existing trademark registration for the name Egg Harbor and the sailfish
logo, and to have these trademarks registered to Egg Harbor LLC.
(Zielinsky Decl. ¶ 6.) Those applications are still pending.
In December 1998, approximately one year after Marine Acquisitions
closed its doors, the New Jersey Superior Court appointed David Weiss,
Esquire as statutory receiver for the remaining assets of Marine
Acquisitions, Inc. Weiss immediately did an accounting of the assets of
Marine, and determined that Marine still owned the Egg Harbor trademarks
being used by Egg Harbor LLC. Mr. Weiss determined that in order to
obtain the best price possible for the company's assets, the business
should be sold as a going concern to a sophisticated buyer, and that the
company represented an unusual opportunity for someone to start up where
the prior owners had left off.
Upon learning that Egg Harbor LLC was operating under the Egg Harbor
flag, Weiss filed in state court for a Temporary Restraining Order
enjoining DiDonato from using the Egg Harbor name. This application for
emergency relief was denied by the New Jersey Superior Court on February
2, 1999 because there was no showing of irreparable harm as the receiver
was not then manufacturing boats. (Oral Opinion of the Honorable L.
Anthony Gibson, JSC, Docket No. ATL-C-14-99 (N.J. Super Ch. Div. Feb. 2,
1999), Pl.'s Ex. 12.) Judge Gibson made it clear that he was not ruling
on the merits of the receiver's trademark claims. (Id. at 10:2-14.)
There is some dispute as to when, but sometime in early 1999 Weiss and
Mr. DiDonato met to discuss a proposal under which Egg Harbor LLC would
purchase from the receivership certain assets of Marine Acquisitions,
including the Egg Harbor name and logo. According to Mr. Weiss, DiDonato
quickiy terminated this meeting. Soon thereafter, the receiver filed the
present action in June 1999 on behalf of Marine Acquisitions, seeking to
quiet title to the EGG HARBOR name and mark.
After Weiss filed the present action, he and DiDonato met again on
August 19, 1999. (Weiss Decl. ¶ 10.) At this second meeting, Weiss
states, he and DiDonato reached an agreement under which the receiver
would drop the suit pending in this Court and sell Egg Harbor LLC all
assets of Marine, excluding real estate, for approximately $377,000.00.
Weiss declares that he and DiDonato also agreed that, once he had removed
the tangible assets from the Egg Harbor site, DiDonato would leave the
premises "broom clean".*fn4 (Id. at ¶ 11.) Weiss's understanding of
these negotiations was memorialized in a letter to DiDonato dated August
24, 1999. In this letter, however, Weiss unilaterally raised the asking
price to $452,000.00. DiDonato apparently found the disparity in asking
price too great, and negotiations were terminated.
After these negotiations broke down, Weiss began discussions with Dr.
Ira Trocki. He consummated a sale with Dr. Trocki on September 29, 1999,
under which Trocki acquired all Marine assets for the sum of
$1,450,000.00. This price did not include any guarantees to the Egg
Harbor name or logo, but rather sold all assets "AS IS, WHERE IS AND WITH
ALL FAULTS." (Receiver's Agreement of Sale, Pl.'s Ex. C, at ¶ 15.2.)
Concerned that Trocki would launch a competing Egg Harbor Yacht
business, Mr. Zielinski contacted Dr. Trocki's attorney, Robert
Grossman, Esquire to inquire into whether Trocki would observe the status
quo pending a judicial resolution of the
trademark issue. Zielinsky allegedly was told that Trocki had no
intention of wading into the yacht-building business until the trademark
issues were ironed out. Nevertheless, in November 1999 Trocki started up
EH Yacht LLC, which professed itself to be the successor of the old Egg
Harbor company in name and assets. In response, defendants instituted
their motion for preliminary injunctive relief on November 24, 1999.
III. CONCLUSIONS OF LAW
This Court has federal question jurisdiction pursuant to the Lanham Act
15 U.S.C. § 1051 et seq. Having read the parties' extensive
submissions, and having heard oral argument on December 13, 1999, this
Court now enters its conclusions of law on — the present
A. Preliminary Injunction Standards
The parties have filed cross motions for preliminary injunctions. The
decision of whether to grant a preliminary injunction is an extraordinary
remedy which should be granted only if the movant produces evidence
sufficient to demonstrate the following four factors:
(1) a likelihood of success on the merits;
(2) the extent to which the movant will be irreparably
injured by the conduct complained of;
(3) the extent to which preliminary relief will result
in even greater harm to the nonmoving party; and
(4) the extent to which granting the preliminary
relief will be in the public interest.
Council of Alternative Political Parties v. Hooks, 121 F.3d 876, 879
(3d Cir. 1997)(citing American Civil Liberties Union of New Jersey v.
Black Horse Pike Regional Board of Educ., 84 F.3d 1471, 1477 n. 2 (3d
Cir. 1996)(en banc)). The Third Circuit has held that the moving party
must demonstrate both a likelihood of success on the merits and the
probability of irreparable harm in the absence of injunctive relief in
order to obtain a preliminary injunction, and that a preliminary
injunction granted by a district court will not be sustained on appeal if
either of these requirements is not satisfied. Hoxworth v. Blinder,
Robinson & Co., Inc., 903 F.2d 186, 197 (3d Cir. 1990).
1. Likelihood of Success on the Merits
Defendant Egg Harbor LLC's claim to the Egg Harbor trademark depends on
a finding of abandonment. As there never was a public statement of intent
not to resume use of the Egg Harbor mark, defendants' case at trial will
turn on its ability to establish by clear and convincing evidence that
the trademark had been abandoned and that there was no intent to resume
use of the trademark. The issue of abandonment is governed by section 45
of the Lanham Act, 15 U.S.C. § 1115, et seq., the definition section
of which provides, in relevant part:
A mark shall be deemed `abandoned' . . .
(1) When its use has been discontinued with intent not
to resume such use. Intent not to resume may be
inferred from circumstances. Nonuse for 3 consecutive
years shall be prima facie evidence of abandonment.
`Use' of a mark means the bona fide use of such mark
made in the ordinary course of trade, and not made
merely to reserve a right in a mark. 15 U.S.C. § 1127
A party asserting abandonment of trademark must prove (1)
discontinuance of use of the mark and (2) an intent not to resume use
within a reasonably foreseeable time in the future. Exxon Corp. v. Humble