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June 6, 1996


The opinion of the court was delivered by: KAPLAN

 LEWIS A. 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.


 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"). *fn1" 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. *fn2"

 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) *fn3" In 1970, Liebowitz formed plaintiff Advanced Engineering Research and Development Corp. ("AERDCO") for the purpose of producing EFM and other journals. *fn4" 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)

 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"). *fn5"

 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, *fn6" AERDCO served as "general editor-in-chief" and appointed and supervised the editors of the individual journals in the Computer Series. (Id. Ex. 14A PP 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 P 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 P 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) *fn7" 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 enrichment claim for lack of standing, holding that such a claim could be raised only by the buyer, Elsevier N.V., which would have been the party injured by any payment it made to MCC for property that MCC purported to sell but did not own. Judge Stanton dismissed also plaintiffs' claim for conversion, holding that no action for conversion of trademarks is recognized under the state laws potentially applicable to that claim. Noting that neither MCC nor Elsevier N.V. claimed to own the trademarks to the journals, Judge Stanton dismissed plaintiff's declaratory judgment claim on that question as against those defendants. Pergamon, however, did claim to own the trademarks and Judge Stanton therefore refused to dismiss the declaratory claim against Pergamon, concluding that questions of fact precluded summary judgment on the question whether plaintiffs or Pergamon owned the trademarks. *fn8" Liebowitz v. Maxwell, 1994 U.S. Dist. LEXIS 13342, 32 U.S.P.Q.2D (BNA) 1683 (S.D.N.Y. 1994). Pending decision of the ownership dispute, Judge Stanton enjoined plaintiffs from attempting to register the trademarks. Liebowitz v. Maxwell, No. 91 Civ. 4551 (LAK) (S.D.N.Y. Dec. 2, 1992).

 The Present Motions

 Following Judge Stanton's decisions, plaintiffs amended the complaint to seek a declaration against Pergamon, now renamed Elsevier Science, that plaintiffs rather than Elsevier Science own the journal trademarks. They seek damages for defendants' alleged false designation of origin and for breach of contract. Defendants now seek summary judgment dismissing the complaint. They argue that plaintiffs do not own the trademarks. They contend also that defendants' use of the trademarks is not an actionable false designation of origin because plaintiffs have failed sufficiently to allege likelihood of confusion. Defendants move also to dismiss plaintiffs' contract claims on a variety of grounds. Plaintiffs cross move for summary judgment in their favor on one aspect of their contract claims -- the claim that Pergamon's appointment of Heller to co-edit COMPUTERS & EDUCATION violated plaintiffs' contractual right to appoint editors of the Computer Series.


 Although couched in the language of trademark infringement and unfair competition, this case in reality is a dispute about ownership of the principal assets of a business that plaintiffs and defendants have operated jointly for over twenty-five years. The parties are now, as they have been for many years, engaged in the joint production of one set of goods, marketed under the trademarks at issue.

 The Trademark and Unfair Competition Claims

 Ownership (Count I)

 Plaintiffs seek a declaratory judgment that they own the trademarks related to C&S, EFM, and the Computer Series journals. *fn9" As the case has been framed as a dispute about the ownership of trademarks, it is useful to begin by considering what a trademark is and what it means to own a trademark.

 A trademark is, essentially, a designation of origin. Manufacturing Co. v. Trainer, 101 U.S. 51, 53, 25 L. Ed. 993 (1879). It serves to inform the public of the source of the goods. As the public comes to know a trademark, it relies on the trademark as a sign that the goods sold under that trademark are of the same quality as goods that it has purchased from that source before. Levitt Corp. v. Levitt, 593 F.2d 463, 468 (2d Cir. 1979); Marshak v. Green, 505 F. Supp. 1054, 1061 (S.D.N.Y. 1981); Revlon, Inc. v. La Maur, Inc., 157 U.S.P.Q. 602, 605 (TTAB 1968). This public association between goods of a certain quality and a trademark benefits the owner of the trademark by making it easy for consumers to find its product and it benefits consumers by allowing them more easily to find goods of a particular producer that have given them satisfaction in the past. Park ' N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 198, 83 L. Ed. 2d 582, 105 S. Ct. 658 (1985).

 These functions of trademarks have led the law to treat trademarks differently from other species of property. Because the value of a trademark arises from its association with goods of a particular quality and source, a trademark comes into existence only once it is affixed to goods in commerce. United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97-98, 63 L. Ed. 141, 39 S. Ct. 48 (1918). Likewise, a trademark cannot be transferred except in connection with a business. Id.; Capital Temporaries of Hartford Inc. v. Olsten Corp., 506 F.2d 658, 663 (2d Cir. 1974). Otherwise, the mark would cease to signify the source and quality of the goods to which it once related and the public could be confused or misled by continued use of the trademark. For the same reasons, although a trademark can be licensed, the licensor must retain some degree of control over the quality of the goods marketed under the trademark by the licensee. Dawn Donut Co., Inc. v. Hart's Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959). As all of this illustrates, whoever controls the quality of the goods marketed under the trademark is the source and therefore owns the trademark. In re Polar Music Corp., 714 F.2d 1567, 1571 (Fed Cir. 1983); Bell v. Streetwise Records, Ltd., 640 F. Supp. 575, 580-81 (D.Mass.), aff'd mem., 787 F.2d 578 (1st Cir. 1986). Thus, the answer to the question of ownership of the marks at issue here will be found by determining who controls the quality of the goods. Before determining who controls the quality of the goods, however, the Court must determine what the "goods" are. Bell, 640 F. Supp. at 581.

 What do consumers of the journals in this suit expect to receive when they subscribe to the journals? Plainly, they expect, in large part, scholarly articles in the fields covered by the journals, selected and edited in accordance with the standards to which they have become accustomed. *fn10" By way of comparison, in cases involving disputes among band members or between band members and their managers over use of the names of various musical groups, the "goods" have been defined as "that quality or characteristic for which the group is known by the public." Id. In the case of scientific journals, the quality or characteristic with which the public associates the journal must be, in essence, the nature and quality of the content of the scholarly work published in the journals. *fn11" Whoever controls the nature and quality of the journals' content, then, is the source of the goods and the owner of the journal trademarks.

 As a matter of logic, there are three possibilities. If the source is plaintiffs, then the public would be deceived by defendants' continued use of the trademarks, and plaintiffs may be entitled to an injunction against such use, If defendants are the source, then their continued publication of the journals would create no confusion, and both plaintiffs' declaratory judgment and false designation of origin claims should be dismissed. Finally, if the source is not uniquely plaintiffs or defendants, but some combination of their joint efforts, then the public would be confused by either party's independent production of the journals without the other's input, See Durango Herald, Inc. v. Riddle, 719 F. Supp. 941, 951-52 (D.Colo. 1988) (extinguishing trademark owned by defunct joint venture where former co-venturers could not agree on subsequent use of trademark). In such circumstances, neither party would be entitled to make continued use of the trademarks without the consent of the other. *fn12"

 Plaintiffs contend that they have controlled the quality of the journals' content. They note that Liebowitz has been the editor-in-chief of C&S and EFM, and AERDCO the general editor-in-chief of the Computer Series. (Pl. 3(g) Exs. 4, 7, 11D P 1 & 14A P 1) With regard to EFM, Liebowitz agreed to "maintain the quality and establish guidelines for acceptance and rejection on manuscripts." (Pl. 3(g) Ex. 4) Gilbert Richards, an employee of Pergamon Press Ltd. who dealt with Liebowitz at times on behalf of Pergamon, testified that "Pergamon relies on the reputation and knowledge of Professor Liebowitz, which is well known, to ensure that the quality of the material published in [EFM] is maintained." (Richards Dep. at 25:13-16, Pl. 3(g) Ex. 13) As for C&S, Liebowitz agreed to select appropriate manuscripts personally or in consultation with the advisory board that he assembled. (Pl. 3(g) Ex. 10) Under the 1971 Agreement, AERDCO was given "responsibility and authority" to appoint editors and advisory boards of the journals in the Computer Series. (Pl. 3(g) Ex. 11D P 4) On AERDCO's behalf, the editors, in turn, were to gather and submit manuscripts to Pergamon for publication. (Id. P 5) Affidavits of many past and current editors of the Computer Series make clear their belief that they served at Liebowitz's pleasure and acted on his behalf. (Pl. 3(g) Ex. 30) Pergamon's managing director, Michael Boswood, testified that, "We do not attempt to assess the quality of individual papers because that is what we have external editors for. There would be no point in trying to duplicate their work." (Boswood Dep. at 25:2-5, Pl. 3(g) Ex. 42) Robert Miranda, who was vice president of the Journal Division at Pergamon Press, Inc. at the time the 1971 Agreement was reached, testified that the fees Pergamon agreed to pay AERDCO were in return for AERDCO's work "to make sure that the quality control of those journals was good." (Miranda Dep. at 147:19-20, Pl. 3(g) Ex. 1)

 The evidence, however, is not entirely one-sided. Although plaintiffs contend that no one ever was appointed editor of one of the Computer Series journals without Liebowitz's approval until the disputed appointment of Heller to edit C&E, it is not clear whether Liebowitz actually appointed all of the editors or merely acquiesced in appointments made by Pergamon. Moreover, Boswood testified that Pergamon, in addition to relying on Liebowitz, assessed the quality of the journals by reviewing the frequency with which the journals are cited in other scientific publications, by monitoring the volume of manuscript submissions, and by monitoring the journals' subscription levels. (Boswood Dep. at 24:8-22, Pl. 3(g) Ex. 42) Pergamon also prepared quality control reports in which Pergamon staff called to Liebowitz's attention concerns regarding various journals. (See, e.g., 9/29/78 Report PP 9 & 12, 3/85 Report PP 12 & 14, Pl. 3(g) Ex. 59) *fn13" Thus, while its full extent is unclear, it appears that defendants had some degree of involvement in controlling the quality of the journals. *fn14"

 Defendants attempt to save their motion with the contention that ownership of a trademark confers no more than a right to ensure that the public is not confused as to the source of the goods marketed under the trademark. They argue that plaintiffs cannot show any likelihood of such confusion. Defendants point out that the journals always have carried Pergamon's own trademarks -- the name "Pergamon" and Pergamon's colophon, a Greek coin bearing the head of the goddess Athena -- in addition to the journals' distinctive titles and cover designs. This, they argue, shows that they are the source of the goods and ensures that the public is not confused as to source because Pergamon is clearly identified on the journal covers. Hence, they contend, that both plaintiffs' declaratory judgment and false designation of origin claims should be dismissed.

 In addition to assuming the point at issue, however, defendants' position mistakenly regards the public's perception as determinative of ownership. See Bell, 640 F. Supp. at 580-81. Regardless of whether the public believes Pergamon to be the source of the journals, the source of the journals is whoever controls the quality of the journals. *fn15" If that source were held to be plaintiffs, defendants' placement of their trademarks on journals marketed without plaintiffs' quality control under the journal titles and cover designs would not alter this analysis. Surely Pergamon could not lawfully market a cola-flavored soda in a red and white can marked "Coca-Cola" simply by affixing its own "Athena colophon" trademark as well. See, e.g., A.T. Cross Co. v. Jonathan Bradley Pens, Inc., 470 F.2d 689, 692 (2d Cir. 1972) (one may not escape liability for using another's trademark simply by adding one's own trademark to the goods); W. E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 662 (2d Cir. 1970) (same) Source Perrier, S.A. v. Waters of Saratoga Springs, Inc., 217 U.S.P.Q. 617, 620 (1982) (same). With or without Pergamon's trademark on the cover of the journals, consumers likely would be confused if plaintiffs and defendants independently marketed competing journals under the same titles and cover designs to the same audiences. Accordingly, defendants' motion for summary judgment dismissing Count I is denied.

 False Designation of origin (Count XI)

 In addition to seeking a declaratory judgment that they own the trademarks, plaintiffs assert that defendants are infringing their trademarks by continued use without plaintiffs' consent, in circumstances in which plaintiffs' ability to control the quality of the journals allegedly has been curtailed. This, plaintiffs say, deceives the public as to the nature of the goods being sold under the journal trademarks and violates plaintiffs' right to control the quality of goods marketed under their trademarks. Defendants have moved also for summary judgment dismissing this false designation of origin claim.

 Traditional analysis of this claim would proceed in two steps. First, plaintiffs would have to show that they possessed rights in the journal trademarks. Second, they would have to establish that the defendants adopted marks that were the same, or confusingly similar to, plaintiffs' marks with the result that consumers of the journals were likely to confuse defendants' products with plaintiffs.' See Conagra, Inc. v. Singleton, 743 F.2d 1508, 1512 (11th Cir. 1984). Defendants have failed at this stage to show that plaintiffs lack rights in the journal trademarks. *fn16" And, as the foregoing discussion demonstrates, that question is inextricably linked to the question whether use of the trademarks by defendants would create a likelihood of confusion.

 This is born out by consideration of the traditional factors applied to the question whether likelihood of confusion exists: whether the plaintiff's mark is strong, whether the defendants' mark is similar, whether the products are similar, whether the market and marketing of the products' are similar, the intent with which the defendant adopted its mark, and any evidence of actual confusion, See, e.g., Conagra, 743 F.2d at 1512; Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820, 7 L. Ed. 2d 25, 82 S. Ct. 36 (1961). In this case the marks, the products, the marketing, and the markets are not merely similar, they are identical. If one accepts plaintiffs' claims that they have controlled the quality, and therefore have been the source, of the goods, and that defendants have interfered with plaintiffs' control over the quality, then it seems inevitable that the journals currently produced with plaintiffs' impaired supervision are likely to be confused with the journals that previously had been produced under the plaintiffs' supervision, since they are overwhelmingly similar. The absence of evidence of actual confusion would not be determinative of this question. See, e.g., Lever Bros. Co., v. American Bakeries Co., 693 F.2d 251, 253 (2d Cir. 1982) (likelihood of confusion is determined with reference to each case's facts and circumstances; no one factor is preeminent or determinative); Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 687 F.2d 563, 569 (2d Cir. 1982) (lack of evidence of actual confusion held not dispositive).

 Thus, all roads through this dispute lead back to the question of ownership of the trademarks. In reality each side accuses the other of trying to steal the trademarks, and with them the entire business represented by the journals. *fn17" Plaintiffs and defendants formed a business relationship, the formal nature of which is not specified in their agreements. That business successfully created valuable goodwill, but the parties never addressed the question of to whom such goodwill would belong. Each side now lays claim to the goodwill represented by the journal trademarks. In light of the existence of genuine questions of material fact as to who controlled the ...

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