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. e du/thir dc ir c uit_2001/25Filed February 9, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No: 99-5614

LARRY MARSHAK,

Appellant

v.

FAYE TREADWELL; TREADWELL DRIFTERS, INC; THE DRIFTERS, INC.; BOWEN AGENCY LTD/ADMIRAL

TALENT

On Appeal from the United States District Court for the District of New Jersey

Dist. Ct. No. 95-cv-03794 District Court Judge: The Honorable Nicholas H. Pol itan

Argued: January 13, 2000

Before: ALITO and BARRY, Cir cuit Judges, and ALDISERT, Senior Circuit Judge

(Opinion Filed: February 9, 2001)Stephen B. Judlowe, Esq. (argued)

Lisa M. Ferri, Esq.
Eve Kunen, Esq. Vincent A. Sireci, Esq. Hopgood, Calimafde, Kalil & Judlowe, LLP

60 East 42nd Street New York, New York 10165

Kenneth D. McPherson, Jr., Esq. Mark J. Ingber, Esq. Waters, McPherson, McNeill 300 Lighting Way P.O. Box 1560, 7th Floor Secaucus, New Jersey 07096 Attorneys for Appellant

James P. Flynn, Esq. (argued) Epstein Becker & Green, P.C. Gateway Two

12th Floor Newark, New Jersey 07102

Joshua Levine

Law Office of Ira Levine

0-99 Plaza Road

P.O. Box 2777 Fair Lawn, New Jersey 07410 Attorneys for Appellees

OPINION OF THE COURT

ALITO, Circuit Judge:

This is an appeal from orders enter ed by the Distr ict Court after a trial concerning the right to use the mark "The Drifters" for a singing group. Larry Marshak, who acquired a federally registered service mark for "T he Drifters" name in 1978, brought this action against Faye Treadwell and others, claiming that they were infri nging his

mark. The defendants contended that Marshak's feder ally registered mark had been procur ed by fraud and tha t Marshak was infringing senior common-law rights. Af ter a

2trial and post-trial motions, the District Court or dered that

Marshak's federally registered mark be canceled, permanently enjoined Marshak from using the mark in commerce, and required an accounting of all profits received by Marshak since he began using the mark. Marshak then took this appeal. We affir m in part a nd dismiss in part for lack of appellate jurisdiction.

I.

The Drifters were one of the classic popular singin g groups of the 1950s and early 1960s. Among their we llknown hits were "Under the Boardwalk," "On Broadway ,"

and "Save the Last Dance for Me."

The Drifters first appeared in 1953 and came under the management of George Treadwell the following year. From then until his death in 1967, George T readwell man aged the group through The Drifters, Inc., a New York corporation that he formed. George T readwell hired and paid salaries to the members of the group, who chan ged continually over the years. He also scheduled the g r oup's performances, negotiated their r ecording contracts , and chose their music and arrangements.

In 1959, George Treadwell r eleased all of the then current members of the group and signed the former members of a group called the Five Crowns to perfor m as The Drifters. The new members included Charlie Thom as, Elsbeary Hobbs, and Dock Green. Like all other memb ers of the Drifters, Thomas, Hobbs, and Green signed contr acts that provided in pertinent part as follows:

The Artist agrees that the name 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 Th e 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 Dr ifters; and he further acknowledges that the name, T he Drifters, is a valuable property and any vio lation of this

3paragraph could not be adequately compensate d by

money damages and he therefore agr ees that the employer shall be entitled to an injunction in any Court of competent jurisdiction to enjoin an y violation or threatened violation of the contract by t he Artist.

App. at 1264.

When George Treadwell died, his wife, Faye Treadwel l, whom he married in 1955, became the sole shar ehold er of The Drifters, Inc., and she took over the managemen t of the group. She later formed Treadwell's Drifters, Inc., a New Jersey corporation, and all of the assets and contr actual rights of The Drifters, Inc. were transferr ed to t he new corporation.

By the time of George Treadwell's death, Hobbs and Green had already left the group. Charlie Thomas le ft shortly thereafter, but other members continued to perform under Treadwell's direction. By the late 1960s, how ever, the popularity of "The Drifters" and similar gr oups ha d waned in this country, and Treadwell focused her efforts on Europe, where the group remained popular. After 197 0, the Drifters made few live appearances in this country, but the group's classic recordings continued to be played o n the radio, and Atlantic Records continued to pay r oyal ties to The Drifters, Inc. or Treadwell's Drifters, Inc. Se e App. at

720.

Larry Marshak's involvement with The Drifters began in 1969. CBS radio had recently changed fr om a contemporary to an "oldies" format. T o generate enthusiasm for its format change, CBS appr oached R ock Magazine and proposed a partnership to r eunite old singing groups to perform live concerts. Marshak, who was a n editor at Rock Magazine, was given the task of reun iting some of these groups for the first revival concert at the New York Academy of Music. Among the groups that Marsha k attempted to reunite was "The Drifters." Marshak co ntacted several former members of the group, including Thom as, Hobbs, and Green, all of whom agreed to perform for Marshak. The revival concerts were a success, and t he reunited members agreed to continue per forming und er "The Drifters" name. In 1972, Thomas, Hobbs, and Gr een signed an exclusive management contract with Marsha k.

4Soon after the revival group began per forming, Mar shak

received a letter from Treadwell's attorney asserti ng that Marshak was infringing her right to use the gr oup' s name. App. at 244. The letter pointed out that the for me r members of the group had signed contracts with The Drifters, Inc. in which they had given up any right to use the group name. Id. Despite this war ning, Marshak persisted in his efforts to promote and market his group.

In 1971, Treadwell brought an action against Marsha k in state court in New York. Treadwell's request for a preliminary injunction to prevent Marshak and his g roup from using "The Drifters" name was denied, and the suit was eventually dismissed in 1973 because Tr eadwell "willfully defaulted and failed to answer interr og atories propounded by defendants." App. at 1245. At the tri al in the current case, Treadwell testified that she and her group stopped performing in the United States in part bec ause she did not have the financial resour ces to defend her mark against Marshak through extended litigation. See Ap p. at

598.

Marshak, in contrast, benefitted from a r enewed in terest

in "The Drifters" in the United States that had res ulted from a wave of nostalgia for the early days of rock and roll. Throughout the 1970s, Marshak's group made recordin gs, appeared on television, and gave live per formances

.

Marshak began to litigate against other groups that used the name "The Drifters" or a variant. In 1976, Mars hak learned that "The Platters," another r evived 1950s singing group, had been successful in preventing others fro m using their name by registering their service mark, and M arshak urged Thomas, Hobbs, and Green to do the same. Mars hak convinced the trio that if they agreed to assign th eir rights to the name to him, he would continue as their mana ger and prevent others groups from using"The Drifters" name. In December 1976, Thomas, Hobbs, and Green, acting as a partnership, filed an application with the United S tates Patent & Trademark Office (PTO) to r egister "The D rifters" as a service mark for a singing group, and they ass igned their rights to Marshak. See App. at 1267. In their registration application, Thomas, Hobbs, and Gr een each

attested that

5no other person, firm, corporation, or assoc iation, to

the best of his knowledge and belief, has th e right to

use such mark in commerce either in the iden tical

form thereof or in such near resemblance the reto as to be likely, when applied to the goods of such other person, to cause confusion, or to cause mist ake, or

deceive.

See 15 U.S.C. S 1051 (1976).

Marshak filed the present action in 1995, following the publication of Faye Treadwell's book, Save the Last Dance for Me, in which Treadwell claimed to be the sole o wner of the Drifters mark. See App. at 875. Named as defend ants were Faye Treadwell, The Drifters, Inc., Treadwell' s Drifters, Inc., and a booking company. Marshak alleged that t he defendants had infringed his mark and had thr eaten ed to continue to do so by offering Tr eadwell's book for sale and by engaging a group to perform as The Drifters. He asserted a claim under Section 32 of the Lanham Act, 15 U.S. C. S 1114(a), for infringement of his federally r egis tered mark, as well as a claim under Section 43(a), 15 U.S.C.S 1125(a),

and under the statutes of New York for violation of his common-law rights. He sought declaratory and injunc tive relief and treble and punitive damages.

In their answer, the defendants claimed that Treadw ell's Drifters had a superior common-law right to the mar k, and they asserted as an affirmative defense that Marsha k's federal registration had been procur ed by fraud. A s a counterclaim, Treadwell's Drifters r epeated the al legation of fraudulent procurement. In addition, alleging that Marshak had infringed and continued to infringe its common- law right to the mark, Treadwell's Drifters asserted a claim under Section 43(a) of the Lanham Act and a state-l aw claim for unfair competition. The counterclaim soug ht, among other things, cancellation of Marshak's mark, declaratory and injunctive relief, and an accountin g of Marshak's profits.

The case was tried before a jury, which found that Marshak or his assignors had perpetrated a fraud on the PTO in 1976. See App. at 1562. In accor dance with this finding, the District Court ordered the PTO to canc el

6Marshak's federal registration. The jury also found

,

however, that Treadwell and her corporation had abandoned their common-law right to "The Drifters" mark by 1976. Moreover, the jury found that Marshak had established protectable common-law rights in the na me by

that time.

On cross post-trial motions, the District Court uph eld the jury's verdict regarding Marshak's fraud on the PTO , but the Court vacated the jury verdict insofar as it fo und that Treadwell had abandoned her rights in 1976. Instead , the Court held that the continuous stream of r oyalty r evenues collected by Treadwell since the 1960s was sufficie nt to

defeat Marshak's claim of abandonment. See Marshak v. Treadwell, 58 F. Supp. 2d 551 (D.N.J. 1999). After additional briefing regarding appr opriate remedies , the Court molded the judgment to reflect that Marshak h ad infringed Treadwell's Drifters' common law rights. The Court then permanently enjoined Marshak fr om furth er use of the "The Drifters" mark in commerce and ordered an accounting of Marshak's profits for the entir e per iod of his infringement -- viz., from 1970 to 1998. Marshak ap pealed.

II.

We begin by examining our jurisdiction to r eview t he various orders challenged on appeal. Under 28 U.S.C

. S 1292(a)(1), we plainly have jurisdiction to revie w the permanent injunction prohibiting Marshak from using The Drifters mark. Under Santana Products, Inc. v. Comp ression Polymers, Inc., 8 F.3d 152 (3d Cir . 1993), the ord er requiring cancellation of Marshak's federally r egi stered mark, standing alone, is not appealable under S 129 2(a)(1), but Santana Products did not r each the question wh ether an order of cancellation may be reviewed pursuant t o S 1292(a)(1) when a district court also issues an i njunction against the use of the mark, as occurred her e. 8 F .3d at

155 & n.3.

When we have jurisdiction to review an or der relat ing to an injunction under S 1292(a)(1), our jurisdiction extends to matters inextricably linked to the appealable or de r. See S.E.C. v. Black, 163 F.3d 188, 194 (3d Cir. 1998). In this

7case, the ground on which cancellation of the feder ally

registered mark was ordered-- fraud on the PTO -- w as also asserted by Treadwell as a defense to Marshak' s claim that she was infringing his incontestable mark. All of the arguments raised by Marshak on appeal in connection with the cancellation order apply as well to that defens e. Under these circumstances, the link between the or der of cancellation and the injunctive order is close enou gh to permit review of the order of cancellation at this time. See Wrist-Rocket Mfg. Co. v. Saunders Archery Co., 516 F.2d 846, 849 (8th Cir. 1975) (court has jurisdiction un der 28 U.S.C. S 1292(a)(1), to examine the merits of order granting a permanent injunction and ordering the cancellatio n of registration).

By contrast, we lack jurisdiction to review the por tion of the District Court order requiring an accounting of Marshak's profits. Marshak contends that we have jurisdiction under the final order rule of 28 U.S.C . S 1291, but we do not agree. A final order is one that "lea ves nothing for the court to do but execute the judgmen t." Catlin v. United States, 324 U.S. 229, 233 (1945). A finding of liability that does not also specify damages is not a final decision. See, e.g., Liberty Mut. Ins. Co. v. Wetze l, 424 U.S. 737, 744 (1976); Sun Shipbldg. & Dry Dock Co. v. Be nefits Rev. Bd., 535 F.2d 758, 760 (3d Cir . 1976). Althou gh the practical finality rule, also known as the For gay- Conrad doctrine, permits appellate review of an order that is not technically final but resolves all issues that are not purely ministerial, see Forgay v. Conrad, 47 U.S. (6 How.) 201, 204-05 (1848); Cromaglass Corp. v. Fer m, 500 F.2d 601, 605 (3d Cir. 1974) (en banc), the accounting at iss ue in this

case does not come within that rule.

Our decision in Apex Fountain Sales, Inc. v. Kleinf eld, 27 F.3d 931 (3d Cir. 1994), a trademark infringement c ase, is apposite. In Apex Fountain Sales, the District Cour t entered a contempt order that, among other things, or dered an accounting of the net profits realized from sale of the infringing items. We held that the or der was not r eviewable under the Forgay Conrad doctrine because the determination of net profits would not be easily re ached.

See id. at 936.

8In Goodman v. Lee, 988 F.2d 619 (5th Cir. 1993), th e

Fifth Circuit addressed circumstances similar to th ose with which we are confronted. In that case, Shirley Good man sued the heirs of her former recor ding partner, Au drey Lee, for copyright ownership rights to their 1956 hit so ng, "Let the Good Times Roll." The jury found in favor of Go odman, and the District Court ordered the r egistrar of co pyrights to correct the records of the copyright office to refl ect Goodman's ownership. Furthermore, the Court ordered

Lee's heirs to account to Goodman for one-half of a ll royalties paid over the 29-year period between the time of the song's release and the date of the judgment. Th e District Court did not reduce the award to a certai n sum.

On appeal, the Fifth Circuit acknowledged a line of cases in which appeal had been permitted prior to afinal accounting because the accounting was viewed as"pur ely `ministerial' and/or `mechanical.' " Id. at 626 (ci ting Winston Network v. Indiana Harbor Belt R. Co., 944 F .2d 13 51 (7th Cir. 1991); Parks v. Pavkovic, 753 F .2d 1397 (7th Cir. 1985)). However, the Goodman Court concluded that t he accounting in the case before it would not be purel y ministerial:

The award contemplates identifying royalties paid on one particular song to songwriter now dead a nd

thereafter to his heirs over an almost thirt y (30) year period. . . . Clearly, the amount to be divi ded is not known, was not identified in the extensive d istrict court experience and must be reconstructed r equiring factual determinations by the district court

.

Id. at 627. Therefore, the Court held that the judg ment was not within the Forgay-Conrad rule and was not an appealable final order. Id.

A similar result was reached in Zwack v. Kraus Bros & Co., 237 F.2d 255 (2d Cir. 1956). There, a Hungaria n firm sought injunctive relief against its United States distributor to enforce its trademark, as well as damages and an accounting of profits. The District Court held the distributor liable but referred the matter to a spe cial master for an accounting of profits. The Second Cir cuit h eld that the reference to the special master to determine da mages rendered the entire order interlocutory. See id. at 261.

9In this case, as in the cases noted above, the acco unting

cannot reasonably be characterized as mer ely minis terial.

The District Court ordered Marshak "to account to Treadwell for the profits he ear ned in each year, beginning with the first act of infringement in 1970 and endi ng with the first day of trial testimony in this case." App . at 87. As in Apex Fountain Sales, the parties her e have a lo ng history of contentious litigation, and there is a substanti al likelihood that "one or both parties will dispute t he ultimate amount of damages awarded, leading to a second appe al. This would be contrary to the federal judiciary's g eneral policy against piecemeal litigation." Apex Fountain Sales, 27

F.3d at 935.

We are aware that the District Court, in denying Treadwell's request that a special master be appoin ted, expressed the opinion that "the accounting will not be complicated or exceptional," App. at 1687 n.2, but that statement was made in a notably differ ent context. An accounting may seem simple enough to persuade a Dis trict Court that the appointment of a special master is n ot necessary and still be far from ministerial in the sense relevant here. We must ther efore dismiss Marshak's appeal insofar as it contests the portion of the district court order requiring an accounting.1

III.

Turning to the merits of the issues over which we h ave jurisdiction, we first consider Marshak's ar gument s relating to Treadwell's fraudulent procur ement defense and

counterclaim.

___________________________________________________ ______________

1. We are thus unable to expr ess our view as to wh ether any accounting should have been limited to the period of the appr opriate statute of limitations. If on remand the District Court goes f orward with the accounting, consideration of the propriety of that remedy will have to await the completion of the accounting and the entr y of a final order. We recognize that this procedure may r esult in a cons iderable waste of time and resources in connection with the accounting, bu t the scope of our appellate jurisdiction leaves no alternative.

10A.

Marshak argues that the fraudulent procur ement def ense and counterclaim are time-barred. Relying chiefly o n our decision in Beauty Time, Inc. v. VU Skin Sys., Inc. , 118 F.3d 140, 143 (3d Cir. 1997), Marshak maintains that the Lanham Act does not specify the time within which a claim of fraudulent procurement may be asserted, that it is therefore appropriate to borr ow the most analogous state statute of limitations, and that under the most ana logous

state statute -- either the New York or the New Jer sey sixyear statute of limitations for actions sounding in fraud -- Treadwell's claim is barred. W e reject this argume nt based on the plain language of the Lanham Act.

Treadwell's counterclaim was br ought under Section 14 of the Lanham Act, 15 U.S.C. S 1064, which specifie s in detail the time limits for petitioning to cancel a mark on various grounds. This provision states in relevant part:

A petition to cancel a registration of a mar k, stating the grounds relied upon, may, upon payment of th e prescribed fee, be filed as follows by any p erson who believes that he is or will be damaged . . . by the registration of a mark on the principal r eg ister established by this chapter . . .

* * *

(1) Within five years from the date of the r egistration of the mark under this chapter.

(2) Within five years from the date of publi cation under section 1062(c) of this title of a mar k registered under the Act of March 3, 1881, o r the Act of February 20, 1905.

(3) At any time if the register ed mark beco mes the generic name for the goods or services, or a portion thereof, for which it is registered, or has been abandoned, or its registration was obtained fraudulently or contrary to the provisions o f section 1054 of this title or of subsection (a), (b) , or (c) of section 1052 of this title for a registratio n under this chapter.

11Lanham Act S 14, 15 U.S.C. S 1064 (emphasis added).

The first step in interpreting a statute is to dete rmine "whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co., 51 9 U.S. 337, 340 (1997). See also, e.g., Michael C. v. Radn or Township Sch. Dist., 202 F.3d 642, 648-49 (3d Cir. 2000); Deane v. Pocono Med. Ctr., 142 F .3d 138, 146 (3d C ir. 1998) (en banc). "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used , and the

broader context of the statute as a whole." Robinso n, 519 U.S. at 341. Where we find that the statutory langu age has a clear meaning, we need not look further. Id. at 3 40.

Here, the meaning of the phrase "at any time" in Se ction 14 (3) is clear even if that particular subsection is viewed in isolation. Moreover, the contrast between the five- year time limits imposed in subsections (1) and (2) and the u se of the phrase "at any time" in subsection (3) r einforces the point that the language of subsection (3) means what it s ays: a petition falling within subsection (3), including a petition seeking cancellation based on fraud, is not subject to any time limit but may be filed "at any time." W e note that the Supreme Court has recognized that the pr edecessor of the current Section 14(3) "allows cancellation of an incontestable mark at any time . . . if it was obta ined fraudulently." Park `n Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 195 (1985) (emphasis added).2

We recognize that Section 14(3) itself applies to a petition filed with the Patent and Trademark Office, rather than a claim asserted in court, but Section 37 of the Lanh am Act, 15 U.S.C. S 1119,3 gives federal courts concurrent authority

___________________________________________________ ______________

2. We also note that the PTO has consistently held that the phrase "at any time" precludes a laches defense to a cancellat ion action premised on fraudulent procurement. See Harjo v. Pro Footbal l, Inc., 30 U.S.P.Q.2d 1828, 1831 (T.T.A.B. 1994); TBC Corp. v. Grand Prix Ltd., 12 U.S.P.Q.2d 1311, 1313 (T.T.A.B. 1989); Bausch & Lomb, Inc. v. Leupold & Stevens, Inc., 1 U.S.P.Q.2d 1497, 1499-1500 (T .T.A.B. 1986)

.

3. Section 37 provides:

12to cancel registered marks when the validity of the mark is

called into question in a judicial proceeding. See Ditri v.

Coldwell Banker Residential Affiliates, Inc., 954 F .2d 869, 873 (3d Cir. 1992); Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp., 257 F.2d 485, 491 (3d Cir . 1958). As we explained in Ditri, "[a]lthough a petition to the P atent and Trademarks Office is the primary means of securing a

cancellation, the district court has concurr ent po wer to

order cancellation as well for the obvious r eason that an entire controversy may thus be expediently resolved in one forum." Id. at 873. We see no r eason why Congress would have wanted to allow a petition for cancellation un der

Section 14(3) to be filed with the PTO "at any time " but to subject an identical request, when entertained by a District Court pursuant to its concurrent power under Sectio n 37, to a state statute of limitations. Such a regime wo uld prevent a case like the one before us fr om being

"expediently resolved in one forum." Id.

The language of the Lanham Act also makes it clear that

there is no time limit on the assertion of fraudule nt procurement as a defense to an infringement claim b rought by the holder of a mark that has become incontestab le. Under Section 15 of the Lanham Act, 15 U.S.C. S 106 5, an otherwise incontestable mark may be attacked "on a ground for which application to cancel may befiled at any time under paragraphs (3) and (5) of section 1064 o f this

title." Accordingly, the language of the Lanham Act makes

it clear that a claim for cancellation of a mark ba sed on fraudulent procurement and a defense to an otherwis e

___________________________________________________ ______________

In any action involving a registered mark th e court may determine the right to registration, order the cancell ation of registrations,

and otherwise rectify the register with r espect to the registrations of any party to the action. Decrees and orders shal l be certified by the court to the Director, who shall make approp riate entry upon the records of the Patent and Trademark Office, and shall be controlled thereby.

15 U.S.C. S 1119.

13incontestable mark on a similar ground may be asser ted at

any time.4

The reason for this rule is quite simple--the inter est vindicated by Section 14 is not just the injury to the challenging party, but the integrity of the r egist er. Where the interest at issue is the integrity of the feder al register, a statute of limitations should not operate to frus trate that interest. See Harjo v. Pro Football, Inc., 30 U.S.P .Q.2d 1828, 1831 (T.T.A.B. 1994) ("The Boar d has held that the equitable defenses of laches and estoppel ar e not available against claims of fraud and abandonment because the r e exists a broader interest--a `public policy' intere st--in addition to a private interest in removing from the register those registrations procured or maintained by fraud and those registrations for marks that have been abando ned."); TBC Corp. v. Grand Prix Ltd., 12 U.S.P.Q.2d 1311, 1 313 (T.T.A.B. 1989) ("Where the pr oposed ground for cancellation is abandonment, equitable defenses sho uld be unavailable for the same reason they have been held unavailable when the ground asserted is descriptive ness or fraud. It is in the public interest to r emove aban doned registrations from the register . We therefore hold that the

___________________________________________________ ______________

4. The origins of the "at any time" language of Sec tion 14(3) support this conclusion. This language derives from Section 13 o f the Trademark Act of 1905, 15 U.S.C. S 93. That section pr ovided tha t "whenever any person shall deem himself injured by the r egistrat ion of a trade-mark in the Patent Office he may at any time apply to the C ommissioner of Patents to cancel the registration." (emphasis adde d). The accepted meaning of the phrase "at any time" under the 1905 Act was that it excluded the defense of laches in a cancellation pr oceeding. See DwinellWright Co. v. National Fruit Prod. Co., 129 F.2d 84 8, 853 (1st Cir. 1942); White House Milk Prods. Co. v. Dwinell-W right Co., 111 F.2d 490, 493 (C.C.P.A. 1940); Cluett, Peabody & Co. v. Hartogens is, 41 F.2d 94, 97 (C.C.P.A. 1930). The language in the 1905 Act, in t urn, was derived from a line of Supreme Court precedent holding that lach es would not bar an injunction against future infringement, but only an accounting for past profits. See Saxlehner v. Eisner & Mendelson Co., 1 79 U.S. 19 (1900); Menendez v. Holt, 128 U.S. 514 (1888); McLean v. Fl eming, 96 U.S. (6 Otto.) 245 (1877). It is telling that although the Lanham Act now specifically provides that an infringement action i s subject to equitable defenses, see 15 U.S.C. S 1125, the statute continu es to provide that a mark is vulnerable to a cancellation proceeding"at any time."

14prior registration defense is unavailable in a proc eeding

where the issue is abandonment."). Accor dingly, we hold that Treadwell's fraudulent procur ement defense an d

counterclaim were not time-barred.

Marshak's only attempt to address the language of t he Lanham Act permitting fraudulent procur ement to be asserted in these contexts "at any time" appears in his reply brief, where he argues that this language mer ely reflects the fact that the grounds for cancellation covered by Section 14(3), such as a mark's becoming generic ,"are of a type in which the right to bring cancellation may arise `at any time', i.e., some years (very possibly more that the five years of Section 1064(1)) after trademark r eg istration." Reply Br. at 4 (emphasis in original). Marshak sugg ests that once a plaintiff has become aware of the necessary predicate for bringing a cancellation pr oceeding, the plaintiff should be required to do so within the li mitations period specified by the most analogous state statut e.

Marshak's argument cannot be reconciled with the pl ain language of Section 14(3), which, as noted, pr ovid es unambiguously that a petition seeking cancellation based on fraudulent procurement "may . . . befiled" "at a ny time." Marshak would read Section 14(3) as essentially a t olling provision, but the drafters of this provision would surely have selected different language if that is what th ey had intended. For all these reasons, we hold that T rea dwell's

counterclaim and defense are not time-barr ed.

This holding is entirely consistent with our decisi on in Beauty Time, on which Marshak relies. In Beauty Tim e, count XI of the complaint asserted a claim under Se ction 38 of the Lanham Act, 15 U.S.C. S 1120, which provi des as

follows:

Any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation, or al or in writing, or by any false means, shall be lia ble in a civil action by any person injured thereby for any damages sustained in consequence thereof.

A claim for damages brought under Section 38 is not governed by any of the time limits set out in Secti on 14(3)

15or any other provision of the Act specifying a limi tations

period, and therefore we held that the plaintiff 's Section 38 claim for fraud was subject to Pennsylvania's two-y ear statute of limitations for actions based on fraud. 118 F.3d at 143-49. We did not mention Section 14(3) or sugg est that a request for cancellation pursuant to that section is subject to a state statute of limitations. Thus, Be auty Time does not support Marshak's argument her e.5

B.

Marshak argues that Treadwell's fraudulent procurem ent defense and counterclaim were barr ed by principles of collateral estoppel. In the District Court, Marshak relied on several prior adjudications, but on appeal he focus es on Marshak v. Sheppard, 666 F.Supp. 590 (S.D.N.Y. 1987 ), a Lanham Act action brought by Marshak against, among

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5. Marshak also relies (see Appellant's Br . at 33, Reply Br. at 2) on the statement in 5 J. Thomas McCarthy, McCarthy on T ra demarks and Unfair Competition S 31:59, at 31-108 (4th ed. 2000 ), that "[w]hen fraud is used as a basis for challenging the validity of an incontestable registration, the claim must be asserted within the relevant statute of limitations." On its face, this statement supports Marshak's argument, but we decline to follow it in the particular conte xt here, i.e., where Section 14(3) applies. The treatise does not attemp t to explain how this sweeping statement can be reconciled with the langu age of Section 14(3), and elsewhere the treatise recognizes that a reques t to cancel based on fraud may be filed at any time. 5 McCarthy, supra, S 31:80. Furthermore, the authority cited by the treatise in support of this statement, Calzaturificio Rangoni S.p.A. v. United States Shoe Corp., 868 F.Supp. 1414 (S.D.N.Y 1994), is unconvincing. Borro wing a state statute of limitations, the District Court in that case r e lied solely on a prior District Court decision that had applied a state st atute to a false advertising claim brought under Section 43(a) of th e Lanham Act. See 868 F.Supp. at 1420 (relying on PepsiCo., Inc. v. D unlop Tire & Rubber Corp., 578 F.Supp. 196, 198 (S.D.N.Y . 1984)). A fa lse advertising claim under Section 43(a), however, is quite dif ferent f rom a request for cancellation under Section 14(3). Assuming that it is appropriate to apply a state statute to such a Section 43(a) claim , it does not follow

that all other Lanham Act claims or defenses relating to fraud must be treated similarly even if the language of the Act e xpressly addresses the question of the time within which those claims or d efense may be

asserted.

16others, a performer who appeared with a group calle d "Rick

Sheppard and the Drifters."6 In that case, Sheppard unsuccessfully sought cancellation of Marshak's r e gistered mark on grounds very similar to those asserted by Treadwell in this case, and Marshak contends that Treadwell is bound by the judgment in that case. Ma rshak acknowledges that Treadwell was not a party in Mars hak v. Sheppard, but he maintains that she is bound on the ground that she wielded a "laboring oar" on behalf of the defendants. Appellant's Br. at 49.

The principle on which Marshak relies is aptly stat ed as follows in the Restatement (Second) of JudgmentsS 3 9:

A person who is not a party to an action but who controls or substantially participates in th e control of the presentation on behalf of a party is bou nd by the determination of issues decided as though he were a party.

Comment c. adds:

To have control of litigation requir es that a person have effective choice as to the legal theories an d proofs to be advanced in behalf of the party to the actio n. He must also have control over the opportunity to ob tain review.

Cf. Collins v. E.I. DuPont de Nemours & Co., 34 F.3 d 172, 176 (3d Cir. 1994) (New Jersey law).

Here, Marshak has not pointed to any dir ect eviden ce that Treadwell exercised any contr ol over the prio r litigation. Indeed, his brief notes only two concr ete facts that are relevant: Treadwell testified in the prior case and had an interest in the outcome (in the sense that s he would have benefitted if Marshak's federally registered m ark had

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6. The section of Marshak's brief concerning collat eral estoppel (Appellant's Br. at 48-49) does not r efer to the d ismissal of Treadwell's 1971 action in New York state court. As noted, that case was dismissed because Treadwell did not comply with discovery. Th e District Court held that, under New York law, such a dismissal was with out prejudice. See Marshak, 58 F. Supp. 2d at 562 n.17 (citing Maitlan d v. Trojan Elec. & Mach. Co., 480 N.E.2d 736, 737 (N.Y. 1985)). Becaus e Marshak does not rely on this dismissal as a basis for his collatera l estoppel argument, we

need not consider that issue here.

17been ordered canceled). Appellant's Br . at 49. Wit hout

more, these facts are plainly insufficient to permi t a reasonable inference that she exer cised any contro l over litigation decisions or strategy. Marshak's collate ral estoppel argument must therefore be rejected.

C.

Marshak contends that the jury's finding of fraud w as based on an erroneous jury instruction, which state d that fraud on the PTO could be shown by proof that the applicants "should have known" about T readwell's s uperior right to "The Drifters" name. Although we agr ee wi th Marshak that this instruction was erroneous, we are

convinced that the error was harmless.

Most of the District Court's lengthy instruction on fraudulent intent is unobjectionable,7 but at seve ral points, the Court told the jury that "[t]he defense of frau d will turn upon whether you believe that the persons who r egi stered the mark knew or reasonably should have known that someone else had legal rights to the name `The Drif ters.' " App. at 1482-83 (emphasis added). Marshak objects t hat the "should have known" language misstates the natu re of the PTO oath and the requisite measure of proof.

At the time when Thomas, Hobbs, and Green submitted their declaration, an applicant was requir ed to st ate that

no other person, firm, corporation, or assoc iation, to the best of his knowledge and belief, has th e right to

use such mark in commerce either in the iden tical

form thereof or in such near resemblance the reto as to be likely, when applied to the goods of such other person, to cause confusion, or to cause mist ake, or

deceive.

15 U.S.C. S 1051 (1976) (emphasis added). Thus, app licants attested only to their own subjective knowledge and belief.

To demonstrate that a federal registration was fraudulently procured, therefor e, a challenging pa rty must

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7. Much of the charge is set forth in the District Court's opinion. See Marshak, 58 F. Supp. 2d at 566-67.

18adduce evidence that the registrant actually knew o r

believed that someone else had a right to the mark. See Metro Traffic Control, Inc. v. Shadow Network Inc., 104 F.3d 336, 340 (Fed. Cir. 1997); see also 5 McCarthy supr a, S 31:76. Accordingly the instruction given by the D istrict Court was not entirely correct.8

The error, however, was har mless because " `it is highly probable that [it] did not affect the outcome of th e case.' " West v. Philadelphia Elec. Co., 45 F .3d 744, 752 ( 3d Cir. 1995). The "should have known" language used by the

District Court could have affected the ver dict onl y if a properly instructed jury would have found that the applicants had an actual but unreasonable belief th at no one else had a right to use "The Drifters" name. Ho wever, based on the evidence in this case, we are convince d that a properly instructed jury would not have made such a finding. Marshak has not called to our attention an y appreciable evidence that the applicants had a sinc ere belief that no one else had a right to the mark, an d there was very strong evidence to the contrary. Marshak's cross-

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8. In support of its instruction, the District Cour t relied on G.H. Mumm & CIE v. Desnoes & Geddes, Ltd., 917 F.2d 1292, 129 6 (Fed. Cir. 1990), and Torres v. Cantine Torresella S.r.l., 808 F.2d 4 6, 49 (Fed. Cir. 1986). In both of those cases, the Court stated that an ap plicant knowingly attempts to mislead the PTO if the applicant files a renewal application stating that its mark is currently in use in inters tate commerce but the applicant "knows or should know" that this is not t rue. Neither case involved a jury instruction, and we do not interpr et those cases as taking the position that proof of subjective bad faith is unnecessary in order to prove fraud on the PTO. On the contrary, T orres em phasizes that an applicant must act "knowingly" in order to commit s uch a fraud. 808 F.2d at 48. We understand these opinions to mean si mply that in the particular context presented there -- where the rep resentation related to a matter about which the applicant almost certainly had subjective knowledge, i.e., whether the applicant's own compan y was using the mark in commerce -- proof that the applicant should have known was ample to prove actual knowledge. We note that the F ederal Circuit has subsequently held that proof of actual knowledge or belief is necessary in the context of fraudulent procurement.See Metro Traffic Control, 104

F.3d at 340. We also note that even T readwell's br ief seems to give G.H. Mumm and Torres a similarlynarrow interpretation. S ee Appellee's Br. at

48-49 & n. 12.

19examination, in which excerpts of Thomas' depositio n were

read, essentially produced the admission that Georg e Treadwell had been "the true owner of the Drifters' name," that George Treadwell "had rights to the name," and that Thomas had simply been "an employee." App. 470. Similarly, when Marshak was asked whether a member of "The Drifters" during the George T readwell era "wo uld . . . have had the right to use the name Drifters," Marsh ak responded that "[t]he only person who has the right to the name is the person that develops it and keeps it in the public's eye." App. 510. Marshak also testified tha t a member of "The Drifters" was simply an "employee" a nd that an employee of a group that provides entertain ment cannot "go around saying he is [the gr oup]." See A pp. 1662. In view of the evidence, we are convinced that the mistake in the jury instruction was harmless.

D.

Marshak's final argument concerning fraudulent procurement is that there was insufficient evidence to support the jury's finding. The jury's ver dict mus t be sustained if it is rationally supported, see Starce ski v. Westinghouse Elec. Corp., 54 F.3d 1089, 1098 (3d Ci r. 1995), and the verdict here has ample support. In a ddition to the direct evidence just mentioned r egarding th e applicants' and Marshak's subjective knowledge and belief,

there was substantial circumstantial evidence from which such knowledge or belief could be inferred. As note d, the applicants had signed contracts acknowledging that the name "The Drifters" belonged exclusively to their e mployer and that they had no right to that name. Under thos e contracts, if they left the group, they could not e ven publicize the fact that they had been members.

In arguing that the evidence was insufficient, Mars hak relies on the 1971 ruling of the New York state cou rt denying Treadwell's request for a pr eliminary inju nction and opining that Treadwell had not established that Marshak or the members of his group "ha[d] been inf ringing upon [her] good name and good will." App. 724. This was certainly evidence for the jury to consider, but it is

20insufficient to overturn the jury's ver dict.9 We t hus hold

that fraud in the procurement of the federal mark w as properly proven and that cancellation was justified

.

IV.

We now consider Marshak's arguments r elating to Treadwell's claim that Marshak was infringing upon her superior common-law right. As previously noted, the

counterclaim of Treadwell's Drifters asserted a cla im under Section 43(a) of the Lanham Act, 15 U.S.C. S 1125(a ), based on Marshak's alleged infringement of their common l aw right to "The Drifters" mark. In order to prove thi s claim, the counterclaimant was required to show that "(1) the mark [was] valid and legally protectable; (2) the m ark [was] owned by the plaintiff; and (3) [Marshak's] use of the mark to identify goods or services [was] likely to creat e confusion concerning the origin of the goods or services." Fi sons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 (3d Cir. 1994). The jury did not find that the counterc laimant had established these elements. On the contrary, th e jury found that Treadwell and her companies had abandone d their common law rights and that Marshak had not us ed "The Drifters" name in such a way as to misr eprese nt the source of his goods or services or to falsely sugge st a

connection between those services and Tr eadwell's Drifters. App. at 1562. The District Court, however, explicit ly granted judgment as a matter of law in favor of the counterclaimant on the issue of abandonment and, in effect, did the same thing with respect to the enti re Section

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9. The evidence regarding the 1971 state court ruli ng does not undermine our conclusion that the error in the jury instruction discussed in part III.C, supra, was har mless. The jury instruction error related to the question of subjective knowledge or belief, but the

evidence concerning the 1971 state court ruling is evidence of objective reasonableness, not the applicants' subjective stat e of mind. As the District Court noted, "Marshak has cited no testimo ny or other evidence that he or his assignors subjectively believed that the dismissal of Treadwell's 1971 lawsuit constituted afinal adjudic ation of their trademark rights," 58 F.Supp. 2d at 562, and thus e stablished that Treadwell had no right to the use of"The Drifters" name.

2143(a) counterclaim. On appeal, Marshak challenges t his

disposition on several grounds.

A.

Marshak contends that the District Court err ed in entering judgment as a matter of law against him on the issue of abandonment.10 W e do not agree.

Section 45 of the Lanham Act, 15 U.S.C. S 1127, pro vides
that "[a] mark shall be deemed abandoned . . . [w]h en its

use has been discontinued with intent not to r esum e use."

"To establish the defense of abandonment it is nece ssary to show not only acts indicating a practical abandonme nt, but

an actual intent to abandon." Saxlehner v. Eisner & Mendelson Co., 179 U.S. 19, 31 (1900). "Intent not to resume may be inferred from cir cumstances," 15 U.S .C. S 1127, but "abandonment, being in the nature of a forfeiture, must be strictly proved." United States Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 139 (3d Cir. 19 81).

Thus, in order to show that there was an abandonmen t of the common law rights originally acquired by Geo rge Treadwell and The Drifters, Inc., Marshak bore the burden

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10. Even if the jury had sustained Marshak's federa l registration, it would still be necessary to consider the question o f abandonment. Even if a junior user's mark has attained incontestable status, such status does not cut off the rights of a senior user . See Natural Footware Ltd.

v. Hart, Schnaffner & Marx, 760 F.2d 1383, 1395 (3d Ci r. 1985) ("[A] federal registrant is still subject to the defense of a pri or user of the mark who has established a market in specific areas notwiths tanding that senior user's failure to register.");see also 815 Tonawand a Street Corp.v. Fay's Drug Co., 842 F.2d 643, 646 (2d Cir . 1988) ("[T]he plain meaning of the S 1065 exception is that if a party has acquir ed c ommon-law trademark rights continuing since before the publication of t he federal registration, then to that extent the registration will not be in contestable.") (citations omitted)); Cuban Cigar Brands N.V. v. Upmann Int'l, Inc., 457 F. Supp. 1090, 1100 (S.D.N.Y. 1978) ("[D]efendant's marks ar e not incontestable as against that of plaintiff for, since defendant's use infringes plaintiff 's valid common law rights obtained long prior to defe ndant's registration, it has no shield of incontestability in a suit by p laintiff to enforce

that mark."). Since Marshak has used "The Drifters" cont inuously since 1970, his ability to enjoin Treadwell's use depends on wh ether she abandoned

the mark.22of "strickly" proving (a) that use of The Drifters mark had

been discontinued in the United States1 1 and (b) t hat the owner of the common law rights had the actual inten t to

abandon the mark. Marshak could have established a prima facie case of abandonment, however, by provin g nonuse in this country for two consecutive years. Lanh am Act S 45, 15 U.S.C. 1127 (1994).12

Here, the District Court found that ther e was no abandonment as a matter of law because "the origina l Drifters recordings have been played on the radio a nd sold in record stores, without interruption, for the pas t 40 years." Marshak, 58 F. Supp. 2d at 575. The Distric t Court adopted the reasoning of The Kingsmen v. K-Tel Int' l, Ltd., 557 F. Supp. 178, 183 (S.D.N.Y. 1983), in which the court held that a mark designating a disbanded singing gr oup remained in use because the group's r ecordings wer e played and the group continued to collect r oyaltie s. The

court wrote:

We find that defendants have failed to show either non- use or intent to abandon. Even though plaint if fs disbanded their group in 1967 and ceased r e cording new material, there is no evidence suggestin g that they failed to use the name Kingsmen during the p eriod from 1967 to the present to promote their pr eviously recorded albums. Moreover, the fact that the se individuals continue to receive royalties fo r Kingsmen recordings flies in the face of any suggesti on of intent to abandon use of the name Kingsmen. These p laintif fs have no more abandoned their right to pr ote ct the name of Kingsmen than have The Beatles, The Supremes or any other group that has disband ed and ceased performing and recor ding, but contin ues to collect royalties from the sale of pr evious ly recorded material. We must reject defendants' content ions that

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11. For purposes of trademark rights in the United States, "use" means use in the United States, not in other nations. See Rivard v. Linville,

133 F.3d 1446, 1448-49 (Fed. Cir. 1998).

12. In 1994, the statute was amended to pr ovide th at three, not two, years of nonuse were needed to make out a prima fac ie case of

abandonment.

23the name Kingsmen has been abandoned to the public

domain.

Id.

We concur with this reasoning, and we also agree wi th the District Court that it mandates the entry of ju dgment as a matter of law against Marshak. As the District Court put it, "[a] successful musical group does not aban don its mark unless there is proof that the owner ceased to commercially exploit the mark's secondary meaning i n the music industry." Marshak, 58 F. Supp. 2d at 575; se e also Robi v. Reed, 173 F.3d 736 (9th Cir . 1999); HEC En ters., Ltd. v. Deep Purple, Inc., 213 U.S.P.Q. 991 (C.D. C al. 1980).

Marshak bore the burden of proving non-use and actu al intent to abandon. United States Jaycees v. Philade lphia Jaycees, 639 F.2d at 139. Tr eadwell's Drifters wer e entitled to judgment as a matter of law on the issue of abandonment because, even giving Marshak the benefi t of all reasonable inferences, Bar na v. City of Perth Amboy, 42 F.3d 809, 813 n.5 (3d Cir. 1994), the evidence was

insufficient to establish those elements. Motter v. Everest & Jennings, Inc., 883 F.2d 1223, 1228-29 (3d Cir. 198 9).

Marshak did not prove non-use, i.e., that the class ic recordings of "The Drifters" wer e not played and t hat the resulting royalties were not paid. On the contrary, the parties stipulated that "The Drifters" r ecords and albums continue to be played and sold in the United States and that many of their songs have now been recor ded on compact disk and re-released. App. at 110. In addit ion, Treadwell testified that The Drifters, Inc. and Tre adwell Drifters, Inc. have continuously received r oyaltie s from

Atlantic Records for the sale of Drifters r ecords in the United States. App. at 720. Likewise, Marshak faile d to prove an actual intent to abandon. The continuous u se of the mark in connection with the commercial exploita tion of the group's recordings in this country gave rise to a strong

inference of an intent not to abandon the mark.

In arguing that judgment as a matter of law was improper, Marshak relies on the following evidence. First, Treadwell dropped her 1971 action against Marshak i n New York state court after the court denied her applica tion for a

24preliminary injunction and issued an unfavorable op inion.

Second, Treadwell did not oppose the federal regist ration of Marshak's mark or previously seek to have it cancel ed. Third, Treadwell failed to challenge numerous viola tions of "The Drifters" name, whereas Marshak stopped those uses through legal action. Fourth, Treadwell left for En gland in 1972. Fifth, Treadwell's English r ecording contrac ts did not provide for distribution in the United States. Howe ver, once it is recognized that the commercial exploitation o f classic Drifters recordings in this country constitutes use , it is apparent that the evidence that Marshak cites is

insufficient to show either the non-use and or the actual intent to abandon that are necessary for afinding o f

abandonment.

B.

Marshak argues that the District Court err ed in ho lding that he infringed the common-law rights held by Treadwell's Drifters. We conclude, however, that Tr eadwell's Drifters were entitled to judgment as a matter of l aw on their infringement claim.

As previously noted, Treadwell's Drifters were requ ired to show (1) that their mark was valid and legally pr o tectable; (2) that they owned the mark; and (3) that Marshak' s use of the mark to identify his group was likely to cre ate confusion concerning their origin. Fisons Horticult ure, Inc., 30 F.3d at 472. In view of our holding r egarding abandonment, there can be no question r egarding el ements one and two, and we do not understand Marshak to co ntest those elements on any other ground.

With regard to the third element, Marshak argues th at the District Court should not have disturbed the ju ry's finding that Marshak had not used "The Drifters" na me in such a way as to misrepresent the sour ce of his go ods or services or to falsely suggest a connection between those services and Treadwell's Drifters. App. at 1562. We agree with the District Court, however, that a r easonabl e factfinder could not fail to find a likelihood of c onfusion on

the facts of this case. As the District Court wr ot e, "Marshak's group performs under the name `The Drift ers'

25and sings the same hit songs that were r ecorded an d made

famous by the original Drifters in the fifties and sixties. There is surely a likelihood of confusion because t he public is misled to believe that Marshak's singers and the famous Drifters records originate from the same source." A pp. at 1681-82. Although infringement is generally a quest ion for the jury, the evidence here mandated judgment for t he counterclaimant and justified the entry of the perm anent injunction barring Marshak from using the Drifters mark. We have considered all of Marshak's ar guments, and we find no basis for reversal of the portions of the D istrict Court's orders that are properly before us.

V.

For these reasons, we affirm the or ders of the Dis trict Court insofar as they order cancellation of Marshak 's federal registration and permanently enjoin Marshak from using The Drifters name in commerce. We dismiss the appeal insofar as it contests the order for an acco unting of profits.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

26