United States District Court, Southern District of New York
October 19, 2000
PILATES, INC., PLAINTIFF,
CURRENT CONCEPTS, INC. AND KENNETH ENDELMAN, DEFENDANTS.
The opinion of the court was delivered by: Miriam Goldman Cedarbaum, United States District Judge.
Plaintiff Pilates, Inc. sues defendants Current Concepts, Inc. and
Kenneth Endelman for infringing two of plaintiff's registered trademarks
in the word PILATES. One mark is registered for certain types of
equipment used in the "Pilates method" of exercise. The other mark is
registered for use in connection with exercise instruction services.
Plaintiff seeks only declaratory and injunctive relief. A bench trial was
held from June 5 to June 26, 2000.
Because defendants did not contest infringement, the central issue at
trial was the validity of plaintiff's marks. Defendants asserted, in
essence, six defenses to plaintiff's claim of infringement: (1) the marks
are generic; (2) the marks were abandoned; (3) the marks were improperly
assigned in gross; (4) the marks were registered fraudulently; (5)
defendants are prior users of the marks; and (6) plaintiff's claims are
barred by the doctrine of "unclean hands."
After considering all the evidence, observing the demeanor of the
witnesses, and considering the plausibility and credibility of the
testimony, I conclude that defendants have proven by clear and convincing
evidence that: (1) both of the marks at issue are generic; (2) if there
ever was a PILATES equipment trademark, it had been abandoned long before
plaintiff applied for its registration, and its registration was obtained
by plaintiff through fraud; and (3) the exercise instruction service mark
was invalidly assigned in gross. The following shall constitute my
findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
I. The Parties
Plaintiff Pilates, Inc. is a Montana corporation with offices at 890
Broadway and 2121 Broadway in New York City. Plaintiff's business includes
providing instruction in the Pilates method of exercise, training Pilates
instructors, and selling Pilates equipment and merchandise. Pilates, Inc.
is the registered holder of the trademarks at issue in this suit. Sean
Gallagher is the President and sole shareholder of Pilates, Inc.
Defendant Current Concepts, Inc. is a California corporation with its
main office in Sacramento, California.*fn1 Defendant Kenneth Endelman is
President of Current Concepts and owns 50% of its shares.
II. The Trademarks
Two trademarks are at issue in this case.*fn2 PILATES, U.S.
1,405,304, was registered by Aris Isotoner Gloves, Inc. on August 12,
1986 for "exercise instruction services" (the "PILATES service mark").
PILATES, Registration No. 1,907,447, was registered by plaintiff on
July 25, 1995 for "exercise equipment, namely reformers, exercise
chairs, trapeze tables, resistance exercise units and spring
actuated exercise units" (the "PILATES equipment mark").*fn3
It is undisputed that the PILATES service mark is incontestable. See
15 U.S.C. § 1065. The PILATES equipment mark is contestable. Both marks
are in full force and effect on the Principal Register.
III. Events During the Lifetime of Joseph Pilates
Joseph Humbertus Pilates was born in Germany in 1880. Starting in or
around 1914, when Mr. Pilates was interned in England with other German
nationals during World War I, he developed a method of conditioning
incorporating specific exercises designed to strengthen the entire body,
with emphasis on the lower back and abdominal region, while at the same
time enhancing flexibility. Mr. Pilates developed numerous pieces of
equipment for use in connection with his method of conditioning.
Most of these pieces of equipment utilize springs to provide some form
of resistance against which the person performing the exercises can work.
The most prominent among these pieces of equipment are the "reformer,"
the "Cadillac" (also known as a "trap table"), the "Wunda Chair," and
various "barrels," one of which is referred to as a "spine corrector."
In the mid-1920s, Mr. Pilates and his wife, Clara, emigrated to the
United States. They moved into an apartment at 939 Eighth Avenue in New
York City and opened an adjoining studio at which they provided training
in the method of exercise Mr. Pilates had developed. During Mr. Pilates'
lifetime, his method of conditioning, which he sometimes called
"contrology," gained a positive reputation in the New York City dance
In 1941, Romana Kryzanowska, then a dancer in George Balanchine's dance
company, was referred to Mr. and Mrs. Pilates for rehabilitation of an
ankle injury. At that time, the studio had a glass door which read, in
black ink, "Contrology — Art of Control — Pilates Studio
— Joseph Pilates," with each of these four terms on descending
levels. Kryzanowska trained and studied with Mr. and Mrs. Pilates until
1944, when she married and moved to Peru. Kryzanowska lived in Peru until
Between 1927 and 1951, Mr. Pilates obtained patents for several of the
pieces of exercise equipment he invented. He placed metal plaques on his
equipment to identify the name of the apparatus and the patent number.
For example, one plaque identified the PILATES UNIVERSAL REFORMER as made
by PILATES STUDIOS OF CONTROLOGY.
After 1959, the studio became less active because the condition of the
building deteriorated and the neighborhood became more dangerous.
Throughout his lifetime, Mr. Pilates promoted his method of exercise and
attempted to increase its use by the public. For example, as Kryzanowska
related, "[Mr. Pilates] wanted all colleges mainly to have this exercise
program because he thoroughly believed in it and thought it would be
good for the human race and even children in schools." Mr. and Mrs.
Pilates never did anything to prevent others from using their name to
describe what they taught.
In 1965, Mr. Pilates opened a studio in the beauty salon at Henri
Bendel, a department store in New York City, at which his method of
conditioning was taught. Naja Corey, who had been trained by Mr.
Pilates, was the instructor at the Bendel facility until 1972. Corey was
succeeded by Kathleen Grant, who had also been trained by Mr. Pilates.
The Bendel store directory included a sign for "Pilates Studios." Grant
worked at the Bendel facility until it closed in 1988.
While Mr. Pilates was alive, he taught a number of students who went on
to become Pilates instructors themselves. Among these students were Bruce
King, Carola Trier, Bob Steed, Naja Corey, Kathy Grant, Ron Fletcher, and
Eve Gentry. Mr. Pilates died in 1967. He did not leave a will.
IV. 1967 to 1984:939 Studio Corporation and Pilates Studio, Inc.
After Mr. Pilates' death, Clara Pilates continued to teach at and run
the studio until 1970. Mrs. Pilates was represented by John Steel, an
attorney, beginning in or around 1970 and continuing until her death.
Steel was also a Pilates student and close friend of Mr. and Mrs.
Pilates. On March 3, 1970, Steel formed a New York corporation called 939
Studio Corporation ("939 Studio") whose purpose was to own and operate
the studio at which Mr. and Mrs. Pilates had taught and provide support
for Mrs. Pilates. In September 1971, Steel formed a limited partnership
between 939 Studio and approximately 20 investors who wished to keep the
939 Studio was the general partner and the investors were limited
partners. The limited partnership purchased the assets of her studio from
Mrs. Pilates. At some point during this period, Kryzanowska agreed to take
over the responsibilities of running the studio. In or around 1972, the
studio moved from 939 Eighth Avenue to 29 West 56th Street in New York
City. After the move, the studio gained more clients.
On June 4, 1973, 939 Studio changed its name to Pilates Studio, Inc.
(the "first Pilates Studio, Inc.")*fn4 That same year, Kryzanowska
became a 50% shareholder of the first Pilates Studio, Inc. The remaining
shares were owned by the limited partners of 939 Studio. Clara Pilates
died in 1976.
The State University of New York at Purchase ("SUNY Purchase")
maintained a facility from 1975 through 1990 at which students received
instruction in the Pilates method. SUNY Purchase never paid anyone for
its use of the name "Pilates Studio at SUNY Purchase."
During the 1970s, Kryzanowska facilitated the sale of Pilates equipment
by a manufacturer named Donald Gratz to some of her students. Kryzanowska
forwarded orders and payments from the buyers to Gratz, and Gratz would
then ship or directly deliver the equipment to the buyers. Kryzanowska
sometimes added an extra amount to the price as compensation for her
participation in the transactions. Buyers sometimes ordered directly from
Gratz rather than through Kryzanowska. The first Pilates Studio, Inc.
never manufactured equipment itself, nor did it license anyone to
manufacture equipment. Before her death, Clara Pilates gave Mr. Pilates'
original equipment blueprints to Ron Fletcher for Fletcher's use in
having equipment built in California.
Also starting during the 1970s, Kryzanowska trained people to teach the
Pilates method, although there was no formal certification program.
Sometimes Kryzanowska provided a letter of recommendation
to students who intended to teach Pilates on their own.
The first Pilates Studio, Inc. initiated a few lawsuits and sent some
cease and desist letters in the early 1980s. During the 1970s, defendant
Endelman became involved in manufacturing Pilates equipment. Prior to
1975, Endelman conducted a furniture business located in Los Angeles,
California. Current Concepts first existed as a furniture design
business and was established in or around 1974.
Endelman first learned of the Pilates method and of the equipment Mr.
Pilates had invented in late 1975 or early 1976 when a client asked him
to manufacture a reformer. In 1976 or 1977, Current Concepts started to
manufacture equipment for use with the Pilates method. Current Concepts
moved to Sacramento, California in 1980 and has operated there
continuously since that time.
V. 1984 to 1986: Aris Isotoner
In 1984, the first Pilates Studio Inc.'s assets were sold to Aris
Isotoner Gloves, Inc. ("Aris Isotoner"). Aris Isotoner's then-president
and CEO, Lari Stanton, was a student of Kryzanowska's who wanted the
studio to survive despite its financial difficulties.
Aris Isotoner bought all of the studio's assets in an agreement dated
August 14, 1984. A separate assignment of the studio's trademarks was
executed on September 24, 1984. The assignment from the first Pilates
Studio, Inc. to Aris Isotoner provided for the transfer of the service
marks PILATES and PILATES STUDIO and the trademark MAGIC CIRCLE, along
with the trade names PILATES, PILATES STUDIO and PILATES STUDIOS. The
assignment did not mention a trademark for equipment.
Kryzanowska continued to teach at the studio as an employee of Aris
Isotoner. She continued to give letters of recommendation to students
whom she trained to teach Pilates.
During these years, Aris Isotoner listed its exercise business in the
Manhattan telephone directory as "Isotoner Fitness Center." This name was
also used in advertisements for the studio.
Aris Isotoner never manufactured Pilates equipment or provided a
license to anyone to manufacture such equipment. Kryzanowska continued
to facilitate the sale of equipment while working for Aris Isotoner.
Aris Isotoner sent some cease and desist letters and settled a
trademark infringement lawsuit relating to the PILATES marks during this
period. Aris Isotoner never licensed any of the PILATES marks. Because
the studio was losing money and Lari Stanton was unable adequately to
manage both the studio and Aris Isotoner's other business
simultaneously, Stanton decided to sell the assets of the studio.
VI. 1986 to 1992: Healite
A. 1986 to 1989: Healite Operates The Pilates Studio
On December 30, 1986, Aris Isotoner transferred all assets related to
its Pilates business to Healite, Inc. for $15,000. Healite Inc. was
wholly-owned and operated by Wee-Tai Hom, a student of Kryzanowska. A
separate assignment of the trademarks was executed on the same day. The
assignment named the same marks as those described in the assignment to
Aris Isotoner. No equipment trademark was mentioned.
Healite moved the Pilates Studio to a new location at 160 East 56th
Street in New York City. On January 6, 1987, Healite incorporated a new
Pilates Studio, Inc. The second Pilates Studio, Inc. was a wholly-owned
subsidiary of Healite. Kryzanowska continued to teach at the Pilates
Kryzanowska and Hom implemented a more formalized training program for
Pilates teachers. They issued certificates to instructors who had
completed the Pilates teacher training program. Hom sold some Magic
Circles to individuals in California. He also placed at least one
magazine advertisement on behalf of his business.
B. 1989 to 1992: Closing Of The Studio
Healite was unable to make the Pilates Studio into a financial success.
The studio was losing money and could not pay its rent. On April 1, 1989,
Healite's financial difficulties resulted in the closing of the East 56th
Street studio, Healite's only studio. On that day, upon their arrival at
the studio the studio's instructors and clients found the studio closed
and the door locked. Wee-Tai Hom immediately sent the studio's clients a
letter referring them to Body Art, Sichel Chiropractic, and The Gym.*fn5
The letter was printed on Body Art stationery, although Hom signed as
President of Pilates Studio, Inc. Hom created a schedule for the
instructors who used to work at the East 56th Street location, assigning
them to specific times at either Body Art or The Gym. Hom received one or
two dollars as a referral fee for each client served at the three
locations. Hom distributed some cards advertising the three locations.
Hom also distributed in person and by mail a number of fliers
advertising a piece of equipment called the "Pilates Exerciser" and
promoting the Pilates method. The fliers refer to Healite and the
Pilates Studio. It is not clear when these materials were distributed.
Hom sold some equipment and books in July of 1989. Hom also placed some
advertisements in Dance magazine during 1990 and 1991. The advertisements
included a toll-free telephone number which rang in Hom's home. Hom was
billed personally for these advertisements.
Used equipment from the East 56th Street Studio was distributed among
three locations in New York City: Sichel Chiropractic, Body Art Exercise
Ltd. ("Body Art"), and The Gym.
Healite did not open another facility at which the Pilates method was
taught. On May 10, 1991, the owner of The Gym, Dragutin Mehandzic
("Drago"), paid Hom $3000 for all of the equipment Hom had moved there
when the East 56th Street studio closed in 1989. Between 1989 and 1991,
Drago had paid Hom one to two dollars for each customer Hom referred to
The Gym. The Gym never had any licensing agreement or other payment
arrangement with Healite or the second Pilates Studio, Inc. Hom engaged
in a number of sporadic Pilates-related activities on his own behalf. He
gave a lecture at the International Ballet Festival in Jackson,
Mississippi in 1990 and he taught a Pilates course at New York
University in 1990.
Hom certified a student in February, 1990, signing as "president" of an
unspecified business. He approached a few people regarding selling the
Pilates marks, including defendants. As a substitute for returning $300,
he volunteered a one-year license to Amy and Rachel Taylor to use the
Pilates name in connection with their studio in Colorado.
Neither Healite nor the second Pilates Studio, Inc. filed any federal
income tax returns from 1988 through 1993. After April 1, 1989,
Kryzanowska taught Pilates at The Gym, where she continues to teach
today. She also taught at Body Art for a few months.
During this period, Sean Gallagher, who would later form plaintiff
Pilates, Inc., was engaged in a separate Pilates-oriented business. In
1990, Gallagher and Steve Giordano formed Synergy Exercises Systems
("Synergy"). Gallagher and Giordano also established "The Pilates Guild"
in or around 1990. Synergy provided Pilates exercise instruction
services, set up studios to teach the Pilates method, and sold Pilates
equipment. Synergy did not have a license to use the words "Pilates,"
"Pilates method," or "Pilates-based."
VII. 1992 to Present: Plaintiff Purchases And Polices The PILATES Marks
Sean Gallagher acquired the trademark registrations for the PILATES
service mark and PILATES STUDIO for $17,000 under an asset purchase
agreement effective August 3, 1992.*fn6 The agreement did not mention a
trademark for equipment. Moreover, Healite represented in the agreement
that "[e]xcept for the [marks listed], Healite presently owns no other
mark containing the word `Pilates' or referencing `Pilates' in any
Gallagher also acquired the studio's archives, which included
photographs, business records, books, films, and other documents dating
back as early as the 1940s. Gallagher destroyed eighty percent of the
papers he received. Gallagher also acquired client lists, which he threw
away within a year.
Gallagher incorporated Pilates, Inc. in 1992. In June 1994, Gallagher
assigned the Pilates marks to Pilates, Inc. On September 25, 1992,
Gallagher applied for a trademark registration for PILATES for use on
exercise equipment. The application was denied in March 1994. Gallagher
eventually obtained registration for a PILATES equipment mark.
In 1993, plaintiff began to develop a formal teacher certification
program headed by Kryzanowska. Kryzanowska was, and is, an independent
contractor. Plaintiff grants certified instructors a license to use its
PILATES marks in specified fashions. Plaintiff currently has license
agreements with approximately 450 instructors.
Shortly after purchasing the PILATES marks, plaintiff had an arrangement
with defendants under which defendants manufactured Pilates equipment and
sold it to plaintiff for resale. The arrangement was of short duration.
Starting in 1996 or 1997, plaintiff entered into a licensing agreement
with Stamina Products. Under this agreement, Stamina sells Pilates
equipment through mass market outlets, including the QVC network, to
consumers who have not been trained in the Pilates method. Stamina's
best-selling Pilates product has been the "Pilates Performer." The
majority of plaintiff's revenue comes from its licensing agreement with
Plaintiff has vigorously enforced the PILATES marks since it acquired
them. Plaintiff has sent hundreds of cease and desist letters to
purported infringers and has sued for trademark infringement in several
other cases. One of those actions resulted in a settlement between
plaintiff and the Joseph H. Pilates Foundation for Physical Fitness, a
non-profit corporation operated by Endelman. Plaintiff currently
operates studios in New York, Chicago, Atlanta, Philadelphia, Seattle,
VIII. History Of This Action
Plaintiff filed a complaint against Current Concepts and Endelman in
1996 alleging three claims of trademark infringement and unfair
competition and seeking declaratory and injunctive relief. Plaintiff
filed an amended complaint later that year adding a claim for false
designation of origin.
Defendants asserted numerous affirmative defenses and four counterclaims
in their answer and named as counterclaim defendants Sean Gallagher, The
Pilates Studio, The Pilates Guild, and Performing Arts Physical Therapy.
Defendants also filed a class action complaint against those same entities
seeking cancellation of plaintiff's marks and unspecified damages.
Plaintiff did not oppose class certification. I certified the class.
decertified the class with the consent of counsel for both sides
for reasons stated on the record at the final pretrial conference.
(Transcript of Proceedings, May 31, 2000, at 2-10.) I also dismissed all
of defendants' counterclaims for lack of supplemental jurisdiction.*fn7
I allowed defendants to maintain on their own behalf the class action
claims seeking cancellation of plaintiff's marks pursuant to
15 U.S.C. § 1119.*fn8 An eleven day bench trial was held in June, 2000.
I. Burden of Proof
The parties are in agreement that defendants bear the burden of proving
each of the defenses asserted in this action. The parties also agree that
defendants' fraud defense must be proven by clear and convincing
evidence. See Orient Express Trading Co. v. Federated Dep't Stores, Inc.,
842 F.2d 650, 653 (2d Cir. 1988); Ushodaya Enter., Ltd. v. V.R.S. Int'l,
Inc., 63 F. Supp.2d 329, 335 (S.D.N.Y. 1999). However, the parties are
in disagreement concerning the proper standard of proof for defendants'
genericness and abandonment defenses. Plaintiff argues that these
defenses must be proven by clear and convincing evidence, while
defendants argue that a preponderance of the evidence standard is
In a handful of cases, the Court of Appeals has explained that a higher
standard of proof is applicable to a defense of abandonment. See Saratoga
Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980)
("[A]bandonment, being a forfeiture of a property interest, should be
strictly proved, and the statutory aid to such proof should be narrowly
construed.") (citation omitted); Warner Bros. Inc. v. Gay Toys, Inc.,
724 F.2d 327, 334 (2d Cir. 1983) (requiring a "high burden of proof" to show
abandonment of a trademark). A number of district courts have interpreted
these cases as holding that a clear and convincing standard is applicable
to the defense of abandonment. See McKay v. Mad Murphy's, Inc.,
899 F. Supp. 872, 878 n. 5 (D.Conn. 1995) (explaining that, with respect
to an abandonment defense, the preponderance of the evidence standard "is
the minority view of the Circuits and is not followed in the Second
Circuit"); Eh Yacht, LLC v. Egg Harbor, LLC, 84 F. Supp.2d 556, 564-65
(D.N.J. 2000) (explaining that a majority of courts have held that
abandonment must be proven by clear and convincing evidence).
See also General Cigar Co. v. G.D.M. Inc., 988 F. Supp. 647, 658
(S.D.N.Y. 1997) (RWS) (abandonment must be "strictly proved"); Frankel v.
Central Moving & Storage Co., No. 95 Civ. 6330, 1997 WL 672003, at *3
(S.D.N.Y. Oct. 29, 1997) (BN) (abandonment is "a forfeiture which must be
strictly proven"); Warner-Lambert Co. v. Schick U.S.A., Inc.,
935 F. Supp. 130, 143 (D.Conn. 1996) (party asserting
abandonment has a "high burden of proof"). In light of this authority,
defendants' defense of abandonment must be proven by clear and convincing
In contrast, no decision within the Second Circuit requires "strict
proof" or a "higher standard" for proving genericness. Decisions from
other circuits expressly hold that a preponderance of the evidence
standard is applicable to a genericness defense. See Glover v. Ampak,
Inc., 74 F.3d 57, 59 (4th Cir. 1996) (presumption of validity can be
overcome with showing by a preponderance of the evidence that a mark has
become generic); Anti-Monopoly, Inc.
v. General Mills Fun Group, Inc., 684 F.2d 1316, 1319
(9th Cir. 1982) (same). Since I find that defendants have proven
their genericness defense by clear and convincing evidence, it
is unnecessary to decide whether a preponderance of the evidence
would be sufficient.
Defendants do not dispute that if the PILATES marks are valid, they were
For example, defendants placed a number of advertisements in print
media that infringed the PILATES marks. In advertisements, defendants
provided the telephone number "1-800-PILATES" for readers seeking more
information. A 1992 Shape magazine advertisement reads, "The Pilates
body. Get yours at a body conditioning studio near you," and lists a
number of "Pilates-based fitness studios" to be contacted for more
Defendants have continued through April 2000 to place in numerous other
publications advertisements prominently featuring the term PILATES.
Defendants have also infringed plaintiff's marks in brochures and other
publications by Current Concepts. One brochure which predates this
lawsuit includes the "1-800-PILATES" telephone number. Balanced Body's
1998 and 1999 brochures feature the words "Finely crafted Pilates
equipment" in large print on the cover, with the word "Pilates" in
reverse type surrounded by a block of dark color.
Plaintiff provided other evidence of infringement which will not be
discussed in detail, such as infringement through the use of Internet
domain names including PILATES, and infringement through the production,
marketing, and distribution of video tapes that are described as PILATES
videos. Defendants have infringed the PILATES equipment and service
A. Applicable Law
A trademark or service mark that becomes generic is no longer entitled
to protection. Park `n Fly, Inc. v. Dollar Park and Fly, Inc.,
469 U.S. 189, 194, 105 S.Ct. 658, 661, 83 L.Ed. 2d 582 (1985);
Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir.
1976). Generic marks are subject to cancellation at any time. Park `n Fly,
469 U.S. at 194, 105 S. Ct. at 661. A generic mark lacks protection even
if it is incontestable. Id. at 195, 105 S.Ct. at 662.
A generic mark "is one that refers to the genus of which the particular
product is a species." Park `n Fly, 469 U.S. at 194, 105 S.Ct. at 661.
However, a mark is not generic when "the primary significance of the term
in the minds of the consuming public is not the product but the producer."
Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 118, 59 S.Ct. 109, 83
L.Ed. 73 (1938); see also 15 U.S.C. § 1064(3).*fn11
This is so because "[t]he purpose of a mark is to identify the
source of [goods or services] to prospective consumers." Lane
Capital Management, Inc. v. Lane Capital Management, Inc.,
192 F.3d 337, 343-44 (2d Cir. 1999).
Types of evidence to be considered in determining whether a mark is
generic include: (1) dictionary definitions; (2) generic use of the term
by competitors and other persons in the trade; (3) plaintiff's own
generic use; (4) generic use in the media; and (5) consumer surveys. See
Brandwynne v. Combe Int'l Ltd., 74 F. Supp.2d 364, 381 (S.D.N.Y. 1999).
In addition to these factors, it is necessary to determine whether there
are commonly used alternative means to describe the product or service.
Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 144 (2d Cir.
1997); A.J. Canfield Co. v. Honickman, 808 F.2d 291
, 305-06 (3d Cir. 1986).
B. Evidence of Genericness
1. Dictionary Definitions
Dictionary definitions, while not conclusive, reflect the general
public's perception of a mark's meaning and are thus helpful in
determining whether a term is generic. Murphy Door Bed Co. v. Interior
Sleep Sys., Inc., 874 F.2d 95, 101 (2d Cir. 1989). The Random House
Webster's College Dictionary defines "Pilates" as follows:
Pilates (pi l ä ' tez). Trademark. a system of
physical conditioning involving low-impact exercises
and stretches, performed on special equipment. Also
called Pila'tes meth'od.
Random House Webster's College Dictionary 1000 (2d ed. 1999).
Plaintiff objects to this definition on the ground that the definition
indicates that Pilates is a trademark. However, as the dictionary's
editors explain, an acknowledgment that a term may be trademarked does
not show that the term's primary significance is to indicate a source of
a product or service:
A number of entered words which we have reason to
believe constitute trademarks have been designated as
such. However, no attempt has been made to designate
as trademarks or service marks all words or terms in
which proprietary rights might exist. The inclusion,
exclusion or definition of a word or term is not
intended to affect, or to express a judgment on, the
validity or legal status of the word or term as a
trademark, service mark, or other proprietary term.
Id. at iv.
Moreover, the dictionary's publishers include the term Pilates on the
dust jacket in a listing of new words, along with words like "FAQ," "road
rage," "smoothie," and "index fund." The dictionary's publishers explain
why these new words were added:
The sources of new words and meanings are manifold.
They include news items and articles in newspapers and
magazines, books and CD-ROMS, plays and movies,
television and radio, and the texts of electronic
databases like NEXIS and LEXIS. . . . Editors
periodically review the citations and select from them
those items that show sufficient currency and
importance to be recorded in the dictionary. . . .
Physical fitness and body building are movements that
since the 1960s have enlisted the enthusiasm of
millions, producing a host of new words, including
aerobics, dancercize, jazzercize, Exercycle, Pilates,
step aerobics, abs, delts, lats, and glutes.
Id. at xxiv-xxv.
This dictionary use is generic because it identifies Pilates as a method
of exercise. Accordingly, this factor weighs in favor of genericness.
2. Use By Competitors And Persons In The Trade
Generic use of a term by a trademark holder's competitors weighs in
of genericness. Generic use by competitors which the trademark
holder has not challenged strongly supports a finding of genericness.
However, the lack of use of the mark by other suppliers of the same
product or service does not weigh against genericness where the holder
of the registered mark polices it in such a manner as to deter others
from using the term in describing their products or services. Murphy
Door Bed, 874 F.2d at 101 n. 2.
Romana Kryzanowska identified at least two dozen individuals who use, or
have used, the term Pilates to describe their services. Kryzanowska
explained that these people were trained in the Pilates method, then
"scattered" around the United States and not only called what they
taught Pilates but trained new instructors who themselves called what
they taught "Pilates."
Ron Fletcher, another former student of Mr. Pilates, also identified a
number of individuals who described what they taught as "Pilates." He
explained that over the years he met with other Pilates practitioners and
visited other facilities where the exercises were taught, and that the
exercises and method in general were referred to as "Pilates." Ron
Fletcher also sold equipment with plaques attached containing the name
Kathy Grant, another former student of Mr. Pilates, has taught Pilates
since the 1960s and has used no other name to describe what she teaches.
She has taught Pilates to hundreds of NYU students and has always
identified what she taught to them as "Pilates." She has also trained
Pilates teachers who have gone on to call what they taught "Pilates."
Grant has never paid a licensing fee to use the word Pilates in
connection with her teaching. Nor has she ever sought authorization for
calling her courses "Pilates." Amy Taylor studied with and was certified
When she later moved to Boulder, Colorado to open her own studio, she
was aware of approximately twelve teachers in the area who called what
they taught "Pilates." Since 1990, Taylor has run
the Pilates Center in Boulder, offering Pilates training and teacher
certification. Taylor identified at least ten other individuals or
organizations that certify teachers in the Pilates method. The Pilates
Center alone has certified approximately 110 people. Taylor is aware of
at least five manufacturers of Pilates equipment in addition to Current
Other witnesses*fn12 credibly identified numerous individuals and
businesses that teach Pilates, train Pilates instructors, and sell
Pilates equipment. All of these witnesses testified that they have no way
to describe what they teach other than the word "Pilates." All of these
witnesses together have trained hundreds of individuals in the Pilates
Plaintiff makes two responses to this evidence. First, plaintiff points
out that some of the witnesses identified above have either been sued or
sent cease and desist letters by plaintiff. However, witnesses such as
Kathy Grant and Donald Gratz have not been challenged by plaintiff
despite prominent use of the Pilates name over many years. Moreover,
witnesses identified many other businesses and individuals offering
Pilates services and equipment, and plaintiff provides no evidence that
it has challenged all or even most of them. Accordingly, this objection
only slightly reduces the weight of this evidence.
Second, plaintiff argues that these witnesses showed that there are
many other names to describe body conditioning exercise instruction
services that are similar to but distinct from PILATES, such as the Ron
Fletcher Work, IMAX, Spiralfitness, Core Dynamics, Corfitness, The
Well-Tempered Workout, Body Moves, and Universal Reformer Technique.
this does not undercut the credible and voluminous testimony that
there is no other way that is commonly understood to describe Pilates
Moreover, the evidence shows that many of these alternative names were
developed in response to threats of litigation, which does not weigh
against genericness. See Murphy Door Bed, 874 F.2d at 101 n. 2. This
objection has little impact on the strength of this evidence.
Accordingly, the use of the word Pilatesby competitors and other persons
in the trade weighs strongly in favor of genericness.
3. Plaintiff's Use
A plaintiff's own generic use of its marks supports a finding of
genericness, as does generic use by plaintiff's claimed predecessors.
There is no evidence that Mr. Pilates intended to prevent the use of his
name in connection with services and equipment relating to his method of
exercise. John Steel, the Pilates' friend and lawyer, testified that Mr.
and Mrs. Pilates never tried to restrict the use of their name by others.
Kryzanowska, plaintiff's principal witness, agreed that Mr. Pilates wanted
"the Pilates method everywhere to be for the world so that everyone could
benefit from it."
Kryzanowska operated the Pilates Studio during the 1970s and early 1980s
and has been responsible for plaintiff's certification program since
Gallagher purchased the Pilates marks. When asked "what do you do for a
living?" at the beginning of her testimony, she replied, "I teach Pilates."
Kryzanowska also agreed that some dance warmup exercises are sometimes
called "the Pilates," "the way table tennis is called ping pong." When
asked, "[w]hen people talk about Pilates, whether they do it as well as
you or not as well as you, they're not talking about you, they're talking
about this method of exercise, correct?" Kryzanowska replied, "I hope so."
Finally, while Kryzanowska was in charge of the Pilates Studio, she
assisted in the writing of a book called The Pilates Method of Physical
and Mental Conditioning and "dictated large portions" to the book's
authors. Kryzanowska agrees that Pilates is a method of exercise.
Sean Gallagher used the term Pilates in a generic manner when he briefly
owned the marks personally. In a letter dated April 5, 1993 inviting
"Pilates Instructor[s]" to join The Pilates Guild, Gallagher used the
word Pilates to identify a method of exercise:
The Pilates Studio is also determined, for lack of a
better phrase, to make Pilates a "household" word. As
you know, The Pilates Exercise System has been a
virtual exercise secret for over seventy years.
Outside of New York and Los Angeles, even exercise
enthusiasts have little or no knowledge of the system.
It is only thanks to the enduring quality of Pilates
exercise and the persistent and committed efforts of
Pilates instructors in these and other cities that
Pilates hasn't disappeared altogether!
See also Def. Ex. 1068 (New Mexico trademark application to "provide
instruction in Pilates exercise system"); Def. Ex. 1062 (Colorado
trademark application "to offer instruction in The Pilates Exercise
System[,] provide facilities for Pilates Exercise, sell pilates Exercise
Equi[pment]"); Def. Ex. 1070 (federal trademark application for
"Pilates-based" mark "for exercise and physical conditioning for the
Pilates exercise system and method").
Finally, plaintiff Pilates, Inc. has used PILATES in a generic manner
on a number of occasions. For example, in an undated memorandum to all
certified teachers by Elyssa Rosenberg, Associate Director of The Pilates
Studio, plaintiff advises that "a change has been made to make The Method
less generic in its description to the public and within the community."
The change requires instructors to stop referring to "The Pilates
Method" and instead call it "The Pilates Method of Body Conditioning,"
and to refer to "the method" as "The Method." Moreover, plaintiff's
lawyers frequently used Pilates in a generic sense during the course
of the trial.*fn13
Plaintiff argues that this evidence is irrelevant because it currently
polices its marks vigorously and none of the uses described were made in
connection with prospective purchasers of instruction services or
exercise equipment. But when "the mark has `entered the public domain
beyond recall,' policing is of no consequence to a resolution of whether
a mark is generic."
Murphy Door Bed, 874 F.2d at 101 (quoting King-Seeley Thermos Co. v.
Aladdin Indus., 321 F.2d 577, 579 (2d Cir. 1963)). The evidence described
above shows that plaintiff and its predecessors, starting with Mr.
Pilates himself, have used the word Pilates in a generic sense to
describe a method of exercise. Accordingly, this factor weighs in favor
4. Media Usage
a. Newspapers and Magazines
Newspaper and magazine use of a term in a generic sense is strong
evidence of genericness. Harley-Davidson, Inc. v. Grottanelli,
164 F.3d 806, 811 (2d Cir. 1999).
Defendants submitted 775 articles dated after 1982 which use the word
Pilates in some manner. Defendants divide these articles into four
categories: (1) those which mention only plaintiff or its predecessors as
the source of Pilates instruction, facilities, or equipment; (2) those
which \mention both plaintiff or its predecessors and others as sources
for Pilates instruction, facilities, or equipment; (3) those which
mention only others and not plaintiff or its predecessors as sources for
Pilates instruction, facilities, or equipment; and (4) those which do
not mention any source for Pilates instruction, facilities, or
Of these 775 articles, defendants claim that only 83 (11%) mention
plaintiff or its predecessors alone; 60 (8%) mention both plaintiff or
its predecessors and others; 165 (21%) do not mention any source; and
467 (60%) mention only other sources. Plaintiff raises a number of
objections to these articles.
First, plaintiff argues that defendants' classification system is flawed
because it only seeks to establish that sources other than plaintiff are
identified with Pilates. Plaintiff argues that this is irrelevant because
"[a] trademark need not identify source directly or explicitly." A.J.
Canfield Co. v. Honickman, 808 F.2d 291
, 300 (3d Cir. 1986). Plaintiff
contends that because defendants admit that their third category "may
include" some of plaintiff's licensees, the articles cannot show that the
Pilates marks are generic because 610 of the 775 articles indicate some
This objection carries little weight. It is correct that "a term may
function as an indicator of source and therefore as a valid trademark,
even though consumers may not know the name of the manufacturer or
producer of the product." Id. However, this principle is inapplicable to
defendants' collection of articles, for two reasons. First, most of the
articles use the word Pilates to describe a method of exercise — a
use which plaintiff concedes is generic — in addition to
identifying sources of Pilates services and equipment. Second, plaintiff
has not shown that the articles imply that there exists a single
"anonymous source" of Pilates services and equipment. Plaintiff's
assertion that the 467 articles which mention only other sources of
Pilates services and equipment include its licensees is unsupported by
any evidence. Plaintiff's argument, in essence, is that because 610 of
the 775 articles indicate some source of
Pilates services and equipment, the Pilates marks are not generic.
However, plaintiff has not shown, and cannot show, that the articles
use the word Pilates to indicate a single source of services and
equipment. The fact that 610 articles refer to a wide variety of
sources is evidence that the term Pilates is generic.
Plaintiff's next objection is that only 270 of the articles were
published prior to the commencement of this lawsuit. Plaintiff asserts
that after defendants were sued, Endelman publicly encouraged members of
the subsequently certified class to infringe plaintiff's marks. Thus,
plaintiff argues, some of the articles written after 1995 referring to
defendants or former class members were "conscious efforts to develop a
self-serving body of evidence." (Pl. Ans. Mem. at 11.) However, none of
the evidence cited by plaintiff shows that defendants encouraged others
to start using, or to increase their use of, plaintiff's marks. At best,
the evidence shows that Endelman counseled businesses already using the
word Pilates that the class action would allow them to continue their
existing uses without fear of being sued. Moreover, plaintiff does not
identify which articles published after this lawsuit was filed refer to
former class members. Thus, this objection carries little weight.
Plaintiff also raises numerous objections to the classification of
specific articles. For example, plaintiff cites eight articles classified
by defendants as indicating "no source" which in fact either refer to
plaintiff's trademarks, plaintiff's licensees, or plaintiff itself. The
classification of a handful of these articles is indeed ambiguous.
Plaintiff also cites a number of articles referring to the trademark
dispute and more than thirty articles referring to other names for
exercise instruction services and equipment, such as "Physical Mind,"
"Stott Core Conditioning," "Balanced Body Method," and "Polestar." As
discussed above, the existence of a controversy over the marks and the
existence of incentives for competitors to create new names to describe
a generic, but heavily-policed, method of exercise do not weigh against
genericness. Finally, plaintiff cites eighty-three articles referring to
certification or special training programs, but there is ample evidence
in the record that such services are offered by numerous sources other
than plaintiff. Accordingly, these specific objections to the articles
carry little weight.
Finally, plaintiff argues that there is no evidence of how these
articles were gathered or selected for inclusion in defendants'
submission. However, plaintiff had an opportunity to examine Endelman
regarding how he collected many of these articles. Endelman testified
that he gathered articles through the Bacon's clipping service starting
in May 1999. Although it is not clear how the articles pre-dating May
1999 were gathered or selected, defendants do not appear to claim that
the articles constitute a random sample of articles mentioning Pilates
but rather show significant generic use of the term by the media.
In 1980 Doubleday & Co. published The Pilates Method of Physical and
Mental Conditioning by Philip Friedman and Gail Eisen ("The Pilates
Method"). A second edition was published in 1982 by Warner Books. The book
does not mention a source or trademark for Pilates exercise instruction
services or equipment.
The book merely sets forth and illustrates the basic exercises which
comprise the Pilates method of exercise. Indeed, plaintiff concedes that,
as used in the title of this book, the word Pilates does not refer to an
exclusive source of exercise instruction services. See also Ray
Kybartas, Fitness is Religion 226 (discussing Pilates "as an alternative
form of exercise"). The Pilates Method has been discussed in a number of
c. Broadcast and Internet Evidence
Defendants submitted videotapes of various television broadcasts in
which the word Pilates was used in a generic manner. Although some of
the broadcasts are undated, most were aired between February 1995 and
July 1997. The broadcasts include local and national news shows, such as
the CBS Morning News, and national entertainment-oriented shows, such as
"Hard Copy," "Entertainment Tonight," "Regis & Kathie Lee," and the game
show "Greed." These broadcasts use "Pilates" to refer to a method of
exercise and not to identify a source of services or equipment.
Accordingly, this evidence weighs strongly in favor of genericness.
Defendants also submitted evidence of the use of the word "Pilates" on
Internet web sites. Frank A. Cona, who operates a business specializing in
searching, monitoring, and documenting intellectual property on the
Internet, reviewed 318 web pages and concluded that 89% used the term
Pilates to refer to a form of exercise and not a source of services or
While many of the web sites Cona identified do show generic use, Cona's
numbers are questionable. First, Cona admitted that some of the sites he
reviewed were outside the United States.
Second, he admitted making numerous errors in his categorization of the
web pages he reviewed. Accordingly, the evidence of Internet use of the
word Pilates adds little to defendants' other evidence of newspaper,
magazine, and television use of the term. Overall, media use provides
powerful evidence in favor of genericness.
5. Survey Evidence
Consumer surveys are routinely admitted in trademark cases to show
genericness of a mark. Schering Corp. v. Pfizer, Inc., 189 F.3d 218, 225
(2d Cir. 1999); Nestle Co. v. Chester's Mkt., Inc., 571 F. Supp. 763, 769
(D.Conn. 1983). Each side submitted a survey in this case.
Defendants retained Dr. Michael Rappeport to conduct a survey to test
whether the name Pilates is perceived as the name of a type of product
or service or the name of a source.
Rappeport's survey first screened respondents who were unfamiliar with
the term Pilates; 200 of the 273 people surveyed answered that they were
familiar with the word. The questions of principal significance were
"Other than the word Pilates, is there some kind of word or short phrase
that you use to refer to this type of exercise, or is Pilates the only
word you use?" and the follow-up "Is Pilates the only word you've heard
other people use?" The survey also asked, "Generally, in your own words,
how would you describe Pilates?"
Of the 200 who were familiar with the word, no one provided a
substitute word for Pilates. One-hundred-seventy-seven people responded
that Pilates is the only word they use to describe the type of exercise.
One-hundred-sixty-seven people responded that Pilates is the only word
they hear others use to describe the type of exercise. The remainder
provided sentences including "stretching," "mind and body," and other
similar words and phrases. In response to the open-ended question "how
would you describe Pilates?", everyone surveyed described Pilates as a
type of exercise.*fn14
Rappeport's survey also included questions about equipment. For
example, respondents were asked "Are you aware of Pilates equipment?"
and the follow-up "As far as you know, is Pilates equipment manufactured
by: a) one company; b) several companies; c) or you don't know or don't
have an opinion." 145 people had heard of Pilates equipment, and of
these, 25 answered "one company," 41 answered "more than one company,"
and 79 answered "don't know or don't have an opinion."
Other questions related to differences among exercises and types
of equipment and are not particularly helpful to a determination
Plaintiff objects to Rappeport's survey on a number of grounds. First,
plaintiff argues that the wrong universe was surveyed with respect to the
PILATES service mark. Rappeport chose as his universe a trade association
of health professionals called IDEA. Plaintiff argues that IDEA members
are not potential purchasers of exercise instruction services, but
rather are potential vendors of such services, and thus are not
"potential consumers of the product in question." Conopco, Inc. v.
Cosmair, Inc., 49 F. Supp.2d 242, 253 (S.D.N.Y. 1999) (JES).
Plaintiff further argues that the wrong universe was surveyed with
respect to the PILATES equipment mark. Plaintiff contends that the general
public is the proper universe for Pilates equipment because plaintiff,
through its licensee Stamina Products, markets equipment to the general
public through mass market commercial channels.
Plaintiff's objections to Rappeport's survey universe reduce the
survey's usefulness to some extent. It is undisputed that Pilates
exercise instruction and equipment are increasingly being marketed to
the general public. An ideal survey universe would include all potential
purchasers of Pilates equipment or exercise instruction services, not
just professionals who are members of IDEA.
However, the IDEA universe was adequate for the survey to have some
weight in the genericness inquiry. First, plaintiff's own expert, Edward
Epstein, testified that he analyzed the adequacy of Rappeport's survey
universe and concluded that it was adequate. Indeed, Epstein used the same
universe in his own survey. Second, although it is undisputed that Pilates
instruction services and equipment are purchased by non-professionals in
the general public, it is also undisputed that fitness professionals
purchase Pilates equipment and receive training and certification in
Pilates instruction. Thus, the IDEA universe includes potential purchasers
of both Pilates equipment and Pilates services.
Plaintiff submits a survey by its own expert, Edward Epstein, to rebut
Rappeport's findings. In his survey, Epstein asked respondents whether a
number of purported "physical conditioning or fitness methods," including
karate, yoga, "Crunch," and Feldenkreis, "may be used and promoted by
trainers without having to obtain any company's authorization, permission
or certification." Among those who were aware of each method, 17%
responded that Pilates may be used without authorization; 66% said the
same about karate; 74% said the same about yoga; 42% said the same about
Crunch; and 17% said the same about Feldenkrais. Thus, Epstein concludes,
the proportion of respondents who consider Pilates generic is far less
Epstein also asked respondents who were familiar with the piece of
equipment called the reformer "May any company that makes the Reformer
put the Pilates name on the equipment or promote the fact that the
company makes the Pilates Reformer, or may only those companies that are
authorized to do so put the Pilates name on the equipment and promote
the fact that the company makes Pilates Reformer?" 86% replied that only
those companies that are authorized to do so may put the Pilates name on
The main problem with Epstein's survey is that it is based on a faulty
premise. According to Epstein, his survey was designed:
to ascertain the primary significance or meaning of
Pilates to the relevant universe or as Professor
McCarthy puts it, what do buyers understand by the
word? Is it seen as a method of exercise and apparatus
that is available for anyone to use because it is a
type of exercise or is it seen as someone's proprietary
property that cannot be used and promoted without
obtaining authorization, permission or certification
from the company that owns the rights to it?
When asked on cross-examination "Can we agree that if your premise is
incorrect, that a method of exercise can be someone's proprietary
property, then your survey tested the wrong thing?"
Epstein replied, "I would say yes." Since plaintiff concedes that a
method of exercise cannot be trademarked, it is clear by Epstein's own
admission that his survey is fundamentally flawed since it assumes that a
method of exercise can be someone's exclusive property. This is confirmed
by the fact that 29% of those surveyed responded that the generic term
"karate" could not be used without authorization and 25% said the same
thing about the generic term "yoga."
Epstein's survey is also flawed with respect to the equipment question.
The question assumes the existence of "those companies that are authorized
to [use PILATES on equipment]." Just as the value of Rappeport's question
"what is Pilates" is reduced because the answer is suggested elsewhere in
the survey, so too is the value of Epstein's equipment question reduced
because the question itself suggests the answer.
In sum, both surveys have serious flaws and neither is particularly
helpful in determining whether the Pilates marks are generic.
1. The Primary Significance Of PILATES Is As A Method Of Exercise,
Not As A Source Of A Product Or Service
No one disputes that there exists a distinct method of exercise based
on the teachings of Joseph Pilates which people refer to as the "Pilates
method" or simply as "Pilates." Nor is there any dispute that equipment
designed by Mr. Pilates is an integral component of the Pilates method.
The evidence described above shows that PILATES is understood by the
public to refer to either the Pilates method (as in "I do Pilates") or
to products or services used in connection with the Pilates method (as in
"Pilates equipment" or "Pilates instruction"). In both uses of the word,
the primary significance of PILATES is as a method of exercise, not as a
source of a product or service.
Plaintiff nonetheless asserts that it may prevent others from using the
name PILATES to describe instruction services and equipment. However, it
is undisputed that plaintiff cannot prevent anyone from doing or
teaching the exercises developed by Joseph Pilates or from manufacturing
and selling equipment invented by Mr. Pilates (since the patents on
those inventions have long since expired). Plaintiff's argument thus
rests on the assumption that even if the word PILATES is understood by
consumers as a generic term for a particular method of exercise, the
word may still be appropriated to identify a particular source of
services and equipment related to that method of exercise.
This argument was soundly rejected in American Montessori Soc'y, Inc.
v. Association Montessori Internationale, 155 U.S.P.Q. 591 (T.T.A.B.
1967). In Montessori, the Trademark Trial and Appeal Board held that the
term MONTESSORI was generic as applied to a particular type of education
and the "philosophy and methods associated therewith." Id. at 592.
Responding to an argument similar to plaintiff's, the Board explained
that "it necessarily follows that if the term `MONTESSORI' is generic
and/or descriptive as applied to the `MONTESSORI' teaching methods, it
is equally so as used in connection with toys, games, teaching aids, and
other material employed in connection with said methods." Id. at 593.
This case is strikingly similar. Since the word PILATES is generic with
respect to a particular method of exercise, it is necessarily also generic
with respect to
equipment and services offered in connection with that method.
The evidence shows that consumers identify the word PILATES only
with a particular method of exercise, whether the word is used by itself
or in connection with instruction services or equipment for use in that
Plaintiff cannot monopolize a method of exercise by asserting trademarks
in the generic word used to describe it.
2. PILATES Is A Genus, Not A Species
"A generic term is one that refers, or has come to be understood as
referring, to the genus of which the particular product is the species."
Abercrombie, 537 F.2d 4, 9 (2d Cir. 1976). The underlying assumption in
plaintiff's position is that the relevant genus in this case is "the realm
of exercise methods emphasizing core movements" and that the species is
(Pl. Letter of Jun. 19, 2000.) In plaintiff's view, other species
include brands like Balanced Body, the Ron Fletcher Work, Polestar, and
Core Dynamics. Under plaintiff's overgeneralized definition of the
genus, any genus could be transformed to a species. For example, yoga
would be classified as a species along with Pilates, even though yoga is
a method of exercise that is properly classified as a genus.
Plaintiff's method of classification does not reflect the reality of
what is actually taught under these names. With respect to the PILATES
service mark, there is ample evidence that the Pilates method forms the
basis for the Balanced Body Method, the Ron Fletcher Work, and other
exercise instruction services.
Even though these methods of instruction may differ in some respects
from those used by plaintiff, all of them, including plaintiff's, are
united by the Pilates method of exercise.
Accordingly, in a proper system of classification, the Pilates method
is the genus, and the particular ways of teaching that method are the
species. Under this approach, the Ron Fletcher Work is a species of
Pilates, as is the Balanced Body program.
3. No Word Other Than PILATES Can Adequately Describe Products
And Services Based On The Pilates Method
A final factor in the genericness inquiry is the availability of other
means to describe the product or service at issue.*fn15
Circuit explained the importance of this consideration in Genesee
Brewing Co. v. Stroh Brewing Co., 124 F.3d 137 (2d Cir. 1997):
Trademark law seeks to provide a producer neither with
a monopoly over a functional characteristic it has
originated nor with a monopoly over a particularly
effective marketing phrase. Instead the law grants a
monopoly over a phrase only if and to the extent it is
necessary to enable consumers to distinguish one
producer's goods from others and even then only if the
grant of such a monopoly will not substantially
disadvantage competitors by preventing them from
describing the nature of their goods. Accordingly, if
a term is necessary to describe a product
characteristic that a competitor has a right to copy,
a producer may not effectively preempt competition by
claiming that term as its own.
Id. at 144. This rule is "based on long-standing and integral principles
of trademark law." Id. at 145.
The evidence established that the word PILATES is necessary to describe
the exercises and teachings that comprise the Pilates method. Although
flawed in other respects, defendants' survey showed that consumers of
exercise instruction services and equipment generally do not use any
other term to describe the Pilates method. Numerous witnesses testified
that they did not use any other expression to describe
the Pilates method, nor could they even think of one. Efforts by
plaintiff and its lawyers to avoid using PILATES in a generic sense
result only in cumbersome expressions such as "exercises based on
the teachings and methods of Joseph H. Pilates." Accordingly,
this case falls squarely within the rule announced in Genesee.
Plaintiff offers two responses. First, plaintiff points to numerous
other terms that it contends are adequate substitutes to identify the
Pilates method of exercise. However, there was ample testimony by the
creators of many of these terms that they still use the word PILATES to
describe the nature of their products and services. Indeed, one of the
alternative terms plaintiff identifies is Balanced Body, which is
defendants' current brand name. However, defendants continue to use
PILATES to describe their equipment and services for lack of a better
term to do so. Moreover, many of the alternative terms identified by
plaintiff (such as Physical Mind) were created in response to
plaintiff's threats of litigation. Such use does not weigh against
genericness. Murphy Door Bed, 874 F.2d at 101 n. 2.
Second, plaintiff argues that it objects only to the use of PILATES in
a trademark sense. However, plaintiff has never been able to state a
coherent distinction between acceptable and unacceptable uses of the
word. Moreover, such a distinction is inconsistent with plaintiff's
policing of the mark. For example, in a cease and desist letter sent to
Anthony Rabara in 1993, Gallagher informed Rabara that "[s]hould you
choose not to pay the licensing fee, please understand that you will not
be able to use the Pilates(R) name in your advertising, or any
promotional materials. You won't be able to call what you do Pilates."
(emphasis added). Numerous other cease and desist letters prohibit the
use of PILATES "in any manner." Accordingly, protecting plaintiff's
marks would "effectively preempt competition." Genesee, 124 F.3d at 144
In sum, although plaintiff has made substantial efforts to police its
marks and promote the Pilates method, it nonetheless cannot foreclose
others from using the word PILATES to describe their services of which the
equipment is an integral part. See Abercrombie, 537 F.2d at 10 ("[N]o
matter how much money and effort the user of a generic term has poured
into promoting the sale of its merchandise and what success it has
achieved in securing public identification, it cannot deprive competing
manufacturers of the product of the right to call an article by its name.")
For the foregoing reasons, defendants have proven by clear and
convincing evidence that the PILATES service mark and the PILATES
equipment mark are generic.
IV. Abandonment and Assignment in Gross
Defendants also claim that the PILATES marks were forfeited in two ways
during the period in which the marks were owned by Healite, Inc. First,
defendants argue that Healite abandoned the PILATES marks through nonuse
after it closed its studio in April 1989. Second, defendants argue that
Healite had no business goodwill when it transferred the marks to Sean
Gallagher in 1992, and therefore the sale was an invalid assignment in
Although these defenses are somewhat related, they will be addressed
A trademark is deemed abandoned "[w]hen its use has been discontinued
with intent not to resume such use. Intent not to resume may be inferred
from circumstances." 15 U.S.C. § 1127.
In order to show abandonment, defendants must show that plaintiff or its
predecessors did not use the PILATES marks and did not intend to resume
their use in the reasonably foreseeable future. Stetson v.
Howard D. Wolf & Assocs., 955 F.2d 847
, 850 (2d Cir. 1992). In
this case, two years of nonuse is prima facie evidence of
The presumption of abandonment that arises from such
nonuse is rebuttable. Defiance Button Mach. Co. v. C & C Metal Prod.
Corp., 759 F.2d 1053
, 1060 (2d Cir. 1985). The abandonment defense is
available even against an incontestable mark. 15 U.S.C. § 1115
It is undisputed that Healite permanently closed its East 56th Street
Pilates Studio on April 1, 1989. Plaintiff argues that despite the
closing of the studio, Healite and its wholly-owned subsidiary, the
second Pilates Studio, Inc., continued to use the PILATES marks in
commerce. Defendants argue that any use from 1989 through 1992 was
merely sporadic token use and that Healite's business was entirely
defunct during that time period.
1. Evidence of Use
a. "Expansion" To New Locations
Plaintiff contends that Healite's business operations did not cease
after the April 1989 closing of the Pilates Studio. Rather, plaintiff
argues, Healite's business moved to other locations. Plaintiff points out
that Hom moved most of the studio's equipment to three locations when he
closed the studio — the neighboring chiropractic office of Dr.
Howard Sichel; an exercise facility called Body Art; and an exercise
facility called The Gym (now known as Drago's). Plaintiff argues that
Hom assigned his teachers to work at these three locations.
Plaintiff also points to the referral fees Hom received from these
locations and his notification letters to clients concerning the new
locations. Hom described this movement of equipment, clients, and
instructors as "expanding in the sense of continuing the business and the
exercises to different locations."
Hom's testimony that he moved equipment and instructors to other
locations as an "expansion" of his business was not credible. First, Hom
admitted that he moved the equipment to three locations because "[n]o one
had large enough space for all of the equipment." Second, once the East
56th Street studio closed, Healite was no longer responsible for the
instructors who went to teach at the other locations. Hom's testimony to
the contrary was contradicted by more credible evidence.
After the studio closed, Dr. Sichel asked two instructors from the
Pilates Studio to join him and paid them himself. Sichel paid a per-client
referral fee to Hom personally for only a brief period of time. Hom never
taught or supervised instruction at Sichel's business.
Dragutin Mehandzic ("Drago"), the owner of The Gym, was contacted by
Kryzanowska about moving the Pilates Studio's equipment to The Gym. At the
time, Drago did not know Hom.
Since Kryzanowska started to teach at Drago's, Drago has paid her
himself. Later, at Kryzanowska's request, Drago agreed to pay Hom a two
percent fee for every customer. He explained that "I felt sorry for that
place, Pilates Studio has to be closed and has to come to me. He was
spending some time in the place teaching some people that they are not
customers, just young girls, how to teach them how to teach." Drago
never paid or agreed to any payment to Healite or the second Pilates
Studio, Inc. In 1991, Drago gave Hom $3000 for all of the Pilates
equipment Hom had moved to The Gym's premises, and stopped paying Hom
Plaintiff makes much of the fact that Hom drafted a schedule assigning
his instructors to shifts at either Body Art or The Gym. However, this
does not show that Healite continued its business. One
instructor testified that the schedule was only in effect for one
week and that she then made her own arrangements with the respective
studios. There is no evidence that Hom made more than one or two
such schedules, or that any schedules were followed for more than
a brief period of time following the closing of the Pilates Studio.
Plaintiff also contends that Healite had licensing agreements with Body
Art, Sichel's, and The Gym to use PILATES in connection with their
facilities. However, Drago and Sichel credibly denied that they had any
such arrangements with Hom, and Hom was not a credible witness.
In sum, Hom's only business connection with Body Art, Sichel's, or The
Gym was the one to three dollar referral fee he received personally for
customers at those locations for a limited period of time. There is no
evidence of any business connections between these three locations and
Healite or the second Pilates Studio, Inc.
b. Training and Certification
Plaintiff next argues that Hom's continued certification of Pilates
instructors shows that Healite's business continued after the Pilates
Studio closed. However, plaintiff introduced evidence that only three
instructors were certified by Hom: Amy Taylor (now Amy Taylor Alpers),
Rachel Taylor, and Susan Moran.
Hom's testimony that he trained others was not credible. Hom appeared
to assume that instructors who were trained by Kryzanowska during this
period were in effect trained by his business, a fact which is
contradicted by the evidence of Kryzanowska's arrangements with Drago.
c. The Taylor Sisters' License
Amy and Rachel Taylor, who operated (and still operate) an exercise
studio in Boulder, Colorado, received a license from Hom to use the
PILATES marks in connection with their studio for one year from their
opening in November 1990. Hom granted the license in exchange for
forgiveness of a $300 debt he owed the Taylor sisters for an undelivered
piece of equipment. Upon the Taylor sisters' request, Hom also wrote a
letter on Pilates Studio, Inc. letterhead calling the sisters' studio
"my first official U.S. affiliate."
d. Promotional Activities
Plaintiff points to a number of promotional activities engaged in by
Hom to show that Healite and/or the second Pilates Studio, Inc.
continued to use the PILATES marks. Hom printed and distributed cards
around New York City advertising "PILATES(tm) METHOD STUDIO EXERCISES"
at Body Art, The Gym and Sichel's. Hom also handed out brochures
advertising the "Pilates Exerciser" and promoting the Pilates method on
behalf of Healite and The Pilates Studio. Hom also placed five
advertisements in Dance magazine between November 1990 and April 1991
offering information on "equipment, books, training seminars, and video"
and referring inquiries to a toll-free telephone number Hom had
Plaintiff also points to Hom's teaching activities following the closing
of the East 56th Street studio as evidence of continued use of the marks.
Hom taught a course in Pilates at NYU. He also spoke at an international
ballet conference in Mississippi in 1990. These activities do not show
that Healite or the second Pilates Studio, Inc. used the PILATES marks in
There is evidence of only three sales of any products by Hom after
April 1989. A professor at the NYU Department of Dance and Dance
Education purchased a reformer and thirty copies of The Pilates
Method for $2400 in July 1989. An August 1989 NYU purchase order
for "Pilates Studios c/o Wee-Tai Hom" referenced a balance of $2170,
although there is no evidence of what was in fact purchased. In 1990, Hom
caused one piece of equipment
to be delivered to the Taylor sisters in Colorado in exchange
for a sum of money. Hom never sold any equipment as a result of
his advertisements in Dance magazine. Hom's testimony that he
sold books as a result of those advertisements was not credible.
2. Evidence of Intent To Resume Use
In addition to arguing that Healite continued to use the PILATES marks
from 1989 through 1992, plaintiff asserts that Healite did not intend to
abandon the marks. In addition to the evidence described above, plaintiff
cites Healite's efforts to sell its PILATES marks and to develop
alternative business models as evidence of lack of intent to abandon the
a. Efforts To Sell Marks
Plaintiff contends that Healite made efforts to sell the PILATES marks
during this period. Hom approached Endelman in 1991 to propose that
Endelman purchase the marks and drafted a purchase agreement which he sent
to Endelman. Hom spent several months in 1992 negotiating the purchase of
the marks by Gallagher, a transaction which was eventually consummated.
b. Alternative Business Models
Plaintiff next contends that Hom's efforts to devise alternative models
for his Pilates business show that he did not intend to abandon the
marks. In the middle of 1989, Hom drafted a proposal for purchasing a
chain of fitness centers called "Living Well" and incorporating Pilates
instruction into those centers. He showed his proposal to an investor,
Bruce Wrobel, and two businesses which were either investment banks or
management consultants. Hom requested from Living Well, and received, a
list of fitness center markets in which Living Well had a presence.
In early 1990, Hom gave up on his hope to acquire Living Well.
Although it is a close question, defendants have failed to prove by
clear and convincing evidence that Healite abandoned the PILATES service
mark during the period between 1989 and 1992.
The brochures handed out by Hom, the Dance magazine advertisements, and
the license of the PILATES service mark to the Taylor sisters in Colorado
are barely sufficient to show attempts to use the PILATES service mark
during the period in question. Hom's efforts to sell the PILATES and
PILATES STUDIO marks to Endelman and Gallagher and to acquire Living
Well are inconsistent with an intent to abandon the marks. See Defiance
Button, 59 F.2d at 1060 (efforts to sell trademark during several years
of nonuse defeat inference of intent to abandon mark); Adolphe Lafont, S.A.
v. S.A.C.S.E. Societa Azioni Confezioni Sportive Ellera, S.P.A., 228
U.S.P.Q. 589, 594, 1985 WL 71974 (T.T.A.B. 1985) (efforts to find
acceptable distributor of goods defeats inference of intent not to
resume use despite seven years of nonuse).
However, defendants have proven by clear and convincing evidence that
Healite abandoned any claim to the PILATES equipment mark. Only three
types of evidence relate to the use of PILATES in connection with
equipment. First, Hom sold two or three pieces of equipment to customers
during this period.*fn17 Second, Hom distributed copies of a single
brochure on behalf of Healite which advertised the "PILATES EXERCISER"
and included an order form. Third, Hom included "equipment" among the
types of information available from his toll-free number in the Dance
magazine advertisements. None of plaintiff's remaining evidence
of trademark use relates to Pilates equipment.
"Minor activities" are not sufficient to avoid a finding of abandonment
through nonuse. Stetson, 955 F.2d at 851. "To satisfy the use
requirement, application of the trademark must be sufficient to maintain
`the public's identification of the mark with the proprietor.'" Id.
(quoting Silverman v. CBS, Inc., 870 F.2d 40, 48 (2d Cir. 1989)). There
is no evidence that Hom used the PILATES mark on the equipment itself or
its packaging. The sporadic uses identified by plaintiff over the
three-year period in question were not sufficient to maintain the public's
identification of the PILATES equipment mark with Healite or Pilates
Studio, Inc. Cf. Warner-Lambert Co. v. Schick U.S.A., Inc.,
935 F. Supp. 130, 143 (D.Conn. 1996) (sales of over a
thousand LADY SCHICK shavers in each of five consecutive years to over a
hundred retailers and distributors nationwide were sufficient to maintain
public's identification of LADY SCHICK mark with owner).
Moreover, there is no evidence that Hom intended to resume use of the
mark. In fact, the agreement transferring the PILATES marks to Gallagher
included a representation that Healite possessed no PILATES marks other
than the PILATES STUDIO mark and the PILATES service mark. This
representation is a stark admission by Hom that Healite abandoned whatever
rights it may have claimed in a PILATES equipment mark.
B. Assignment in Gross
Defendants also argue that the PILATES service mark was abandoned when
it was assigned by Healite to Gallagher without any corresponding
goodwill.*fn18 "[A]n owner of a trademark or service mark may not
assign the rights to that mark `in gross,' i.e. divorced from the
appurtenant good will that the mark engenders." Dial-A-Mattress Operating
Corp. v. Mattress Madness, Inc., 841 F. Supp. 1339, 1350 (E.D.N.Y. 1994);
see also 15 U.S.C. § 1060(a); United Drug Co. v. Theodore Rectanus
Co., 248 U.S. 90, 97, 39 S.Ct. 48, 50-51 (1918). Good will is "the value
attributable to a going concern apart from its physical assets —
the intangible worth of buyer momentum emanating from the reputation and
integrity earned by the company. A trademark or service mark is merely
the symbol by which the public recognizes that reputation and hence has
no independent significance apart from the owner's good will."
Dial-A-Mattress, 841 F. Supp. at 1350. Defendants contend that Healite
was defunct by the time the PILATES marks were transferred to Gallagher
in 1992 and thus did not possess any good will with which the marks
could have been transferred.
There is ample evidence that Healite's business had no substantial
assets or income at the time of the transfer. The Pilates Studio itself
was closed in April 1989. Hom sold all of the Pilates Studio's equipment
to other exercise facilities. Hom referred all of the Pilates Studio's
clients to those same facilities. Neither Healite nor the second Pilates
Studio, Inc. filed any federal income tax returns after 1988. Neither
Healite nor the second Pilates Studio, Inc. had a listing in the
Manhattan telephone directory from 1989 through 1992. There is no
evidence that either business earned any income after April 1989.
The only tangible assets Gallagher received in the transfer from
Healite were a number of boxes of books, films, business records, and
other documents. He also received Healite's client lists. However,
Gallagher admits that he destroyed about
eighty percent of the papers he received. He also admits that he
threw away the client lists after approximately one year. Despite
Hom's efforts to make his business a success, by 1992 no good
will remained in Healite's business that could have accompanied
an assignment of the PILATES marks.
Plaintiff argues that a naked transfer of a trademark is not invalid
per se. It is correct that assignments without a corresponding transfer
of physical assets will be upheld where the assignee is producing a
product or providing a service which is substantially similar to that of
the assignor and where consumers will not be deceived or harmed. Marshak
v. Green, 746 F.2d 927, 930 (2d Cir. 1984). Plaintiff argues that because
its Pilates certification and training programs are similar to those
offered by Healite and the second Pilates Studio, Inc., the assignment of
the marks was valid even in the absence of good will.
The rule cited by plaintiff is inapplicable to this case. Cases like
Marshak address only a situation where the owner of a trademark assigns
that mark without also transferring the physical assets of the business
to which that trademark was previously attached. A crucial distinction
is that all decisions in which assignments have been deemed valid
despite the absence of a transfer of physical assets held that the
transferor business possessed good will at the time of the transfer. See,
e.g., Dial-a-Mattress, 841 F. Supp. at 1350-51; Bambu Sales, Inc. v.
Sultana Crackers, Inc., 683 F. Supp. 899, 908 (E.D.N.Y. 1988); Money
Store v. Harriscorp Fin., 689 F.2d 666, 678 (7th Cir. 1982). Here, there
is no evidence that Healite had any business or retained any good will
that was symbolized by the PILATES marks.
Additionally, there is ample evidence that Gallagher was interested in
purchasing only naked trademarks rather than a business with accompanying
good will. Gallagher testified candidly that he contacted Hom to find out
if Hom was interested in "selling the trademarks" and that he was
negotiating to "buy the trademarks." He testified that he threw away
eighty percent of the materials he received because "I didn't feel I had
the need to have any of that because it was not my business."
Gallagher's use of the term PILATES in his Synergy business with Steve
Giordano prior to his purchase of the PILATES marks also shows that he
sought only the ability to use the name PILATES rather than the good will
associated with it. See Clark & Freeman Corp. v. Heartland Co.,
811 F. Supp. 137, 141 (S.D.N.Y. 1993) (JSM). Finally, Hom recognized
Healite's lack of good will and Gallagher's desire to obtain naked
trademarks when he testified that "Sean Gallagher had his own business
plan. He just wanted the trademark and our assets, which was the
Accordingly, defendants have proven by clear and convincing evidence
that the transfer of the PILATES service mark to Gallagher was an
invalid assignment in gross.*fn19
V. Prior Use
Defendants argue that they are prior users of the PILATES equipment
mark, albeit in an unspecified geographic area, and thus possess the
right to use PILATES on their equipment. In order to assert a prior use
defense, defendants must prove four elements: (1) present rights in the
mark; (2) acquired prior to the date of registration; (3) continual use
of the mark since that date; and (4) use prior to the registrant on the
goods or services that are in issue. Dial-a-Mattress, 841 F. Supp. at
1353-54. Defendants "must affirmatively demonstrate an unbroken
continuum of use without significant interruption from a date prior to
the maturation of plaintiff's rights in the mark. . . . [S]poradic use .
. . is insufficient to overcome the strong policy behind the Lanham Act
of rewarding those who first seek registration." Id.
Plaintiff asserts that it is the senior user of the equipment mark
because its predecessors used the term PILATES in connection with
equipment sales at least as early as 1970. However, not one of the
agreements transferring the PILATES marks over the years refers to a
mark for equipment even though they refer to the PILATES STUDIO and
PILATES service marks. The assignment from Healite to Gallagher removes
any doubt as to whether an equipment mark was transferred along the
chain of custody. The assignment, like the previous assignments, refers
to the PILATES STUDIO and PILATES service marks. However, Healite
represents in the agreement that "[e]xcept for the [marks listed],
Healite presently owns no other mark containing the word `Pilates' or
referencing `Pilates' in any manner." Thus, plaintiff possesses no rights
in an equipment mark beyond those which it may have established through
its own use.
On the other hand, defendants have not established "an unbroken
continuum of use" of the PILATES equipment mark starting prior to the
maturation of plaintiff's rights in the mark. Defendants rely on two
uses in support of their contention of prior use. First, Endelman
testified that his business has used the label PILATES on approximately
half of the crates for its reformers since 1980 or 1981. However, his
testimony was equivocal on this point and he delicately avoided stating
that the use was continuous to the present day. Second, Endelman and Ron
Fletcher testified that starting in 1988 or 1989, defendants began
affixing plaques directly on reformers reading, "THE PILATES REFORMER
— Approved by Ron Fletcher." However, there is no evidence that
this arrangement lasted longer than two or three years. Moreover, such
use was not a trademark use since Fletcher requested that PILATES be
used on the plaques, and no one but Fletcher purchased the equipment.
Defendants have thus shown only sporadic use of PILATES in relation to
equipment prior to Gallagher's registration of the PILATES equipment mark.
Accordingly, defendants have not proven all of the required elements of
their prior use defense.
A trademark registration, even if incontestable, is invalid if it was
fraudulently obtained. 15 U.S.C. § 1115(b)(1).
Allegedly fraudulent statements must show a deliberate attempt to
mislead the Patent and Trademark Office ("PTO") and may not be the
product of mere error or inadvertence. Orient Express Trading Co. v.
Federated Dep't Stores, Inc., 842 F.2d 650, 653 (2d Cir. 1988).
Moreover, the knowing misstatements must have been made "with respect to
a material fact — one that would have affected the PTO's action on
the applications." Id.
A. The PILATES Service Mark
Defendants claim that the registration of the PILATES service mark is
invalid because it was preserved by fraud.
Specifically, they contend that the "Combined Declaration of Use and
Incontestability" signed by Wee-Tai Hom in August 1992 was knowingly
misleading because it falsely stated that the mark had been used
continuously in interstate commerce between 1986 and 1991 and that it
was still in use in interstate commerce on August 1, 1992. A failure to
file an affidavit including these representations would have resulted in
cancellation of the mark. 15 U.S.C. § 1058(a)-(b).
There is clear and convincing evidence that the statements of continuous
and current use in interstate commerce were false.
Except for the license to the Taylor
sisters in Colorado and the five advertisements in Dance magazine,
Hom did not use the PILATES service mark in interstate commerce
from 1989 to 1992. A single license and a handful of advertisements
do not constitute continuous use. Moreover, there is absolutely
no evidence that Hom was using the PILATES service mark in
interstate commerce during 1992, the year in which he represented
that he was currently using the mark.
However, defendants carry the heavy burden of showing fraudulent
intent. Woodstock's Enter. Inc. v. Woodstock's Enter. Inc., 43
U.S.P.Q.2d 1440 (T.T.A.B. 1997). "Fraud in a trademark cancellation is
something that must be `proved to the hilt' with little or no room for
speculation or surmise; considerable room for honest mistake,
inadvertence, erroneous conception of rights, and negligent omission;
and any doubts resolved against the charging party." Yocum v. Covington,
216 U.S.P.Q. 210, 216 (T.T.A.B. 1982). Although it is an extremely close
question, defendants have not shown by clear and convincing evidence
that the submission with respect to the PILATES service mark was
B. The PILATES Equipment Mark
Defendants also claim that the PILATES equipment mark is invalid
because it was procured by fraud. They rely on two submissions by
Gallagher to the PTO in support of their contention. First, they cite
the application for the PILATES equipment mark submitted by Gallagher to
the PTO in September 1992, one month after he purchased the PILATES
service mark from Healite. In that application, Gallagher affirmed that:
(1) he owned the PILATES equipment mark; and (2) no other person or
business had the right to use the PILATES equipment mark in commerce.
Second, defendants cite a supplemental submission Gallagher filed in
August 1994 in response to a March 1994 PTO denial of the original
application. In this submission, Gallagher stated that the PILATES
equipment mark had been used in commerce continuously and exclusively
since 1923 and specifically for five consecutive years prior to the
These representations, defendants argue, were knowingly and materially
false. First, Gallagher's statement that he owned the PILATES equipment
mark was clearly false. As discussed in Part V, supra, Gallagher received
no such mark from Healite when he purchased Healite's assets in August
1992. There is no evidence that Gallagher used PILATES in relation to
equipment or otherwise acquired an equipment mark during the month
between his acquisition of Healite's assets and his submission of the
equipment mark application.
Plaintiff's only response is that Gallagher believed in good faith that
he did in fact receive an equipment mark from Healite. However,
Gallagher's testimony on this point, like his testimony on other aspects
of the transfer of the marks from Healite, was evasive and lacked
credibility. Gallagher could not have believed that he received an
equipment mark from Healite.
Gallagher initialed the two and one-half page assignment from Healite
immediately below the representation that Healite did not own (and thus
could not assign) any PILATES marks other than the PILATES service mark
and PILATES STUDIO mark. Moreover, neither of the two prior written
assignments (the first Pilates Studio, Inc. to Aris Isotoner and Aris
Isotoner to Healite) mentioned an equipment mark. Gallagher's
representation was a material and knowing misrepresentation.
Second, Gallagher's statement that the PILATES equipment mark had been
used continuously in commerce was clearly false. As explained in Part IV-A,
supra, Healite abandoned whatever equipment mark it may have had because
it did not use the mark to sell equipment from 1989 through 1992. There
is no evidence that even the few sporadic equipment sales by
Hom during that period included the PILATES mark on the equipment
or its packaging, contrary to Gallagher's representation in the
trademark application and supplemental submission that the mark
was "used on the exercise equipment." In addition, Gallagher's
submission of a copy of the patent plaque that had been used by
Mr. Pilates on his equipment as a specimen of recent use was
misleading because that plaque had not been used in any of the
five years preceding the application and Gallagher had no reason
to believe that the plaque had been so used. See Torres v. Cantine
Torresella, 808 F.2d 46, 49 (Fed. Cir. 1986).
Finally, Gallagher's vague testimony concerning his investigation of
Healite's continuous use of the PILATES marks was not credible. He never
inquired into Healite's sales of equipment using the PILATES mark.
Indeed, Gallagher consciously avoided making any inquiries that would
have resulted in evidence showing a lack of use. Gallagher thus had
absolutely no basis for stating that the equipment mark had been used
continuously in commerce. This misrepresentation was material because it
related to an essential prerequisite for registration. Accordingly,
Gallagher's representations in his registration application concerning
his ownership of a PILATES equipment mark and the continuous use in
commerce of that mark constituted a deliberate attempt to mislead the
Because defendants have proven by clear and convincing evidence that
Gallagher's application for registration of the PILATES equipment mark
contained material and knowing misrepresentations, the PILATES equipment
mark registration is invalid.*fn20
VII. Unclean Hands
Defendants next argue that plaintiff's infringement claims are barred
under the doctrine of "unclean hands" because Gallagher used the word
PILATES in connection with Synergy Systems' instruction and equipment
prior to his acquisition of the PILATES marks from Healite.
This argument can be dismissed summarily. Defendants do not, and
cannot, cite authority for the proposition that where a junior user of a
mark acquires that mark from the senior user, the junior user is forever
barred from asserting claims for infringement of that mark. Such a rule
would make little sense.
Moreover, even if Gallagher's use of the word PILATES were considered
inequitable conduct, it was discontinued long before the outset of this
litigation, which precludes a finding of unclean hands. J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition § 31:53 (4th
ed. 2000). Defendants' unclean hands defense lacks merit.
VIII. Claim and Issue Preclusion
On the eighth day of the eleven-day trial, plaintiff moved for judgment
as a matter of law on defendants' defenses on grounds of claim and issue
preclusion. The basis for plaintiff's motion is a settlement agreement
between plaintiff and the Joseph H. Pilates Foundation, Inc. (the
"Foundation"), the defendant in an earlier infringement action. In that
settlement agreement, the Foundation acknowledged the validity of the
PILATES service mark and the PILATES equipment mark. Plaintiff argues
that defendants were sufficiently involved with the Foundation to be
bound by the terms of the settlement.
Defendants argue that there is no privity between them and the
Foundation, and that in any event, plaintiff has waived these
A. Relevant Facts
The Foundation was a non-profit membership corporation formed by
Endelman in 1994. Endelman was the Foundation's president throughout its
existence. The Foundation's stated purpose was to function as an
educational center and charitable organization for the Pilates
On May 5, 1995, plaintiff sued the Foundation in this district for
infringement of its PILATES service mark and PILATES STUDIO mark. Current
Concepts paid the bulk of the Foundation's defense costs. That action was
settled on November 21, 1995.
Pursuant to the settlement agreement, the Foundation agreed to stop
using the name PILATES and to change its name to "J.H.P. Foundation."
The Foundation also "acknowledge[d]" and "agree[d] not to directly or
indirectly challenge" the "validity and ownership" of the PILATES
service mark and the PILATES equipment mark.
The Foundation is now defunct.
Defendants contend that plaintiff has waived its claim and issue
preclusion defenses. Plaintiff never asserted claim or issue preclusion
in any of its pleadings. Nor did plaintiff raise issue or claim
preclusion at the final pretrial conference or in the joint pretrial
order. The first time plaintiff raised the matter was on the eighth day
of trial, four and one-half years after the complaint was filed and more
than three years after the filing of defendants' answer, counterclaims,
and class action complaint.
Federal Rule of Civil Procedure 8(c) requires affirmative defenses such
as claim or issue preclusion to be raised in pleadings responding to
claims for relief.*fn21 Rule 15 allows pleadings to be amended by leave
of the court only "when justice so requires." Fed.R.Civ.P. 15(a); see
also MacDraw, Inc. v. CIT Group Equip. Fin., Inc., 157 F.3d 956, 962 (2d
Additionally, the parties in this case were required to set forth all
of their proposed findings of fact and conclusions of law in a joint
pretrial order pursuant to Rule 16. Fed.R.Civ.P. 16(c), (e). A pretrial
order "shall be modified only to prevent manifest injustice." Fed.R.Civ.P.
16(e); see also Rule 16, Advisory Committee Notes for subdivision (c)
("If counsel fail to identify an issue for the court, the right to have
the issue tried is waived. . . . the rule's effectiveness depends on the
court employing its discretion [to modify a pretrial order]
sparingly."); Bradford Trust Co. of Boston v. Merrill Lynch, Pierce,
Fenner and Smith, Inc., 805 F.2d 49, 52 (2d Cir. 1986).
Plaintiff was a party to the Foundation litigation and was thus well
aware from the outset of this case of any possible relationship between
the Foundation and defendants that could support claim or issue
preclusion. Plaintiff's only proffered excuse for not raising claim or
issue preclusion earlier is that it had no incentive to do so during the
pendency of the class action, which ended with the decertification of
class shortly before the final pretrial conference. Plaintiff
suggests that because Current Concepts was only one of seven class
representatives, no practical purpose would have been served by
attempting to dismiss Current Concepts as a class representative.
Plaintiff's excuse is insufficient. The pleading requirements of the
federal rules are fully applicable in class actions. See 7A Charles A.
Wright, Arthur R. Miller & Mary Kane, Federal Practice and Procedure §
1789 (1997). Plaintiff could have raised its claim and issue preclusion
defenses against Current Concepts' cancellation claims, but chose not to
Plaintiff's failure to assert this defense was a tactical choice for
which it must bear the consequences. Cf. Seneca Nation of Indians v.
State of New York, 26 F. Supp.2d 555, 569 (W.D.N.Y. 1998) (plaintiffs'
strategic decision to not assert defense did not show a lack of
opportunity to litigate it; "[plaintiffs] cannot blame their silence on
other parties"). Moreover, plaintiff received notice during a series of
telephone conferences prior to the final pretrial conference that the
class action would be decertified. Plaintiff's failure to include issue
or claim preclusion in the joint pretrial order was thus especially
Nor has plaintiff shown that denial of permission to amend the
pleadings or pretrial order would result in manifest injustice. On the
contrary, allowing plaintiff to assert this defense for the first time
in the waning hours of this litigation would be unfair to defendants,
who have spent four years preparing at great expense to try the case on
Moreover, the purpose of issue and claim preclusion is to promote
judicial efficiency, a goal which would not be advanced by allowing
plaintiff's defense to be raised in the middle of trial. See Davis v.
City of Chicago, 53 F.3d 801, 803 (7th Cir. 1995) ("Preclusion serves a
vital purpose, inducing people to combine claims and theories that are
efficiently litigated jointly, and preventing the waste of judicial
resources (and the adverse parties' time) that sequential suits
create."). This litigation has already ended, and preclusion would not
serve its intended purpose.
This case bears a striking similarity to Evans v. Syracuse City School
Dist., 704 F.2d 44 (2d Cir. 1982). In Evans, the defendant in a Title VII
action asserted a claim preclusion defense nearly three years after the
defense could have been first asserted and six days before trial.
Nonetheless, the district court granted the defendant leave to amend its
answer to incorporate the defense. The Court of Appeals reversed, finding
that the district court abused its discretion in granting leave to amend.
The court concluded that defendant had offered no satisfactory
explanation for its delay in raising the defense and that plaintiff had
been prejudiced by expending time and resources on discovery and
preparation for trial. Id. at 46-47.
The same conclusions can be drawn from the facts of this case, and the
same result must be reached. Plaintiff has waived its issue and claim
C. The Defenses
Even if plaintiff did not waive res judicata and collateral estoppel,
preclusion fails on the merits. Neither claim nor issue preclusion
prevents defendants from litigating the validity of plaintiff's PILATES
Under the doctrine of claim preclusion, or res judicata, "a prior
decision dismissed `on the merits' is binding in all subsequent
litigation between the same parties on claims arising out of the same
facts, even if based upon different legal theories or seeking different
relief on issues which were or might have been litigated in the prior
action but were not."
Northern Assurance Co. of Am. v. Square D Co., 201 F.3d 84, 87 (2d Cir.
2000) (quoting EFCO Corp. v. U.W. Marx, Inc., 124 F.3d 394, 397 (2d Cir.
1997)) (internal quotation marks omitted). A judgment of dismissal
pursuant to a settlement agreement can
constitute a final judgment "on the merits." Amalgamated Sugar
Co. v. NL Industries, Inc., 825 F.2d 634, 639-40 (2d Cir. 1987).
The doctrine of issue preclusion, or collateral estoppel, "bars the
relitigation of issues actually litigated and decided in [a] prior
proceeding, as long as that determination was essential to that
judgment." Central Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A.,
56 F.3d 359, 368 (2d Cir. 1995).
Issue preclusion has four elements: (1) the issues of both proceedings
must be identical, (2) the relevant issues must have been actually
litigated and decided in the prior proceeding, (3) there must have been
"full and fair opportunity" for the litigation of the issues in the
prior proceeding, and (4) the issues must have been necessary to support
a valid and final judgment on the merits. Id. Plaintiff argues that the
validity of the PILATES marks was adequately litigated and decided in
the Foundation case and thus cannot be relitigated in this case.
Neither claim nor issue preclusion bars litigation of the validity of
the PILATES marks in this case because plaintiff has not proven an
essential element of both claim and issue preclusion: that defendants
were in privity with a party that had adequate incentive and opportunity
to litigate the previous action. Haring v. Prosise, 462 U.S. 306, 311,
103 S.Ct. 2368, 76 L.Ed.2d 595 (1983) ("[A]mong the most critical
guarantees of fairness in applying collateral estoppel is the guarantee
that the party to be estopped had not only a full and fair opportunity
but an adequate incentive to litigate `to the hilt' the issues in
question."); Alpert's Newspaper Delivery Inc. v. The New York Times Co.,
876 F.2d 266, 270 (2d Cir. 1989).
The factors plaintiff cites to show privity include: Endelman's status
as president and founder of both the Foundation and Current Concepts;
Current Concepts' financing of the Foundation's defense; and the
Foundation's distribution of videotapes produced by Current Concepts.
Plaintiff argues that these factors, combined with the common interest
shared by Current Concepts, Endelman, and the Foundation in challenging
the PILATES marks, establish that defendants and the Foundation were
sufficiently connected to establish privity.
However, although defendants and the Foundation were closely related,
their interests with respect to litigating the validity of the PILATES
marks were distinct. While Current Concepts is a long-standing business
operated for profit, the Foundation was a non-profit membership
organization operated for educational and charitable purposes. The
Foundation was financed by contributions from its 120 members, while
Current Concepts is financed by its equipment and other product sales.
The Foundation and Current Concepts kept different books, maintained
separate bank accounts, and had different accountants and attorneys.
This evidence shows that Current Concepts and the Foundation were
distinct organizations with distinct financial interests.
Even more important to a showing of lack of privity are the facts
relating specifically to the Foundation litigation.
Plaintiff's suit against the Foundation exhausted the Foundation's
limited funds, giving it a powerful incentive to settle the case despite
receiving financial support from Current Concepts during the brief
duration of the litigation. Endelman consulted with the Foundation's
members before agreeing to settle the case on the Foundation's behalf.
From a commercial perspective, the stakes were much lower in the action
against the Foundation than in this case, creating "little incentive to
defend vigorously." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 330, 99
S.Ct. 645, 651, 58 L.Ed.2d 552 (1979). This conclusion is confirmed by
the realities of the respective litigations: the Foundation case lasted
six months and involved only one defense (with respect to a preliminary
injunction) and minimal motion practice, while this
case has lasted over four years and has involved extensive
discovery, several defenses, numerous counterclaims, a certified
class action, and an eleven day bench trial.
Additionally, although the Foundation settlement agreement expresses an
intent to preclude the Foundation from challenging the validity of any of
the PILATES marks, it evinces no such intent to preclude challenges by
Endelman or Current Concepts.
Prior to the settlement, plaintiff discussed a global settlement with
Current Concepts, Endelman, and the Foundation. Defendants rejected the
offer. After the Foundation case was settled, defendants continued their
settlement discussions with plaintiff.
Plaintiff sued defendants approximately one month after the settlement,
and as discussed previously, did not raise claim or issue preclusion
until more than four years later. These facts show that plaintiff,
defendants, and the Foundation clearly understood the settlement
agreement to bind only the Foundation.
In view of the Foundation's significant interest in settling its case,
it cannot be concluded that Current Concepts or Endelman was "adequately
represented" in that action.
"[R]epresentative capacities must be held separate in order to ensure
vigorous pursuit of litigation without concern about the possible impact
on other interests." 18 Charles A. Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 4451. The corollary to this
principle is that representative capacities must also be held separate
to allow appropriate settlement of litigation without concern about the
possible impact on other interests. This policy would not be furthered
by holding defendants to be in privity with the Foundation.
The incentives to litigate the two cases were vastly different. It would
be unfair to bind defendants to a settlement agreement in which they
specifically declined to participate and had little financial interest in
joining. Accordingly, plaintiff cannot prove a required element of its
In accordance with the foregoing findings of fact and conclusions of
law, the Clerk shall enter judgment for defendants on all of plaintiff's
claims. The Clerk shall direct the United States Patent and Trademark
Office to cancel Pilates, Inc.'s registrations for the PILATES service
mark (Reg. No. 1,405,304, registered August 12, 1986) and the PILATES
equipment mark (Reg. No. 1,907,447, registered July 25, 1995).