The opinion of the court was delivered by: LEWIS A. KAPLAN
The issue in this case is whether Harper still has the right to use the Dun & Bradstreet name in the title pursuant to a license executed in connection with its purchase of Crowell. D&B contends that Harper's right to use the name expired with the termination of the contract between Crowell and one C. Colburn Hardy, the author of the Guide at the time of the Crowell acquisition, or, at the latest, when Hardy stopped writing the Guide. It asserts that Harper's continued use of the Dun & Bradstreet name therefore constitutes trademark infringement, false designation of origin in violation of the Lanham Act, and unfair competition. D&B seeks only an injunction against future use of the Dun & Bradstreet name and ancillary equitable relief.
Harper, for its part, asserts that the license authorizes it to use the Dun & Bradstreet name in the title indefinitely.
The action has been submitted to the Court for trial on a stipulated record consisting of affidavits, deposition transcripts and documentary evidence with the understanding that the Court is empowered to make findings of fact as if it had taken oral testimony. This constitutes the Court's findings of fact and conclusions of law.
The Guide began at least as early as the mid-1960s, when it was called Guide to $ Your Investments$ or $ Your Investments$ . It was published originally by Pilot Publishing and distributed by Hawthorne Publishing. (Metcalf Aff. Ex. D at 19) McGraw-Hill took over the book in the early 1970s and apparently published it until the rights were acquired by Crowell in the early 1970s. (Id. 20, 23-25) At or shortly after Crowell's acquisition, Crowell entered into a contract with Hardy to revise or update the book. (Id. 26-33; DX
V) The arrangement contemplated annual revisions.
The moving force behind Crowell's acquisition appears to have been Paul Fargis of Crowell, who had been familiar with the book during his employment by Hawthorne in the 1960s and persuaded Crowell's president, Lewis W. Gillenson, to acquire the rights. (Id. 10, 25-26)
At about the same time that Crowell acquired the rights to the Guide and signed Hardy to revise it each year, D&B acquired Crowell (Buchanan Aff. P 5) and encouraged Crowell to use the Dun & Bradstreet name to enhance Crowell's sales. So the name was changed to The Dun & Bradstreet Guide to $ Your Investments$ . (Metcalf Aff. Ex. D at 27-28) Interestingly, D&B was not involved in investments at the time the change in title was made. "The idea, according to Fargis, "was to take a respected authoritative name to give the book some more authority." (Id. at 28) Hence, beginning with the 1974 edition, the Guide was revised each year by Hardy and published under a couple of slightly different titles, all of which included the Dun & Bradstreet name.
On March 7, 1977, Fargis, on behalf of Crowell, offered Hardy a new contract, signed by Hardy a week later, which governed future editions of the Guide (the "1977 Hardy Contract"). (Metcalf Aff. Ex. E at tab 8) It obligated Hardy to furnish a revised manuscript each year. It contained no provision for termination. There was no indication that Crowell might dispense with Hardy's services, although Hardy granted Crowell all of his rights in and to the material, and the contract provided that the work would be copyrighted in Crowell's name.
Harper's Acquisition of Crowell
"Dun-Donnelly or one of its affiliated companies will retain all rights to the 'Dun-Donnelley' and 'Dun & Bradstreet' names. Where the contractual arrangements contemplate reprints or revisions of books containing such names in their imprints or titles, the Purchaser [Harper] will have the right to continue to use the Dun-Donnelley and Dun & Bradstreet names, provided, however, that Dun-Donnelley shall have the right to approve any such revisions, such approval not to be unreasonably withheld. Absent such contractual provisions, the Purchaser will have the right to sell out all such books in print but will eliminate such names and imprints when the books are reprinted or revised." (Emphasis added)
None of those who actually negotiated the transaction testified concerning the meaning of the italicized language.
Harper, however, acknowledges that the "contractual arrangements" referred to in the LOI were contracts between Crowell and the authors of the works. (Metcalf Aff. Ex. G at 14) Thus, the LOI seems to have indicated that Crowell's right to use the Dun & Bradstreet name in book titles after the acquisition would be limited to selling off existing stocks of such books and publishing revisions of such books to the extent then-existing contracts with authors contemplated such revisions. Put another way, Crowell was permitted to use the name in the titles of revisions of existing works where Crowell already was bound to authors for preparation of the revisions, but not otherwise.
The LOI, however, explicitly stated that nothing contained therein was to be binding upon either party absent execution of a definitive written agreement, which was to include the matters set forth in the LOI as well as other provisions described in more general terms. (Id. P 12) Thus, the LOI manifestly contemplated further negotiations between the parties.
The Acquisition Agreement and License
The transaction contemplated by the LOI ultimately took place. D&B and Harper entered into a Stock Purchase Agreement, dated as of April 25, 1977, pursuant to which Harper acquired from D&B all of the issued and outstanding shares of Crowell and Conklin Book Center, Inc. for $ 9.2 million subject to certain post-closing adjustments. (Buchanan Aff. Ex. C)
At the same time, D&B entered into a license with Crowell, drafted initially by Buchanan (Metcalf Aff. Ex. E at 51 & tabs 10, 12), for the use by Crowell of the Dun & Bradstreet name (the "License Agreement"). (Id. Ex. D) It contains provisions central to this action. Paragraph 1 provided as follows:
"1.(a) [D&B] hereby grants to Crowell, at no cost to Crowell, the right to continue the use of the 'Dun & Bradstreet' name in the titles of, and to continue the use of the 'Dun-Donnelley' imprint on, such of Crowell's book [sic] as (i) are currently in print and currently have said names in the titles thereof or imprint thereon and (ii) are in the process of being printed and published as of the Closing Date . . . until the inventory of any such book bearing the 'Dun & Bradstreet' name in the title or the 'Dun-Donnelley' imprint has been exhausted. A list of the books to which the license hereinabove granted shall apply, together with copies of any contracts in existence covering the publishing of said books, is attached as Schedule A hereto.
"(b) [D&B] hereby assigns to Crowell, effective the Closing Date, all of [D&B]'s rights in and to the books listed in Schedule A hereto (other than the 'Dun & Bradstreet Handbook of Credit and Collection'), including [D&B]'s rights to reprint and/or revise said books and to use the Dun & Bradstreet name in the titles thereof; provided, however, that Crowell shall not have the right to use the 'Dun & Bradstreet' name in the title of, nor the right to use the 'Dun-Donnelley' imprint on, any revisions of said books unless [D&B] shall first have approved said revisions, such approval not to be unreasonably withheld. With respect to the 'Dun & Bradstreet Handbook of Credit and Collection,' [D&B] hereby assigns to Crowell, effective the Closing Date, all of [D&B]'s rights in and to ...