Judgment as a Matter of Law on the fraudulent procurement claim and defense, since:

a. The "should have known" standard for the requisite fraudulent intent in the District Courtís charge was in error and was material. The fraud on the PTO cancellation Judgment should be reversed for a new trial;

b. Treadwell was collaterally estopped from raising this defense by active participation and common interest in the Marshak v. Sheppard case;

c. A reasonable finder of fact properly instructed, could not have found the requisite clear and convincing evidence of intent to defraud the Patent and Trademark Office;
Did the District Court commit error in granting a 29-year monetary recovery award, since:

a. The statute of limitations forecloses any award to Treadwell; and

b. The monetary remedy awarded Treadwell, if any, should be limited by the six year statute of limitations period ñ providing a damages period beginning in 1990, rather than the District Courtís 29-year period (1970 -1999).
STATEMENT OF THE CASE

Plaintiff-appellant Larry Marshak (ìMarshakî) is the manager of The Drifters musical group. The Drifters have been performing in the United States under his auspices since 1969 in various forms (concerts; political, historical and charitable events; television appearances and records). (Stipulated Facts: A109 5-7; A237-38, 259-261, 284-85, 298-302). Marshak is the assignee and holder of United States Trademark Registration No. 1,081,338 for the mark THE DRIFTERS for ENTERTAINMENT SERVICES - NAMELY A SINGING GROUP. (Stipulated Facts: A112, 32-34; A287-89, 948-51).

Defendant, counterclaimant and appellee Faye Treadwell (ìTreadwellî) is the widow of George Treadwell who became manager of The Drifters after their formation in 1953. Appellee Treadwell took up sponsorship of The Drifters' entertainment services after her husband's death in 1967. Treadwellís Drifters performed under her sponsorship in the United States until the early 1970s. (A110-11, A1657).

Responding to declining business and a lost litigation to Marshak over rights to The Drifters name in New York State Supreme Court in 1971, Treadwell left this country for England in 1972. (A1658). Under her management, The Drifters have performed in England (but not in the United States with three exceptions) since then. (A257-58, 328, 537, 1624, 1658).
Treadwell released a book in the United States entitled "Save The Last Dance For Me" in 1993 that purported to trace The Drifters history. (A605, A874). Marshak disputed Treadwellsís claim of ownership to The Drifters mark -- and sued for trademark infringement, violation of the Lanham Act, 15 U.S.C. ß 1125(a), and related causes. (Complaint: A806-10). Treadwell attacked the trademark registration as supposedly procured by fraud on the Patent and Trademark Office -- and counterclaimed in 1996 for infringement of her claimed common law rights in The Drifters mark. (Answer, Counterclaim: A70-91). Marshak defended, in part, by asserting that Treadwell abandoned The Drifters service mark. (15 U.S.C. ß 1127). (Reply: A96-100).

The jury found for Marshak, deciding that Treadwell had abandoned use of The Drifters in the United States (Jury Verdict Interrogatory No. 3: A1563); that Marshak held the continuing valid trademark rights to use the mark (Id., No. 4: A1563); and that Marshak had not misrepresented the source of origin of his Drifters services to be connected with Treadwell's Drifters. (Id., No. 1(b): A1562). The jury found for Treadwell on her claim of fraudulent procurement of the federal Trademark Registration. (Id., No. 1(a): A1562). The District Court entered Judgment on this basis in 1998 ñ expressly noting that he was leaving the parties in their same relative positions existant for the previous several decades. (A1633-35; A1624).

The District Court later granted Treadwell Judgment As a Matter of Law that she had not abandoned the mark. (A1673-74). In a Modified Order of August 16, 1999, the Court enjoined Marshak from any Drifters activities and assessed 28 years of infringement damages against Marshak going back to 1970. (A1691-95).
Marshak moved for an Order from this Court staying the District Courtís Orders of September 30, 1998, July 30, 1999 and August 16, 1999 pending appeal, and for an Order suspending the permanent injunction. This Court granted Marshak's motion and suspended the injunction pending a decision here. (A1696).
STATEMENT OF FACTS
(i) The Drifters History
a. The Treadwell

Years (1953-1970)
George Treadwell became manager of The Drifters in 1953. The group consisted of four singers who performed extensively throughout the United States during the years 1953 - 1970. There were many live performances -- and the group popularized (and recorded) several widely popular songs between 1959 and 1964. These included "There Goes My Baby", "Under The Boardwalk", "On Broadway" and "Save The Last Dance For Me". During most of this 1959-1964 period the Driftersí performers included some or all of: Charles Thomas, "Doc" Green, and Elsbeary Hobbs . (A1657). The recordings were made while all three members were in the group; but some were released after one or more had left. (A633).
The fortunes of the Treadwell Drifters went down rapidly beginning in the mid-1960s. George Treadwell died in 1967; and The Drifters' doo-wop genre of music declined in popularity. (July 1999 Opinion: A1657). Messrs. Thomas, Green and Hobbs took other work. (Id.). As Ms. Treadwell put it in her book: "Faced with such apathy, the Drifters more or less broke up in March 1970". (A874(a); p.120). Treadwell's Drifters gave only four performances in this country between 1968 and the August 1971 lawsuit against Marshak et al. and only one performance between December 1974 and the 1976 service mark application. (A686-87, 689-90, 811-846).

Thomas, Green and Hobbs began performing as the Drifters in 1969 and entered into a management arrangement with Marshak in the early 1970s. (A1657-58). In 1971, Treadwell's attempt to enjoin The Drifterís performances by Marshak, Thomas et al. was denied by the New York Supreme Court, and her case was dismissed with costs. (A252-54, 724-730, 1568, 1626-27). Treadwell left this country for England in 1972, and her Drifters group has performed in that country at least since 1972. (A537-598; 1998 Opinion: A1624; 1999 Opinion: A1657-58).

b. The Marshak

Years (1969 - 1998)
In 1969, plaintiff Larry Marshak organized a doo-wop revival concert at the New York Academy of Music. He obtained the services of several groups of the earlier period, including The Drifters. Thomas, Hobbs and Green appeared in the group. (A238-241, A1657).

The successful reception of The Drifters' revival performance caused the group to continue regular performances, with Marshak as their manager, from 1970 through the 1998 trial here. (A237-38, 259-61, 284-85, 298-302, 910). In the almost 30 year period from 1970 through the trial, the Marshak Drifters:
(i) Gave thousands of live performances, averaging better than one hundred per year. (A534);

(ii) Performed on various television programs, including: Twentieth Century Foxís History of Rockín Roll, the David Letterman Show, Good Morning America, the Today Show, and Saturday Night Live. (A284-85, A910);

(iii) Recorded albums and singles under The Drifters name which were sold nationwide. (A259-61, A912-28);

(iv) Gave special event performances, such as: four White House appearances, including President Fordís Birthday and President Clintonís Inauguration, and at a presentation for Chief Justice Burger as part of the celebration of the 200th anniversary of the Constitution. (A298-302);

(v) Pursued over one hundred enforcement proceedings to enforce Marshakís exclusive rights to the Drifters service mark over a twenty plus year period -- all successfully up to this case. (A304-05, A971-1203).

c. Record Royalties

Marshak, Thomas et al. recorded old and new Drifters songs in the 1970s - 1990s and retained the royalties for these recordings. (A874, A259-60, A406-07). Residual royalties for the older (1959-1964) recordings paid during the 1970-1990s are shared between Treadwell and the then performing artists including Green, Hobbs and Thomas. (A1652-53).
Treadwellís recording contracts specifically precluded any record distribution in the United States for her England-based Drifters during the 1970-1990s. (A700-02, 848-68).

Since the residual royalties represent the District Court's sole basis for overturning the Juryís verdict (as a matter of law) that Treadwell abandoned The Driftersí name, we repeat below the entire record on these royalties:

(i) Q. Starting with Drifters, Inc. and then going through Treadwell Drifters, Inc., have you for that entire period received royalties from Atlantic Records for sales of Drifters records in the United States?

A. Yes. (Faye Treadwell's direct examination at trial, A720);
(ii) Stipulated Fact No. 15: A110:
Each of these songs have publicly performed on the radio throughout the United States, sold on singles records and albums, and continue to be played and sold in the United States to this day.
(iii) Treadwell's testimony given for the same purpose (to hopefully [for her] invalidate Marshak's Service Mark Registration) a decade ago in the Sheppard litigation (quoted at pp.16-19, infra); and
(iv) Messrs. Thomas, Hobbs and Green received a portion of the royalties by assignment from The Drifters Inc. executed in 1959 when the hit recordings began. (A522, A1652-53).
(ii) Marshak's Trademark

Registration No. 1,081,338
Marshak's use of the Drifters service mark gave him the common law rights to the mark by at least 1976. (Jury Interrogatory No. 4: A1563).
Thomas, Green and Hobbs applied to register The Drifters service mark that year. (Application: A960-62). The three applicants executed a plenary assignment of the Application to Marshak. The service mark application included a declaration in which the three applicants stated "that to the best of their knowledge and belief no other person, firm, corporation or association has the right to use said mark ["The Drifters"] in commerce." (1999 Opinion: A1658).

Marshak consulted trademark counsel who prepared and prosecuted the service mark application. Marshak discussed with counsel the significance, if any, of the prior Thomas contract and the 1971 judgment upholding Marshakís Drifterís rights to the mark. (A525-28) .

After review, the Patent and Trademark Office allowed the service mark application. The law requires that before grant, the allowed mark be published for opposition by anyone having a reason to believe he would be damaged by the registration of the mark. 15 U.S.C. ß 1063. Treadwell did not oppose the registration, although she was aware of it at the time. (A696, A946-1203). Accordingly, the PTO issued Service Mark Registration No. 1,081,338 to Marshak on January 3, 1978 covering the mark "THE DRIFTERS" for "ENTERTAINMENT SERVICES - NAMELY A SINGING GROUP". (Stipulated Facts: A109 2, A112 31). The Registration has subsequently become incontestable. (15 U.S.C. ß 1115(b)). (1999 Opinion: A296-97, A1658, A1666).
(iii) The Thomas - Treadwell

Drifters Contract
Charlie Thomas signed an Agreement with The Drifters Inc. in April, 1960. (A1261-71, A1660). The Agreement contains performance and economic terms and limitations (pars. 1-6 and 9-10). Paragraph 7 states that Thomas ("The Artist") acknowledges that THE DRIFTERS name belongs to the Employer (The Drifters, Inc.) and would not be used by Thomas if he left the group. (A1261, A1660).

The legitimacy, viability, enforceability and consequences of this "Agreement" have been discussed by three courts (unfavorably to Treadwell) as discussed immediately below.

(iv) The Relevant Prior Litigations
a. The 1971 New York

Supreme Court Case
In 1971 defendant-appellee Faye Treadwell (Drifters Inc.) sued Marshak, Thomas, Hobbs and Green (and two booking agents) in New York Supreme Court, New York County, for infringing her supposed rights to The Drifters name. She argued that contracts supposedly signed by the former Drifters performers provided her with those rights. A contract signed by Thomas was the principal evidence -- and Treadwell/Drifters Inc. moved for a preliminary injunction to enjoin the performance by the Thomas, Green, Hobbs, Marshak group.

The preliminary injunction was denied. The Court stated:
In this instance, plaintiff [Treadwell/Drifters Inc.] has failed to establish its allegations that it has an established reputation in the entertainment field and that defendants [Thomas, Green, Hobbs, Marshak] have been infringing upon plaintiff's good name and good will. ... Nor may such relief be predicated upon the existence of certain writings allegedly executed by two of the named defendants herein. There are serious questions as to the validity of the p[ur]ported contracts and whether or not plaintiff has fully complied with the contract terms and conditions. (emphasis added).
(Decision of Justice Davidson, January 23, 1972: A724-30).

Judgment was entered dismissing the Complaint on May 6, 1973 because Treadwell/Drifters Inc. "willfully defaulted and failed to answer interrogatories propounded by defendants". The dismissal was with costs. (Judgment: A724-30).

As part of a limiting jury instruction in our case the jury was charged:

"It [the dismissal] has nothing to do with the merits of the case".

(A533; 1999 Opinion: A1673).

b. Marshak v. Green:

1981 (Judge Weinfeld)

Original Drifter and trademark assignor Doc Green had a falling out with his colleagues and left Marshak, Thomas and Hobbs to perform with his own "Drifters" in competition with the Marshak group. Marshak sued Green (and his manager Dave Rick) for trademark infringement in the United States District Court for the Southern District of New York. Green defended in part by attacking the validity of the trademark registration on the same fraudulent procurement basis relied upon here, contending "that the application contains false allegations as to exclusive use, continuous use and first use", relying upon the supposed rights of Treadwell. Marshak v. Green, 505 F. Supp. 1054, 1057, 1060 (S.D.N.Y. 1981).

This fraudulent procurement defense was rejected by Judge Weinfeld. The judge ruled:

There is no evidence that during this decade [1970 - 1980] any other group was so identified by the public as The Drifters, or that any other group had an unrestricted right to the name, although defendants sought to prove that plaintiff's group was not the exclusive user of the name "The Drifters". Thus, they suggested that Faye Treadwell, George Treadwell's widow, has continued to manage a group of Drifters since his death, and that this group had at least as great a right as plaintiff to "The Drifters" name. But the evidence was insufficient to support this claim. The evidence establishes that following a 1971 infringement suit brought by Treadwell against Marshak in New York State Supreme Court, she had agreed to restrict her group's performances to Europe. Id. at 1057.
In arriving at his determination, Judge Weinfeld specifically took into consideration the 1971 New York State Supreme Court case and the availability of the supposedly "continuously available" Drifters records (this being the same issue as the record royalty stream relied upon by Treadwell here). Indeed, that Court attributed the good will of these records to the artists who performed them. Id. at 1057, 1060.

Judge Weinfeld concluded that "[t]he record ... indicates that [Marshak's] mark is valid and strong". Id. at 1061.

Treadwell did not participate in the Marshak v. Green case to sponsor its fraud defense -- although she was asked by Green to do so.
c. Marshak v. Sheppard:

1987 (Judge Pollack)
In an action tried in 1987, Marshak sued Rick Sheppard for infringing The Drifters registered mark, trademark dilution and the like in the Southern District of New York. Sheppard defended on the basis that:

In their 1976 trademark application, Marshak's assignors (Hobbs, Thomas and Green) affirmed that no other party had the right to use the mark for which they were applying. Sheppard asserts that this was a knowing and material fraud upon the PTO because Hobbs, Thomas and Green knew that Treadwell at that time managed another group using the name "The Drifters".
Marshak v. Sheppard, 666 F. Supp. 590, 598, 592-93 (S.D.N.Y. 1987).

Treadwell appeared at trial as a witness to sponsor -- in fact to constitute -- the same inequitable procurement defense relied upon here and raised earlier in Green. Voiding the trademark for inequitable conduct is in rem, and of course would directly benefit Treadwellís interest. Invalidation would have gotten Treadwell off the hook for at least any violation of Marshak's federal Registration rights.

The Faye Treadwell testimony in the Sheppard case is part of our record here. Relevant excerpts are reproduced at A748-59. To the end of proving the supposed fraudulent procurement on the part of Marshak, Thomas, Hobbs and Green, Treadwell testified at length during her direct examination in Sheppard:

(i) The subject of her testimony was framed by Judge Pollack at the outset:
I will read to you the statement in the Declaration that is open for inquiry.
Dock Green, Charlie Thomas and Elsbeary Hobbs, to the best of their knowledge and belief, no other person, firm, corporation or association has the right to use said mark in commerce and any willful false statement may jeopardize the validity of the application or document or any registration resulting therefrom. (A751).
(ii) She testified in full attempting to support her contention of fraudulent procurement of the service mark registration. She testified that her "Drifters" had performed in the U.S. during the years running up to 1976 (the Marshak service mark application date). Treadwell said :

(a) Drifters Inc. was in existence in 1975-76. (A752).

(b) During 1975 and 1976, her Drifters were performing "all over the world," including the United States. (Id.)

THE COURT: When were they performing at Seaside Heights?

THE WITNESS: In the summer of 76. We worked all along the coast. Asbury Park. That's in '75. We worked around southern Jersey in '76, too. (A753).
(d) She testified to earlier activities in the United States:

Q. How about the period 1970 through 1974, were these performers working in the United States?
A. More than that then, because we -- we did mostly that time there because we had a Las Vegas contract for five years with Del Webb. We worked three months a year for each one of the hotels. And we worked there mostly and we did Dallas, Texas. Denver. Aspen, Colorado, we worked there. (Id., A754).
(iii) Treadwell testified in full about her residual record situation relied upon in that case (and here) to supposedly constitute fraud on the PTO:

Q. Treadwell, had Drifters, Inc., at any time entered into an agreement with Atlantic Records to release recordings?
MR. JUDLOWE: Objection, your Honor.
MR. ZAVIN: Your Honor, this is mere foundation.
THE COURT: You better focus immediately.
Q. Were the recordings made for Atlantic Records, if you know, being sold in the United States in the years 1970 through 1977?
A. Yes. Definitely.
(e) She testified in full about the Thomas-Drifters Inc. agreement relied upon in that case (and here) to supposedly constitute fraud on the PTO.

Q. Treadwell, I'm going to show you a document that has been marked for identification as Defendant Sheppard's Exhibit L.
MR. JUDLOWE: May I see it, counsel?

Q. Treadwell, I ask you if you recognize that document.
A. I do.

Q. Could you tell us to your knowledge, what that document is?
A. I was there when it was signed.
Q. Well, what I'm first asking you to do is describe what the document is.
A. The document is an agreement between The Drifters, Inc., and Charles Thomas stating that he will work for them It's an employment contract --
THE COURT: That's enough.
Q. Treadwell, do you know when that document was executed?
A. In 1960.
Q. Were you there when it was executed?
A. Yes. Louis Lebish office, one of the stockholders who signed the contract. (A756-57).
Judge Pollack reviewed the history of The Drifters in the Treadwell and Marshak eras; 666 F. Supp. at 593-94; the fraudulent procurement defense; the 1971 New York Supreme Court case with its underlying Thomas contract; the residual record royalty matter, id. at 593; and the Green case, with its stare decisis effect, id. at 596-97.

Judge Pollack decided and ruled against the fraud on the PTO defense:
The testimony at trial showed that Marshak's assignors made no willful material misstatements in completing the application. Upon cross-examination of both Hobbs and Thomas, defendant Sheppard asked whether either of them knew of others using the name "Drifters" during the period preceding their trademark application. Hobbs stated that he knew of no such other groups; Thomas stated that he knew of some "phony" Drifters groups that were performing at the time. Thomas' belief that some "phony" groups were using the name is entirely consistent with his declaration to the PTO that no other person had the right to use the mark for which he applied. (emphasis in original). Marshak v. Sheppard, 666 F. Supp. at 598.
Marshak v. Sheppard decided the fraud invalidation defense -- and specifically said so. Marshak v. Sheppard did not decide the common law rights of Treadwell "if any" -- and specifically said so. 666 F. Supp. at 599. Judge Politan's statement that Judge Pollack didn't decide the fraudulent procurement defense presented by Treadwell in Sheppard is clearly erroneous.

(v) The Procedural

History Of This Case
a. The Case
Plaintiff-appellant Marshak's Complaint was filed in the Eastern District of New York in 1995 alleging service mark infringement and related causes of action. The matter was transferred to the District of New Jersey pursuant to 28 U.S.C. ß 1404(a). (A24-43). In 1996, Treadwell raised the fraudulent procurement affirmative defense and counterclaimed for cancellation of the Marshak Registered Trademark, and for violation of her asserted rights to "The Drifters" mark. (A70-91).
The matter was tried to a jury on six trial days in July and August, 1998. Principal trial issues included Treadwell's contention that defendant Marshak's Trademark Registration was invalid as inequitably procured, i.e., as involving fraud on the Patent and Trademark Office. The principal contentions of Marshak were that Treadwell had long since abandoned any rights she may have had in "The Drifters" name and that any claim she might have had was barred by laches.

b. The Jury Charge

And The Jury Question
(i) The "Should Have

Known" Fraud Charge
Fraud on the Patent and Trademark Office requires, inter alia, clear and convincing evidence of a specific intent to mislead or defraud. Ignorance, negligence, and even gross negligence does not suffice for the requisite intent. Kingsdown Medical Consultants Ltd. v. Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) cert. denied. (en banc) and the authorities at pp. 47-49, infra.

Judge Politan charged the jury (over objection) that a "should have known standard" applied for proof of intent. (A1423-24). That is, the jury could find fraud on the Patent and Trademark Office if there was material information of which the trademark applicants should have been aware. Specifically, the District Court charged the jury:
The defense of fraud will turn upon whether you believe that the persons who registered the mark knew or reasonably should have known that someone else had legal rights to the name "The Drifters." This will require you to consider the ways in which people acquire and lose legal rights in a name. You will have to determine who in fact owned the rights to the name "The Drifters" at the time Mr. Marshak's Trademark was registered with the Patent and trademark Office. And you will have to determine whether the persons who registered the mark made a fraudulent misrepresentation to the Patent and Trademark Office.
(A1482-83; emphasis added).
There is nothing in the oath or statute which requires an applicant to disclose all other possible users who, in fact, may be using the mark. However, the applicant does have a duty to disclose those users whom the applicant reasonably should know have legal rights to use the mark.
(A1488; emphasis added).
Fraud against a registrant will not lie where a statement was a false misrepresentation occasioned by honest misunderstanding, inadvertence, negligent omission, or the like. Rather, fraud requires proof of a wilful intent to deceive. However, fraud may be found if the applicant or registrant knew or reasonably should have known the fact that -- that the fact represented was not true.
(A1488; emphasis added).
If you merely find that Larry Marshak's assignors signed an application for trademark rights which stated that no others had the right to use The Drifters mark in commerce, this is insufficient to establish that Larry Marshak's assignors committed fraud in procurement of the federal trademark, absent evidence that such assignors actually knew, or reasonably should have known that others had legal, contractual right to use the mark.
(A1489; emphasis added).
Marshak objected to the charge -- pointing out that a "should have known" standard does not suffice for the requisite intent to defraud the Patent and Trademark Office. (A1423-24).
(ii) The (Correct) "All

Circumstances" Charge

On Abandonment
The Court's charge to the jury on abandonment included, inter alia:

Under the Lanham Act, proof of non-use for two years creates a presumption that the mark has been abandoned. This presumption has even been applied to an unregistered common law trademark. Once the presumption is triggered, the burden shifts to the owner to rebut it. In order to rebut the intent to abandon, the party must show meaningful commercial scale use of the mark, not just token use.
When considering whether a mark has been discontinued with the intent not to resume, you should consider all the circumstances in the case. . . .
(A1495; emphasis added).

Responding to a jury question during deliberation specifically directed to Treadwellís continuing receipt of royalties, the judge again repeated the "all circumstances" legal directive with no single fact being dispositive:

Whether or not any particular fact by itself or in combination of other facts in the case constitute ìmeaningful commercial scale use of the mark, not just token use,î is a determination that you must make in this case based upon all of the evidence that has been presented to you. (A1547).
c. The Jury Verdict
The jury rendered its verdict on August 5, 1998 (Verdict Sheet: A1561-65). The jury concluded that "Marshak (or his assignors) committed fraud on the Patent and Trademark Office" (Jury Interrogatory No. 1(a): A1562); but, notwithstanding such fraud, that Marshak had valid common law trademark rights to The Drifters name. (Id., No. 4: A1563) . The jury also concluded that "Treadwell intended to and did, in fact, voluntarily abandon after the 1976 application by Marshak's assignors the use of ëThe Driftersí name in association with the promotion and advertisement of goods and services in the country". (Id., No. 3: A1563).

The jury decided that Treadwellís book entitled, "Save The Last Dance For Me" did not infringe or disparage Marshak's mark. (Id., No. 5(a): A1564).

The jury determined that Marshak had not misrepresented the source of origin of his services to suggest a connection with Treadwell's Drifters. (Id., No. 1(b): A1462).

The jury did not answer the Jury Interrogatories about whether Marshak had committed any act of infringement vis-a-vis Treadwell. (Id., unanswered interrogatories Nos. 6-9). The jury ended deliberations with question 5 at the District Court's direction. (A1555).

d. The 1998 Post Trial

Opinion And Judgment

Following the jury verdict, the District Court denied Marshak's Motion for Judgment as a Matter of Law that Treadwellís counterclaim and affirmative defense of fraudulent service mark procurement were barred by the statute of limitations; and independently barred by the collateral estoppel preclusive effect of the earlier 1971 New York Supreme Court and Sheppard litigations. (1998 Opinion: A1625, July 1999 Opinion: A1664-65).

The District Court's Letter Opinion also settled the equitable issues in the case. Specifically the Court rejected Treadwell's claim that the fraudulent Registration procurement barred the valid trademark rights the jury awarded Marshak (Jury Interrogatory No. 4: A1563) on three separate bases. First:

This Court is reluctant to apply the defense of unclean hands for several reasons. First, Marshak has not received any equitable relief from this Court, and so equitable defenses, like unclean hands, are inapposite. Second, Treadwell essentially seeks to use the doctrine as a sword to reclaim trademark rights, rather than as a defense to an infringement action. Treadwell has cited no case in which the doctrine of unclean hands was employed in this fashion; nor has the Court found such a case.
(A1627-28);
Even assuming that the doctrine of unclean hands is available to Treadwell, it is nonetheless a matter left to the Court's discretion -- like all matters of equity. See Tennessee Valley Authority v. Hill, 437 U.S. 153, 192-196 (1978). In exercising that discretion in this case, the Court is guided by the old equitable maxim that one who seeks equity must not slumber on his or her rights. In this case, there can really be no question that Treadwell has slumbered on her rights, and the Court would therefore decline to employ the doctrine of unclean hands.
(Id., A1628); and
Ms. Treadwell knowingly and voluntarily chose to flee to England rather than stay and pursue her trademark rights. There was no evidence in this case that Marshak's fraud on the PTO either coerced or duped Ms. Treadwell into her abandonment. Ms. Treadwell plainly testified that she chose to leave rather than to litigate.

(Id., A1629).
Final Judgment and Order was entered on September 30, 1998 in accordance with the Jury Verdict and Letter Opinion. (A1633-35). The Judgment provided:

(i) That Treadwell had abandoned her trademark rights after 1976 (A1634); and

(ii) Marshak has established his common law rights in "The Drifters" mark which remain viable (id.).

As the Court's Letter Opinion put it to summarize the overall effect of the trial results:

Thus, the jury's verdict in this case did not significantly alter the legal rights of either Marshak or Treadwell; indeed, both parties have rights nearly identical to those they possessed prior to trial. (A1631);
and to a like effect:
Thus, the parties conclude this litigation in essentially the same position from which they started -- minus the federal trademark registration. (A1624).
e. The July 30, 1999 Opinion And Judgment
The parties each made motions for Judgment as a Matter of Law. (A1636, A1643). The court denied Marshak's motion for Judgment that no fraud had been committed on the Patent and Trademark Office. (A1660-73). The Courtís reliance was basically upon "two material misrepresentations", viz., appropriation of The Drifters mark with "no colorable claim" (the Thomas 1960 Agreement), and the continuing record royalty payments. (A1660-61).
The Court granted Treadwell's motion for Judgment as a Matter of Law, and vacated the jury verdict holding that Treadwell had not abandoned "The Drifters" name as contrary to law. (A1673-74). The basis of Treadwell's JMOL motion was 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.
(A1673). The Court agreed, stating that, "[a]s a matter of law there was no abandonment". (A1674).

Unstated in the Opinion was why Treadwellís rights, if she had them, would be inimical to Marshak's "valid" right to use the name which the jury explicitly found (Jury Interrogatory No. 4) -- particularly in view of the laches on the part of Treadwell, which the court found to exist in the 1998 Letter Opinion, and which was left intact by the 1999 decision. The substance of this July 1999 opinion was entered as a Judgment on that date. (A1676-78).

f. The August 16, 1999 Letter Opinion And Judgment

In a Letter Opinion of August 16, 1999 (A1679-90) the District Court enjoined all future performances of the Marshak infringers; found that Marshak's performances infringed Treadwell's common law service mark rights which were said to follow from the JMOL of non-abandonment; awarded 29-years of damages from 1970 through the 1999 injunction; and awarded the attorneys' fees which he had previously denied in the 1998 Letter Opinion.
There was, of course, Jury Interrogatory No. 1(b) (A1562) that found that Marshak had not violated any Treadwell right. Please see also unanswered Jury Interrogatories Nos. 6-9 on point. (A1564-65). A jury had been demanded in this case for resolution of all issues.

The third element required for Lanham Act trademark infringement was said by the District Court to be:

(3) the defendant's use of the mark to identify goods or services is likely to create confusion concerning the origins of the goods or services.
(Id., A1680). The judge found this to be satisfied:

The third element has also been proven. First, the jury expressly answered "Yes" to the fourth question on the Verdict Sheet, which asked:
Having determined that Mr. Marshak's registered mark should be canceled, do you nonetheless find that plaintiff Larry Marshak has proven by a preponderance of the evidence that he owns a valid trademark in the name Drifters by virtue of his use of such mark in commerce in this country in the period since 1976?
(Id A1681) (emphasis supplied)).

There was no surrogate given in the July 1999 Opinion for the absence of any jury determination that Treadwell had any rights in the name. Please see, for example, unanswered Jury Interrogatory No. 6 (A1564).
SUMMARY OF ARGUMENT

1. The District Court committed error in denying Marshak's motion for Judgment as a Matter of Law that Treadwellís affirmative defense and counterclaim of fraud on the PTO is barred by the statute of limitations. Where fraud is used as a basis for challenging the validity of an incontestible registration, the claim must be brought within the relevant statute of limitations ñ here, six years.

Reversing the cancellation of Marshakís federal Registration based upon the erroneous finding of fraud fully restores the parties to the status quo ante of over 20 years duration. (Point I, pp. 33-36).

2. The District Court committed error in granting Treadwell's motion for Judgment as a Matter of Law that Treadwell had not abandoned any rights she had to The Drifters service mark, as:

a. A reasonable juror could (and did) find that Treadwell had abandoned the service mark under the correct and correctly charged "all circumstances" standard. The per se rule applied by the Court in granting Treadwellís JMOL, viz., that residual record royalties require a finding of non-abandonment as a matter of law, is in error. Hence, the JMOL for Treadwell should be reversed and the jury verdict reinstated.

Reversing the erroneous JMOL which overturned Jury Verdict No. 3 regarding abandonment would restore the parties to the status quo ante of over 20 years duration minus the federal Registration as the Court had held in its 1998 Letter Opinion and accompanying Judgment. (Point II.b., pp. 37-41);
b. The jury's fraud on the Patent and Trademark Office verdict ("unclean hands") does not vitiate the valid common law rights which the jury found to repose in Marshak, not Treadwell. The July 1999 Judgment should be reversed, and this Court should award Marshak common law rights to The Drifters. (Point II.c., pp. 41-44);

c. A reasonable juror could (and did) find that Marshak did not misrepresent the source of origin of his services to suggest a connection with Treadwell's Drifters. The District Courtís finding that Marshak infringed Treadwellís mark, in effect, entered judgment (erroneously) for Treadwell in contravention of the juryís verdict and should be reversed. (Point II.d., pp. 44-45).

d. The District Courtís alternative decision to grant a new trial on the abandonment issue as against the weight of the evidence is an abuse of discretion and should be reversed. This Court should direct a judgment that Treadwell abandoned the mark. (Point II.e., p. 45).

3. The District Court committed error in denying Marshak's pretrial Summary Judgment motion and post trial motion for Judgment as a Matter of Law that there was no fraud on the Patent and Trademark Office, since:

a. The "should have known" standard for the requisite fraudulent intent was in error and was material. The Judgment finding fraud on the PTO and cancelling the mark should be reversed for a new trial. (Point III.b., pp. 47-49).
b. Treadwell was collaterally estopped from raising this defense by active participation and common interest in the Marshak v. Sheppard case. (Point III.c., pp. 49-50).

c. A reasonable finder of fact properly instructed, could not have found the requisite clear and convincing evidence of intent to defraud the Patent and Trademark Office. JMOL should have been entered for Marshak on the fraud issue ñ Treadwellís affirmative defense and counterclaim of fraud should be dismissed. (Point III.d., pp. 51-54).

4. The District Court committed error in granting a 29-year monetary recovery award, since:

a. The statute of limitations forecloses any award to Treadwell (Point IV, pp. 55-56); and

b. The monetary remedy awarded Treadwell, if any, should be limited by the six year statute of limitations ñ providing a damages period beginning in 1990, rather than the District Court's 29-year period (1970-1999). (Point IV, p.56).
ARGUMENT
Point I - The Fraudulent Procurement Cancellation

Claim And Affirmative Defense Is Barred

By The Statute Of Limitations
The District Court rejected appellant Marshak's contention that Treadwellís fraudulent procurement claim is barred by the statute of limitations. As the court put it:

By the express and unambiguous language of the Lanham Act, there is no statute of limitations for petitions to cancel a federally registered mark on the grounds of fraudulent procurement. Such claims may be brought ìat any time.î
(A1625). We respectfully submit that the law is directly to the contrary.

It is certainly true, as the District Court said, that the Lanham Act contains no express limitations provisions. It is not correct, however, that this means the law does not otherwise provide a limitations period.

The Lanham Act contains no express statute of limitations and the general rule is that when a federal statute provides no limitations for suits, the court must look to the state statute of limitations for analogous types of actions. A claim for fraud under the Lanham Act conforms to this general rule.
Beauty Time, Inc. v. VU Skin Systems, Inc., 118 F.3d 140, 143 (3d Cir. 1997); Wilson v. Garcia, 471 U.S. 261, 266-68 (1985); Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996)(applying New York's six year period); Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1395 (9th Cir. 1993)(applying Oregon's two year limitations period).
Trademark law falls within the genre of trade regulation of commercial affairs which requires settled rights to flourish. Section 1115(b) incontestability:

provide[s] a means for the registrant to quiet title in the ownership of his mark ... thus encourag[ing] producers to cultivate the goodwill associated with a particular mark.
Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985). As noted recently in The Joint Stock Society v. UDV North America Inc. 53 F. Supp.2d 692 (D. Del. 1999) citing Third Circuit authority:

In other words, by openly, notoriously, hostilely, and continuously using a particular mark in commerce for an extraordinarily lengthy period of time, a party should be able to obtain the right to use that mark, to the exclusion of all others, by mere operation of time and use. This result comports with the notion that the trademark laws serve as a tool for protecting the accumulated good will of a particular business. ... In other words, a business which actually makes and sells products under a certain name, even a name that has been stolen from another, is building up a certain amount of ìgood willî in the marketplace, albeit in a rather ìbadî way. However, if the company whose name has been stolen never complains about this theft in any way or if the individuals who once ran the company do nothing to try to win back that name, then the company that has ìwrongfullyî acquired the name should nonetheless be afforded the right to use it.
Id., at 721-22 (emphasis added).
The requirement for quiet title and settled rights specifically applies to a charge of fraud in obtaining a federal trademark Registration. "When fraud is used as a basis for challenging the validity of an incontestable registration [the precise situation here], the claims must be asserted within the relevant statute of limitations". McCarthy on Trademarks, ß 31:59, p. 31-100. That is the specific holding of Beauty Time, 118 F.3d at 143-44, which applied Pennsylvania's two year fraud statute of limitations to bar a claim of fraudulent trademark procurement; and please see Calzaturificio Rangoni S.p.A. v. United States Shoe Corp., 868 F. Supp. 1414 (S.D.N.Y. 1994) (applying New York's six year statute to bar a fraud challenge specifically discussing the incontestability provision); Lurzer GMBH v. American Showcase, Inc., 1998 U.S. Dist. LEXIS 13605 (S.D.N.Y. Aug. 31, 1998)(six year limit from constructive notice).

New Yorkís six year fraud statute of limitations, New York C.P.L.R. ß 213(8) begins to run "from the time [Treadwell] . . . discovered the fraud or could with reasonable diligence have discovered it". The New York statute applies -- although the situation is identical under New Jersey law .

Treadwell knew of the application by Marshak to register the service mark in 1976 -- the year it was filed. She knew of the supposed operative fraud facts before that. As matters were put in her testimony here:

Q. I think you testified under oath during your attorney's examination of you that you were aware of the trademark application proceeding back in 1976, isn't that correct?
A. Oh, yes, yes. But ñ
Q. Again, didn't start a lawsuit until 13 years after that?
A. I didn't have the money to start the lawsuit, Mister.
(A696). This 1976 knowledge is 20 years before she asserted the fraud claim here in 1996 (more than 3 times the six year statute of limitations period). For other instances in our record of her knowledge of the issued Registration and the "fraud", please see her testimony on the fraud charge ten years earlier, in Marshak v. Sheppard (1987).

We urge that Treadwell's fraudulent procurement cancellation claim and affirmative defense are time barred ñ and that the District Court committed legal error in not barring the affirmative defense and cancellation counterclaim.

Point II - JMOL On The Jury's

Abandonment Verdict Was In Error
a. The Standards For

Judgment As A Matter Of Law

Judgment as a matter of law should be granted only when "there is no legally sufficient evidentiary basis for a reasonable jury to find" in favor of the non-moving party on an essential issue. Rule 50, Fed. R. Civ. P.; July 1999 Opinion (A1658). In deciding a JMOL motion, all reasonable inferences must be drawn in favor of the party against whom the motion is made. Continental Ore Co. v. Union Carbide and Carbon Corp., 370 U.S. 690, 782-83, fn. 6 (1962); Barna v. City of Perth Amboy, 42 F.3d 809, 813 n.5 (3d Cir. 1994). The Court may not consider either the credibility or the weight of the evidence in granting JMOL. Rather, the Court must ìconfine [itself] to ascertaining whether the party against whom the motion is made adduced sufficient evidence to create a jury issueî. Motter v. Everest & Jennings, Inc., 883 F.2d 1223, 1228-29 (3d Cir. 1989) (quoting Fireman's Fund Insurance Co. v. Videdreeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976), cert. denied, 429 U.S. 1053 (1977)); Cook v. Lehman, 863 F. Supp. 207, 209 (E.D. Pa. 1994).

b. The More Than Ample Evidence

From Which A Reasonable Jury

Could Have Found Abandonment
A service mark is abandoned if its proprietor stops using it in a meaningful commercial scale without intent to resume use. 15 U.S.C. ß 1127; Browning King, v. Browning King Co., 176 F.2d 105, 106-07 (3d Cir. 1949); Kirkland v. National Broadcasting Co., Inc., 425 F. Supp. 1111, 1117-18 (E.D. Pa. 1976), affíd, 565 F.2d 152 (3d Cir. 1977); (Charge: A1494-97). Non-commercial use for two years creates a presumption of abandonment shifting the burden to the abandoning party. 15 U.S.C. ß 1127; American Int'l Group, Inc. v. American Int'l Airways, Inc., 726 F. Supp. 1470, 1480-81 (E.D. Pa. 1989); (Charge: A1494-97). Abandonment is an issue of fact for the jury. Browning King, 176 F.2d at 106-07; Rivard v. Linville, 133 F.3d 1446, 1449 (Fed. Cir. 1998). The issue is resolved under the totality of the circumstances. 15 U.S.C. ß 1127; Oklahoma Beverage Corp. v. Dr. Pepper Love Bottling Corp., 565 F.2d 629, 632 (10th Cir. 1977); Charvet S.A. v. Dominique France, Inc., 568 F. Supp. 470, 477 (S.D.N.Y. 1983), affíd, 736 F.2d 846 (2d Cir. 1984) (Charge: A1494-97).
Here the jury did decide that Treadwell had abandoned the service mark. (A1563). Reviewing the evidence ñ fairly, much less with the "most favorable to Marshak" prospective the law requires ñ a reasonable juror could predicate abandonment on any or all of:

(i) Treadwell's loss in the 1971 New York State Court litigation; her failure to respond to discovery requests in that case; and her failure to pursue the supposed Marshak infringement of her "rights" -- for years and for decades;

(ii) Her failure to oppose or timely cancel the 1978 Marshak Registration ñ although she knew about it;

(iii) Her failure to enforce the service mark during the 1970s, 1980s, and half of this decade against the many violations actually stopped by Marshak. Failure to enforce a mark is evidence of abandonment. Hermes Int. v. Lederer de Paris Fifth Avenue, Inc., 50 F.Supp.2d 212, 220 (S.D.N.Y. 1999);

(iv) Treadwell's giving up and leaving the United States in 1972 to relocate in England;

(v) Treadwellís recording contracts after leaving for England which expressly proscribed any record distribution in the United States.

(vi) The presumption of abandonment and the jury's rejection of any Treadwell rebuttal to that presumption.
The District Court's decision never disagreed with this sufficiency of evidence. Rather, the Court granted JMOL based upon a perceived per se rule, viz., that continuing royalties for old (1959-1964) recordings preclude a finding of abandonment as a matter of law. (A1673-74). This necessarily refers to Treadwell's entitlement for a shared portion of the royalties ñ with Marshak's assignors Thomas, Hobbs and Green getting the other aliquot. (A1652-53).

There is no case in the Opinion or in motions below which has ever recited such a per se rule based on royalties -- and there is a great deal to the contrary in the Statute, in the Charge here, and in the authorities to require the "all circumstances" jury finding of abandonment. Indeed the law specifically rejects that such residual commerce is an ongoing commercial "use" for abandonment purposes. As the court stated in Kusik v. The Family Circle Inc., 894 F. Supp. 522 (D. Mass. 1995): ìnominal or residual use is not sufficient to avoid abandonment." Id. at 533
(emphasis added) (continuing sale of back issues of a trademarked publication insufficient to avoid abandonment); La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271-72 (2d Cir. 1974) ; Cerveceria Centroamericana, S.A. v. Cerveceria India, Inc., 892 F.2d 1021, 1024-26 (Fed. Cir. 1989); Rivard v. Linville, 133 F.3d 1446, 1449-50 (Fed. Cir. 1998)("sporadic trip to the United States, cursory investigations" did not suffice for the requisite commercial scale activities); AmBrit, Inc. v. Kraft, Inc., 805 F.2d 974, 994 (11th Cir. 1986)("meaningful commercial use" required), cert. denied, 481 U.S. 1041 (1987).
Here, the royalty stream (be it very little or otherwise -- a fact not in the record here) was paid to Treadwell, and to Thomas, Green and Hobbs, for recordings made long ago and by the three Marshak assignors at that. There is nothing in the record to suggest that the recordings serve in any way as to identify Treadwell as a source of origin of the music rather than the three performers (or someone/no-one else) -- the sine qua non of a trademark use. Please see as illustrative in the artistic milieu Silverman v. CBS Inc., 870 F.2d 40, 48-49 (2d Cir.), cert. denied, 492 U.S. 907 (1989) and Marshak v. Sheppard, 665 F. Supp. at 593.

The continuing record royalties were specifically acknowledged by the courts in Green and Sheppard. They are at most a factor in the "all circumstances" consideration as the Judge charged both originally and again in response to the juryís inquiry. (A1547) .

The jury, charged with fact finding in this case, gave the royalties such weight as it considered appropriate. The jury found abandonment. We urge that this finding is certainly one a reasonable juror could make, and that this Court exercise its plenary review to determine that the JMOL was in error. Barna, 42 F.3d at 812.
The single authority relied upon by the District Court for its per se rule, Kingsman v. K-Tel Intern. Ltd., 557 F. Supp. 178 (S.D.N.Y. 1983), which involved a motion for preliminary injunction, does not contain any per se rule making royalties for past performances a "use" as a matter of law. The case specifically comments on other factors which would have been relevant, e.g., whether plaintiffs (other group members) "use[d] the name Kingsman during the period from 1967 to the present to promote their previously recorded album". 557 F. Supp. at 183. That kind of other evidence is present in our case -- in great detail -- and the jury heard it all.

We urge that the District Court was correct in its 1998 Judgment to the extent it applied the jury verdict of abandonment and that the continuing common law rights for The Drifters service mark resided in Marshak. (A1634). As the Court noted in its accompanying 1998 Letter Opinion, that maintained the parties in their respective positions of 25 years duration, aside from the impact on the federal Service Mark Registration. (A1624).

c. The PTO Fraud (Unclean Hands)

Does Not Vitiate Marshak's Common

Law Service Mark Rights
The jury found that notwithstanding the PTO fraud verdict of Jury Interrogatory 1(a), Marshak had valid common law trademark rights to The Drifters service mark. (A1563).

There is a significant difference in consequence between the effect of a fraud on the PTO in the procurement of a patent vis-a-vis the procurement of a trademark registration. McCarthy on Trademarks, ß 31:62-65. A patent creates the intellectual property right which did not exist before the grant. Brown v. Duchesne, 60 U.S. 183, 195 (1857); Exxon Chemical Patents Inc. v. The Lubrizol Corp., 935 F.2d 1263, 1266 (concurring opinion) (Fed. Cir. 1991). Thus, a patent procured by fraud is unenforceable. Fox Industries, Inc. v. Structural Preservation Systems, Inc., 922 F.2d 801, 804 (Fed. Cir. 1990).
That is not so for trademark and service mark registrations. Trademarks and service marks are created by the use which underlies the registration and are not created by federal registration. Federal registration provides procedural advantages rather than creating the underlying right.

Fraudulent trademark registration does not vitiate the underlying common law trademark rights:

It is difficult to understand why defendants in many trademark infringement suits expend so much time, effort and money in vigorously pursuing the claim that plaintiffís federal registration was obtained by fraud. It has been held several times that even if defendant succeeds in proving that the plaintiffís registration was fraudulently obtained, plaintiffís common law rights in the mark continue unabated and are sufficient to require an injunction against an infringing defendant. In addition, plaintiffís separate federal rights in unregistered marks under Lanham Act ß 43(a) continue unabated even if a registration is disregarded or cancelled.

McCarthy on Trademarks, ß31:60, pp. 31-100 and 101 (emphasis added)(citing Orient Express Trading Co. v. Federated Dep't Stores, Inc., 842 F.2d 650, 654 (2d Cir. 1988) (fraud in the registration process leading to cancellation of registrations does not bar possible relief based upon Lanham Act ß 43(a) claim for infringement of unregistered rights.î) and ßß 31:64, 35:65; Standard Terry Mills, Inc. v. Shen Mfg. Co., 626 F. Supp. 1362 (E.D. Pa. 1986), affíd on other grounds, 803 F.2d 778, (3d Cir. 1986) (misconduct in obtaining federal registration is not unclean hands precluding a claim founded upon common law, unregistered, rights); House of Westmore, Inc. v. Denney, 151 F.2d 261, 265 (3d Cir. 1945); Campbell Soup Co. v. Armour Co., 175 F.2d 795, 796-97 (3d Cir.), cert. denied, 338 U.S. 847 (1949); Volkswagenwerk Aktiengesellschaft v. Wheeler, 814 F.2d 812, 819 (1st Cir. 1987) ("cancellation of a trademark registration does not extinguish common law rights that registration did not create"); San Juan Products, Inc. v. San Juan Pools of Kansas, Inc., 849 F.2d 468, 474 (10th Cir. 1988) (registration does not abridge the remedies available without registration); Ginseng-Up Corp. v. American Ginseng Co., 215 U.S.P.Q. 471 (S.D.N.Y 1981) (where suit is based only on common law rights, alleged fraud in procuring federal registration is irrelevant and does not constitute an unclean hands defense).

In his 1998 Letter Opinion, Judge Politan refused to upset Marshakís exclusive common law rights in The Drifters service mark which the jury had awarded based upon unclean hands/the fraud on the PTO defense. (A1627-29 and the 1998 Judgment, A1633-35). As the District Court put it, ìTreadwell has cited no case in which the doctrine of unclean hands was employed in this fashion; nor has the Court found such a case.î (A1628)

Thus, all the authority ñ and there is a great deal of it -- compels Judgment awarding Marshak The Drifters common law rights ñ which the Jury awarded ñ unaffected by the fraud verdict. We respectfully submit that the Judge was correct in his 1998 Opinion and Judgment. The 1999 Judgment appealed from is in error and should be reversed.
d. The Sub-Silencio JMOL

Overturning The Finding Of

Marshak Infringement Is Error
Violation of the Lanham Act is a question of fact for the jury. Abdul-Jabbar v. General Motors Corp., 85 F.3d 407, 413 (9th Cir. 1996); Guardian Life Ins. Co. of America v. American Guardian Life Assurance Co., 943 F. Supp. 509, 521 (E.D. Pa. 1996). The District Court stated that "the jury never reached the question of whether Marshak has been infringing" Treadwell's rights. (August 1999 Opinion: A1682). The Court then decided the matter in Treadwell's favor. (Id.).

However, the jury did decide the matter -- holding for Marshak:

1(b) Has Treadwell proven by a preponderance of the evidence that plaintiff Marshak has since the issuance of Registration No. 1,081,338, used The Drifters name in such a way as to misrepresent to the public the source of origin of the goods or services plaintiff Marshak advertises and promotes and to suggest falsely a connection between such services and Treadwell's Drifters?
Yes, Treadwell has proven that.

X No, Treadwell has not proven that.
(A1562). And please see the Court's August 16, 1999 Letter Opinion: A1685, that "the parties did not argue, and the jury did not find, that there was either direct competition or actual confusion.î

Treadwell never moved for JMOL on this verdict. The District Court never reviewed the verdict for Anderson sufficiency.
This case was appropriate for jury determination -- and was determined by jury verdict. The Final Judgment (A1691-93) holding Marshak liable for violating Treadwell's service mark rights is in error as directly conflicting with jury verdict 1(b), and should be reversed on this basis.

e. A New Trial

Is Not Warranted
The District Court, arguendo, makes the alternative finding, should its JMOL be rejected, that the juryís finding of abandonment was against the weight of the evidence and warrants a new trial. Rule 50(c)(1), Fed.R.Civ.P. (A1674). This Court reviews the new trial decision for abuse of discretion. Roebuck v. Drexel Univ., 852 F.2d 715, 735 (3d Cir. 1988).

We urge that not to be the case. JMOL (and presumably, the otherwise unspecified new trial ratio decedendi) was predicated solely upon the record royalties. These residual, shared royalties, of unknown amount and frequency for long past performances of Marshak's assignees , of questionable legal significance, do not overcome Treadwell's over 20 year purposeful absence from the United States and failure to assert or protect her claimed service mark rights. We respectfully submit that the new trial conclusion is an abuse of discretion. "[I]n an appropriate case a court of appeals may direct that judgment be granted against an appellee without permitting the appellee to seek a new trial from the District Court." Exxon Chemical, 137 F.3d at 1481.

Point III - JMOL Should Have Been Granted On

The Fraudulent Procurement Claim/Defense
a. The Law Of

Fraudulent Procurement
Treadwellís defense to Marshakís claim of infringement, of course, is that Marshak and his assignors committed fraud on the PTO by not reporting the supposed Treadwell use rights said to be manifested by the 1960 Thomas employment Agreement and the residual record royalty payments.

Fraud on the Patent and Trademark Office requires proof to a clear and convincing standard of a specific and actual intent to mislead. Abercrombie & Fitch Co. v. Hunting World Inc., 537 F.2d 4, 14 (2d Cir. 1976)(must prove that statement was "knowingly false"); Molins PLC v. Textron Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995); Tol-O-Matic, Inc. v. Proma Produkt-Und Marketing Gesellschaft m.b.H., 945 F.2d 1546, 1554 (Fed Cir. 1991); the Charge, A1482-83, A1486-90. Mistake, ignorance, negligence, even gross negligence does not suffice. Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc), cert. denied, 490 U.S. 1067 (1989); Orthopedic Equipment Co. v. All Orthopedic Appliances, Inc., 707 F.2d 1376, 1383 (Fed. Cir. 1985). There is no affirmative duty to investigate for one seeking federal registration. American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1362 (Fed. Cir. 1984), cert. denied, 469 U.S. 821 (1984); Money Store v. Harriscorp. Finance, Inc., 689 F.2d 666, 671 (7th Cir. 1982).
The Lanham Act does not require a statement by a trademark applicant that "no other firm has the right to use" the mark "in commerce" -- only a "belief" in that proposition. 15 U.S.C. ß 1051(a), emphasis added; McCarthy on Trademarks, ß 31:76 citing extensive authority including Marshak v. Sheppard; Stansfield v. Osborne Indus., 52 F.3d 867, 814 (10th Cir. 1995), cert. denied, 516 U.S. 920 (1995)("when veracity of application oath is challenged, '[i]t is, therefore, the applicant's subjective belief that is at issue" (no fraud found)).

b. The "Should Have Known"Charge For Intent To Defraud
The Lanham Act requires a service mark applicant to recite that:

"to the best of [the applicant's] knowledge and belief no other person, firm, corporation, or association has the right to use the above identified mark in commerce"
15 U.S.C. ß 1051(a),(b) - emphasis added.
The knowledge or belief at issue here is not knowledge and belief of the fact that the Thomas Agreement or Treadwell royalty shares exist. Rather, it is the knowledge and belief that the Agreement or royalties imparted a right in Treadwell to use the mark in commerce. Metro Traffic Control Inc. v. Shadow Network, Inc., 104 F.3d 336, 340-41 (Fed. Cir. 1997); Northlake Marketing & Supply, Inc. v. Glaverbel, S.A., 958 F. Supp. 373, 377-78 (N.D. Ill. 1997) (quoting Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1573-74 (Fed. Cir. 1991) and citing Kingsdown Medical, 863 F.2d at 872.
On four occasions the jury was charged that actual knowledge that some other person or entity [Treadwell] had the right to use the mark was not required; rather that the jury could find the requisite intent to defraud the Patent and Trademark Office if Thomas, Hobbs and Green (the assignors) or Marshak "should have known" that what they told the PTO was false. (A1482, 1488 and the passages quoted at pp. 22-23, supra). Marshak objected to this "should have known" standard. (A1423-24).

"Should have known", "reasonably should be aware", and the like have been specifically rejected as in error and an impermissible surrogate for the actual intent to defraud which must be specifically proven. Nordberg, Inc. v. Telsmith, Inc., 82 F.3d 394, 397 (Fed. Cir. 1996); American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1362 (Fed. Cir. 1984), cert. denied, 469 U.S. 821 (1984).

The District Court cites to Torres v. Cantine Torresella S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986) and G. H. Mumm & CIE v. Desnoes & Geddes, Ltd., 917 F.2d 1292, 1296 (Fed. Cir. 1990) (quoting Torres) to support its ìshould have knownî standard. Torres and Mumm, however, are inapposite as both cases relate to renewal of a trademark application where the false statement related to applicantís own use ñ not that of others ñ and could not be explained as erroneous without an attempt to mislead. Furthermore, Torres and Mumm cite no other authority for a ìshould have knownî standard; and neither the District Court nor Treadwell have cited a ìshould have knownî standard outside a renewal context.
The difference in this case is substantial. There is no evidence of record that Marshak or his assignors ever actually knew or ever actually believed that Treadwell had a right to use The Drifters name in commerce when they filed the trademark application in 1976 (or at any other time). For the most part the trial record does not show they were ever even asked -- and the evidence in Marshak's case is that he believed that Treadwell had no such right based upon, inter alia, the 1971 New York State Supreme Court decision and Treadwell's leaving the United States.

The charge was plain, material error. Beardshall v. Minuteman Press Int'l, Inc., 664 F.2d 23, 25-27 (3d Cir. 1981). We respectfully urge that the Judgment based upon the jury finding of fraud on the Patent Office is in error and should be reversed, and a new trial be ordered on point if one is required.

c. Deja Vu All Over Again ñ

The Collateral Estoppel

Preclusion (Marshak v. Sheppard)
Judge Pollack ruled that there was no fraud on the Patent and Trademark Office during prosecution of The Drifters federal Registration in Marshak v. Sheppard. pp. 20-21 , supra. Judge Politan here denied Marshak's summary judgment and JMOL motions to preclude Treadwell from relitigating that fraud defense/claim since she was not a party to that case, i.e., "Treadwell's claim of fraud had not been previously litigated; she was entitled to her day in court." (1999 Opinion: A1664-65 and p. 25, supra).

We respectfully submit that the District Court was in error, and materially understated the preclusive scope of collateral estoppel. Collateral estoppel extends to certain non-parties in an earlier litigation who are considered to have had their day in court:

[O]ne who ... assists in the prosecution or defense of an action in aid of some interest of his own ... is as much bound ... as he would be if he had been a party to the record.

Montana v. United States, 440 U.S. 147, 154, 155 (1979)(defendant had a sufficient "laboring oar" in the conduct of the prior litigation to invoke preclusion); Souffront v. La Compagnie des Sucreries De Porto Rico, 217 U.S. 475, 486-87 (1910); Cotton v. Federal Land Bank of Columbia, 676 F.2d 1368, 1369-71 (11th Cir. 1982), cert. denied, 459 U.S. 1041 (1982); Talbot v. Quaker-State Oil Refining Co., 104 F.2d 967, 968-69 (3d Cir. 1939); Marine Power & Equipment Co. v. United States, 594 F. Supp. 997, 1003 (D.D.C. 1984).

Treadwell participated in the identical fraudulent procurement defense in Sheppard. She testified fully in Sheppard ñ including sponsoring and presenting the two "misrepresentations" relied upon by the District Court here ñ viz., the Thomas 1960 Agreement and the residual record royalties. She not only had the laboring oar, she rowed the boat. Her "rights" were the subject and gravamen of the supposed fraud defense in Sheppard, and she appeared to vigorously sponsor that defense.

Treadwell had an interest (the same as Sheppardís) in a successful outcome of the fraud defense. Voiding the Registration would relieve Treadwell of jeopardy under it ñ and hopefully (for her) lead to a possible resurrection of performance rights under The Drifters name.

Treadwell participated (presented) the fraud defense in Sheppard ñ a defense in which she had an interest. She is bound by the doctrine of collateral estoppel. Montana, 440 U.S. 147 (the latest of Supreme Court cases on point); and the other authorities cited, supra, p. 49.
d. There Was No Clear And

Convincing Evidence Of Fraud

On The PTO In The Record
We argue above that the jury's fraud on the PTO verdict was rendered on an erroneous charge. We assert here that Marshak's JMOL motion of no fraud should have been granted since a reasonable juror properly instructed could not have found clear and convincing evidence of an intent to defraud the Patent & Trademark Office by the statement that no one else had the right to use The Drifters name in commerce.

1. There is no direct evidence that Thomas, Hobbs, Green and/or Marshak believed that anyone else had any such right. Only Marshak was ever asked -- and he denied that anyone had any such right and, more importantly under the operative standard, that he knew or believed that anyone (Treadwell) had such a right. (A525-31).

2. Marshak's belief that Treadwell had no such use right stemmed in part from the New York Supreme Court's 1971 decision which said that "it is the defendants [Thomas, Green, Hobbs, Marshak] who have established such [Drifters] reputation and notoriety" rather than Treadwell. (A724-30).
Maitland v. Trojan Electric & Machine Co., 480 N.E.2d 736 (N.Y. 1985) is cited by the District Court for the proposition that the New York County Judgment was not a dismissal on the merits under New York CPLR ß 5013. This does not change matters. The New York Supreme Court's statement in a dismissal without prejudice can (did, and rationally should) still form the basis of Marshakís and the service mark assignorsí belief the probable operative fact that the performers rather than Treadwell held the rights to the name. The issue is the applicants' belief in their rights -- not whether some nicety of unknown and unknowable (Maitland was decided 9 years after the 1976 application date) is said to have made the Judgment without prejudice .
3. Marshak's belief that Treadwell had no such use right stemmed in part from Treadwell leaving for Europe in 1972 and abandoning all United States performances. (A811-47, A686-87, A689-90).

4. Marshak's belief that Treadwell had no such use rights stemmed in part from her failure to pursue any claim of exclusion (by litigation or otherwise) against his group or any Drifter infringers during the 1971-1976 period after the lost 1971 litigation.

5. Marshak and the assignors knew about the 1960 Thomas Agreement with the Drifters Inc. They also knew that the validity and enforceability of the Agreement was the subject of "serious questions" by the New York County Court which denied preliminary injunctive relief and dismissed the 1971 action based on it.

Two respected judges found that the Thomas contract did not give rise to fraud on the Patent and Trademark Office. Green, 505 F. Supp. at 1060 and Sheppard, 666 F. Supp. at 598-600. Fraud on the PTO is a matter of law. Cabinet Vision v. Cabnetware, 129 F.3d 595, 601 (Fed. Cir. 1997). These two decisions were entitled to stare decisis respect here. Please see the authorities and discussion applying stare decisis in Sheppard, 666 F. Supp. at 597.
6. There is no evidence that anyone even considered the Treadwell residual (really shared) royalties when making the right to use statement. Thus it cannot be the subject of fraud.

The royalties were considered on point in Green and Sheppard and found not to support any fraud defense. 505 F. Supp. at 1060 and 666 F. Supp. at 593, respectively. Please see also the law regarding residual activity not sufficing to save abandonment at pp. 39-41.

"Reasonable doubt" by the Marshak applicants is not fraud. We respectively submit that no reasonable trier of fact could find fraud to a clear and convincing standard from the requisite all circumstances here.

7. Following issuance of the service mark, applicants and registrant had no additional information ñ that anyone points to ñ other than what they had at the time they filed the application. Thus there was no failure to correct.

e. In Summary On the Fraud Defense/Claim

We respectfully urge that Judgment as a Matter of Law should have been entered for Marshak on the fraud issues (defense and Treadwell cancellation claim). Treadwell was precluded from raising the issue by both the Statute of Limitations and by collateral estoppel. Either or both of these require dismissal of the defense and claim.

There was also error in the jury charge, and in denial of Marshak's JMOL on the merits. The former would require retrial; the latter dismissal or retrial at this Court's discretion.
Reversal of the fraud on the PTO issue would fully restore both parties to the status quo ante, i.e., which includes the Registration, full of some 20 years duration.

Point IV - The District Court's Monetary Award Is

Precluded By The Statute Of Limitations
As noted above (p. 33) the Lanham Act has no limitations period for any of its provisions. That absence has been filled in as a matter of law. On an issue-by-issue basis, the courts have found an appropriate limitations period which corresponds to "the most appropriate" or "the most analogous" state statute of limitations. Wilson v. Garcia, 471 U.S. 261, 266-68 (1985); Holmberg v. Armbrecht, 327 U.S. 392, 395 (1946); Beauty Time, Inc. v. VU Skin Systems, Inc., 118 F.3d 140, 143 (3d Cir. 1997); Ceres Partners v. GEL Assoc., 918 F.2d 349, 352-53 (2d Cir. 1990); Vanderboom v. Sexton, 422 F.2d 1233, 1237 (8th Cir.), cert. denied, 400 U.S. 852 (1970); 4 R. Callmann Unfair Competition Trademarks and Monopolies, ß 22.30 at 141 (1983).

The large majority of federal courts considering the matter have applied the state's fraud limitations period for Lanham Act infringement and unfair competition. Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996) and the discussion in Derrick Mfg. Corp., v. Southwestern Wire Cloth, Inc., 934 F. Supp. 796, 804-05 (S.D. Tex. 1996) citing extensive authority. Here the two possible statutes of limitations to be applied are both six years (New York Civ. Proc. L.&R. 213(8); Hartford Accident & Indemnity Co. v. Baker, 504 A.2d 1250, 1252 (N.J. Super. Ct. Law Div. 1985) (interpreting N.J.S.A. ß 2A:14-1)).
Treadwell had notice of what the District Court viewed to be Marshak's infringing activities no later than 1971 when she commenced the New York State Supreme Court action. The operative six year Statute of Limitations period thus expired in 1978. It expired three more times before Treadwell's counterclaim in 1996 which gave rise to the District Court's monetary award.

We respectfully submit that the claim is barred by the Statute of Limitations.

The New York and majority rule is to bar all monetary relief once trademark infringement passes the limitation period. Please see the authorities above. There is some authority for providing monetary relief going back from filing the claim for the statute of limitations period, with any monetary relief being lost before that. Derrick Mfg. Corp., 934 F. Supp. at 809. Courts within the Third Circuit have not spoken on this issue. Guardian Life Insurance, Co. v. American Guardian Life Assur., 943 F. Supp. 509, 518 (E.D. Pa. 1996). Here that would provide, at most, a remedy for the period beginning April 1990 ñ not the 29-year period granted by the District Court extending back to 1970.

In fashioning its remedy, the District Court acknowledged that damages were not available to Treadwell as the jury was not asked to determine whether Treadwell should recover damages or whether there was any actual competition or confusion. (A1685). Instead, the District Court awarded an accounting of profits for the period beginning April 1970-1999(!) to prevent Marshakís supposed unjust enrichment. (A1685).
The court cites to W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 664 (2d Cir. 1970); Wolfe v. National Lead Co., 272 F.2d 867, 871 (9th Cir. 1959), cert. denied, 362, U.S. 950 (1960) for the proposition that an accounting of profits should be coextensive with the period of infringement. These cases, however, are inapposite. No statute of limitations bar was in an issue in either case. In Bassett, suit was brought five months after the infringement began and in Wolfe, suit was brought three years after the infringement began. Neither the Court, nor defendants have proffered authority for the proposition that an equitable remedy may exceed -- really vitiate -- a limitations period capped or barred damages period.

Here, we urge that all relief should be lost to Treadwell in view of the three decade non-assertion of any rights she might have. Failing this, we urge that any relief prior to April 1990 is in error.
CONCLUSION

By reason of all that is said above, plaintiff-appellant Marshak respectfully requests reversal of the District Court's Final Judgment, restoring his common law and federal Registration rights to The Drifters service mark, and obviating the monetary recovery against him.

Respectfully submitted,
Dated: November 9, 1999

Stephen B. Judlowe

HOPGOOD, CALIMAFDE, KALIL

& JUDLOWE, LLP

60 East 42nd Street

New York, New York 10165

(212) 551-5000

Of Counsel:
Lisa M. Ferri

Eve Kunen

Vincent A. Sireci

HOPGOOD, CALIMAFDE, KALIL

& JUDLOWE, LLP

60 East 42nd Street

New York, New York 10165

(212) 551-5000
Mark J. Ingber

WATERS, McPHERSON, McNEILL

300 Lighting Way

Secaucus, N.J. 07096

(201) 863-4400
TABLE OF CONTENTS

Page
STATEMENT OF RELATED CASES AND PROCEEDINGS . . 1
JURISDICTIONAL STATEMENT . . . . . 2
ISSUES ON APPEAL . . . . . 3
STATEMENT OF THE CASE . . . . 6

STATEMENT OF FACTS . . . . 8

(i) The Drifters History . . . . . 8
a. The Treadwell Years

(1953-1970 ) . . . . 8

b. The Marshak Years

(1969 - 1998) . . . . . 9
c. Record Royalties . . . . . 10
(ii) Marshak's Trademark

Registration No. 1,081,338 . . . . . 11

(iii) The Thomas - Treadwell

Drifters Contract . . . . . 13
(iv) The Relevant Prior Litigations . . . . . 13
a. The 1971 New York

Supreme Court Case . . . . . 13
b. Marshak v. Green:

1981 (Judge Weinfeld) . . . . . 14
c. Marshak v. Sheppard:

1987 (Judge Pollack) . . . . . 16
(v) The Procedural History

Of This Case . . . . . 20

TABLE OF CONTENTS (Con't.) Page

a. The Case . . . . . 20
b. The Jury Charge And

The Jury Question . . . . . 21
(i) The "Should Have

Known" Fraud Charge . . . . 21
(ii) The (Correct) "All

Circumstance" Charge

On Abandonment . . . . 23
c. The Jury Verdict . . . . . 23
d. The 1998 Post Trial

Opinion And Judgment . . . . . 24
e. The July 30, 1999 Opinion

And Judgment . . . . . 26
f. The August 16, 1999 Letter

Opinion And Judgment . . . . . 27
SUMMARY OF ARGUMENT . . . . 29

ARGUMENT . . . . . 32
Point I - The Fraudulent Procurement

Cancellation Claim Affirmative

Defense Is Barred By The Statute

Of Limitations . . . . . 32
Point II - JMOL On The Jury's Abandonment

Verdict Was In Error . . . . . 35
a. The Standards For

Judgment As A Matter Of Law . . . . . 35
b. The More Than Ample Evidence

From Which A Reasonable Jury

Could Have Found Abandonment . . . . 36

TABLE OF CONTENTS (Con't.) Page
c. The PTO Fraud (Unclean Hands)

Does Not Vitiate Marshak's Common

Law Service Mark Rights . . . 40

d. The Sub-Silencio JMOL Overturning

The Finding Of Marshak Infringement

Is Error . . . . . 43
e. A New Trial Is Not Warranted . . . . . 44
Point III - JMOL Should Have Been Granted

On The Fraudulent Procurement

Claim/Defense . . . . . 45
a. The Law Of Fraudulent

Procurement . . . . . 45
b. The "Should Have Known"

Charge For Intent To Defraud . . . . . 46
c. Deja Vu All Over Again -

The Collateral Estoppel

Preclusion - Marshak v. Sheppard . . . . 48
d. There Was No Clear And

Convincing Evidence Of Fraud

On The PTO In The Record . . . . . 50
e. In Summary . . . . . 53
Point IV - The District Court's Monetary

Award Is Precluded By The

Statute Of Limitations . . . . . 54
CONCLUSION . . . . . 57
CERTIFICATION OF ADMISSION TO BAR
CERTIFICATION OF COMPLIANCE

TABLE OF AUTHORITIES

Abdul-Jabbar v. General Motors Corp.,

85 F.3d 407 (9th Cir. 1996) 43
Abercrombie & Fitch Co. v. Hunting World Inc.,

537 F.2d 4 (2d Cir. 1976) 45
AmBrit, Inc. v. Kraft, Inc.,

805 F.2d 974 (11th Cir. 1986)

cert. denied, 481 U.S. 1041 (1987) 38
American Hoist & Derrick Co. v. Sowa & Sons, Inc.,

725 F.2d 1350 (Fed. Cir. 1984) cert. denied,

469 U.S. 821 (1984) 45
American International Group, Inc. v.

American International Airways, Inc.,

726 F.Supp. 1470 (E.D. Pa. 1989) 37
Barna v. City of Perth Amboy,

42 F.3d 809 (3d Cir. 1984) 35
Beardshall v. Minuteman Press International, Inc.,

664 F.2d 23(3rd Cir. 1981) 48
Beauty Time, Inc. v. VU Skin Systems, Inc.,

118 F.3d 140 (3rd Cir. 1981) 32, 34, 54
Brown v. Duchesne,

60 U.S. 183 (1857) 40
Browning King v. Browning King,

176 F.2d 105 36
Cabinet Vision v. Cabnetware,

129 F.3d 595 (Fed. Cir. 1997) 52
Calzaturificio Rangoni S.p.A. v. United States Shoe Corp.,

868 F.Supp. 1414 (S.D.N.Y. 1994) 34
Ceres Partners v. GEL Associate,

918 F.2d 349 (2d Cir. 1990) 54

Cerveceria Centroamericana, S.A. v. Cerveceria India, Inc.,

892 F.2d 1021 (Fed. Cir. 1989) 40
Charvet S.A. v. Dominique France, Inc.,

568 F.Supp. 470 (S.D.N.Y. 1983) 36
Conopco, Inc. v. Campbell Soup Co.,

95 F.3d 187 (2d Cir. 1996) 32, 54
Continental Ore Co. v. Union Carbide and Carbon Corp.,

370 U.S. 690 (1962) 35
Cook v. Lehman,

863 F.Supp. 207(E.D. Pa. 1994) 36
Cotton v. Federal Land Bank of Columbia,

676 F.2d 1368(11th Cir.), cert. denied,

459 U.S. 1041 (1982) 49
Derrick Manufacturing Corp. v. Southwestern Wire Cloth, Inc.,

934 F.Supp. 796 (S.D. Tex. 1996) 54, 55

Dial-A-Mattress Operating Corp. v. Mattress Madness Inc.,

33 U.S.P.Q.2d 1961(E.D.N.Y. 1994) 50

Exxon Chemical Patents Inc. v. The Lubrizol Corp.,

935 F.2d 1263 (Fed. Cir. 1991) 40, 44
Failla v. City of Passaic,

146 F.3d 149 (3d 1998) 3, 4
Fox Industries, Inc. v. Structural Preservation Systems, Inc.,

922 F.2d 801(Fed. Cir. 1990) 41
Ginseng-Up Corp. v. American Ginseng Co.,

215 U.S.P.Q. 471(S.D.N.Y. 1981) 42
Grant v. City of Pittsburgh,

98 F.3d 116 (3d Cir. 1996) 4
Guardian Life Insurance Co. of America v.

American Guardian Life Assurance Co.,

943 F.Supp. 509 (E.D. Pa. 1996) 43, 55
Hermes Int. v. Lederer de Paris Fifth Avenue, Inc.,

50 F.Supp.2d 212 (S.D.N.Y. 1999) 37

Holmberg v. Armbrecht,

327 U.S. 392 (1946) 56
King-Size, Inc. v. Frank's King Size Clothes Inc.,

547 F.Supp. 1138 (S.D. Tex. 1982) 50
Kingsdown Medical Consultants Ltd. v. Hollister, Inc.,

863 F.2d 867 (Fed. Cir. 1988) cert. denied.,

490 U.S. 1067 (1989) 21, 45, 46
Kingsman v. K-Telegraph Intern. Ltd.,

557 F.Supp. 178 (S.D.N.Y. 1983) 39, 40
Kirkland v. National Broadcasting Co., Inc.,

425 F.Supp. 1111 (E.D.N.Y. Pa. 1976),

aff'd, 565 F.2d 152 36
Kusik v. The Family Circle Inc.,

894 F.Supp. 522 (D. Mass. 1995) 38
La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc.,

495 F.2d 1265 (2d Cir. 1974) 38
Lurzer GMBH v. American Showcase, Inc.,

1998 U.S.Dist. LEXIS 13605

(S.D.N.Y. Aug. 31, 1998) 34
Marine Power & Equipment Co. v. United States,

594 F.Supp. 997(D.D.C. 1984) 49
Marshak v. Green,

505 F.Supp. 1054 (S.D.N.Y. 1984) 15, 19, 53
Marshak v. Sheppard,

666 F.Supp. 590 (S.D.N.Y. 1987) 1, 4, 16, 20, 35, 39, 52, 53
Metropolitan Traffic Control Inc. v. Shadow Network, Inc.,

104 F.3d 336 (Fed. Cir. 1997) 46
Molins PLC v. Textron Inc.,

48 F.3d 1172 (Fed. Cir. 1995) 45
Money Store v. Harriscorp. Finance, Inc.,

689 F.2d 666 (7th Cir. 1982) 45
Montana v. United States,

440 U.S. 147 (1979) 48, 49

Motter v. Everest & Jennings, Inc.,

883 F.2d 1223 (3d Cir. 1989) 36
Nordberg, Inc. v. Telsmith, Inc.,

82 F.3d 394 (Fed. Cir. 1996) 47
Northlake Marketing & Supply, Inc. v. Glaverbel, S.A.,

958 F.Supp. 373 (N.D. Ill. 1997) 46
Official Airline Guides, Inc. v. Goss,

6 F.3d (9th Cir. 1993) 34
Oklahoma Beverage Corp. v. Dr. Pepper Love Bottling Corp.,

565 F.2d 629 (10th Cir. 1977) 36
Omnipoint Corp. v. Zoning Hearing Board,

181 F.3d 403 (3d Cir. 1999) 5
Orient Express Trading Co. v. Federated Department Stores, Inc.,

842 F.2d 650 (2d Cir. 1988) 41
Orthopedic Equipment Co. v. All Orthopedic Appliances, Inc.,

707 F.2d 1376 (Fed. Cir. 1985) 45
Park 'N Fly, Inc. v. Dollar Park & Fly, Inc.,

469 U.S. 189 (1985) 33
Rivard v. Linville,

133 F.3d 1446 (Fed. Cir. 1998) 36, 38
Roebuck v. Drexel University,

852 F.2d 715 (3d Cir. 1988) 44
San Juan Products, Inc. v. San Juan Pools of Kansas, Inc.,

849 F.2d 468 (10th Cir. 1988) 42
Silverman v. CBS Inc.,

870 F.2d 40 (2d Cir.)

cert. denied, 492 U.S. 907 (1989) 39
Souffront v. La Compagnie des Sucreries De Porto Rico,

217 U.S. 475 (1910) 49
Standard Terry Mills, Inc. v. Shen Manufacturing Co.,

626 F.Supp. 1362 (E.D. Pa. 1986),

aff'd on other grounds, 803 F.2d 778 (3d Cir. 1986) 41

Stansfield v. Osborne Industrial,

52 F.3d 867, (10th Cir. 1995), cert. denied,

516 U.S. 920 (1995) 46, 50
Talbot v. Quaker-State Oil Refining Co.,

104 F.2d 967 49
Tennessee Valley Authority v. Hill,

437 U.S. 153 25
The Joint Stock Society v. UDV North America Inc.,

53 F.Supp.2d 692 (D. Del. 1999) 33
Tol-O-Matic, Inc. v. Proma Produkt-Und Marketing

Gesellschaft m.b.H., 945 F.2d 1546 (Fed. Cir. 1991) 45
Torres v. Cantine Torresella S.r.l.,

808 F.2d 46 (Fed. Cir. 1986) 47
Vanderboom v. Sexton,

422 F.2d 1233 (8th Cir.),

cert. denied, 400 U.S. 852 (1970) 54
W.E. Bassett Co. v. Revlon, Inc.,

435 F.2d 656 (2d Cir. 1970) 56
Wilson v. Garcia, 471 U.S. 261(1985) 54
Wolfe v. National Lead Co.,

272 F.2d 867, (9th Cir. 1959)

cert. denied, 362, U.S. 950 (1960) 56
STATE CASES
Carven Associates v. American Home Assurance Corp.,

84 N.Y.2d 927 (1994) 51
Hartford Accident & Indemnity Co. v. Baker,

504 A.2d 1250 (N.J. Super. Ct. Law Div. 1985) 54
Maitland v. Trojan Electric & Machine Co.,

480 N.E.2d 736 (N.Y. 1985) 51

FEDERAL STATUTES
15 U.S.C. ß 1051(a), 6 48
15 U.S.C. ß 1063 13
15 U.S.C. ß 1115(b) 14, 33
15 U.S.C. ß 1125(a) 8
15 U.S.C. ß 1127 36
28 U.S.C. ß 1291 2
28 U.S.C. ß 1338 2
28 U.S.C. ß1404(a) 20
Rule 50, Fed.R.Civ.P. 35
MISCELLANEOUS
4 R. Callmann Unfair Competition Trademarks and Monopolies, 54
McCarthy on Trademarks, 33, 40, 41

STATE STATUTES
New York. Civ. Proc. L.&R. ß 213(8) 34, 54
N.J.S.A. ß 2A:14-1 34, 54

Reversing the cancellation of Marshakís federal Registration based upon the erroneous finding of fraud fully restores the parties to the status quo ante of over 20 years duration.

Raised: A93, A1643; Objected to: A1636; Ruled upon: A1665; Standard of Review: plenary; Failla v. City of Passaic, 146 F.3d 149, 153 (3d Cir. 1998).

Raised: A96, A180, A1643; Objected to: A177, A206-07, A1569; Ruled upon: A183, A212, A1673-74; Standard of Review: plenary; Failla, 146 F.3d at 153.

Raised: A180, A1643; Objected to: A177, A1636; Ruled upon: A183, A212, A1659-64; Standard of Review: plenary; Grant v. City of Pittsburgh, 98 F.3d 116, 123 (3d Cir. 1996); Failla, 146 F.3d at 153.

Raised/Objected to: A161, A170, A1679; Ruled Upon: A1691; Standard of Review: abuse of discretion. Omnipoint Corp. v. Zoning Hearing Bd., 181 F.3d 403, 409-10 (3d Cir. 1999).

The fourth singer, Ben E. King, left the group and achieved independent success in his own right. (A241).

The date of trial.

The statement in the 1999 Opinion to the contrary (A1664) is clearly erroneous.

We respectfully view this as clear error. The evidence shows reliance upon this dismissal on the part of Marshak, as well as the performers, and therefore, the dismissal is relevant to the element of intent. (A525-31).

We cite this testimony to demonstrate Treadwell's full opportunity to testify on the fraud defense - rather than in any way sponsoring its accuracy. This testimony is grossly inconsistent with Treadwell's Performance Log and testimony in this case. (A811-47, A748-59).

The Court noted that this was only three times per year. (A752-53).

"4. Having determined that Mr. Marshak's registered mark should be canceled, do you nonetheless find that plaintiff Larry Marshak has proven by a preponderance of the evidence that he owns a valid trademark in the name Drifters by virtue of his use of such mark in commerce in this country in the period since 1976?

No, Marshak has not proven that.

X Yes, Marshak has proven that."

New York C.P.L.R. ß 213(8):

ìan action based upon fraud; the time within which the action must be commenced shall be computed from the time the plaintiff or the person under whom he claims discovered the fraud, or could with reasonable diligence have discovered it.î

The service mark application was executed and prosecuted in New York; and Marshak and Drifters Inc. were all located in New York. Please see also N.J.S.A. ß 2A:14-1 for the New Jersey six year period.

15 U.S.C. ß 1127. Two years was the appropriate time through 1994. The period was changed to three years to satisfy GATT international harmonizing requirements in 1994.

"To prove bona fide usage, the proponent of the trademark must demonstrate that his use of the mark has been deliberate and continuous, not sporadic, casual or transitory."

Then again, the royalties may be ignored as "residual" and as not providing a service mark source of origin as discussed above.

The District Court itself noted that Kingsmen cites no authority for any supposed royalty/per se non-abandonment rule of law.

Please see also the judgeís observation that:
ìIn this case, there can really be no question that Treadwell has slumbered on her rights, and the Court would therefore decline to employ the doctrine of unclean hands.î (A1682).

Whose 1960 contractual obligations to Drifters Inc. were disparaged in 1971 by the New York Supreme Court; by New York Judges in Green and Sheppard; and having Statutes of Limitations which have run 3 times over.

There is no fraud where there is knowledge of other users, but no belief such user has the ìright.î Stanfield, 52 F.3d at 874 (no fraud in procurement of registration where applicant believed other users had waived right to trademark), cert. denied, 516 U.S. 920 (1995); Dial-A-Mattress Operating Corp. v. Mattress Madness Inc., 33 U.S.P.Q.2d 1961, 1971 (E.D.N.Y. 1994) (no ìknowingly falseî statement to support fraud for failure to disclose other users where plaintiff believed others were infringers); King-Size, Inc. v. Frankís King Size Clothes Inc., 547 F. Supp. 1138, 1167 (S.D. Tex. 1982) (failure to disclose other users of mark is not fraudulent where plaintiff asserted its exclusive right to use the mark through extensive promotional activities and vigorous enforcement against third-party users).

The reality is that the dismissal is with prejudice. An action dismissed for failure to comply with discovery may not be recommenced after the applicable statute of limitations has run. Carven Assocs. v. American Home Assurance Corp., 84 N.Y.2d 927 (1994).
The res judicata effect of the 1971 dismissal was acknowledged by Judge Pollack at the Sheppard trial in response to counselís statement that the Judgment was not final on the merits:
THE COURT: You are ignoring the judgment ... which expressly recites ... that ìIt is adjudged that the complaint in the above-entitled action be and the same hereby is dismissed. And it further adjudges that the defendants shall recover costs as tax and have execution therefor.î That in the Supreme Court of the State of New York, County of New York, parlance is the final judgment of dismissal.

....

THE COURT: What happened here was the plaintiff, The Drifters, Inc., willfully defaulted and failed to answer interrogatories propounded by the defendants. That resulted in a final dismissal with costs. You donít get costs on a nonsuit.
MR. ZAVIN: Your honor my point is that there was no finding by a court on the merits in that action.
THE COURT: That precluded the plaintiff in that case from again litigating that issue. (The transcript is not in the record; it is cited for its precedent value).

The Treadwell Drifters Answer

PREFACE
This brief is submitted on behalf of Appellees Faye Treadwell, Treadwell Drifters, Inc., and Drifters, Inc. (hereinafter ìTreadwellî or ìAppelleeî). Treadwell has, through her own actions or those of her predecessors since the mid-1950s, controlled the business and artistic image of the world-famous musical group ìThe Drifters.î Her connection to the Drifters and the use of that name by her, or her licensees, in commerce in the United States has been continuous since the 1950s, and she here urges this Court to affirm in all respects the decisions of the judge and jury in the United States District Court for the District of New Jersey recognizing that she, not appellant Larry Marshak (ìMarshakî), owns that Driftersí trademark.

STATEMENT OF ISSUES
Statute of Limitations

A trademark becomes ìincontestable,î subject to certain conditions, after five years. 15 U.S.C. ß1065. One defense that remains to such claimed incontestability after those five years is fraudulent procurement. 15 U.S.C. ß1115(b)(1). In furtherance of the common sense notion that fraud not ever be rewarded, the Lanham Act clearly states at least twice that one seeking to cancel a fraudulently procured mark may do so ìat any time.î 15 U.S.C. ß1064(3) and ß1065. Marshak suggested a statute of limitations analysis that would frustrate this clear statutory language and structure by allowing the adoption of state statutes of limitation significantly shorter than, and other than, the time frames noted in the statute. The District Court rejected that argument in favor of the unequivocal statutory language.

Does not the plain language and structure of the Lanham Act require affirmance of the District Courtís rejection of a statute of limitations defense, especially when one recalls that plaintiff Larry Marshak himself initiated this litigation?

Abandonment

Abandonment, since it results in a forfeiture, is a disfavored defense that must be strictly proven, arguably to the point of clear and convincing evidence. To sustain an abandonment defense, Marshak had to show at least non-use in commerce in the United States for two years. Marshak Brief (ìMbî) at 23. Only after that burden is carried is a presumption of abandonment triggered, Mb 23, and here Marshak never offered any such proof of non-use, for the record reflects the stipulated continuous use in commerce through sales of recordings, the admitted numerous performances throughout the 1970s proven in Marshakís own exhibits, and Marshakís own allegations as part of his infringement action that Treadwell was using this mark in the United States to a degree of commercial significance.

Does not such a record make clear that the District Court correctly determined that Marshak could not have, and did not as a matter of law, carry his burden of proof on the affirmative and unplead defense of abandonment that should never have been allowed before the jury?

Fraud

Marshak stipulated that his assignors had previously signed employment contracts with Treadwell. A-110. Those contracts stated that:

The Artist agrees that the name of THE DRIFTERS belongs exclusively to the Employer [i.e., Treadwellís predecessor, Drifterís Inc.] and that he will not at any time use the name of The Drifters or any name similar thereto or any name incorporating The DriftersÖ and he further acknowledges that the name, The Drifters, is a valuable property . . . [A-1264 (emphasis added)].
Marshak also stipulated that in 1998 he admitted to a television reporter that Thomas never owned the Driftersí name. A-1564. And Marshak and his assignors knew in the 1970s and through the present that (i) Treadwell continued to commercially exploit the Drifterís work through, among other things, sales of licensed recordings and (ii) she and her predecessors owned the name. Clearly, as a matter of fact, the evidence of fraud was overwhelming, and was so found by both jury and judge. Because direct evidence of the intent of those conspiring in fraud is rarely available, an objective standard of proof as to that intent is appropriate.

Does not the overwhelming evidence of fraud here make clear that the Courtís ìknew or should have knownî charge was either correct or was harmless error?

Collateral Estoppel
Collateral estoppel, or issue preclusion, precludes the relitigation by the same parties or their privies, of issues actually litigated and necessarily determined in a prior proceeding. Marshak nevertheless urges this Court to apply this doctrine based on Marshak v. Sheppard, 666 F. Supp. 590 (S.D.N.Y. 1987), a case in which Treadwell was not a party and in which the issues concerning her rights were specifically deemed, at Marshakís own urging, ìimmaterialî by that earlier court. Id. at 599.

Does not the specific refusal of that earlier court to determine those fraud issues preclude Marshak from arguing that Treadwell is collaterally estopped by a case in which she was not even a party?

Accounting and Disgorgement of Profits
A. This matter was bifurcated, with (i) Marshakís liability and damages claims and Treadwellís defenses and substantive counterclaims to be tried together and (ii) proof and calculation of Treadwellís damages and other monetary relief to be subject to later proceedings. Those later proceedings have now been ordered by the District Court.

Does not the pendency of those further district court proceedings preclude Marshakís raising of those monetary- relief-related claims in this Court since this is an interlocutory appeal and only those issues related to the injunction against Marshak performances and appealable under 28 U.S.C. ß1292 (a)(1) are before this Court?
B. Treadwell specifically sought the relief of a constructive trust. A constructive trust is a tool of equity used to fashion appropriate relief, and the creativity and flexibility of equity exists for that very purpose. Equity does not reward those whose fraud has muddied their hands and sullied the system, and the Lanham Act combats such conduct by allowing fraudulently-obtained mark to be cancelled ìat any time.î Courts of equity, likewise, refuse to impose any immovable temporal limits on a wronged partyís ability to seek, or the courtís power to grant, constructive trusts.

Does not the equitable nature of the remedy of a constructive trust, the stated legislative desire to allow such suits ìat any time,î and the overwhelming evidence of fraud make clear that it is well within the District Courtís discretion to fashion the remedy it did?

STATEMENT OF JURISDICTION

Treadwell disagrees with Marshakís statement that the basis of this Courtís jurisdiction is 28 U.S.C. ß1291. That monetary relief issues and an accounting are still to be decided means that the September 30, 1998, July 30, 1999 and August 16, 1999, whether read individually or collectively, are not final orders applicable under 28 U.S.C. ß1291. See, e.g., Hain Pure Food Co., Inc. v. Sona Food Products Co., 618 F.2d 521, 522 (9th Cir. 1980). Nevertheless, the issues 1 through 3 raised by Marshak (Mb 3-4) appear properly before the Court under 28 U.S.C. ß1292(a)(1).

STATEMENT OF RELATED CASES

Treadwell knows of no other related cases presently pending in this Court or elsewhere. However, Marshakís recently dismissed action against Arista Recording Corp., and Rhino Records, Civil Action No.: 96-3032 in the Eastern District of New York was a related case. Treadwell also notes that proceedings between the parties before the United States District and Trademarks Office have been stayed pending this litigation. Finally, Treadwell notes that she did not ìsponsorî any defense in Marshak v. Sheppard, 666 F. Supp. 590 (S.D.N.Y. 1987). Mb. 1.
STATEMENT OF THE CASE

A. The Pleadings

In May 1994, plaintiff-appellant Larry Marshak filed suit against Treadwell as well as Ruth Bowen and two of Ms. Bowenís booking agencies, Bowen Agency Ltd. and Admiral Talent. A-24 to A-43. In that complaint, he put into issue the incontestable status of alleged mark, ìThe Drifters,î Registration No. 1,081,338. A-26; A-27. He also alleged that Treadwell and the other defendants used ìThe Driftersî mark ìin interstate commerceî though, among other things, book sales, ìengag[ing] the services of a group of individual for the purpose of performing live entertainment services,î and broadcasting recorded performances. A-28. In fact, Marshak alleged that this use of the Driftersí mark was so extensive as to produce competitive injury and to affect substantially interstate commerce. A-29.

Treadwell answered, and later counterclaimed, contesting immediately the alleged incontestable status of Marshakís registration and alleging fraud in the procurement of that registration. A-67; A-73; A-80 to A-82. Treadwell also claimed that she had ìprior, superior and exclusive right to use of The Drifters name and markî and that the Court should declare Treadwell the rightful owner of the Driftersí mark. A-81; A-82. Marshakís response to this counterclaim did not plead the affirmative defense of abandonment. A-93 to A-94; A-97 to A-98.

Marshak later amended his complaint, and in response Treadwell amended her counterclaim. A-153 to A-169. The amendment to the counterclaim reiterated Treadwellís claim to continuing use of the mark ìsince a time before its use by plaintiffî and asked for the declaration of a constructive trust. A-166. Marshak failed, in response to this amendment, to raise the affirmative defense of abandonment. A-171.

B. Cross-Motions For Summary Judgment And Stipulations

After discovery and entry of a pretrial order, the parties cross-moved for summary judgment. A-177 to A-182. Though the Court concluded that the presence of fact issues precluded entry of judgment for either party, A-212, Marshak had already stipulated that, among other things:

13. Treadwellís Drifters performed and recorded a number of songs throughout the United States under the name The Drifters, each of which are original works of authorship.
14. Amongst the most popular of these songs are ìThere Goes My Baby,î ìUp on the Roof,î ìUnder the Boardwalk,î ìSave the Last Dance for Me,î and ìOn Broadway,î each of which were ìTop-10î hits on Billboardís Rhythm and Blues charts.
15. Each of these songs have [been] publicly performed on the radio throughout the United States, sold on singles records and albums, and continue to be played and sold in the United States to this day.
16. Many of the songs performed by the Drifters have been re-recorded onto compact discs and re-released. [A-110].
Marshak also stipulated that ìFaye Treadwell repeatedly claimed to be the rightful holder of the ëThe Driftersí trademark, and repeatedly stated her intent to enforce those rights.î A-116.

Despite those stipulations and the belated notice of motion to amend, the Court allowed Marshak to add the affirmative defenses of abandonment. A-184 to A-185; A-1569 to A-1570.

C. The Trial And Post-Trial Proceedings

The trial in this matter began on July 28, 1999.

1. The Abandonment Issue

During the trial, Treadwell testified, without any contrary evidence being introduced, that she had used the Driftersí name in commerce continuously through the present day through the sale of recordings under a license to Atlantic. A-720. [This merely confirmed the stipulated facts noted above, which were made known to the jury. T. 68-70; A-396 to A-397; T. 806. ]

At the conclusion of the trial, the Court instructed the jury without objection that Marshak carried the burden of proof on that issue, saying that a trademark owner ìabandon[s] his rights to exclusive use of [a] trademark if he discontinues its use with an intent not to resume it . . . The party asserting abandonment here, Mr. Marshak, has the burden of proving that abandonment occurred by a preponderance of the evidence. Under the Lanham Act, proof of non-use for two years creates a presumption that the mark has been abandoned.î A-1494 to A-1495. The Court also instructed the jury, without objection, that:

A change in use of a mark from one product to another will not constitute abandonment if the products also are closely related. That is, where a registrant discontinues to use a trademark on a certain product, he will not be held to have abandoned the mark if he continues to use the mark on related items, and if the discontinued product is one which would still be thought by the buying public to come from the same source and is one which remained in the normal field of expansion of the ownerís business.
There is no abandonment or break in the chain of priority of use merely because use of the mark is shifted from one line of goods or services to another.
[A-1496 to A-1497.]
Treadwellís counsel requested, after colloquy prompted by a jury question, a certain response to the juryís question, even if it amounted to a directed verdict on the abandonment issue. A-1545. The Court would not grant that request nor answer the juryís question as requested by Treadwellís counsel. A-1539 to A-1540; A-1548; A-1553 to A-1554. The Court did, however, indicate then and later that it expected a post-trial motion on that issue. See, e.g., A-1545; A-1711.

After that post-judgment motion, the district court concluded that, based on the stipulated facts and unrebutted facts presented, Marshak could not as a matter of law have carried his burden of proving abandonment. A-1673 to A-1675. Coupling that conclusion with the juryís fraud finding resulted in a judgment that Treadwell owned the mark. A-1673 to A-1674. The Court then, on August 16, 1999, enjoined Marshakís use of the mark. A-1691 to A-1693.

2. The Fraud Issue

During the trial, the evidence of fraud was overwhelming. A-1668. For example, the jury heard sworn testimony of Marshakís sole living assignee, Charlie Thomas, to the effect that he had been with Treadwellís Drifters as a mere employee and Treadwell was the true owner of the name. A-470. The jury also heard Marshak on videotape acknowledge Charlie Thomasí inconsequential status as a member of Treadwellís group. A-1655. The effect of that admission was confirmed by admissions Marshak had made in an earlier litigation, which were then published to the jury. A-510; A-1655. Similarly, the jury had in evidence Charlie Thomasí employment contract unequivocably giving up any claim to ownership of the Driftersí name. A-1264. Marshak never rebutted this evidence and the jury found fraud to have occurred.

3. The Monetary Relief Sought by Treadwell.

The pretrial order in this matter noted that the matter was ìto be bifurcatedî and that if Treadwell prevailed on his counterclaims, ìin whole or in part, [she] will seek an accounting.î A-144, A-146. That bifurcation was then twice confirmed by the District Court, once in jury instructions. A-215, A-1504 to 1505. The jury was also instructed on, and asked to decide, the substantive aspects of Treadwellís state law counterclaims. A-1500 to A-1504; A-1519; A-1565.

At trial, when it became clear that the jury had found Marshakís fraud, but that the trial court had incorrectly responded to its abandonment question, Treadwellís counsel demanded that the jurors be allowed to determine the issues of unfair competition and the like. A-1539 to A-1540; A-1548; A-1553 to A-1554. The district court refused, id., and later inexplicably stated that Treadwell had not argued for, or pressed her, damage claims. A-1685.
STATEMENT OF FACTS

A. Historical Background

In 1953 a singing group called THE DRIFTERS first appeared and shortly after its formation George Treadwell became the manager of the group. A-109. The Drifters was managed by George Treadwell through The Drifters, Inc., a New York corporation (hereinafter ìThe Drifters, Inc.î) incorporated in 1954. A-1247 to A-1255.

Between 1954 and 1959, and thereafter, THE DRIFTERS was composed of a varying number of singers. A-109. Mr. Treadwell married defendant Fayrene Treadwell in March of 1955. A-A-109. During the period from 1953 to 1967, George Treadwell and Irv Nahan managed THE DRIFTERS and controlled its artistic style. A-469 to A-473; A-515; A-540 to A-543. Mr. Lebish acted as the accountant and bookkeeper for THE DRIFTERS. A-543.

Mr. Treadwell managed THE DRIFTERS from 1954 until his death in 1967. A-110; A-540 to A-543. After Mr. Treadwellís death, Faye Treadwell took over full-time, day to day management responsibilities for the group. Id. Throughout the years, they maintained a specific quality, look and sound for Treadwellís DRIFTERS. A-469 to 473; A-515, A-540 to A-543; A-548.

B. Employment Contracts

In 1959, George Treadwell replaced all of the members of THE DRIFTERS, and hired several members of a group then performing as ìThe Crowns.î A-109. Three of these replacement singers, Dock Green, Elsbeary Hobbs, and Charles Thomas, were from that group. A-109. Dock Green, Elsbeary Hobbs, and Charles Thomas then became singers with Treadwellís DRIFTERS in April of 1959. A-109.

Paragraph 7 of the employment contracts provided as follows:

Dock Green, Elsbeary Hobbs, and Charles Thomas were employees of The Drifters, Inc. who entered into contracts with The Drifters, Inc. in which they acknowledged that they had no right to use the name THE DRIFTERS. A-110; A-540; A-1264. Dock Green, Elsbeary Hobbs, and Charles Thomas were never given or sold any rights to THE DRIFTERS name or mark and they never acquired any rights to THE DRIFTERS name or mark as both Thomas and his assignee Marshak acknowledged. A-550; A-1264.

As Thomas said under oath in 1998, (well after the 1976 application at issue here): George Treadwell was ìthe true owner of the Driftersí name,î and Thomas was his mere employee under a signed contract. A-470. And Marshak admitted that:
They already had had three top ten records by the time [Charlie Thomas] joined the Drifters in the 1950's. He joined the Drifters as an employee. He got a job. He was now a sideman. Can a sideman in Les Mis go around saying he is Les Mis? Of course not.
He got a job. He worked then under somebody's direction, who told him what to do . . . . None of the original members, not from the Drifters, the Platters, the Marvelettes, ever wrote those songs, ever arranged those songs, ever chose the materials, chose the singers to perform. They had nothing to do with what made them hit records, except their voices.

[A-1655 (emphasis added)].
This confirmed another Marshak admission brought to the juryís attention:
Certainly four or five of them are changing every day and itís a commonócertainly someone who sings with the Drifters, just by virtue of having sang with the Drifters, didnít develop a right to the name when he left voluntarily or even when he was dismissed from the Drifters.

[A-510]
C. The Constants Through The Years:

Faye Treadwell, Well Known Hits And Continuous Record Sales
In 1967 Faye Treadwell assumed full day-to-day management and control of THE DRIFTERS singing group through Drifters, Inc. A-110. [Mr. Lebish had died in 1965. A-110. Mr. Treadwell had died in 1967. A-110.] In or about 1976, Ms. Faye Treadwell formed the corporation, Treadwellís Drifters, Inc., a New Jersey corporation. A-110. In 1977 Faye Treadwell relocated her base of business operation to New Jersey and in fact transferred all of the Faye Treadwell assets of Drifters, Inc., including the service mark THE DRIFTERS, to Treadwellís Drifters, Inc., thereafter allowing Drifters, Inc. to lapse as a corporation. A-1415.

From its founding in the 1950s to the present, the singing group managed by Drifters, Inc. and Treadwellís Drifters, Inc. has performed and has recorded in the United States and internationally under the service mark THE DRIFTERS. Recordings of such 1960s hits as ìUnder the Boardwalk,î which was recorded by THE DRIFTERS singing group managed by George Treadwell and Faye Treadwell through Drifters, Inc., have been continuously sold to the public and played through the media in connection with THE DRIFTERS service mark in the United States and internationally, and royalties from said recordings were previously paid to Drifters, Inc. and are now paid to Treadwellís Drifters, Inc. A-110; A-720

D. False Declarations of Green, Hobbs and Thomas
On November 27, 1976, Dock Green, Elsbeary Hobbs, and Charles Thomas executed a declaration later filed as part of a trademark application, wherein they declared the following:

ìDOC GREEN, CHARLEY THOMAS and ELSBEARY HOBBS declare: That they are partners in the Drifters and make this declaration on behalf of themselves and the partnership; that they believe said partnership to be the owner of the mark sought to be registered; that to the best of their knowledge and belief no other person, firms, corporation or association has the right to use said mark in commerce, either in the identical form or in such near resemblance thereto as might be likely, when applied to the goods of such other person, to cause confusion, or to cause mistake, or to deceive; that all statements made herein of their own knowledge are true and that all statements made on information and belief are believed to be true; and further, that these statements were made with the knowledge that willful false statement and the like so made are punishable by fine or imprisonment, or both under section 1001 of Title 18 of the United States Code and that such willful false statements may jeopardize the validity of the application or document or any registration resulting therefrom."

[A-961].

In other words, they swore under oath that:

they believed ìThe Driftersî partnership to be the owner of ìThe Driftersî trademark; and

to the best of their knowledge and belief, no other person, firm, corporation or association has the right to use The Drifters trademark in commerce

[A-961].
On December 15, 1976, Dock Green, Elsbeary Hobbs, and Charles Thomas assigned their rights, title and interest to the service mark in ìThe Driftersî to Larry Marshak. A-1267.

On December 17, 1976, Dock Green, Elsbeary Hobbs, and Charles Thomas, acting as a partnership, filed an application to register ìThe Driftersî as a service mark for entertainment services in the United States Patent and Trademark Office. A-959. Dock Green, Elsbeary Hobbs, and Charles Thomas stated that ìthey believe[d]î themselves ìto be the owner of the mark sought to be registeredî and that ìto the best of their knowledge and belief no other person, firm, corporation or association has the right to use said mark in commerce...î A-961. On January 3, 1978, the United States Patent and Trademark Office issued a registration to Larry Marshak of United States Services Mark, registration No. 1,081,338, for ìThe Driftersî trademark. A-970.

E. Treadwellís Performances and Recordings
During the entire period from the founding of Drifters, Inc. through November 27, 1976, (the date of the fraudulent Thomas, Hobbs, Green trademark registration declaration), Treadwellís DRIFTERS used the Drifters name in commerce, performing here in the United States (and abroad) and selling records under that name through a licensee, Atlantic Records. A-720; see also A-110. There can be no doubt that when, Hobbs, Green, and Thomas signed the November 1976 declaration, they knew it to be false. In fact, as proven by Marshakís own documents and testimony, Charlie Thomas knew of Treadwellís groups continued performance in the 1970s, and even visited Treadwellís group backstage after an appearance. A-369 to A-371; A-762 to A-769; A-776 to A-784.

Additionally, Treadwellís DRIFTERS performed and recorded a number of songs throughout the United States under the name THE DRIFTERS, each of which are original works of authorship. A-110. These hit songs have publicly performed on the radio throughout the United States, sold on singles records and albums, and continue to be played and sold in the United States to this day. A-110. Many of the songs performed by THE DRIFTERS have been re-recorded onto compact discs and re-released. A-110; A-1288 to A-1337. As the insert to one of these currently on the market states, these recordings solidified Treadwellís Driftersí place as ìthe all time greatest Atlantic Groupî and insured that they ìremained the quintessential pop/rock vocal group.î A-1291.
STATEMENT OF STANDARD OF REVIEW

Treadwell notes that Mb does not set out a separate section articulating standard of review, though Treadwell acknowledges that Mb3, fn. 2 and fn. 3, Mb. 4, fn. 5 and Mb. 5, fn. 6 discuss such standards.

As the only proper basis for this Courtís jurisdiction is 28 U.S.C. ß1292(a), the Court must review only the appropriateness of the Courtís issuance of the August 16, 1999 injunction. On the review of the grant of such injunctions, an appellate court applies an abuse of discretion standard, though it may apply less deferential standards to antecedent questions of law. ACLU v. Black Horse Pike Bd. Of Ed., 84 F. 3d. 1471, 1476 (3d. Cir. 1996).
LEGAL ARGUMENT

Summary of Argument

Treadwellís argument contains five main points.

First, statute of limitations presents no bar to her claim nor a basis for reversal. This is so because:

(a) Lanham Act allows claims to be brought ìat any timeî, making state statutes of limitation irrelevant. See Point I. A.

(b) Marshakís own arguments on monetary relief contradict his total bar arguments. See Part I. B.

(c) Imposing a statute of limitations bar here would not serve the purpose behind such statutes because Marshak started the litigation and would frustrate the purpose behind the Lanham Act by rewarding fraud. See Point I.C.

(d) By leaving that defense out of the pretrial order and not raising it until the 13th hour, Marshak waived the statute of limitations defense. See Point I. D.

Secondly, the Court below ultimately correctly ruled on the abandonment issues because:

(a) Marshak never plead that affirmative defense and should not have been allowed to add it by amendment so late in the case. See Point II. A.

(b) Marshak never proved, and largely stipulated away, continuous non-use and Treadwellís subjective intent concerning use of her mark in the Untied States. See Point II. B.

(c) Marshak is judicially estopped from arguing that Treadwellís or her licensee us of the mark in the Untied States was commercially insignificant. See Point II. C.

Third, the judge and jury below correctly ruled on the fraud issues because:

(a) the jury charge on fraud was correct. See Point III. A.

(b) the evidence of fraud was so overwhelming that any alleged error in the charge was harmless. See Point III. B.

Fourth, collateral estoppel does not apply because Treadwell was not a party to, nor did she control, the litigation in Marshak v. Sheppard and Marshak himself in that case asserted positions directly contrary to those now proffered here. See Point IV.

Finally, the monetary relief issues Marshak raises are not properly before this Court. See Point V.A. Even if they were, the constructive trust remedy is a equitable one not barred by the statute of limitations, and Marshak is now barred from arguing laches here. See Point V.B.
I. NO STATE STATUTE OF LIMITATIONS CAN OVERRIDE THE LANHAM ACTíS EXPRESS LANGUAGE ALLOWING ONE ìAT ANY TIMEî TO SEEK CANCELLATION OF A FRAUDULENTLY OBTAINED MARK.
A. The Lanham Actís Language And Structure Preclude The Borrowing Analysis Suggested By Marshak.
Section 1064(3) of Title 15 allows one to bring an action to cancel a fraudulently obtained mark ìat any time.î Despite that clear and unequivocal statement, Marshak argues that some borrowed statute of limitations from state law creates a time bar for Treadwellís counterclaim her. Mb 32-35. This Court must reject that argument, as its acceptance would render meaningless the phrase ìat any timeî in ß1064(3) and ß1065, and do violence to the scheme imposed under the Lanham Act.

Marshak offers no explanation of this statutory phrase, and indeed no where cites it in his brief. See Mb, page ix. Before one may borrow a statute of limitations from state law, one must establish the federal statuteís silence to the time in which one may bring suit. Agency Holding Corp. v. Malley Duff & Associates, 483 U.S. 143, 146-147 (1987); McClure v. Borne Chemical Co., Inc., 292 F.2d 824, 833-835 (3d Cir. 1961), cert. den., 368 U.S. 939 (1961); see also Holmberg v. Armbrecht, 327 U.S. 392, 395 (1946). Oneís own silence is not sufficient to carry that burden, particularly where it leaves unexplained or meaningless a phrase with the statute. Bailey v. U.S., 516 U.S. 137, 133 L. Ed. 2d. 472, 481 (1995).

Marshak essentially concedes, in an earlier submission to the Court, that the phrase means that ìthe Patent and Trademark Office may reopen a trademark registration at any time [ ] on the basis of ëfraudí allegations.î Emergent Motion For a Stay Pending Appeal and For Suspension of Permanent Injunction, submitted August 24, 1999, page 19. That concession damns Marshakís argument because a Courtís power to address issues of cancellation of marks stems jurisdictionally from 15 U.S.C. ß1119, but substantively from ß1064, as the former is the mechanism through which the Court applies the latter. See Park-n-Fly, Inc. v. Dollar Park-n-Fly, Inc., 469 U.S. 189, 202 (1985); Ditri v. Coldwell Banker, 954 F.2d 869, 874 (3d Cir. 1992); see also Shakespeare Co. v. Silstar Corp. of America, 9 F.3d 1091, 1092 (4th Cir. 1993), cert. den., 511 U.S. 1127 (1994) (holding that ìCongress adopted 15 U.S.C. ß1119 to give the district court power concurrent with, but not in excess of, the Patent and Trademark Review Board.î) (emphasis added).

The published trademark case precedent Marshak cites, even from this Court, detracts in no way from the power of Treadwellís position. In none of those cases did the Court quote, cite, or appear to have been asked to address in any way the ìat any timeî language of ß1064 and ß1065. Beauty Time, Inc. v. VU Skin Systems, Inc., 118 F.3d 140, 143 (3d Cir. 1997) (no reference to ìat any timeî language of ß1064(3) or ß1065); Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996) (no reference to ìat any timeî language of ß1064(3) or ß1065); Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1395 (9th Cir. 1993) (no reference to ìat any timeî language of ß1064(3) or ß1065; also ìno disputeî between parties over case of applicable statute); see also Park ëN Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985) (confirming that action based on fraud could brought ìat any timeî); The Joint Stock Society v. UDV North America Inc., 53 F. Supp. 2d 692 (D. Del. 1999) (no reference to ìat any timeî language of ß1064(3) or ß1065); Calzaturificio Rangoni S.p.A. v. United States Shoe Corp., 868 F. Supp. 1414 (S.D.N.Y. 1994) (no reference to ìat any timeî language of ß1064(3) or ß1065).

On the other hand, courts that have looked at ß1064 have themselves recognized that it, and it alone within the Lanham Act itself, is ìa kind of statute of limitations for actions seeking cancellation of marks registered for more than five years.î Shakespeare, 9 F.3d at 1096. The limitation up to the five-year period is temporal in that certain basis for cancellation are lost after the given years. After two years, the limitation is substantive in that certain grounds are barred, see 15 U.S.C. ß1115 and ß1065, but others like Treadwell can be brought ìat any time.î 15 U.S.C. ß1064(3). As there is direct statutory language defining when suit may be brought (i.e., ìat any timeî) and since Treadwell raised here counterclaims within that time, this Court should affirm the District Court. See Holmberg, 327 U.S. at 395 (ìIf Congress explicitlyî states time on which action may be brought, ìthere is an end of the matter. The Congressional statute of limitation is definitive.î).

B. Marshakís Own Arguments To Limit Monetary Recovery To A Six-Year Period Is A Concession That The Substantive Claims Are Not Time Barred.
Marshak raises prematurely with this Court issues concerning the monetary relief to which Treadwell will be entitled. See Mb. 54-56 and Point V. A. below. But in doing so, he concedes that even if a borrowing analysis on statute of limitations questions is appropriate, which it is not, such analysis is not a total bar to, but merely a limit on, recovery. This Court should see in that concession Marshakís recognition of the power of the plain language of ß1064(3) and ß1065 and should reject his total bar statute of limitations argument here.
C. Statutes of Limitations Cannot Bar Defenses and Counterclaims, and Public Policy Requires That A Successfully Waged Defense Under 15 U.S.C. ß 1115(b)(1) Redound To The Defendantís Benefit, And To The Public Good, Through Cancellation The Mark Fraudulently Obtained. ______

Larry Marshak started this litigation by suing Treadwell, and that precludes him from now complaining that Treadwell raised time-barred claims against him. That is because, as the United States Supreme Court has recently stated, the purpose of statutes of limitation is not served by barring defenses and counterclaims:

As we have said before, the object of a statute of limitations in keeping ìstale litigation out of the courts,î [U.S. v. Western Pacific R. Co., 352 U.S. 59, 72 (1996)], would be distorted if the statute were applied to bar an otherwise legitimate defense to a timely lawsuit, for limitation statutes ìare aimed at lawsuits, not at the consideration of particular issues in lawsuits.î [Id].
[Beach v. OCWEN Fed. Bank, 523 U.S. 514, 118 S.Ct. 1408, 1411 (1998)].
Marshakís statute of limitations argument falls in the face of the principle. Id.; see also Beach v. Great Western Bank, 670 So. 2d 986, 991 (Fla. App. Ct. 1996), affíd 692 So. 2d 146 (Fla. 1996), affíd sub nom. 523 U.S. 410 (1998) (ìonce a party files an affirmative action, the defendant may assert any affirmative defense or compulsory counterclaim which stems from the same transactionî) (emphasis added); but see Official Airlines Guide, 6 F.3d at 1395-96 (earlier decision of inferior court cited by Marshak).

Application of that principle here also fulfills the legislative intent evident in the statuteís structure. Section 1115(b) makes clear that certain defenses ñ including fraud in the procurement ñ will apply even if a mark reaches incontestable status, which takes five years under 15 U.S.C. ß1065. Thus, the legislative intent to allow fraud claims after a five-year period cannot be disputed. And consequently, any analysis that would lead to adoption of a shorter state statute of limitations must be wrong as it would render all of ß1115(b) nugatory. See Agency Holding, 483 U.S. at 149; McClure, 292 F.2d at 833-835 and compare with Official Airline Guide, 6 F.3d at 1395 (applying two-year statutes borrowed from State law); Beauty Time, 118 F.3d at 143 (applying two-year statutes borrowed from State law.) As Marshakís suggested borrowing analysis would allow just that, it cannot be correct.

Such a borrowing approach would also contravene the public policy and legislative intent embodied in the Lanham Act. The policy behind federal registration is to bring uniformity and precision to the use of such marks nationwide:

Federal trademark protection was overhauled and consolidated with the passage of the Trademark Act of 1946 (Lanham Act), 60 Stat. 427, as amended, 15 U.S.C. ß1051 (1988), et seq. It was adopted to establish consistent nationwide protection for trademarks by creating a system of registration, by instituting safeguards for those trademarks registered for a period of time, and by setting forth an administrative process for infringement actions. Park ëNí Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 193, 105 S. Ct. 658, 661, 83 L.Ed.2d 582 (1985).
[Shakespeare, 6 F.3d at 1094 (emphasis added)]
First, a borrowing approach would frustrate that uniformity and consistency by introducing, theoretically, fifty different time periods governing the bringing of cancellation proceedings. See Agency Holding, 483 U.S. at 149 (promotion of certain federal policies suggests need for ìa uniform statute of limitationsî); accord McClure, 292 F.2d at 833-835. A Congress seeking overhaul and uniformity would eschew such a chaotic result in favor of a single approach applicable everywhere. That is exactly what Congress did in establishing a five-year statute of limitations for cancellation on most grounds, but allowing certain other cancellation claims ñ including fraud ñ to occur ìat any time.î See 15 U.S.C. ß1064(3), ß1065, ß1115(b). Congress clearly concluded that there is no public policy justifying leaving fraudulently registered marks on the register, and thus allowed cancellation ìat any time.î 15 U.S.C. ß1064(3); 15 U.S.C. ß1065.

Second, because trademark rights are potentially long enduring, the present system requires periodic re-affirmation of oneís rights. With it must come duties of candor and truthfulness, and oneís silence as to past fraud does not erase it nor justify ignoring it. As Marshak made such reaffirmations up until at least 1997, A-1444, Treadwellís claim of fraud must be seen as rekindling with each Marshak filing seeking to re-affirm that registration. Hence her claims should not be time barred. See A-1659; see also Robi v. Five Platters, 918 F. 2d. 1439, 1443-1444 (9th Cir. 1990).

Third, and perhaps most dispositioning ìat any timeî in ß1064(3) must mean just that because that section also applies to actions to cancel marks that have become generic. There can be no borrowed statute of limitations for such claims. First, there is no comparable state law cause of action. Second, marks can take decades to become generic and it is impossible to establish any particular point in time when a mark becomes generic. Thus, one could never know when the statute began to run. Moreover, if there were such borrowing allowed, a trademark owner faced with a general six-year statute of limitations provision a defendant wishes to borrow from state law would, on occasion, be forced into the bizarre argument that defendant knew or should have known that the mark actually became generic eight years before the action was filed and that therefore the action is time barred. The absurdity of such a possibility demonstrates Congress wanted to avoid it.

The Court should, therefore, reject Marshakís claim.
D. Marshak Waived Any Statute of Limitations Defense.

Marshak, moreover, waived his statute of limitations claims here. As Treadwell pointed out below, in none of his three briefs on the summary judgment motions did he make any statute of limitations argument. See A-1708; see also Ex. B hereto pages 1, 5, 6 and 9 (August 7, 1998 letter without exhibits, at page 5). Under Williams v. Bell Telephone, 132 N.J. 109, 118-120 (1993), one waives a statute of limitations defense, even if plead, by not raising it again until the conclusion of trial. As Williams makes clear, failure to raise it until such a late date frustrates the very purpose for which such statutes exist. Id.

Federal law in the trademark area is consistent with this. In Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 206 (5th Cir. 1998), the court held that once the pretrial order is entered, it controls course and scope of proceedings, and if a claims or issue is omitted from that order, it is waived even if it appeared in complaint or other initial pleading. Id. Here, Marshak did not propose or preserve a statute of limitations argument in the pretrial order. See A-142 to A-143 (no mention of that issue).

II. MARSHAK CANNOT AS A MATTER OF LAW PREVAIL ON AN UNPLEAD ABANDONMENT AFFIRMATIVE DEFENSE WHERE HE STIPULATED TO BOTH (A) TREADWELLíS SUBJECTIVE INTENT TO ENFORCE HER RIGHTS AND (B) AN ONGOING COMMERCIAL USE BY TREADWELL AND HER LICENSEES OF THE DRIFTERíS MARK IN ITS ORIGINAL OR RELATED FORMATS.
A. Marshak Never Plead Abandonment As An Affirmative Defense, And The District Court Should Never Have Granted The Eleventh-Hour Amendment Of The Pleadings That Allowed That Defense To Be Submitted To The Jury.
Marshak should never have been allowed to present to the jury his abandonment defense to Treadwellís counterclaim. Abandonment is an affirmative defense. Five Platters, Inc. v. Purdy, 419 F.Supp. 372, 382 (D.Md. 1976). Affirmative defenses not plead are waived. Wright & Miller, Fed. Rules & Proc., ß1278 at (477-478) (ìA failure to plead an affirmative defense results in waiver of that defense and its exclusion from the caseî) (citing, among other things, Trio Process Corp. v. L. Goldstein Sons, Inc., 461 F.2d 66, 74 (3d Cir. 1972), cert. den. 409 U.S. 997 (1972); Atlas Supply Co. v. Atlas Brake Shops, Inc., 360 F.2d 16, 18 (6th Cir. 1966) (ìabandonment is an affirmative defense which must be pleaded; otherwise it is deemed waivedî); Dalcote Industries, Inc. v. Ever Best Ltd., 28 F.3d 910, 913 (8th Cir. 1994) (ìabandonment is an affirmative defense which must be pleaded; otherwise it is deemed waivedî). Marshakís answers to the counterclaim nowhere included the ìabandonmentî defense. Only after discovery closed and the pretrial order had been entered (which did not reserve Marshakís intention to move to amend to add such a defense) was the amendment allowed. Such late amendments are inappropriate. Cf. Sample v. Diecks, 885 F.2d 1099, 1107 (3d Cir. 1989); Correa v. Hospital San Francisco, 69 F.3d 1184, 1195 (1st Cir. 1995) cert. den. 517 U.S. 1136 (1996); Elvis Presley, 141 F.3d at 206.
B. Marshak Could Not As A Matter Of Law Carry His Heavy Burden Of Establishing Abandonment Because The Record Was Bereft of Evidence Establishing Non-Use, Largely Because Marshak Stipulated To Evidence Of Use And Subjective Intent.
The continuing receipt of record royalties is indicative of a continuing and continuous use of the Driftersí mark in commerce, and continuous use precludes a presumption of abandonment. Where as here the commercial use never stopped and Treadwellís subjective state of mind was always to use and enforce her mark here in the United States, a finding of abandonment would be factually inappropriate. Where those matters were admitted by Marshak, stipulated or unrebutted, a finding of abandonment became improper as a matter of law and the District Court was correct to so find.

The legally sufficient evidence of Treadwellís continuous use is unchallenged. Kingsmen v. K-Tel makes clear that abandonment can be no defense under the present admitted, stipulated and unrebutted facts:

We find that defendants have failed to show either non-use or intent to abandon. Even though plaintiffs disbanded their group in 1967 and ceased recording new material, there is no evidence suggesting that they failed to use the name Kingsmen during the period from 1967 to the present to promote their previously recorded albums. Moreover, the fact that these individuals continue to receive royalties for Kingsmen recordings flies in the face of any suggestion of intent to abandon use of the name Kingsmen. These plaintiffs have no more abandoned their right to protect the name of Kingsmen than have The Beatles, The Supremes or any other group that has disbanded and ceased performing and recording, but continues to collect royalties from the sale of previously recorded material. We must reject defendantsí contentions that the name Kingsmen has been abandoned to the public domain.

[Kingsmen v. K-Tel, 557 F.Supp. 178, 183 (S.D.N.Y. 1983).]
What Kingsmen makes clear is the principles it discusses apply equally to groups with easily identifiable individual members like the Beatles as it does to those known for single superstar like The Supremes (for Diana Ross) or for a collective sound like the Kingsmen. Surely the Drifters fit somewhere among those groups, and Treadwell uninterrupted receipt of royalties and other facts of record precluded a finding of abandonment.

The present facts include the stipulated facts that evidence Treadwellís continued use of the mark related to record sales and related uses in this country and her subjective intent to enforce her rights. A-110; A-116, see also A-597 (undisputed testimony of continuous record sales). Thus, plaintiff essentially stipulated an abandonment defense. What both that and this case involved is trademark owners (The Kingsmen and Treadwell) who should have been deemed not to have abandoned their right to protect their trade names because they ìcontinue[d] to collect royalties from the sale of previously recorded material.î Kingsmen, 557 F.Supp. at 183. The continuous sale of old recordings is a continuing use of the mark in commerce--the music is the equivalent of an unchanged formula or recipe that the trademark owner (or its assignee) puts within the packaging that actually carries the mark into commerce. A factory producing a tape, album or CD and its packaging today from presently available raw materials and imbuing that new product with the essence of the old formula is a continuing use of the trade mark in exactly the same way that producing new cans of Coca-Cola from the old formula is an ongoing use. Such continuous use coupled with ìpersisting trademark recognitionî precludes a finding of abandonment. See 2 McCarthy on Trademarks and Unfair Competition, ß17:15 (at 17-19 through 17-20.1).

Marshak here never proved any period of non-use because the records have always been on sale. Hence, the jury never should have reached the question of whether Treadwell proffered evidence of sufficient commercial scale use to combat the rebuttable presumption. See Barnes Group Inc. v. Connell Ltd., 793 F.Supp. 1277, 1305 and fn. 42 (D. Del. 1992) (where party relies on statutory inference of intent not to resume based on an alleged two years of non-use, silence in the record ìis no basis for inferring non-useî because evidence relied on by party asserting abandonment must be ìstrictlyî reviewed by the Court).

Because the Kingsmen case relies on the most basic concepts of trademark law, it provides the best and most appropriate precedent on which the Court should rely. Oneís interest in a trademark comes, first and foremost, from its use in a commercial manner, not its use in any particular commercial manner. The continued interests in record sales and related promotions must be more than sufficient to establish commercial scale use -- because the dead, who obviously have stopped performing within the United States, can and do enjoy continued protection of their trademarks long ago made famous through performances. See Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 191 (5th Cir. 1998) (plaintiff holds currently ìat least seventeen federal trademark registrations, as well as common law trademarks for ëElvis Presleyí or ëElvisíî).

Other decisions emerging from the music industry are entirely consistent with the Kingsmen logic. For example, in 1976, the rock and roll band Deep Purple ceased all public performances. However, they continued to collect royalties, reissue prior recordings in new compilations, and be solicited for live performances and new recordings. The court found in HEC Enterprises, Ltd. v. Deep Purple, Inc., 213 U.S.P.Q. 991, 992-93 (C.D. Calif. 1980), that this was sufficient proof of continuing use to overcome a claim of abandonment as presented by former members attempting to capitalize on the groupís earlier success. Similarly, in Giammarese v. Delfino, 197 U.S.P.Q. 162, 163 (N.D. Ill. 1977), the court held that members of the original Buckinghams, popular in the 1960s, had not abandoned the name, even though they were no longer performing, merely by demonstrating their continued interest in the name ìby protests to defendant.î Indeed, the record here establishes the presence of some of the other factors mentioned by these cases. A-110; A-116; A-597; A-720.

That judgment in Treadwellís favor as a matter of law was appropriate is even clearer when one considers that the burden Marshak had to carry was such a high one. Marshak had to show that the Treadwell (or her assigns like Atlantic Records) stopped using the mark with an intent of not resuming its bona fide use in the ordinary course of trade. Compare A-538; A-544; A-545; A-70; A-1661 and Turner v. HMH Publishing Co., 380 F.2d 224, 229 (5th Cir. 1967), cert. den. 389 U.S. 1006 (ìthe Lanham Act definitely contemplates that a trade or service mark may be acquired through its use by controlled licenses, even though the registrant itself may not have used the mark.î); and see 2 McCarthy on Trademarks ß17:11 (at 17-9 to 17-10). Here, Treadwell never stopped using the mark in the ordinary course of trade (in that she kept selling records), and as to performances she never intended to forsake return to U.S. performances: ìQ. Miss Treadwell, was it your intent to abandon use of the Driftersí name in the United States? A. Never. This is my home; I donít want to be in England, I want to be home.î A-599.

In fact, plaintiffís own documents and pleadings establish Treadwellís availability for, and interest in, U.S. performances post-1976, A-28 to A-30; A-40 to A-41. And her testimony is clear -- she always intended to return, having left to avoid Marshakís litigation machine and because of the temporary decrease in demand for her music at that time in the United States. But Treadwell ìnever gave upî on working in the United States. A-599. Marshak presented no evidence contradicting that statement as to her subjective intent and in fact stipulated to her intent to enforce the mark. Hence, a finding of abandonment was against the weight of the evidence and without legally sufficient basis.

The lack of legal sufficiency is made manifest when one sees that plain error was present in the jury instructions on abandonment. First, there are the Kingsmen-related errors noted above. Second, the jury was charged on a preponderance of the evidence standard on the abandonment issue, but should have been charged on a clear and convincing standard. This Circuit requires abandonment to be ìstrictlyî proved because abandonment results in a forfeiture of rights. See Barnes, 793 F.Supp. at 1305, fn. 42; see also U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 139 (3d Cir. 1981). Because one must in the average civil case always ìproveî facts to a preponderance of the evidence, a requirement of ìstrictî proof must, of necessity, indicate a higher burden. Though some courts have nevertheless used a preponderance of the evidence standard explicitly, most have repeated references to such ìstrictî proof, see, e.g., Jaycees, 639 F.2d at 139; Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir 1980), and the leading commentator asserts that such requirement of ìstrictî proof requires clear and convincing evidence. 2 McCarthy on Trademarks and Unfair Competition, ß17:12 (at 17-13 and fn. 2; citing cases including Jaycees.) Several courts have followed McCarthy and used that express ìclear and convincingî language. Such precedent and commentary warranted a ìclear and convincingî charge, and application of that legal standard makes even clearer that Marshak simply could not, as a matter of law, carry his burden of proving abandonment.
C. Marshakís Own Allegations Estop Him From Asserting That Treadwellís Use Of The Mark Was Commercially Insignificant.
This Court has long inveighed against those who ìplay fast and looseî with the Courtís. Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (1996). The doctrine against assertion of inconsistent positions seeks to prevent a litigant from asserting a position inconsistent with one that he has previously asserted in the same or in a previous proceeding. Id. Here, Marshakís affirmative infringement claims in this case are replete with allegations of the significance of Treadwellís use of the Driftersí name. Hence should bar any claim that her use of the mark has been of insufficient scale to avoid abandonment.
III. THE FRAUD PRESENT HERE WAS DEMONSTRATED BY OVERWHELMING EVIDENCE MORE THAN SUFFICIENT TO JUSTIFY THE JURYíS CONCLUSION UNDER BOTH THE CORRECT TEST GIVEN THE JURY AND THE ALTERNATIVE TEST SUGGESTED BY MARSHAK.________
A. The District Court Correctly Charged The Jury On Fraud.
Marshakís own arguments demonstrate the correctness of the District Courtís charge on fraud.

First, Marshak argues that the charge given was an incorrect one because it would allow a finding of fraud based on something other than a finding of a willful intent to deceive. Mb. 45-46. But the Court here specifically charged what Marshak says he now seeks:

Honest mistake, inadvertence, erroneous conception of rights and negligent omission does not constitute fraud . . . .
[T]he applicant [has] a duty to disclose those users whom the applicant reasonably should know have legal rights to use the mark. In other words, if the applicant had a reasonable and good faith belief that no other person or entity had legal rights to use the mark, then the registration was not obtained by fraud.
Fraud against a registrant will not lie where a statement was a false misrepresentation occasioned by honest misunderstanding, inadvertence, negligent omission, or the like. Rather, fraud requires proof of a willful intent to deceive. However, fraud may be found if the applicant or registrant knew or reasonably should have known that the fact represented was not true.
[A-1477 to A-1488 (emphasis added)].
Thus, the applicantís subjective state of mind was described as a relevant part of the inquiry in the charge.

Second, the ìknew or reasonably should have knownî charge appropriately conveyed to the jury a specific instance in which to apply the courtís general charge on direct v. circumstantial evidence. A-1475. Adopting Marshakís present argument would in essence require direct evidence of the subjective belief of the applicant, the sort of ìsmoking gunî test the courts have never required. Cf. Rossi v. Standard Roofing, Inc., 156 F.3d 452, 465 (3d Cir. 1998); see also U.S. v. Goodchild, 25 F.3d 55, 60 (1st Cir. 1994) (fraud can be proven through circumstantial evidence); Eckholdt v. ABI, Inc., 873 F. Supp. 526, 532 (D. Kan. 1994) (fraud provable through circumstantial evidence). In fact, the proofs of fraud here are more than adequate:

Fraud is usually proven by circumstantial evidence. Direct proof of a knowing intent to defraud is rare. See United States v. Nivica, 887 F.2d 1110, 1113-15 (1st Cir. 1989), cert. denied, 494 U.S. 1005, 110 S.Ct. 1300, 108 L.Ed.2d 477 (1990). As we said in Nivica: ìThere is no pat formula for such proof; factual circumstances may signal fraudulent intent in ways as diverse as the manifestations of fraud itself.î Id. at 1113.
[Goodchild, 25 F.3d at 60.]

Indeed, even in Stanfield v. Osborne Industries, Inc., 52 F.3d 867, 874 (10th Cir. 1995), cited at Mb 46, though the Tenth Circuit reasoned that ì[it is] the applicantís subjective belief that is at issue,î 52 F.3d at 874, that court never suggested that this requires direct proof of actual knowledge.

Third, Marshakís acknowledgment that Torres v. Cantina Tonneselle, 808 F.2d 46, 48 (Fed. Cir. 1986), and G.H. Mumm v. Desnoes v. Geddes, 917 F.2d 1292, 1296 (Fed. Cir. 1990), relate to the applicantís own use and rights in the mark demonstrate their applicability here. Both Thomas and Marshak knew that Thomas, despite his declaration, did not believe Thomas was the true owner of the Driftersí name. In Thomasí words in 1998, George Treadwell was that one true owner and in Marshakís contemporaneous views, Thomas was a mere employee who never owned the name. That was their shared, subjective state of mind as to what Thomas actually believed in 1976 when he signed the declaration. It was about Thomasí perception of his own rights, and Torres and Munn merely allow such state of mind to be proven by objective circumstances as well as by such out-and-out subjective admission.

B. Any Alleged Defect In The Charge Was Harmless Error In Light Of the Overwhelming Evidence Of Fraud.
Those applying for a trademark are required to swear under penalty of perjury that they own the mark to be registered and believe no other person has a right to use that mark that is superior to their own. Though Marshakís assignor testified under oath that George Treadwell, and not he, was the true owner of the mark and though Marshak stipulated that that assignor was a mere employee of the Drifters that never came into any trade name ownership, Marshak argues here that there was no evidence that he and his assignors knew the assignorsí assertion of ownership rights in the Driftersí name was baseless. Mb. 50. That argument is without merit, as the evidence that at least one of Marshakís assignors knew they did not own the mark was unrebutted.

False statements made in the application regarding exclusivity of use and the alleged nonexistence of the right on the part of any other person, firm or corporation to use the mark in commerce have been the basis of cancellation actions. Continued filing of false affidavits to maintain the registration and acquire incontestable status for the mark have also been held grounds for cancellation.

Similarly, a false impression upon the minds of another person that the applicant knew of no one using the mark when they had signed a contract agreeing not to use the mark itself is deceit. It is firmly established that a partial and fragmentary disclosure, accompanied with the willful concealment of material facts, is not a true statement, and is as much a fraud as an actual misrepresentation, which, in effect it is. The Lanham Act imposes on applicants the obligation not to make knowingly inaccurate or knowingly misleading statements in the verified declaration forming a part of the application for registration. The so-called partnership declarants also knew at the time they made their oaths that the Drifters Inc. had been using the Drifters mark and were continuing to use the mark in commerce.

Here, Treadwell was the senior, prior and continuous user and owner of the identical mark when the false application for registration was filed. THE DRIFTERS was, and remains, an unregistered mark in use at the time of the application, and was entitled to protection under Section 43(a) of the Lanham Act and under the statutory and common law of the various states. Thomas signed the declaration he, and by the operation of law Marshak, knew that:

1. He had signed contracts with the Drifters Inc. and others wherein he was not to use the mark DRIFTERS, and that this mark was a valuable asset owned solely by the Drifters Inc.;
2. The Drifters Inc. had used the mark in commerce long before the so-called partnership became employed by the Corporation to be one of the many groups singing and performing under the name the DRIFTERS
Applicantsí failure to disclose Treadwellís prior and senior ownership and use was material to the registration itself. And the evidence makes clear that both he and Marshak knew that Thomas had never owned the name.

Marshak here argues that which his counsel argued below ñ the 1971 litigation provided a reasonable though mistaken belief that Treadwell no longer owned the mark. But there is no evidence ñ not one iota ñ that Thomas or the other assignees believed that. Marshakís beliefs to the contrary, if any, are ambiguously expressed and irrelevant, as his rights cannot exceed those of his assignees. See A-1492 (unobjected to charge stating that ìan assigneeî like Marshak ìcannot receive rights greater than those the assignor hasî).
IV. COLLATERAL ESTOPPEL DOES NOT BAR TREADWELL IN ANY WAY BECAUSE NEITHER SHE NOR HER PRIVY WAS A PARTY IN MARSHAK V. SHEPPARD AND THE COURT IN THAT CASE SPECIFICALLY AVOIDED AT MARSHAKíS URGING DETERMINING ISSUES RELATED TO TREADWELLíS RIGHTS.
As Marshak well knows, collateral estoppel/issue preclusion provides him no defense in this matter. Treadwellís Drifterís, Inc. v. Marshak, 18 U.S.P.Q. 2d 318, 321 (T.T.A.B. 1990). Having jettisoned here his previous argument that the 1971 litigation between Marshak and Treadwell supported such an estoppel, id., he makes the stranger argument that such estoppel arises from Marshak v. Sheppard, 666 F. Supp. at 590, a case in which Treadwell was not a party and in which the Court deemed ìimmaterialî the Treadwell rights on which Marshak seeks to base his estoppel. The Court should reject that argument.

First, collateral estoppel only bars relitigation where a party on their privy was a party in the past action. Oxford House v. Cherry Hill, 799 F. Supp. 450, 457-458 (D.N.J. 1992) (ìIt is hornbook law, however, that a party in a second lawsuit cannot be bound by a determination of a claim or issue in a previous lawsuit to which she was not a party.î). Treadwell was a mere witness in the Sheppard case, and that is insufficient basis for an estoppel: ìPlainly participation in a trial as witness does not, without more, bind one to the determination therein†.†. .î Biddle v. Biddle, 166 N.J. Super. 1, 17 (App. Div. 1979); accord Ponderosa Development Corp., 787 F.2d 533, 536-37 (10th Cir. 1986); SCAC Transport Inc. v. S.S. Danoas, 578 F. Supp. 327, 331 (S.D.N.Y. 1984). Marshakís cited precedents all illustrate relationships between the barred party and the previous action that was significantly more involved than that of a mere witness and thus are in-apposite. See, e.g., Montana v. U.S., 440 U.S. 147, 154-155 (1979) (Basing application of issue preclusion in second action on non-party to the first action (United States Government) on contractual relationship between non-party and participant in first case and stipulated facts including fact that government required first action be brought, reviewed and approved the complaint, paid the attorneys fees and costs, directed appeal in first, appeared as amicus in that appeal, directed appeal in that case to United States Supreme Court and then brought about abandonment of that appeal)); Cotton v. Federal Land Bank, 676 F.2d 1368, 1369-71 (11th Cir. 1982) (basing application of issue preclusion in second action on non-party to the first action (husband) where he was lessee of land of wife that was subject of both suits and acted as her joint plaintiff in second action); Maine Power & Equipment Co. v. U.S., 594 F. Supp. 997, 1003 (D.D.C. 1984) (analogizing facts to Montana).

More importantly, however, Marshakís argument fails because determination of the Treadwell issues in Sheppard was not necessary and did not occur in that case, sine qua nons of issue preclusion. Witkowski, 173 F.3d at 188-189; Collins, 34 F.3d at 176. In fact, the court there deemed them irrelevant, and therefore, it was unnecessary for that court to address them:

These arguments miss the mark, however, because they could only accrue, if at all, to Treadwellís benefit, not to Sheppardís. Sheppard argues that the rights to ìThe Driftersî were lodged in the groupís manager, Treadwell, and the corporation he set up to control the groupís assets. In this case, however, when only Marshakís and Sheppardís rights are at stake, these arguments are irrelevant.
[Marshak v. Sheppard, 666 F. Supp. 590, 598-600 (S.D.N.Y. 1987) (emphasis added); see also Marshak v. Green, 505 F. Supp. 1054, 1060-61 (S.D.N.Y. 1981) (holding that Marshak assignor Dock Green was estopped from asserting a claim of fraudulent registration because ìGreen swore to and signed the applicationî)].
Additionally, Marshak himself is judicially estopped from raising this argument. In Marshak v. Sheppard, Marshak was then plaintiff, and as noted in that case ìplaintiff, however, has forcefully argued that [that] case in Marshak v. Sheppard, not Marshak v. Treadwell.î 666 F. Supp. at 599 (emphasis added). In response to that argument, the Sheppard Court noted that it ìwould be an unwise judicial policyî to pretend to determine Treadwell rights in that action ìbecause it would expand many trademark disputes far beyond a mere two party conflict.î Id. Having made such arguments there, Marshak is judicially estopped here. Ryan, 81 F. 3d. at 358.

Thus, the Court should reject Marshakís argument.
V. THIS COURT HAS NO JURISDICTION TO ADDRESS MARSHAKíS ARGUMENT CONCERNING FURTHER MONETARY RELIEF AND, EVEN IF IT DID, THE COURT SHOULD NOT INTERFERE WITH THE DISTRICT COURTíS EFFORTS TO FASHION AN APPROPRIATE REMEDY.
A. This Is An Appeal Properly Before The Court Only Under 28 U.S.C. 1292(a)(1), And Marshakís Arguments Regarding Monetary Issues Are Beyond The Courtís Jurisdiction.
This Court has no jurisdiction to hear the fourth of Marshakís issues on appeal. See Hain, 618 F.2d at 522; see also Liberty Mutual v. Wetzel, 424 U.S. 737, 744 (1976); Sun Ship Building & Dry Dock Co. v. Benefit Review Board, 535 F.2d 758, 760 (3d Cir. 1976). The conduct of the accounting has not occurred and cannot therefore be reviewed by this Court, as any error Marshak alleges may not survive. Similarly, no one has invoked 28 U.S.C. ß1292(b) or any other writ allowing this Court to address now this issue. Therefore, it should not.
B. The District Court Properly Ordered A Constructive Trust Covering The Whole Period Of Marshakís Improper Activity.
Marshakís attempt to impose a strict statute of limitations bar on the reach of a constructive trust is inappropriate. It is inappropriate because it ignores the equitable nature of that claim and the inherent flexibility of a court to use its equitable power to fashion the remedy. Goldberg v. Midtronic, Inc., 686 F.2d 1219, 1229 (7th Cir. 1982) (federal district court has discretion to fashion remedy to do complete justice and appellate court will only set aside that discretion if arbitrary); Levitt Corp. v. Levitt, 593 F.2d 463, 469 (2d Cir. 1979) (district court sitting in equity may devise a remedy the extends or exceeds usual terms of relief necessary to do complete justice). As such, the Court should reject his arguments.

Marshak and his assigns committed fraud here, making the imposition of such a constructive trust a necessary and proper reaction of equity in its purest form, precluding reliance on any set statute of limitations:

Plaintiffís action is for the imposition of a constructive trust grounded in the equitable principle that one should not be permitted to profit from his own wrongdoing. Whenever title to property is acquired by fraud, . . .a constructive trust may be imposed in appropriate circumstances.
* * *
It is well established that since this is a purely equitable action, the general statute of limitations is not applicable†.†.†.
[Hyland v. Simmons, 152 N.J. Super. 569, 575-576 (Ch. Div. 1977), affíd. 163 N.J. Super. 137 (App. Div. 1978), cert. den. 79 N.J. 479 (1979); Accord Holmberg, 327 U.S. at 396].
Moreover, Marshak cannot here argue, as was done in Holmberg or Hyland, that laches applies, as that argument is procedurally waived by its absence from the opening brief (Mb), see Institute for Scientific Information v. Gordon & Breach, 931 F.2d 1002, 1011 (3d Cir. 1991), cert. den., 116 L.Ed. 2d 245 (1991), and substantively inappropriate in the face of Treadwellís fraud allegations. See TBC Corp. v. General Prix Ltd., 12 U.S.P.Q.2d 1311, 1313 (TTAB 1989).

Thus, should the Court address the merits of this argument, it should reject Marshakís position.
CONCLUSION

The Court should affirm the District Court in all respect and lift the Stay it entered on August 16, 1999 injunction.

EPSTEIN, BECKER & GREEN, P.C.

Attorneys for Appellees

By:______________________________

JAMES P. FLYNN

For the Firm
Dated: November ___, 1999
Of Counsel:

Joshua Levine, Esq.

Law Offices of Ira Levine, Esq.

99 Plaza Road

P.O. Box 2777

Fair Lawn, New Jersey 07410

CERTIFICATION OF COMPLIANCE WITH FED.R.APP.P. 32(a)(7)(C)

The undersigned attorney certifies that the foregoing brief of appellees is in a proportionally-spaced type font and contains no more than 14,000 words within those sections of the brief noted in Fed. R. App. P. 32(a)(7)(B)(iii) as counting against the maximum. See next page. I base this certification on the word count function of the word processing system used to prepare the brief.

EPSTEIN, BECKER & GREEN, P.C.

Attorneys for Appellees

By:______________________________

JAMES P. FLYNN

For the Firm
Dated: November ____, 1999

CERTIFICATION OF BAR MEMBERSHIP

I am, and have been since August 1992, a member in good standing of the bar of this Court.

EPSTEIN, BECKER & GREEN, P.C.

Attorneys for Appellees

By:______________________________

JAMES P. FLYNN

For the Firm
Dated: November ___, 1999

UNITED STATES COURT

OF APPEALS FOR THE THIRD CIRCUIT

DOCKET NO. 99-5614
____________________________________

LARRY MARSHAK, :

: Docket No. Below: Civ. No. 95-3794 (NHP)

Plaintiff-Appellant, : United States District Court for the District

: of New Jersey

vs. :

FAYE TREADWELL, TREADWELLíS :

DRIFTERS, INC., and THE DRIFTERíS, :

INC., :

Defendants-Appellees, :

____________________________________:

______________________________________________________________________________
BRIEF OF APPELLEES

(ON APPEAL UNDER 28 U.S.C. ß1292(a) OF THE DISTRICT COURTíS AUGUST 16, 1999 INJUNCTION)

______________________________________________________________________________

EPSTEIN BECKER & GREEN, P.C.

Attorneys for Appellees

The Legal Center

One Riverfront Plaza

Newark, New Jersey 07102-5401

LAW OFFICE OF IRA LEVINE

99 Plaza Road; Box 2777

Fair Lawn, New Jersey 07410

On the Brief:

James P. Flynn

Joshua Levine

TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT i
TABLE OF CONTENTS iii
TABLE OF AUTHORITIES vii
PREFACE 1
STATEMENT OF ISSUES 2
Statute of Limitations 2
Abandonment 3
Fraud 4
Collateral Estoppel 5
Accounting and Disgorgement of Profits 6
STATEMENT OF JURISDICTION 8
STATEMENT OF RELATED CASES 9
STATEMENT OF THE CASE 10
A. The Pleadings 10
B. Cross-Motions For Summary Judgment And Stipulations 11
C. The Trial And Post-Trial Proceedings 12
1. The Abandonment Issue 12
2. The Fraud Issue 14
3. The Monetary Relief Sought by Treadwell 15
STATEMENT OF FACTS 17
A. Historical Background 17
B. Employment Contracts 18
C. The Constants Through The Years: Faye Treadwell, Well Known

Hits And Continuous Record Sales 20
D. False Declarations of Green, Hobbs and Thomas 21
E. Treadwellís Performances and Recordings 23
STATEMENT OF STANDARD OF REVIEW 25
LEGAL ARGUMENT 26
Summary of Argument 26
I. NO STATE STATUTE OF LIMITATIONS CAN OVERRIDE THE LANHAM ACTíS EXPRESS LANGUAGE ALLOWING ONE ìAT ANY TIMEî TO SEEK CANCELLATION OF A FRAUDULENTLY OBTAINED MARK 28
A. The Lanham Actís Language And Structure Preclude The Borrowing Analysis Suggested By Marshak 28
B. Marshakís Own Arguments To Limit Monetary Recovery To A Six-Year Period Is A Concession That The Substantive Claims Are Not Time Barred 31
C. Statutes of Limitations Cannot Bar Defenses and Counterclaims, and Public Policy Requires That A Successfully Waged Defense Under 15 U.S.C. ß1115(b)(1) Redound To The Defendantís Benefit, And To The Public Good, Through Cancellation The Mark Fraudulently Obtained 32
D. Marshak Waived Any Statute of Limitations Defense 36
II. MARSHAK CANNOT AS A MATTER OF LAW PREVAIL ON AN UNPLEAD ABANDONMENT AFFIRMATIVE DEFENSE WHERE HE STIPULATED TO BOTH (A) TREADWELLíS SUBJECTIVE INTENT TO ENFORCE HER RIGHTS AND (B) AN ONGOING COMMERCIAL USE BY TREADWELL AND HER LICENSEES OF THE DRIFTERíS MARK IN ITS ORIGINAL OR RELATED FORMATS 37
A. Marshak Never Plead Abandonment As An Affirmative Defense, And The District Court Should Never Have Granted The Eleventh-Hour Amendment Of The Pleadings That Allowed That Defense To Be Submitted To The Jury 37
B. Marshak Could Not As A Matter Of Law Carry His Heavy Burden Of Establishing Abandonment Because The Record Was Bereft of Evidence Establishing Non-Use, Largely Because Marshak Stipulated To Evidence Of Use And Subjective Intent 38
C. Marshakís Own Allegations Estop Him From Asserting That Treadwellís Use Of The Mark Was Commercially Insignificant 45
III. THE FRAUD PRESENT HERE WAS DEMONSTRATED BY OVERWHELMING EVIDENCE MORE THAN SUFFICIENT TO JUSTIFY THE JURYíS CONCLUSION UNDER BOTH THE CORRECT TEST GIVEN THE JURY AND THE ALTERNATIVE TEST SUGGESTED BY MARSHAK 46
A. The District Court Correctly Charged The Jury On Fraud 46
B. Any Alleged Defect In The Charge Was Harmless Error In Light Of the Overwhelming Evidence Of Fraud 49
IV. COLLATERAL ESTOPPEL DOES NOT BAR TREADWELL IN ANY WAY BECAUSE NEITHER SHE NOR HER PRIVY WAS A PARTY IN MARSHAK V. SHEPPARD AND THE COURT IN THAT CASE SPECIFICALLY AVOIDED AT MARSHAKíS URGING DETERMINING ISSUES RELATED TO TREADWELLíS RIGHTS 53
V. THIS COURT HAS NO JURISDICTION TO ADDRESS MARSHAKíS ARGUMENT CONCERNING FURTHER MONETARY RELIEF AND, EVEN IF IT DID, THE COURT SHOULD NOT INTERFERE WITH THE DISTRICT COURTíS EFFORTS TO FASHION AN APPROPRIATE REMEDY 57
A. This Is An Appeal Properly Before The Court Only Under 28 U.S.C. ß1292(a)(1), And Marshakís Arguments Regarding Monetary Issues Are Beyond The Courtís Jurisdiction 57
B. The District Court Properly Ordered A Constructive Trust Covering The Whole Period Of Marshakís Improper Activity 57
CONCLUSION 60
CERTIFICATION OF COMPLIANCE WITH FED.R.APP.P. 32(a)(7)(C) 61
WORD COUNT 61a
CERTIFICATION OF BAR MEMBERSHIP 62
EXHIBIT A A-1 to A-7
EXHIBIT B B-1 to B-4
CERTIFICATION OF SERVICE C-1 to C-2

U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 139 (3d Cir. 1981); Barnes Group, Inc. v. Connell, Ltd., 793 F. Supp. 1277, 1305 fn. 42 (D. Del. 1992).

American Olean Co., Inc. v. American Marazzi, 9 U.S.P.Q. 2d 1145 (E.D.Pa. 1998); McKay v. Mad Murphyís, Inc., 899 F. Supp. 872, 878 (D. Conn. 1995).

Witkowski v. Welch, 173 F.3d 192, 198-199 (3d Cir. 1999); Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 176 (3d Cir. 1994).

After the close of discovery, A-144, Treadwell moved to bar raising of such an abandonment defense. A-177. In reply, Marshak sought leave to amend, and that amendment was allowed over Treadwellís objections. A-184 to A-185; A-1569 to A-1570.

ìT.î refers to trial transcript pages that are of record but not in the appendix.

Treadwell had also argued the application of 15 U.S.C. ß1115(b)(3), and the jury, after having been misinstructed on the issue, ruled against Treadwell. A-1422; A-1491; A-1506; A-1562. At Mb 43, Marshak states that Treadwell never ìmoved for JMOL on this verdictî as to jury interrogatory 1(b). As illustrated by the attached portions of Treadwellís initial JMOL brief below, that is simply incorrect. See attached at Ex. A (the cover, table of contents, and page 2, 16, 17 and 22 of that brief). Later post-trial briefs also argued that position; the District Court simply did not rule on it. [Also, please note that Treadwell did not seek inclusion in the Appendix of Exs. A and B to this brief as they only became independently relevant to the appeal after the assertions and arguments in Mb. See Fed. R. App. P. 30(a)(2).]

See 2 McCarthy on Trademarks and Unfair Competition, ß 17:16 (at 17-21 and 17-22); Accord P.A.B. Produits, Etc. v. Satinine Societe, 570 F.2d 328, 334 (C.C.P.A. 1978) (ìinference of non-use is readily rebutted by a showing that such non-use was due to special circumstances which excuse the same and not due to any intention to abandon the markî); Starkist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393 (9th Cir. 1985) (hiatus in importation of fish into United States due to unprofitability excuses non-use and precludes finding of abandonment); Clubmanís Club Corp. v. Martin, 188 U.S.P.Q. 455 (T.T.A.B. 1975) (ëexcusable non-useî precludes abandonment).

See, e.g. Cerverceria Centroamericana S.A. v. Cerveceria India, Inc. 892 F.2d 1021, 1023 (Fed Cir. 1989); Roulo v. Russ Berrie & Co., 886 F.2d 931, 938 (7th Cir. 1989), cert. den. 493 U.S. 1075 (1990).

See American Olean Co., Inc. v. American Marazzi Tile, Inc., 9 U.S.P.Q.2d 1145, 1998 Westlaw 29056, *7 (E.D.Pa. 1998) (ìevidence of abandonment must be clear and convincingî); see also McKay v. Mad Murphyís Inc., 899 F. Supp. 872, 878 (D.Conn. 1995); Dial-A-Mattress Operating Corp. v. Mattress Madness, Inc., 841 F.Supp. 1339, 1355, reconsideration den. 847 F.Supp. 18 (E.D.N.Y. 1994); Intrawest Fin. Co. v. Western National Bank, 610 F.Supp. 950, 956 (D.Colo. 1985) (all explicitly using phrase ìclear and convincing to describe burden of proof).

Also note that as appeals are from orders and not opinions, any reason supporting the issuance of the order may be considered by this Court, even if not a ground the court below relied on. See U.S. v. Pennsylvania, 533 F. 2d. 107, 110, fn. 7 (3d. Cir. 1976).

Marshakís allegations in the Arista case were discussed in this case, see, e.g., A-284, A-459 to A-462; A-469 to A-474, and also estop him from claiming that the record sales of Treadwell licensees and sublicensees are commerically inconsequential. See Ex. 7 (Marshak Complaint in Arista case) to the Certification of James P. Flynn In Opposition to Application For Stay, dated August 23, 1999, filed previously with this Court); also see fn. 10.

This is also consistent with the black letter rule, applicable in both civil and criminal cases, that knowledge may be established by proof of reckless disregard for the truth. See Orix Credit Alliance, Inc. v. Taylor Machine Works, Inc., 125 F.3d 468, 479-480 (7th Cir. 1997); see also United States v. Coyle, 63 F.3d 1239, 1243 (3d Cir. 1995) (holding that, in a criminal mail fraud prosecution under 18 U.S.C. ß1341, where ìproof of specific intent is required, [it] may be found from a material misstatement of fact made with reckless disregard for truthî).

See Otis Elevator Co. v. Echlin Mfg. Co., 187 U.S.P.Q. 310 (T.T.A.B. 1975); G. Levor & Co., Inc. v. Nash, Inc., 123 U.S.P.Q. 234 (T.T.A.B. 1959).

Polo Fashions, Inc. v. Extra Special Products, Inc., 208 U.S.P.Q. 421, 427-28 (S.D.N.Y. 1980); Duffy-Mott Co. v. Cumberland Packing Co., 424 F.2d 1095, 1098-99 (C.C.P.A. 1970); Crown Wallcoverings Corp. v. The Wallpaper Manufacturers Ltd., 188 U.S.P.Q. 141, 143-44 (T.T.A.B. 1975); Volkswagenwerk A.G. v. Advance Welding & Mfg. Corp., 184 U.S.P.Q. 367, 368 (T.T.A.B. 1974).

Nichols v. McGlothlin, 330 F.2d 454 (10th Cir. 1964); First Trust & Sav. Bank v. Fidelity-Philadelphia Trust Co., 214 F.2d 320 (3d Cir. 1954), cert. den. 348 U.S. 856 (1954).

San Juan Products, Inc. v. San Juan Pools, Inc., 849 F.2d 468, 474 (10th Cir. 1988) (ìThe Lanham Act protects unregistered marks as does the common law.î).

See fn. 10 above.

Marshakís present appellate counsel, Mr. Judlowe, was his trial counsel there. Sheppard, 666 F. Supp. at 592

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