Marshak v. Treadwell, Civ. No. 95-3794 (NHP) (D. N.J. 7/30/1999)
| Decision Date | 30 July 1999 |
| Docket Number | Civ. No. 95-3794 (NHP). |
| Parties | LARRY MARSHAK, Plaintiff-Counterclaim Defendant, v. FAYE TREADWELL, TREADWELL'S DRIFTERS, INC., and THE DRIFTERS, INC. Defendants-Counter claimants. |
| Court | U.S. District Court — District of New Jersey |
Mark J. Ingber, Esq., WATERS McPHERSON McNEILL Attorney for Plaintiff.
James P. Flynn, Esq., EPSTEIN BECKER & GREEN, Newark, NJ, Attorneys for Defendants-Counterclaimants.
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.
This lawsuit arises out of a trademark dispute involving the musical group "The Drifters." The plaintiff Larry Marshak owned a federal trademark registration for the name "The Drifters," which he acquired through a 1976 assignment from three former Drifters singers, Charlie Thomas, Elsbeary Hobbs, and Dock Green. Since the assignment, Marshak has continuously used the mark in connection with his promotion of Drifters performances. In 1995, Marshak filed the instant Complaint alleging that Faye Treadwell had infringed and disparaged Marshak's federal trademark registration.1
As a defense to Marshak's infringement action, Treadwell alleged, and ultimately proved, that Marshak's federal registration had been obtained by fraud. Treadwell also proved that she and her late husband George Treadwell had owned and managed the original Drifters group since 1955. With regard to Treadwell's infringement counterclaim, however, the jury found that she had abandoned her trademark rights in or about 1976, when her group stopped performing regularly in the United States. Because Marshak's Drifters group has performed continuously since the early 1970s, the jury found that Marshak acquired common law trademark rights in 1976.
The Drifters first appeared in New York in 1953. Shortly thereafter, in 1954, the group came under the management of George Treadwell, who had previously managed other musicians, including Sammy Davis, Jr., Billie Holiday, and Sarah Vaughn. Mr. Treadwell managed the group through The Drifters, Inc., a New York corporation that he formed in 1954. He married the defendant Faye Treadwell in March of 1955.
Although Mr. Treadwell owned all of The Drifters, Inc. stock, he managed the company with his two partners, Irving Nahan and Lewis Lebish.2 Mr. Lebish acted as the accountant and bookkeeper for The Drifters, Inc. Treadwell, assisted by his wife Faye and Irving Nahan, managed the entertainment side of the business. Together, they exercised complete artistic control over The Drifters: they hired and fired Drifters singers; they paid the singers a weekly salary; they selected the music and arrangements; and they made all musical and business decisions relating to both live performances and recording contracts.
Since the group's inception, The Drifters has always been comprised of a constantly changing cast of singers, including Ben E. King, Rudy Lewis, and Johnny Moore. During George Treadwell's stewardship, each Drifters singer was an employee of The Drifters Inc., and each of them signed a written employment contract and received a weekly salary.
In about 1959, Treadwell hired several singers from a group called "The Crowns." Three of these replacement singers were Charlie Thomas, Elsbeary Hobbs, and Dock Green. Thomas, Hobbs, and Green signed employment contracts with The Drifters, Inc. and they performed and recorded as members of The Drifters under Treadwell's exclusive management. Hobbs left the group less than two years later in 1961. Green left in 1964.
The Drifters continued to perform live concerts and record new music through most of the 1960s. The Drifters recorded dozens of original songs, many of which were "Top Ten Hits" on Billboard's Rhythm and Blues Charts. These included "There Goes My Baby" (1959), "Save the Last Dance for Me" (1960), "Some Kind of Wonderful" (1961), "Up on the Roof" (1962), "On Broadway" (1963), and "Under the Boardwalk" (1964). All Drifters records were recorded pursuant to recording contracts negotiated and signed by The Drifters, Inc. and the Atlantic Recording Company. The majority of royalties were paid to The Drifters, Inc. and its shareholders. It was undisputed that Mr. Treadwell exercised exclusive managerial over the group, without interruption, from 1954 until his death in 1967.
After Mr. Treadwell's death, his widow Faye succeeded him as The Drifters' principal manager and shareholder. Charlie Thomas left The Drifters shortly after Faye Treadwell assumed control, but the remaining group members, including Johnny Moore, continued to sing and perform under the management of Mrs. Treadwell and as employees of The Drifters, Inc.3
It appears that the demand for live Drifters performances had substantially declined by the late 1960s. Although the Drifters shareholders continued to receive royalties from the sale of previously recorded albums, the Drifters' style of music had fallen out of favor in the United States. Treadwell began to focus the group's touring efforts in Europe, where The Drifters' popularity was growing.
II. The Reunited Drifters: 1970 through 1995
In 1969, CBS Radio Network adopted an "oldies format" for their FM radio station. At about the same time, CBS also formed a partnership with Rock Magazine, a subsidiary company, to produce live concerts featuring reunited singing groups from the fifties and sixties. Larry Marshak was an editor at Rock Magazine at the time. Although he had never met George or Faye Treadwell or any of their singers, Marshak was given the task of reuniting some of the old groups, including The Drifters.
Marshak first called former-Drifter Ben E. King. King declined Marshak's invitation to participate in a Drifters reunion tour, but he suggested that Marshak contact Charlie Thomas. Charlie Thomas accepted the offer, as did Elsbeary Hobbs and Dock Green. They began performing under the name "The Drifters" in 1970, and then appeared regularly at concerts promoted by CBS Radio and Rock Magazine.4 Shortly thereafter, Treadwell's attorney sent a letter informing Marshak that, pursuant to employment contracts signed by Thomas, Hobbs, and Green, Treadwell and The Drifters, Inc. owned the rights to the group's name.
In 1971, Treadwell brought an infringement action in the Supreme Court of New York against Marshak, Thomas, Hobbs, and Green, seeking to enjoin them from using the name "The Drifters" in connection with their performances. The court denied Treadwell's application for a preliminary injunction based upon its finding that Treadwell had not established a likelihood of success on the merits. The suit was dismissed the following year as a result of Treadwell's failure to provide adequate discovery.
Shortly after the dismissal of Treadwell's lawsuit in 1972, Marshak signed an exclusive management contract with his Drifters singers. Marshak's group toured extensively, and according to Marshak's testimony, he employed an aggressive litigation strategy to prevent any other groups from performing as "The Drifters." During this time, Treadwell became either unwilling or unable to compete with Marshak's superior resources. Since 1972, Treadwell's Drifters have performed primarily in Europe.5
Marshak testified that he later learned that a federal trademark registration would likely simplify his litigation strategy. After discussing the idea with Thomas, Hobbs, and Green, Marshak hired a trademark lawyer to draft the necessary documents. On December 15, 1976, Thomas, Hobbs, and Green executed an assignment of all of their rights to The Drifters mark to Larry Marshak.6 Two days later, on December 17, 1976, Thomas, Hobbs, and Green, acting through a partnership, filed an application in the United States Patent & Trademark Office to register "The Drifters" as a service mark for use in connection with a musical group. In support of their application, the registrants signed a declaration certifying that: (1) they believed themselves to be the rightful owners of "The Drifters" mark, and (2) to the best of their knowledge and belief, no other person or company had the right to use "The Drifters" mark in commerce.
On January 3, 1978, The Patent & Trademark Office issued a service mark, Registration Number 1,081,338, for "The Drifters." Marshak has owned that federal registration since 1978, and it has achieved incontestible status under the Lanham Trademark Act. Marshak subsequently expanded his operation to include two, and sometimes three, separate groups of Drifters. Marshak testified that he coordinated his groups' performances so that there would never be more than one Drifters group in a particular geographic area. There was also evidence that Marshak signed a recording contract with Musicor Records and that some of his singers recorded new songs under the name "The Drifters," although Marshak testified that none of these recordings ever achieved the "Top Ten" status enjoyed by the original Drifters songs.
At the conclusion of the trial in this case, the jury found that Marshak and his assignors had never owned any rights to the name "The Drifters," and that they had defrauded the Patent and Trademark Office into issuing a federal trademark registration. Although the jury found that Marshak later acquired common law rights in the Drifters mark, he has lost the benefits of his incontestible federal registration. The jury's verdict leaves Treadwell in essentially the same position from which she started. Both parties now move before this Court for relief from the jury's verdict.
Federal Rule of Civil Procedure 50 directs trial...
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