Tuesday, July 18, 2017

Trademarks in music. Flashback to New Jersey stating: its previous position "was inadvertently put into the brief."

Further to the July 17 IPBiz post on "who" sang the number one hit "He's a Rebel" (the Blossoms, not the Crystals),
IPBiz notes another interesting bit of music intellectual property. It is "like" the issue in "He's a Rebel," because it involves a "confusion of source" issue. The State of New Jersey was trying to enforce its "Truth in Music" Act (to avoid confusion related to later day bands performing music of earlier groups) against an entity who had in fact secured common law trademark rights. The State lost.

The case comes from events in Atlantic City, New Jersey, concerning a dispute between the state of New Jersey and someone operating with a license of a common law trademark (e.g., from the Platters). The caption: SINGER MANAGEMENT CONSULTANTS, INC.; LIVE GOLD OPERATIONS, INC., v. ANNE MILGRAM, Attorney General of the State of New Jersey, Live Gold Operations, Inc., Appellant, 650 F.3d 223; 99 U.S.P.Q.2D 1180 (CA3 2011), which was an en banc decision [Before: McKEE, Chief Judge, SLOVITER, SCIRICA, RENDELL, BARRY, AMBRO, FUENTES, SMITH, FISHER, CHAGARES, JORDAN, HARDIMAN, GREENAWAY JR., VANASKIE, ALDISERT and ROTH, Circuit Judges. ROTH, Circuit Judge, dissenting, with whom McKEE, Chief Judge, SLOVITER and ALDISERT, Circuit Judges, join. ALDISERT, Circuit Judge, dissenting. ]:

Live Gold Operations, Inc. manages and promotes the music recording and performing [page 225] groups known as "The Platters" and "The Cornell Gunter Coasters" pursuant to licenses of unregistered trademarks. In August 2007, the State of New Jersey learned that Live Gold had scheduled a two-week concert, to begin on August 18, of the Platters and Coasters groups at the Hilton Hotel in Atlantic City. The State informed Live Gold that its use of the trademarks "The Platters" and "The Cornell Gunter Coasters" might violate the New Jersey Truth in Music Act, which provides in pertinent part:

A person shall not advertise or conduct a live musical performance or production through the use of an affiliation, connection or association between the performing group and the recording group unless:

(a) The performing group is the authorized registrant and owner of a federal service mark for the group registered [**3] in the United States Patent and Trademark Office; or

(b) At least one member of the performing group was a member of the recording group and has a legal right by virtue of use or operation under the group name without having abandoned the name or affiliation of the group; or

(c) The live musical performance or production is identified in all advertising and promotion as a salute or tribute; or

(d) The advertising does not relate to a live musical performance or production taking place in this State; or

(e) The performance or production is expressly authorized by the recording group.

N.J. Stat. Ann. § 2A:32B-2.

Things did not go well for the State of New Jersey in D.N.J.:

On September 7, 2007, the parties returned to the District Court [D. N.J.]for a hearing on the preliminary injunction. In its written submission prior to the hearing, the State argued that an unregistered trademark satisfied the Truth in Music Act only if the performing group obtained express authorization from an original group member, included an original member, or denominated itself as a tribute or salute to the original group. The State contended that its interpretation of the Act was consistent with the Lanham Act, the First Amendment, and the Equal Protection Clause of the Fourteenth Amendment. It also objected to Live Gold's suit on jurisdictional grounds.

Judge Debevoise began the preliminary injunction hearing by asking the State why it insisted on distinguishing between registered and unregistered trademarks: "Why shouldn't they proceed on an equal basis, two valid trademarks?" In response, the State contended that because the Lanham Act accorded a rebuttable presumption of validity to registered trademarks, its action here against unregistered trademarks was consistent with federal law. Judge Debevoise repeatedly rejected this argument, explaining that the differences under federal law between registered and unregistered trademarks for purposes of validity did not authorize the State to discriminate against an unregistered trademark, once proven valid. "There's no reason for it," he declared. Nevertheless, the State continued to press its interpretation of the Truth in Music Act. Judge Debevoise again rejected the State's position, stating, "Well, I fail to see it."

After rejecting the State's arguments, Judge Debevoise suggested that the State reconcile the Truth in Music Act with the Lanham Act by interpreting subsection (e) of the former to permit unregistered trademark holders to perform under their group names without any additional requirements. The State suddenly capitulated, effectively adopting Live Gold's interpretation of the Act. Incredulous, Live Gold objected that the State had made "a 180 degree shift in position." Judge Debevoise agreed, telling the State that the position in its brief was "contrary to what I [just] understood you to say." In response, the State explained that its previous position "was inadvertently put into the brief." The Judge then declared that the State would be "bound" by its new interpretation of the Act.

Live Gold then moved for summary disposition, contending that it "should win" because the State had "admitt[ed] the allegations" in the complaint. Judge Debevoise observed that the State's new position resolved the "basic legal problem, which was an equal protection problem, a First Amendment problem, [and] a due [page 227] process problem." He again took note of the State's "evolved" position, but saw no need to "go any further." He then announced:

We have a statement by the State of New Jersey as to what the meaning of this statute is insofar as it relates to common law trademarks, and I think we've stated it. If there's a valid common law trademark under the Lanham Act, and if whoever has possession of it can establish a right to that possession, he is to be treated — or she is to be treated in the same way as the holder of a registered trademark. Now, no necessity of — to say or give any tribute to anybody. So we have an agreement on that.

The issue before the Third Circuit was attorney's fees:

Judge Debevoise then turned to Pryor Cashman's application for attorney's fees. After hearing from Live Gold, he asked, "State, why shouldn't you be responsible for attorney's fees[?]" In response, the State replied that a fee award was inappropriate because "there was no past enforcement action" and because it had never taken any position on the Truth in Music Act. Judge Debevoise disagreed with the latter contention, reminding the State that it made a "180 degree change in position because [it] came in negating everything that [Live Gold] [was] urging, and in effect conceded [Live Gold] [was] right, and permitted everything to go forward." The State again distanced itself from its initial arguments, explaining that they were "not . . . as clear as they could have been" because the State was rushed in responding to the TRO application. The Court took the matter under advisement.

One month later, Judge Debevoise entered an order affirming the Magistrate Judge's order denying reimbursement of Live Gold's attorney's fees and granting [page 228] the State's motion to dismiss. In his order, Judge Debevoise held that Live Gold was not a prevailing party because he "did not enter a preliminary injunction or any other order on the merits of the case." He also concluded that the State voluntarily changed its position, stating that "[w]hile it may be true that this court's involvement aided in the resolution of the constitutional issues between the parties, the fact remains that the issues were not resolved as the result of a court order." In granting the State's motion to dismiss, Judge Debevoise concluded that Live Gold's claims were moot in light of the parties' agreement that the preliminary injunction hearing had resolved all of Live Gold's constitutional claims. In this appeal, Live Gold challenges only the denial of attorney's fees.

CA3 affirmed and thus no award of attorney's fees: "Because no enforceable judgment on the merits issued in this case and the State's actions that mooted the case were voluntary, Buckhannon tells us that Live Gold was not a prevailing party. Given that precedent, we affirm."

Yes, there was a dissent [ ROTH, Circuit Judge, dissenting, with whom McKEE, Chief Judge. SLOVITER and ALDISERT, Circuit Judges, join. ]

The dissent emphasized the grant of the TRO:

"When does a party 'prevail' within the meaning of 42 U.S.C. § 1988?" That is the basic question that both parties here are asking. The Majority qualifies the question by referring to certain facts of record: "Does a party 'prevail' if it obtains a temporary restraining order the day after it files suit . . . but 22 days later is denied a preliminary injunction because the opposing party's voluntary change of position moots the case?" The Majority answers "No" to the question.

I would add different facts to the basic question — and, by doing so, I arrive at a different answer. My "different" qualifying facts are clearly found in the record of this case. Moreover, my facts support a finding of "prevailing party."

I acknowledge that the qualifying facts that the Majority depends upon are reflected in the record before us. As the Majority states, there was a temporary restraining order (TRO) granted. The Majority does not mention, however, that the TRO granted a large part of the relief plaintiffs sought. [page 1187]


The court took note of the State's "evolved" position and then stated:

We have a statement by the State of New Jersey as to what the meaning of this statute is insofar as it relates to common law trademarks, and I think we've stated it. If there's a valid common law trademark under the Lanham Act, and if whoever has possession of it can establish a right to that possession, he is to be treated — or she is to be treated in the same way as the holder of a registered trademark. Now, no necessity of — to say or give any tribute to anybody. So we have an agreement on that.

(App. 388.) There was no dissent.

This conclusion by the court, that a valid common law trademark was to be recognized in the same way as a registered trademark, was the merits question put to the court by Live Gold — and the State of New Jersey was now bound in this action by this legal conclusion. I cannot imagine that the State would dare come again before the District Court and take any position contrary to the ruling of the court: "So we have an agreement on that." Nor, as I discuss later, would the State be in the position to contend in any future action before the New Jersey District Court that a valid common law trademark was not to be accorded the same recognition as a registered one. If it did so, the State would be barred by judicial estoppel.

With these facts in mind, I state my question as follows: "Does a party 'prevail' under the meaning of 42 U.S.C. § 1988 when it has obtained a TRO, granting an important part of the relief sought, and further when its opponent has been bound by the District Court to the position of law that grants complete relief on the merits of the complaint." I answer "Yes." I conclude from this factual setting, supported by the record, that Live Gold is clearly a prevailing party and, thus, deserves an award of its reasonable attorney's fees.

The dissent also noted:

The Majority contends, however, that Live Gold did not receive a judgment on the merits. The Majority does agree that the TRO Live Gold obtained constituted a judgment [page 1188] and that injunctive relief "can, under appropriate circumstances, render a party 'prevailing.'" See ante, 13 (quoting People Against Police Violence v. City of Pittsburgh (PAPV), 520 F.3d 226, 233 (3d Cir. 2008)). But, I part ways with the Majority on its conclusion that the TRO here was not a resolution on the merits.

I find it clear that the TRO obtained by Live Gold was a "judicially sanctioned change in the legal relationship" between Live Gold and the State of New Jersey. The TRO allowed Live Gold to achieve much of the benefit it sought in bringing suit and provided some relief on the merits of its claims. Before the TRO hearing, New Jersey indicated that Live Gold could be penalized if the Platters and the Coasters were not billed as "tribute" bands. After the District Court issued the TRO, the bands were permitted to perform under the names "Platters" and "Coasters" without modifiers like "tribute" or "salute to," and the State was prohibited from penalizing Live Gold for doing so.

Perhaps, the Majority balks at the straightforward conclusion that there was relief here on the merits because it fears that "consent decrees" and "judgments on the merits," or their equivalents, are the only types of outcomes that confer prevailing party status. However, as the Majority seems to concede, there is little doubt that a plaintiff who gains preliminary relief may be a prevailing party. The Supreme Court has not disturbed the longstanding rule that "'plaintiffs may be considered 'prevailing parties' for attorneys' fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit,'" Farrar v. Hobby, 506 U.S. 103, 109, 113 S. Ct. 566, 121 L. Ed. 2d 494 (1992) (quoting Hensley, 461 U.S. at 433), as long as the relief obtained provides at least some relief on the merits, see Buckhannon, 532 U.S. at 604, and consists of a judicially sanctioned change in the legal relationship of the parties, see Rhodes v. Stewart, 488 U.S. 1, 4, 109 S. Ct. 202, 102 L. Ed. 2d 1 (1988) (per curiam) (plaintiff not prevailing party where declaratory judgment was entered after his death and thus could not change his legal relationship to defendants).1

Of some interest to eBay and injunctions in patent cases:

Furthermore, the Majority's conclusion that the TRO in this case was not granted "on the merits" suffers from the failure of the Majority to offer a definition or test for when a decision is "on the merits" in a case involving the grant of preliminary relief. Rather, the Majority states merely that "the 'merits' requirement is difficult to meet in the context of TROs and preliminary injunctions," and that the "decision in PAPV provides an example of that rare situation where a merits-based determination is made at the injunction stage." Ante, 13. This conclusion is confusing in light of the Majority's acknowledgment that to obtain a TRO or preliminary injunction, the plaintiff needs to "show a likelihood of success on the merits." Id.; see also Munaf v. Geren, 553 U.S. 674, 690, 128 S. Ct. 2207, 171 L. Ed. 2d 1 (2008). One would expect that when a plaintiff makes a sufficient showing of likelihood of success on the merits to obtain "an 'extraordinary and drastic remedy,'" a remedy that is "never awarded as of right," Munaf, 533 U.S. at 689-90, this victory would frequently result in prevailing party status.3

- - - - - - - - - - - - - - Footnote 3 - - - - - - - - - - - - - - -
3 The Majority attempts to evade this common-sense conclusion by mistakenly arguing that "'likelihood' does not mean more likely that than not." Ante at 13 (citing Hackett v. Price, 381 F.3d 281, 290-91 (3d Cir. 2004).) But Hackett was not a preliminary injunction case — it was a habeas case concerning the constitutionality of jury instructions at the penalty phase of a capital case, where the question was "whether there is a reasonable likelihood that the jury has applied the challenged instruction in a way that prevents the consideration of constitutionally relevant evidence." Id. at 290. Hackett acknowledged that "[a]s one definition of 'likely' is 'having a better chance of existing or occurring than not,' Webster's Third New International Dictionary 1310 (1971), someone could plausibly argue that 'reasonable likelihood' is not a lesser standard than 'more likely than not.'" Indeed, "courts use a bewildering variety of formulations of the need for showing some likelihood of success." 11A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2948.3 (2d. ed. 2010).
[End footnote 3]

Yes, judicial estoppel is mentioned:

In addition to the judicial order here, the District Court permanently altered the legal relationship between the parties. The court's statement that the State would be "bound" by its new interpretation of the Act should bar the State from taking any inconsistent positions in future litigation because of the doctrine of judicial estoppel. Judicial estoppel is an equitable doctrine that entails "'the intrinsic ability of courts [page 239] to dismiss an offending litigant's complaint without considering the merits of the underlying claims when such dismissal is necessary to prevent a litigant from playing fast and loose with the courts.'" In re Kane, 628 F.3d 631, 638 (3d Cir. 2010) (quoting Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 319-20 (3d Cir. 2003)). "[T]he basic principle of judicial estoppel . . . is that absent any good explanation, a party should not be allowed to gain an advantage by litigation on one theory, and then seek an inconsistent advantage by pursuing an incompatible theory." Krystal Cadillac, 337 F.3d at 319 (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir. 1996)). "Though there is no rigid test for judicial estoppel, three factors inform a federal court's decision whether to apply it: there must be (1) 'irreconcilably inconsistent positions;' (2) 'adopted . . . in bad faith;' and (3) 'a showing that . . . estoppel . . . address[es] the harm and . . . no lesser sanction [is] sufficient.'" G-I Holdings, Inc. v. Reliance Ins. Co., 586 F.3d 247, 262 (3d Cir. 2009) (quoting Chao v. Roy's Constr., Inc., 517 F.3d 180, 186 n.5 (3d Cir. 2008)).

Here, once the State had reversed course and accepted that a valid common law trademark must be treated in the same way as a registered trademark, the State would be judicially estopped from adopting a contrary interpretation of the Act in any subsequent judicial proceeding and certainly in any proceeding against Live Gold. This is the significance of the District Court's statement that the State was "bound" to its new interpretation. Moreover, it showed that the District Court must have relied on this commitment by the State when the court did not enter a permanent injunction [page 1192] [**46] against the State. If the State were to assert again that the Truth in Music Act does not recognize valid common law trademarks, it would be asserting an inconsistent position in presumptive bad faith after already having conceded the wrongfulness of such an assertion. Judicial estoppel, therefore, would apply to prevent the State from perpetuating a fraud on the court. See New Hampshire, 532 U.S. at 751 (noting that a court addressing judicial estoppel should consider "whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped").

Previous IPBiz post Who actually recorded "He's a Rebel"?


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