Third Circuit throws music promoter under the boardwalk

United States of America
In Marshak v Treadwell (Case 08-1771, July 2 2009), the US Court of Appeals for the Third Circuit has found in favour of the former manager of 1950s band The Drifters in a trademark dispute over the band's name.  
 
The Third Circuit’s ruling is the latest skirmish in the long-running battle between Faye Treadwell and Larry Marshak over the rights to use the trademark THE DRIFTERS, the name of the legendary singing group famous for such hits as "Under the Boardwalk" and "On Broadway"Faye Treadwell is the widow of the late music executive George Treadwell and Marshak is a promoter of famous doo-wop groups. 
 
The Drifters first appeared in 1953 and came under the management of George Treadwell. George Treadwell paid the individual performers as employees, replacing them frequently. Faye Treadwell took over management of The Drifters in 1959 upon the death of her husband. In the 1970s, Marshak signed former members of The Drifters (who had been replaced by the Treadwells) to management contracts and began to market them as The Drifters. Marshak continuously marketed his alternative version of The Drifters and even obtained a federal trademark registration for THE DRIFTERS in 1978. 
 
In the late 1990s, Marshak sued Faye Treadwell for trademark infringement in district court in New Jersey. Faye Treadwell counterclaimed for infringement. After a jury trial, the district court ruled in favour of Faye Treadwell, holding that she owned superior rights in the trademark THE DRIFTERS and that Marshak had fraudulently obtained the mark and his federal registration. Marshak and his company were thus permanently enjoined from promoting groups performing under the name The Drifters. 
 
Rather than accept the court’s prohibition, Marshak, along with family members and other associates, reorganized his promotion business in an apparent attempt to circumvent the injunction. The impetus for the organization was the fact that prior to the injunction, Marshak’s version of The Drifters were appearing nightly at a casino with The Platters and The Coasters. However, The Drifters were the bigger box office draw and the show could not survive without them. Subsequently, two business associates of Marshak acquired a licence to the name The Elsbeary Hobbs Drifters from the widow of Elsbeary Hobbs, a former member of The Drifters. Thus, Marshak's associates restarted the casino shows with The Platters and The Coasters playing alongside The Elsbeary Hobbs Drifters. 
 
In 2006 Faye Treadwell filed a motion for contempt against Marshak, his family members and business associates over the continued use of THE DRIFTERS. The district court granted the motion for contempt and held that the injunction was valid not only against Marshak and his company, but also against the associates, companies and employees connected to him that continued to market The Drifters after the injunction was issued. 
 
In affirming the decision, the Third Circuit ruled that non-parties may be held to be bound by an injunction if such parties are “guilty of aiding or abetting” a named defendant in violating an injunction and, therefore, may be held in contempt. The Third Circuit stated that without such a standard, parties might “nullify a decree by carrying out acts through aiders and abettors”.
 
In finding contempt, it was held that the associates of Marshak scrambled to evade the injunction. The court was especially convinced of Marshak and his associates’ intentions when it was revealed that the persons managing the post-injunction activities were managing The Drifters out of Marshak’s basement. As such, it was found that Marshak and his associates had simply reorganized his previous businesses under new names. Consequently, it was proper to hold Marshak, his family members and business associates in contempt.
 
However, the Third Circuit held that one of Larry Marshak’s associates, Dave Revels, was improperly held in contempt since Faye Treadwell did not name him in the motion for contempt. As such, it was unfair to hold him in contempt since he was not given proper notice.       
 
Finally, the Third Circuit found that the district court had erred in limiting the contempt penalty to attorneys’ fees. In so doing, the Third Circuit held that Faye Treadwell did not need to establish actual damages for an award of profits, but that she needed to show only that an accounting was necessary to deter infringement. 

Leo Loughlin, Arent Fox LLP, Washington DC

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