Liebowitz v. Elsevier Science Ltd.

• Decision Date: 07 June 1996
• Docket Number: No. 91 Civ. 4551 (LAK).,91 Civ. 4551 (LAK).
• Citation: 927 F. Supp. 688
• Parties: Harold LIEBOWITZ and Advanced Engineering Research & Development Corporation, Plaintiffs, v. ELSEVIER SCIENCE LTD., f/k/a Pergamon Press, PLC and Elsevier Science, Inc., f/k/a Pergamon Press, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

927 F. Supp. 688

Harold LIEBOWITZ and Advanced Engineering Research & Development Corporation, Plaintiffs, v. ELSEVIER SCIENCE LTD., f/k/a Pergamon Press, PLC and Elsevier Science, Inc., f/k/a Pergamon Press, Inc., Defendants.

No. 91 Civ. 4551 (LAK).

United States District Court, S.D. New York.

June 6, 1996.

As Amended June 7, 1996.

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Francis T. Carr, Howard J. Shire, John Flock, Joshua R. Bressler, Kenyon & Kenyon, New York City, for Plaintiffs.

James W. Dabney, Pennie & Edmonds, New York City, for Defendants.

OPINION

KAPLAN, District Judge.

Plaintiff Harold Liebowitz, former Dean of the School of Engineering and Applied Science at George Washington University, conceived of a scientific journal and persuaded the late media tycoon, Robert Maxwell, who then owned Pergamon Press, to back the idea. Publication began. Over the years, Liebowitz's ideas spawned a number of highly successful journals, all published by Pergamon under Liebowitz's direct or indirect editorship. The contracts between the parties, perhaps reflecting mutual confidence shared by Liebowitz and Maxwell, did not contemplate the possibility that the parties would part ways. In time, however, Pergamon was sold. Relations between Liebowitz and Pergamon's new owners soured. Now they are battling over ownership of the trademarks for the journals, which may well constitute substantially all of the value that inheres in these properties, each apparently trying to capture that value for itself. In view of the lack of guidance in the contracts, the case calls for the application of bedrock principles of trademark law to highly unusual circumstances.

Facts

Plaintiff, Professor Harold Liebowitz, is the editor-in-chief of two academic journals published by defendants Elsevier Science, Ltd. and Elsevier Science, Inc. (together "Elsevier Science").¹ The journals, COMPUTERS AND STRUCTURES ("C & S") and ENGINEERING FRACTURE MECHANICS ("EFM"), address the application of computers to the solution of engineering problems and the area of fracture mechanics respectively.²

Liebowitz conceived of the journals in 1967, when he was Dean of the School of Engineering and Applied Science at George Washington University. In 1967, he and Pergamon entered into an agreement to commence publication of EFM. (Pl. 3(g) Exs. 2 & 3)³ In 1970, Liebowitz formed plaintiff Advanced Engineering Research and Development Corp. ("AERDCO") for the purpose of producing EFM and other journals.⁴ In 1971, Pergamon entered into a second agreement that reconfirmed the EFM publishing agreement and agreed to make payments under it to AERDCO. (Pl. 3(g) Exs. 4 & 5)

Pergamon's task under these agreements was essentially to print, market, and distribute the journal. (Id.) AERDCO, in the person of Professor Liebowitz, had the task of editing the journals, including selecting manuscripts for publication. At first, Pergamon agreed to pay Liebowitz, and later AERDCO, a fee, while Pergamon bore any risk of loss. (Id. Exs. 3-5)

While bringing EFM to fruition, Professor Liebowitz began to consider the creation of C & S. Beginning in 1969, Professor Liebowitz discussed his idea for C & S with Pergamon. In a series of letters during 1969 and 1970, Professor Liebowitz and Pergamon worked out an agreement between AERDCO and Pergamon to publish C & S. (Id. Exs. 7-10) As with EFM, Liebowitz became editor-in-chief of C & S and was responsible for procuring manuscripts and assembling an advisory board. Pergamon again agreed to pay a fee to AERDCO and to publish the journal at Pergamon's own risk and expense. (Id. Ex. 10) Over time, Pergamon agreed to increase the payments it made to AERDCO for both EFM and C & S, and eventually agreed to pay AERDCO a percentage of subscription revenues received from the two journals. (Id. Exs. 25 & 65)

With the success of EFM and C & S, AERDCO and Pergamon developed plans to create a series of journals that would explore the application of computers to a variety of disciplines. This series was conceived in 1970 and 1971 and eventually included an additional dozen titles (the "Computer Series").⁵

Professor Liebowitz continued to serve as editor-in-chief of C & S and EFM, but he did not edit the Computer Series. Instead, under an agreement reached between AERDCO and Pergamon in 1971,⁶ AERDCO served as "general editor-in-chief" and appointed and supervised the editors of the individual journals in the Computer Series. (Id. Ex. 14A ¶¶ 1 & 3) The editors appointed by AERDCO had the task of gathering appropriate manuscripts for publication. Pergamon agreed to print, market, and distribute the journals in the Computer Series, again at its own risk and expense. In addition to paying a fee for each journal, Pergamon agreed to pay AERDCO a percentage of all subscription revenue from the Computer Series journals. (Id. Exs. 14A ¶ 5 & 14C) Over time various changes were made in AERDCO's compensation for the Computer Series. From 1974 onward, the essence of the arrangement remained that Pergamon would pay AERDCO a fee for the journals plus a bonus for journals that exceeded certain subscription levels. (Id. Exs. 16, 25, 28 & 61) The 1971 Agreement was renewed in 1989. (Pl. 3(g) Ex. 25, hereinafter the "1989 Agreement")

The renegotiation of the terms of AERDCO's compensation for the Computer Series that led to the signing of the 1989 Agreement appears to be the first point at which Pergamon ever asserted ownership of the journals. In a letter from its chief executive, Ian Maxwell, Pergamon asserted that it was the "beneficial owner of the journals." It consequently suggested that paragraph seven of the then proposed 1989 Agreement reflect that fact. Attached was a draft in which the proposed paragraph seven stated that AERDCO was responsible for "recommending" to Pergamon the appointment and removal of editors and editorial board members of the Computer Series journals. (Id. Ex. 11I) As will be discussed further below, that provision was not incorporated into the final version of the 1989 Agreement, which retained for AERDCO the "responsibility and authority" that it had been given under the 1971 Agreement to make such appointments. (Id. Ex. 25 ¶ 7)

The present controversy arose in 1991. In May of that year, Elsevier N.V. purchased the assets, including apparently the Pergamon name and intellectual property, of Pergamon from MCC. Although Elsevier N.V. has disclaimed any interest in the matter, Elsevier Science, doing business as Pergamon, thereafter began to assert that they owned the trademarks associated with the journals at issue in this suit. Plaintiffs were of another opinion, and began this lawsuit on July 3, 1991. Understandably, the relationship between AERDCO and Pergamon then began to fray.

At roughly the same time that MCC sold Pergamon to Elsevier N.V., David Rogers, co-editor of COMPUTERS & EDUCATION, informed Pergamon that he intended to resign, effective at year end. (Pl. Cross-Motion 3(g)⁷ Ex. 3) Pergamon did not immediately inform plaintiffs of Rogers' impending departure. (Id. Exs. 3-5) Instead, in December 1991, Pergamon simultaneously informed plaintiffs of Rogers' decision to leave and of its choice of Rachelle Heller, an untenured associate professor at George Washington University, to replace him. (Id. Ex. 6) Plaintiffs swiftly informed Pergamon that they considered Heller unqualified to co-edit the journal and that they intended, pursuant to the 1989 Agreement, to appoint Rogers' replacement themselves. Their choice was to appoint both plaintiff, Harold Liebowitz, and his son, Jay Liebowitz, a tenured professor at George Washington University, to replace Rogers. (Id. Ex. 7) A testy exchange of letters ensued in which Pergamon informed the Liebowitzes, pere et fils, that it did not consider them "remotely qualified" to co-edit the journal and purported to reject their appointment. (Id. Ex. 8) Plaintiffs replied by insisting that, under their agreements with Pergamon, they had the sole authority to appoint editors and that Pergamon forthwith should forward manuscripts submitted to COMPUTERS & EDUCATION to its new co-editors, Harold and Jay Liebowitz, for consideration. (Id. Exs. 9 & 10) Pergamon responded that it had "overruled" plaintiffs' appointments and appointed Heller to replace Rogers. (Id. Ex. 11)

As relations soured between AERDCO and Pergamon during the course of this litigation, plaintiffs added additional breach of contract claims to the complaint, alleging that Pergamon has refused to provide AERDCO with certain information about the production status of the various journals, cheated AERDCO on calculations of CPI increases and currency conversions that were applied to payments to AERDCO, otherwise failed to pay AERDCO monies due to it for various journals, altered the appearance of the journals without AERDCO's consent in violation of various agreements between Pergamon and AERDCO, and violated its duties toward AERDCO by launching a new journal, ENGINEERING FAILURE ANALYSIS ("EFA"), calculated to compete with EFM. Thus, in addition to seeking a declaration that they, rather than Pergamon, own the trademarks associated with C & S, EFM, and the Computer Series, plaintiffs seek damages for breach of contract and an order terminating the publishing arrangements between AERDCO and Pergamon.

Prior Proceedings

Pergamon's claim to ownership of the journals, including their trademarks, apparently was based in part on the sales of Pergamon's assets, including goodwill and intellectual property, to MCC and, later, to Elsevier N.V. In the original complaint, plaintiffs sought relief for alleged conversion of the journal trademarks by Elsevier and unjust enrichment of MCC to the extent that Elsevier N.V. paid MCC for the trademarks which, plaintiffs contend, belong to them. Plaintiffs sought also a declaration that they owned the journal trademarks.

Judge Stanton dismissed plaintiffs' unjust...