Trademark Trial and Appeal Board Electronic Filing System. 3935
`
`ESTTA Tracking number: ESTTA36865
`
`Filing date3
`
`06/27/2005
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`91165017
`Plaintiff
`SIGHTSOUND TECHNOLOGIES, INC.
`
`1 Z
`
`Proceeding
`
`Party
`
`7 W
`
`ILLIAM K. WELLS
`Correspondence KENYON & KENYON
`3 1500 K STREET, N.W., SUITE 700
`Add
`:
`; WASHINGTON, DC 20005
`
`“SS
`
`Submission
`Filer's Name
`
`Opposer's Opposition to Applicant's Motion to Stay
`Susan A. Smith
`
`Date
`
`06/27/2005
`SightSound Opposition to Motion to stay.pdf ( 6 pages )
`EX. A SS Objection to Motion to Reopen Banl<ruptcy.pdf ( 73 pages )
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of:
`
`Application Serial No.
`For the Mark:
`
`Publication Date:
`
`78414770
`NAPSTER LIGHT
`
`March 29, 2005
`
`SightSound Technologies, Inc.,
`
`Opposer,
`
`V.
`Napster, LLC,
`
`Applicant.
`
`Opposition No. 91165017
`
`.
`
`OPPOSER’S OPPOSITION TO APPLICANT’S MOTION TO STAY
`
`Applicant Napster, LLC (“Napster”) seeks to stay this proceeding on the basis of a
`
`bankruptcy case and a patent infringement case; however, as the bankruptcy case is closed and as
`
`the patent case is indefinitely stayed, neither provides a sufficient basis to suspend this
`
`proceeding. Napster’s motion to stay this proceeding is simply a device to avoid adjudication of
`
`the abandonment of its trademark rights and should be denied.
`
`1.
`
`BACKGROUND
`
`Napster’s predecessor in interest, Napster, Inc., was embroiled in a highly publicized
`
`battle with the music industry arising from its operation of an Intemet—based “service” that
`
`facilitated rampant music piracy. Nearly twenty record companies sued Napster, Inc. for
`
`contributory and vicarious copyright infringement and related causes of action, and this action
`
`was soon joined by a class of music publishers. A California district court found a likelihood of
`
`success on the merits of the copyright infringement claim and issued a preliminary injunction
`
`

`
`against Napster, Inc. and stated in its opinion that Napster, Inc. “contributed to illegal copying on
`
`a scale that is without precedent...” A&M Records, Inc. v. Napster, Inc., ll4 F. Supp. 2d 896,
`
`927 (N.D. Cal. 2000). In upholding the injunction (with modification) against Napster, Inc., the
`
`Ninth Circuit confirmed the rampant infringement that Napster, Inc. was engaged in:
`
`Napster, by its conduct, knowingly encourages and assists the
`infringement of plaintiffs’ copyrights.
`
`. properly found that Napster materially
`.
`The district court .
`contributes to direct infringement.
`
`Napster’s failure to police the system’s “premises,” combined with
`a showing that Napster financially benefits from the continuing
`availability of infringing files on its system, leads to the imposition
`of vicarious liability.
`
`A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1020, 1022, 1024 (9th Cir. 2001). Thus, two
`
`federal courts unequivocally stated that Napster, Inc. was an infringer of intellectual property
`
`rights, namely, copyrights.
`
`Despite this unsavory reputation, Applicant’s parent, Roxio, Inc. (“Roxio”), decided to
`
`purchase the NAPSTER trademark through Napster, Inc.’s bankruptcy case in the U.S.
`
`Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
`
`In October 2004, SightSound sued Roxio and its subsidiary, Applicant Napster, LLC
`
`(“Napster”) for patent infringement in the U.S. District Court for the Western District of
`
`Pennsylvania (the “Pennsylvania District Court”). In the course of that litigation, Roxio and
`
`Napster challenged SightSound’s patent rights underlying the suit and sought re—eXamination of
`
`those patents in the PTO. SightSound noted the irony of this request by pointing out that the
`
`Napster name “had been synonymous with the most well—known violation of intellectual
`
`property rights. . ..” Despite the clear and unequivocal ruling of two federal courts that Napster,
`
`Inc. had indeed violated intellectual property rights on an unprecedented scale, Roxio and
`
`

`
`Napster counterclaimed for defamation, trade libel, commercial disparagement, and related
`
`causes of action (collectively, the “defamation claims”) all based on this single statement by
`
`SightSound.
`
`SightSound moved to dismiss the defamation claims on the ground that the statement was
`
`truthful. However, before there could be an adjudication on the merits by the Pennsylvania
`
`District Court, Roxio and Napster requested and obtained an indefinite stay of the entire district
`
`court proceeding so that the PTO could reexamine SightSound’s patents.
`
`SightSound viewed Napster’s defamation claims as an inherent rejection of the reputation
`
`and goodwill of the prior owner of the marks, Napster, Inc. Thus, SightSound instituted this
`
`opposition proceeding on the grounds that, inter alia, Napster apparently had abandoned the
`
`NAPSTER mark.
`
`Napster then sought to reopen the bankruptcy case to prevent SightSound from
`
`maintaining this proceeding, allegedly on the grounds that SightSound is “attacking” the
`
`Bankruptcy Court’s Sale Order. However, as explained in detail in SightSound’s objections to
`
`the motion to reopen, SightSound is not attacking the Sale Order, but instead seeks a
`
`determination of Napster’s trademark rights subsequent to the acquisition.
`
`(See Exhibit A
`
`hereto.) The motion to reopen is currently being briefed and is scheduled for oral argument on
`
`August 15, 2005.
`
`Napster now moves to stay this TTAB proceeding on the basis of the bankruptcy
`
`“proceeding” and the Pennsylvania District Court action.
`
`II.
`
`ARGUMENT
`
`Napster’s motion to stay this proceeding is improper as it is based on a bankruptcy case
`
`that is closed and on a Pennsylvania District Court case that is non—joined and indefinitely
`
`stayed. Napster’s attempt to avoid an adjudication on the merits should not be permitted.
`
`

`
`A.
`
`The Bankruptcy “Proceeding” Is Closed
`
`Napster argues that the Board should stay this proceeding on the basis of a bankruptcy
`
`proceeding that is closed. While Napster seeks to reopen the bankruptcy case, there is no
`
`indication that the Bankruptcy Court will do so. Indeed, SightSound has strongly contested
`
`Napster’s motion to reopen on numerous procedural and substantive grounds.
`
`(See Exhibit A
`
`hereto.) It is Napster’s burden to convince the Bankruptcy Court to reopen the case and
`
`SightSound believes that Napster cannot meet that burden. Napster’s request to stay this
`
`proceeding on the basis of a closed case should be denied.
`
`B.
`
`The Issues In The Pennsylvania District Court Case Have Not Been ,|oined
`
`The defamation claims asserted in the Pennsylvania District Court case have not been
`
`joined and could be dismissed, and thus are not the proper basis for suspension of this
`
`proceeding. According to TTAB rules, absent consent of the parties, it is improper for the TTAB
`
`to stay a case where the issues in the other proceeding have not been joined and, thus, it is not
`
`clear whether the determination of the other proceeding will have a bearing on the TTAB
`
`proceeding. Trademark Trial and Appeal Board Manual of Procedure (TBMP), § 5 l0.02(a). In
`
`the Pennsylvania District Court case, Napster has filed defamation claims against SightSound;
`
`however, SightSound moved to dismiss those claims and no answer has been filed. Thus, the
`
`defamation issues have not been joined and it is not clear if they will even survive the pleading
`
`stage. As such, it is impossible to tell what claims or issues relevant to the TTAB proceeding, if
`
`any, will be before the Pennsylvania District Court. For this reason alone, suspension of this
`
`proceeding on the basis of the Pennsylvania District Court proceeding would not be appropriate.
`
`Furthermore, at Napster’s request, the Pennsylvania District Court case has been stayed
`
`indefinitely. Napster has not presented any authority, and SightSound is not aware of any,
`
`holding that the Board should suspend a proceeding on the basis of a federal court case that is
`
`

`
`itself stayed. Napster requested the stay of the Pennsylvania District Court action so that the
`
`PTO could reexamine SightSound’s patents. It would be consistent with Napster’s action in the
`
`Pennsylvania case for the Board to examine whether this application should be approved or
`
`rejected.
`
`C.
`
`Napster Seeks To Indefinitely Avoid Adjudication On The Merits
`
`Napster’s motivation for its motion to stay is not principles of judicial economy but
`
`avoidance of a substantive determination of its rights. Napster sought and obtained an indefinite
`
`stay of the Pennsylvania District Court case. Napster sought an injunction from the Bankruptcy
`
`Court to prevent SightSound from pursuing its claims in the TTAB. Now Napster seeks to
`
`indefinitely stay this proceeding on the basis of a non—eXistent case and an indefinitely stayed
`
`case. As Napster’s motion to stay is yet another attempt to avoid adjudication on the merits, it
`
`should be denied.
`
`III.
`
`CONCLUSION
`
`In view of all of the foregoing, SightSound respectfully requests that the Board deny
`
`Napster’s motion to stay.
`
`Date: June 27, 2005
`
`Respectfully submitted,
`
`s/ Susan Smith
`William K. Wells
`
`Brian S. Mudge
`Susan A. Smith
`
`KENYON & KENYON
`
`1500 K Street, N.W., Suite 700
`
`Washington, DC 20005
`(202) 220-4200
`
`Fax: (202) 220-4201
`
`Counsel for Opposer SightSound
`Technologies, Inc.
`
`

`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a true copy of the foregoing OPPOSER’S OPPOSITION TO
`APPLICANT’S MOTION TO STAY was served on counsel of record for the Applicant,
`Michael T. Zeller, QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP, 865 South
`Figueroa Street, 10th Floor, Los Angeles, CA 90017, by U.S. mail on this 27th day of June,
`2005.
`
`Date: June 27, 2005
`
`s/ Susan Smith
`
`

`
`IN THE UNITED STATES BANKRUPTCY COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`IN RE:
`
`ENCO RECOVERY CORP. f/k/a NAPSTER,
`INC., a Delaware corporation, et 211.,
`
`Debtors.
`
`\—/'&IV-—/‘V-—/\—/H—/
`
`Chapter 11
`
`Case No. 02-11573 (PJW)
`
`Jointly Administered
`Related to Docket No. 972
`
`Objection Deadline: June 6, 2005
`Hearing Date: June 13, 2005 at 2:30 p.m.
`
`SIGHTSOUND TECHNOLOGIES, INC.’S OBJECTION TO MOTION
`TO REOPEN CHAPTER 11 CASE AND ENFORCE SALE ORDER
`
`Sightsound Technologies, Inc. (“SightSound”), by and through its undersigned counsel,
`
`Kenyon & Kenyon and Saul Ewing LLP, hereby objects to Roxio, Inc. and Napster, LLC’s
`
`(collectively “Roxio”) Motion to Reopen Chapter 11 Case and Enforce Sale Order (the
`
`“Motion”), as follows:
`
`INTRODUCTION
`
`1.
`
`The attempt by Roxio to invoke the jurisdiction of this Court to resolve a dispute
`
`over Roxio’s trademarks is severely misplaced. Simply stated, this Court is without subject
`
`matter jurisdiction to resolve this third-party dispute among two non-creditors of the above-
`
`captioned debtors (the “Debtors”). This dispute has nothing to do with this Court’s Sale Order,
`
`and the outcome of this dispute will have no impact upon the former Debtors, their estates or
`
`creditors.
`
`2.
`
`Roxio’s Motion also fails on the merits, as SightSound does not dispute that
`
`Roxio acquired the NAPSTER trademark and other assets from ENCO Recovery Corp. f/k/a
`
`Napster, Inc. (“Napster”) through a bankruptcy sale in this Court (the “Napster Transaction”);
`
`nor does SightSound “attack” this Court’s Sale Order related thereto.
`
`Instead, the issue joined
`
`522071 is/5/05
`
`DKT. NO.L
`DTI FILED“ ‘ _Q__
`
`

`
`between Roxio and SightSound is the impact under substantive trademark law of Roxio’s post-
`
`sale conduct with respect to the NAPSTER trademark, which is an issue properly (and already)
`
`before the U.S. District Court for the Western District of Pennsylvania (the “Pennsylvania
`
`District Court”) and the U.S. Patent and Trademark Office (the “PTO”). There is no reason to
`
`reopen the Debtors’ cases nor any reason for this Court to interpret or enforce the Sale Order.
`
`3.
`
`Moreover, and among other procedural defects, Roxio’s Motion must be denied
`
`because Roxio cannot satisfy the standards for reopening these cases. Relief is available to
`
`Roxio in two other forums;
`
`litigation of these issues before the Court would be a waste of
`
`precious judicial resources; and the outcome of this dispute between two third—parties can have
`
`no impact upon the Debtors, their fully administered estates, their creditors or parties in interest.
`
`4.
`
`For all of the above reasons, Roxio’s Motion should be denied.
`
`BACKGROUND
`
`5.
`
`As this Court is well aware, Napster was embroiled in a highly publicized battle
`
`with the music industry arising from its operation of an Internet-based “service” that facilitated
`
`rampant music piracy. Nearly twenty record companies sued Napster for contributory and
`
`vicarious copyright infringement and related causes of action, and this action was soon joined by
`
`a class of music publishers. A California district court found a likelihood of success on the
`
`merits of the copyright infringement claim and issued a preliminary injunction against Napster
`
`and stated in its opinion that Napster “contributed to illegal copying on a scale that is without
`
`precedent...” A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 927 (N.D. Cal. 2000).
`
`In upholding the injunction (with modification) against Napster, the Ninth Circuit confirmed the
`
`rampant infringement that Napster was engaged in:
`
`Napster, by its conduct, knowingly encourages and assists the
`infringement of plaintiffs’ copyrights.
`
`522071 I arms
`
`2
`
`

`
`. properly found that Napster materially
`.
`.
`The district court
`contributes to direct infringement.
`
`Napster’s failure to police the system’s “premises,” combined with
`a showing that Napster financially benefits from the continuing
`availability of infringing files on its system, leads to the imposition
`of vicarious liability.
`
`A&M Records, Inc. V. Napster, lnc., 239 F.3d 1004, 1020, 1022, 1024 (9th Cir. 2001). Thus, two
`
`federal courts unequivocally stated that Napster was an infringer of intellectual property rights,
`
`namely, copyrights.
`
`6.
`
`Despite this unsavory reputation, Roxio decided to purchase the NAPSTER
`
`trademark in the Napster Transaction. Again, Sightsound does not dispute that the sale occurred
`
`or this Court’s Sale Order related thereto.
`
`SightSound seeks only to defend itself from
`
`defamation claims brought by Roxio regarding SightSound’s reference to that unsavory
`
`reputation.
`
`7.
`
`After the Napster Transaction, SightSound sued Roxio for patent infringement in
`
`the Pennsylvania District Court.
`
`In the course of that litigation, Roxio challenged SightSound’s
`
`patent rights underlying the suit and sought re-examination of those patents in the PTO.
`
`Sightsound noted the irony of this request by pointing out that the Napster name “had been
`
`synonymous with the most well-known violation of intellectual property rights .
`
`.
`
`. .” Despite the
`
`clear and unequivocal ruling of two federal courts that Napster had indeed violated intellectual
`
`property rights on an unprecedented scale, Roxio counterclaimed for defamation, trade libel,
`
`commercial disparagement, and related causes of action (collectively, the “Defamation Claims”)
`
`all based on this single statement by SightSound.l
`
`It is telling that Roxio fails to mention the litigation between the parties or the Defamation Claims in its
`Motion.
`
`52207] 1 @6105
`
`3
`
`

`
`8.
`
`Sightsound moved to dismiss the Defamation Claims on the grounds that the
`
`statement was truthful. However, before there could be an adjudication on the merits by the
`
`Pennsylvania District Court, Roxio moved to stay the entire proceeding. This motion was
`
`ostensibly on other grounds, but it had the effect of avoiding a ruling on SightSound’s motion to
`
`dismiss as the Pennsylvania District Court has now stayed the action for an indeterminate
`
`amount of time which may be two years.
`
`9.
`
`Roxio’s position in the Pennsylvania District Court is that the Napster name is not
`
`associated with the violation of intellectual property rights.
`
`In asserting this position, Roxio
`
`rejected the reputation or “goodwill” (in trademark law terms) associated with the prior user,
`
`Napster, including the reputation that Napster earned for facilitating copyright infringement on
`
`an unprecedented scale. This position runs contrary to trademark law because a trade name or
`
`mark is merely a symbol of goodwill; it has no independent significance apart from the goodwill
`
`it symbolizes. Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924). “Use of the mark by the assignee
`
`in connection with a different goodwill and different product would result in a fraud on the
`
`purchasing public who reasonably assume that the mark signifies the same thing, whether used
`
`by one person or another.” Marshak v. Green, 746 F.2d 927, 929-930 (2d Cir. 1984); see also, 2
`
`J. McCarthy, TRADEMARKS AND UNFAIR COMPETITION, § 18.2 (4th ed.). Goodwill and its
`
`trademark symbol are “as inseparable as Siamese Twins who cannot be separated without death
`
`to both.” E. The goodwill of a trademark is an inseparable part of that mark as well as an
`
`inseparable part of the business which owns the mark.
`
`Id. Goodwill can no more be separated
`
`
`from a business than reputation from a person. Webster Investors Inc. v. Commissioner, 291
`
`F.2d 192 (2d Cir. 1961).
`
`In an early case, the U.S. Supreme Court stated that good will “is
`
`tangible only as an incident, as connected with a going concern or business having locality or
`
`522071 1 6/6105
`
`4
`
`

`
`9
`name, and is not susceptible of being disposed of independently.’ Metropolitan Bank v. St.
`
`Louis Dispatch Co., 149 U.S. 436, 37 L. Ed. 799, 13 S. Ct. 944_(1893).
`
`10.
`
`Where a trademark is no longer used in association with the reputation or
`
`“goodwill” of the mark, the mark is separated from the goodwill and the mark is considered
`
`“abandoned,” which, when such abandonment occurs after a sale, is often called an “assignment
`
`in gross” under trademark law.
`
`See generally McCarthy on Trademarks, §§ 18.2-18.3.
`
`However,
`
`this term of art does not mean that the assignment never occurred, just that
`
`the
`
`substance of the trademark rights assigned have been impacted by post-sale misuse by the
`
`assignee.
`
`11.
`
`A trademark registration for a mark that has been abandoned (due to an
`
`assignment in gross or otherwise) is subject to cancellation by the PTO.
`
`15 U.S.C. § 1064(3).
`
`As Roxio had sued SightSound for defamation and thereby rejected the goodwill associated with
`
`the Napster mark, SightSound determined that Roxio apparently had abandoned the Napster
`
`mark. Roxio should not be permitted on the one hand to claim ownership of the Napster mark
`
`(which inherently includes its reputation) and on the other, sue those who discuss that reputation.
`
`As was its right, SightSound sought recourse in the PTO, where it instituted a petition (the
`
`“TTAB Petition”) in the Trademark Trial and Appeal Board (“TTAB”) to cancel Roxio’s
`
`trademark registrations for the Napster mark on the basis of Roxio’s position in the Pennsylvania
`
`District Court action, i.e., that it did not acquire the negative aspects of Napster’s reputation
`
`along with the Napster mark.
`
`12.
`
`Roxio has taken inconsistent positions before different
`
`tribunals.
`
`In the
`
`Pennsylvania District Court, Roxio asserted that the Napster reputation does E include “the
`
`violation of intellectual property rights.” Roxio’s and Napster’s First Amended Answer and
`
`522071 .1 oxoros
`
`5
`
`

`
`Counterclaims, 111] 29, 37, 41 (Exhibit A hereto). However, Roxioz filed an answer in the TTAB
`
`and represented to the TTAB it had received all rights in the Napster mark including the
`
`“associated good will.” (See Registrant’s Answer to the Petition for Cancellation, fll 1.) Thus,
`
`unlike its position in the Pennsylvania District Court action -- where it disavowed the reputation
`
`(and, hence, the goodwill) in the Napster mark —-Roxio is now claiming before the TTAB that
`
`has all of the goodwill. Roxio’s TTAB position therefore puts it in direct conflict with its
`
`position in the Pennsylvania District Court}
`
`13.
`
`In addition to requesting a stay of the Pennsylvania District Court action, Roxio
`
`has moved to stay the TTAB proceeding.4 Thus, Roxio is again attempting to avoid an
`
`adjudication on the merits of its trademark rights.
`
`14.
`
`The instant Motion to Reopen is yet another attempt by Roxio to prevent an
`
`adjudication on the merits of SightSound’s trademark claims in the TTAB. Roxie has thereby
`
`established a clear pattern and practice of trying to avoid adjudication of the inconsistent
`
`positions it has taken with respect to the Napster mark. Roxio seems especially keen to avoid the
`
`TTAB proceeding where Roxie would have to admit, in order to save its trademark registrations,
`
`that it took all of the goodwill associated with the Napster mark, even the bad reputation.
`
`(Again, the term “goodwill” signifies the reputation of the mark to the purchasing public and
`
`does not differentiate between good and bad reputation.)
`
`Although the collective term “Roxio" is used, only Napster, LLC is a party to the TTAB proceeding.
`
`Roxio has also admitted to this Court that it acquired all of the goodwill, not just some, from Napster:
`“Since the late 1990’s, the NAPSTER marks have become associated with the service of downloading of
`music and content over the Internet.
`It was this association, or ‘goodwill,’ that Roxio intended to obtain
`through the Asset Purchase Agreement and later exploit in marketing its service .
`.
`. Motion to Reopen,
`$1 35 (citation omitted).
`In the face of this statement, there is no legitimate basis for Roxio’s position in the
`Pennsylvania District Court.
`
`Roxio’s motion to stay the TTAB proceeding is currently pending, with SightSound’s response due
`June 13,2005.
`
`522071 1 5/5/05
`
`6
`
`

`
`15.
`
`As will be shown below, reopening the Debtors’ bankruptcy cases
`
`is wholly
`
`unnecessary and improper because Sightsound has not attacked the Sale Order, and the
`
`underlying issues relate solely to the implications of Roxio’s conduct after the bankruptcy sale
`
`(“Post—Sa1e Conduct”) under trademark law. Roxio’s motion is also procedurally defective.
`
`Furthermore, the relief sought by Roxio in the Motion is unnecessary and unavailable. Roxio’s
`
`Motion is yet another attempt to avoid adjudication of its baseless Defamation Claims against
`
`Sightsound and should be rejected.
`
`ARGUMENT
`
`A.
`
`Roxio Has Not Met The Standard To Reopen A Bankruptcy Proceeding
`
`16.
`
`Roxio has not met its burden to show that reopening the bankruptcy case is
`
`warranted under the circumstances.
`
`Section 350(1)) of the Bankruptcy Code governs the
`
`reopening of a bankruptcy case and provides, in relevant part, that “[a] case may be reopened .
`
`.
`
`.
`
`to administer assets, to accord relief to the debtor, or for other cause.“ 11 U.S.C. § 350(b). This
`
`Court has broad discretion in deciding whether to reopen a case after it has been closed. See,
`
`e.g., Zinchiak V. CIT Small Business Lending Corp. {In re Zinchiak), 406 F.3d 214, 223 (3d Cir.
`
`2005) (citations omitted). The burden is on the moving party to show that reopening a case is
`
`warranted under the circumstances.
`
`In re Otto, 311 B.R. 43, 47 (Bankr. E.D. Pa. 2004), citing 1_n_
`
`re Cloninger, 209 B.R. 125 (Bankr. E.D. Ark. 1997); In re Nelson, 100 BR. 905 (Bankr. N.D.
`
`Ohio 1989).
`
`17.
`
`In determining whether the moving party has met
`
`its burden, courts have
`
`considered a number of factors including: (1) the availability of relief in another court (1, 311
`
`B.R. at 47 (citations omitted)); (2) whether reopening the case would be a waste of judicial
`
`resources (In re Yoder Co., 158 B.R. 99, 101 (Bankr. N.D. Ohio 1993)); and (3) the impact
`
`52207|
`
`I 6/6/05
`
`7
`
`

`
`reopening the case would have on the bankruptcy estate (Apex Oil Co., Inc. v. Sparks [In re
`
`Apex Oil C0,, Inc.1, 406 F.3d 538, 542 (Sm Cir. 2005)).
`
`(i)
`
`18.
`
`Relief Is Available In Two Other Forums.
`
`An analysis of the facts of this case under the factors above demonstrates that this
`
`proceeding should not be reopened. First, there is relief available in another forum.
`
`Indeed, the
`
`issues are already pending in two other forums »— the Pennsylvania District Court and the TTAB.
`
`With all due respect to the Court, these forums are better equipped to determine the trademark
`
`issues for reasons discussed in greater detail below in Section E. Also as discussed below,
`
`Sightsound does not dispute or challenge the Sale Order, so there should be no need for any
`
`tribunal to interpret or enforce the Sale Order. But, assuming, arguendo, that the interpretation
`
`or meaning of the Sale Order becomes relevant to this dispute, both the Pennsylvania District
`
`Court and the TTAB are capable of deciding the effect (if any) of the Sale Order and Asset
`
`Purchase Agreement on SightSound’s request to have the marks cancelled and/or the Defamation
`
`Claims. Therefore,
`
`the relief requested by Roxio can be adequately addressed in a non-
`
`bankruptcy forum.5
`
`(ii)
`
`Reopening The Debtors’ Cases Will Be A Waste Of Judicial Resources.
`
`19.
`
`Second, reopening these cases will be a complete waste of this Court’s already
`
`burdened time and resources. Roxio has requested that the Court, one of the busiest federal
`
`courts in the Country, become involved in complex litigation involving the interpretation of
`
`federal intellectual property law. But, the Pennsylvania District Court and the TTAB are each
`
`capable of ruling upon these issues. Even if the Court decided these issues, the Court’s rulings
`
`Indeed, if Roxio felt that SightSound’s action in the TTAB was in any way improper, Roxio should have
`raised the issue with the Pennsylvania District Court, which already had jurisdiction over the parties and the
`dispute, and was familiar with the facts and issues.
`
`5220? I .1 6x'bJO5
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`8
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`would not operate to end the Pennsylvania District Court action or the TTAB Petition.
`
`It simply
`
`makes no sense to have this Court deal with these issues, which can be efficiently and effectively
`
`resolved by either the Pennsylvania District Court or the TTAB.
`
`(iii)
`
`Reopening The Cases Will Have No Impact Upon
`The Debtors, Their Estates Or Creditors.
`
`20.
`
`As discussed more fully below, the outcome of the dispute between Roxio and
`
`Sightsound will have no impact upon the Debtors, their former estate or creditors. Roxio does
`
`not even allege any such impact.
`
`Instead, Roxio believes that as the buyer of a Debtors’ assets it
`
`is entitled to return to the Court in perpetuity whenever it believes doing so will serve its interest.
`
`But, Roxio’s position is not legally sustainable.
`
`21.
`
`Case law supports SightSound’s position.
`
`In Apg, a group of homeowners
`
`brought a class action lawsuit in state court against a former Chapter 11 debtor and other
`
`defendants, alleging that their design, operation and maintenance of an oil refinery caused
`
`underground toxic waste. 406 F.3d at 541-42. The lawsuit was subsequently removed to the
`
`federal district court and the former debtor filed a motion to reopen the bankruptcy case,
`
`requesting that the bankruptcy court enforce the discharge order against the class plaintiffs and
`
`hold them in contempt for filing the suit. E. at 542. The bankruptcy court denied the motion to
`
`reopen based,
`
`inter alia, on: (1) the availability of an non-bankruptcy forum to afford the
`
`requested relief; and (2) the fact that the underlydng litigation would have no impact on the
`
`debtor’s bankruptcy estate. E.
`
`In affirming the bankruptcy court’s decision, the court held that
`
`the availability of an alternative forum was an appropriate factor to consider when deciding a
`
`motion to reopen under Section 3S0(b).
`
`lg. at 542. To that end, the court noted that although the
`
`bankruptcy court
`
`is best suited to interpret
`
`its own orders, “Congress granted state courts
`
`concurrent jurisdiction to consider bankruptcy issues arising from Chapter 11 proceedings.” E.
`
`52207] I 615/05
`
`9
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`

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`(citing 28 U.S.C. § l334(b)). The court also found compelling that the suit was pending before a
`
`court having more familiarity than the bankruptcy court with the underlying facts and legal
`
`issues involved. E.
`
`22.
`
`Similarly, in M, a purchaser of bankruptcy estate assets filed a motion to
`
`reopen the bankruptcy case and for an order enforcing the terms of the underlying sale order by
`
`enjoining a product liability suit filed against it.
`
`In re Yoder, 158 HR. at 100. The court denied
`
`the motion to reopen, and in so doing, rejected the argument that it was necessary for the
`
`bankruptcy court to determine the effect of its own sale order, the terms of which were “typical
`
`of most such orders and reflect no special consideration of future claims or unique bankruptcy
`
`concerns.” E. The court found that involving itself in such a litigation where no estate was
`
`being administered and where no interests of the debtor or creditors were being pursued would
`
`be an unjustifiable waste of bankruptcy court resources. E. at 101.
`
`23.
`
`As in the cases discussed above, Roxio has two other forums which are capable of
`
`resolving its issues, the outcome of which, will have no impact upon the Debtors, their estates or
`
`creditors. In this circumstance, Roxio has failed to meet its burden to re-open these cases and the
`
`Motion should be denied.
`
`B.
`
`The Bankruptcy Court Lacks Subject Matter Jurisdiction Over This Dispute
`
`24.
`
`Roxio asserts that this Court has subject matter jurisdiction pursuant to 28 U.S.C.
`
`§§ 157 and l334(b) in addition to paragraph 22 of the Sale Order. However, the Motion requests
`
`that the Court: (i) reopen the underlying bankruptcy case to enforce the Sale Order and Asset
`
`Purchase Agreement as between two non-debtor, non—creditor parties with respect to claims and
`
`actions arising significantly after the closing of the bankruptcy case; and (ii) enjoin or stay
`
`SightSound (a third party) from litigating the TTAB Petition against Roxio (also a third party) on
`
`522071 I b.'t:'r‘05
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`

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`the grounds that the TTAB Petition seeks to somehow attack or “undo” the Sale Order.
`
`fieg
`
`Motion, 1| 18. Even if Roxio can successfully hurdle the reopening requirements (which
`
`SightSound argues it has not and cannot do),
`
`this Court would not have subject matter
`
`jurisdiction over this dispute among two third—parties, the outcome of which, will have no impact
`
`upon the Debtors, their estate or creditors.
`
`25.
`
`Bankruptcy courts are courts of limited jurisdiction.
`
`In re Selig, 135 B.R. 241,
`
`243 (Bankr. E.D. Pa. 1992). “Statutorily, Bankruptcy Court’s jurisdiction is limited by the terms
`
`of 28 U.S.C. § l334(b) to all civil proceedings arising under title 11, or arising in or relating to
`
`cases under title 11.” E. A proceeding “relates to a case under title 11” if the outcome of the
`
`litigation “could conceivable have any effect on the estate being administered in bankruptcy.” I_n
`
`re Marcus Hook Development Park, Inc., 943 F.2d 261, 264 (3d Cir. 1991), gig Pacor, Inc. v.
`
` , 743 F.2d 984, 994 (3d Cir. 1984). Consequently, a Bankruptcy Court lacks subject
`
`matter jurisdiction over a dispute which does not effect the debtor or property of the bankruptcy
`
`estate. Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.6 (1995) (“bankruptcy courts have no
`
`jurisdiction over proceedings that have no effect on the debtor.”) As one court has noted,
`
`[M]erely because a dispute can trace its origins to a bankruptcy debtor or
`even to a prior order of the bankruptcy court is not sufficient to confer
`subject matter jurisdiction under
`§ 1334(b).
`Jurisdiction requires
`something “more than the hovering shadow of an earlier bankruptcy .
`.
`.
`
`In re Import & Mini Car Parts, Ltd., Inc., 200 B.R. 857, 860 (Bankr. N.D. Ind. 1996), ,
`
`Langella v. Weisz, 39 B.R. 615, 619 (E.D.N.Y. 1984) (court found no “related to” jurisdiction
`
`over suit stemming from judgment assigned by the debtor).
`
`26.
`
`The reservation of jurisdiction in an order will only operate to confer jurisdiction
`
`if a bankruptcy court has subject matter jurisdiction over a dispute in the first instance. See In re
`
` Resorts Int’l Inc., 372 F.3d 154 (3d Cir. 2004) (“retention ofjurisdiction provisions will be given
`
`522071.] 6/6105
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`1 1
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`

`
`effect, assuming there is bankruptcy court jurisdiction. But neither the bankruptcy court nor the
`
`parties can write their own jurisdictional ticket”).
`
`27.
`
`All the above case law strongly supports SightSound’s assertion that this Court
`
`lacks jurisdiction over this dispute between Roxio and SightSound. Roxio is not the debtor, and
`
`upon information and belief, it is not a creditor of the Debtors. Napster, LLC did not even exist
`
`until after the sale closed and Roxio,
`
`the original purchaser of the Napster assets, created
`
`Napster, LLC. The outcome of the dispute between Roxio and SightSound will have no effect
`
`on the arrangement, standing, or priorities of the Debto