Trademark Trial and Appeal Board Electronic Filing System. 3935
`
`ESTTA Tracking number: ESTTA33870
`
`Filing date3
`
`05/24/2005
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Proceeding
`
`92044347
`
`Defendant
`Napster, Inc.
`Napster, Inc.
`§ 600 Chesapeake Drive
`Redwood City, CA 94063
`
`MICHAEL T. ZELLER
`C
`QUINN EMANUEL URQUHART OLIVER & HEDGES
`orrespondence 3
`Address
`1 865 SOUTH FIGUEROA STREET, 10TH FLOOR
`LOS ANGELES, CA 90017
`
`Submission
`
`Motion to Suspend for Civil Action
`
`Ffler's Name
`
`Michael T. Zeller
`
`Filer's e—mail
`Signature
`
`michae1ze11er@quinnernanuel.corn
`/Michael T. Zellerf
`
`PetitionforStay.pdf ( 7 pages )
`§ DECLARATION.pdf ( 270 pages )
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of:
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2575170
`June 4, 2002
`NAPSTER
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2841431
`May 11, 2004
`NAPSTER
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2843786
`May 18, 2004
`NAPSTER
`
`Cancellation No. 92044347
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2843405
`May 18, 2004
`NAPSTER & Design
`
`RESPONDENT AND REGISTRANT
`NAPSTER, LLC’S PETITION FOR
`STAY
`
`SIGHTSOUND TECHNOLOGIES, INC.,
`
`Petitioner,
`
`V.
`
`NAPSTER, LLC,
`
`Respondent.
`
`
`
`Commissioner of Trademarks
`
`P.O. Box 1451
`
`Arlington, Virginia 22313-1451
`
`04635/652302
`
`1
`
`PETITION FOR STAY
`
`

`
`Respondent Napster, LLC (“Respondent” or “Registrant”), by its counsel, respectfully
`
`moves the Board to stay the instant proceedings pending the resolution of issues raised by
`
`Petitioner SightSound Technologies, Inc. (“Petitioner”) in its Petition for Cancellation that are
`
`currently before the United States Bankruptcy Court for the District of Delaware and the United
`
`States District Court for the Western District of Pennsylvania.
`
`In support of its Motion, Respondent states as follows. In these proceedings, Petitioner
`
`seeks cancellation of four NAPSTER registrations, namely, Registration Nos. 2575170,
`
`2841431, 2843786 and 2843405 (collectively, the “NAPSTER Registrations”). There are
`
`pending civil actions that may bear on the issues before the Board and therefore warrant the entry
`
`of a stay of these cancellation proceedings until the resolution of the relevant issues by the
`
`courts.
`
`First, on June 3, 2002, Napster, Inc. and its subsidiaries (collectively, “Napster, Inc.”)
`
`filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the
`
`Bankruptcy Court of the District of Delaware (the “Bankruptcy Court”).1 After several months
`
`of collaborative efforts by the Bankruptcy Court, the appointed Bankruptcy Trustee, and the
`
`Official Committee of Unsecured Creditors, an Asset Purchase Agreement was entered into
`
`between Napster, Inc. and Roxio, Inc. (“Roxio”), which is Respondent’s parent. The Asset
`
`Purchase Agreement provided for Roxio’s acquisition of substantially all of Napster, Inc.’s
`
`tangible and intangible assets, including the marks, good will and rights underlying the
`
`NAPSTER Registrations (whether as an issued registration or as then-pending Intent to Use
`
`1 The facts stated herein are supported by and set forth in greater detail in the Motion to Reopen
`Chapter 11 Case and Enforce Sale Order and its accompanying exhibits, attached as Exhibit 1 to
`the Zeller Declaration (“Zeller Decl.”) submitted herewith.
`
`0463 5/652302
`
`2
`
`PETITION FOR STAY
`
`

`
`applications). On November 27, 2002, afier notice and a lengthy hearing at which multiple
`
`parties appeared, the Bankruptcy Court entered a Sale Order approving the Asset Purchase
`
`Agreement.
`
`The Petition for Cancellation is specifically predicated on the alleged invalidity of the
`
`assignment of the NAPSTER Registrations that had been accomplished in the Bankruptcy Court,
`
`pursuant to the Bankruptcy Court’s Sale Order on November 27, 2002. §_@ Petition, 111] 5, 7-8.
`
`Indeed, eliminating any question that Petitioner is attacking the Bankruptcy Court’s Sale Order
`
`in these proceedings, the Petition for Cancellation identifies the allegedly unlawful transfer of the
`
`challenged ITU applications as having occurred “when they were transferred by the original
`
`owner, Napster, Inc., to Roxio, Inc. (Napster, LLC’s parent) on November 27, 2002”--the date of
`
`the Bankruptcy Court’s Sale Order approving their transfer pursuant to the Asset Purchase
`
`Agreement. Petition, 1] 8 (emphasis added).
`
`Because Petitioner has collaterally attacked the validity of the Bankruptcy Court’s Sale
`
`Order and the Asset Purchase Agreement that it approved, Respondent and Roxio filed a Motion
`
`to Reopen Chapter 11 Case and Enforce Sale Order (the “Motion”) on May 20, 2005. (Zeller
`
`Decl., Exh. 1.) The Motion was served on Petitioner herein on May 20, 2005. (lg, 11 2.) Among
`
`other things, the Motion seeks to reopen the Bankruptcy Court case and seeks an Order by the
`
`Bankruptcy Court enforcing the terms of the Sale Order, including with respect to the NAPSTER
`
`Registrations at issue in the Petition for Cancellation. (Zeller Decl., Exh. 1, 14-19.) As a result,
`
`the validity of the assignment that Petitioner challenges in these proceedings is at issue in the
`
`Motion before the Bankruptcy Court. (Li)
`
`04635/652302
`
`3
`
`PETITION FOR STAY
`
`

`
`Second, issues raised by the Petition for Cancellation also are the subj ect of another
`
`pending civil action between the parties. On January 25, 2005, Petitioner sued Respondent and
`
`Roxio in the United States District Court for the Western District of Pennsylvania (the “District
`
`Court”) in an action for ostensible patent infringement entitled SightSound Technologies, Inc. v.
`
`Roxio, Inc. and Napster, L.L.C., Case No. 04-1549. (Zeller Decl., Exh. 2.) Respondent and
`
`Roxio filed an Answer and Counterclaims, as well as a First Amended Answer and
`
`Counterclaims.
`
`(I_d., Exh. 3.) The Fourth through Ninth Counterclaims for Relief allege, among
`
`other things, that Petitioner’s issuance of a press release stating that the Napster “name” is
`
`“synonymous with the most well-known violation of intellectual property rights” constituted
`
`unfair competition, trade libel, defamation, commercial disparagement, breach of contract and
`
`intentional interference with prospective contractual relations. (Q) Although the action in the
`
`District Court is currently stayed pending the Patent Office’s re-examination of the patents
`
`asserted by Petitioner in the District Court suit, the action remains pending before the District
`
`Court. (Zeller Decl., 11 4.)
`
`The Petition for Cancellation reveals that it overlaps with, and duplicates, issues that are
`
`pending before the District Court. The Petition for Cancellation acknowledges that
`
`Respondent’s Counterclaims in the District Court “allegedly aris[e] from Petitioner’s reference
`
`to the name Napster” and relies on Respondent’s Counterclaims filed in the District Court as a
`
`basis for cancellation here. Petition for Cancellation, 111] 2, 4. Furthennore, Petitioner filed with
`
`the District Court on February 11, 2005 a motion to dismiss that puts at issue, in largely identical
`
`language, matters asserted in the Petition for Cancellation. Thus, Petitioner’s motion to dismiss
`
`in the District Court recites the same allegations Petitioner makes in paragraph 3 of the Petition
`
`04635/652302
`
`4
`
`PETITION FOR STAY
`
`

`
`for Cancellation. (Zeller Dec1., Exh. 4, at 1-2.) Furthermore, Petitioner’s motion to dismiss
`
`presents to the District Court the same assignment-in-gross arguments that are alleged in
`
`paragraphs 4 and 5 of the Petition for Cancellation. (Zeller Decl., Exh. 4, at 7-8.)2
`
`Because the issues currently before the Bankruptcy Court and the District Court may
`
`have an effect on issues raised in the Petition for Cancellation, the instant proceedings should be
`
`stayed pending the courts’ determinations. The Board’s usual practice of staying its proceedings
`
`pending the outcome of a court action that may have a bearing on the issues before the Board, as
`
`is the situation here, is codified at 37 C.F.R. § 2.1 17(a):
`
`“Whenever it shall come to the attention of the Trademark Trial and Appeal Board that a
`
`party or parties to a pending case are engaged in a civil action or another Board
`
`proceeding which may have a bearing on the case, proceedings before the Board may be
`
`suspended until termination of the civil action or other Board proceeding.”
`
`E Trademark Trial and Appeal Board Manual of Procedure § 510.02(a) (“[o]rdinarily, the
`
`Board will suspend proceedings in the case before it if the final determination of the other
`
`proceeding will have a bearing on the issues before the Board.”). E all The Other Telephone
`
`Co. v. Connecticut Nat’l Telephone Co., 181 U.S.P.Q. 779, 781-82 (Comm’r of Patents 1974);
`
`Townley Clothes, Inc. v. Goldring, Inc., 100 U.S.P.Q. 57, 58 (Comm’r of Patents 1953) (“it is
`
`deemed the sounder practice to suspend the [Trademark] Office proceedings pending termination
`
`of the Court action.”).
`
`The most logical and efficient course of action is for the Board to suspend these
`
`proceedings until the Bankruptcy Court and the District Court resolve the issues that Petitioner
`
`2 The District Court has not yet ruled on Petitioner’s motion to dismiss in those proceedings.
`(Zeller Decl., 1] 5.)
`
`04635/652302
`
`5
`
`PETITION FOR STAY
`
`

`
`also asserts here. Respondent respectfully requests that the Board grant its motion and stay the
`
`instant cancellation proceedings pending the completion of the relevant proceedings before the
`
`Bankruptcy Court and before the District Court.
`
`Respectfully submitted,
`
`Dated: May 24,2005
`
`By:
`
`lam...
`
`QUINN EMANUEL URQUHART
`OLIVER & HEDGES, LLP
`Michael T. Zeller
`
`Michael E. Williams
`
`865 South Figueroa Street, 10th Floor
`Los Angeles, California 90017
`Telephone: (213) 443-3000
`Facsimile: (213) 443-3100
`
`Attorneys for Respondent
`Napster, LLC
`
`04635/652302
`
`6
`
`PETITION FOR STAY
`
`

`
`Proof of Service
`
`I hereby certify that a true and complete copy of the foregoing Respondent and Registrant
`
`Napster, LLC’s Petition for Stay has been served on William K. Wells by mailing said copy on
`
`May 24, 2005, Via First Class Mail, postage prepaid to:
`
`William K. Wells
`
`Brian S. Mudge
`Susan A. Smith
`
`KENYON & KENYON
`
`1500 K Street, N.W., Suite 700
`Washington, DC 20005
`Tel.: (202) 220-4200
`Fax: (202) 220-4201
`
`/2 law‘
`
`04635/652302
`
`7
`
`PETITION FOR STAY
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`Cancellation No. 92044347
`
`DECLARATION OF MICHAEL T.
`
`ZELLER IN SUPPORT OF
`RESPONDENT AND REGISTRANT
`NAPSTER, LLC’S PETITION FOR
`STAY
`
`In the Matter of:
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2575170
`June 4, 2002
`NAPSTER
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2841431
`May 11, 2004
`NAPSTER
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2843786
`May 18, 2004
`NAPSTER
`
`Trademark Reg. No.
`Registration Date:
`For the Mark:
`
`2843405
`May 18, 2004
`NAPSTER & Design
`
`SIGHTSOUND TECHNOLOGIES, INC.,
`
`Petitioner,
`
`v.
`
`NAPSTER, L.L.C.,
`
`Respondent.
`
`Commissioner of Trademarks
`P.O. Box 1451
`
`Arlington, Virginia 22313-1451
`
`04635/652400
`
`1
`
`DECL. ISO PETITION FOR STAY
`
`

`
`1, Michael T. Zeller, do hereby declare and state as follows:
`
`1.
`
`I am a member of the State Bars of California, New York and Illinois and am
`
`counsel for Napster, LLC in these proceedings and for Napster, LLC and Roxio, Inc. in
`
`SightSouna' Technologies, Inc. v. Roxio, Inc., and Napster, L.L.C., Civil Action No. 04-1549
`
`(W.D. Pa.), and In re: Enco Recovery Corp. f/k/a/ Napster, Inc., No. 02-11573 (PJW) (Bankr. D.
`
`Del.).
`
`I have personal knowledge of the facts stated herein and, if sworn as a witness, could and
`
`would testify competently thereto.
`
`2.
`
`On May 20, 2005, Respondent and Roxio filed a Motion to Reopen Chapter 11
`
`Case and Enforce Sale Order (“the Motion”) in In re: Enco Recovery Corp. f/k/a/ Napster, Inc.
`
`A true and correct copy of the Motion and its accompanying exhibits are attached hereto as
`
`Exhibit 1. The Motion was served on Petitioner herein on May 20, 2005. Among other things,
`
`the Motion seeks to reopen the Bankruptcy Court proceedings and seeks an Order by the
`
`Bankruptcy Court enforcing the transfer of assets, including the four NAPSTER Registrations at
`
`issue in the Petition for Cancellation. As a result, the validity of the assignment that Petitioner
`
`challenges in these proceedings is at issue in the Motion before the Bankruptcy Court.
`
`3.
`
`On January 25, 2005, Petitioner sued Respondent and Roxio in the United States
`
`District Court for the Western District of Pennsylvania (the “District Court”) in an action for
`
`ostensible patent infringement entitled Sz'ghtSound Technologies, Inc. v. Roxio, Inc. and Napster,
`
`L.L. C., Case No. 04-1549. A true and correct copy of the Complaint in that action is attached
`
`hereto as Exhibit 2. Respondent and Roxio filed an Answer and Counterclaims, as well as a First
`
`Amended Answer and Counterclaims. A true and correct copy of the original and First
`
`Amended Answer and Counterclaims are attached hereto as Exhibit 3.
`
`04635/652400
`
`2
`
`DECL. ISO PETITION FOR STAY
`
`

`
`4.
`
`The Fourth through Ninth Counterclaims for Relief in the First Amended Answer
`
`and Counterclaims allege, among other things, that Petitioner’s issuance of a press release stating
`
`that the Napster “name” is “synonymous with the most well-known violation of intellectual
`
`property rights” constituted unfair competition, trade libel, defamation, commercial
`
`disparagement, breach of contract, and intentional interference with prospective contractual
`
`relations. Although the action in the District Court is currently stayed pending the Patent
`
`Office’s re-examination of the patents asserted by Petitioner in the District Court suit, the action
`
`remains pending before the District Court.
`
`5.
`
`Petitioner filed with the District Court on February 11, 2005 a motion to dismiss
`
`that puts at issue, in largely identical language, matters asserted in the Petition for Cancellation.
`
`A true and correct copy of the motion to dismiss is attached hereto as Exhibit 4. Thus,
`
`Petitioner’s motion to dismiss recites (at pages 1 to 2) the same allegations Petitioner makes in
`
`paragraph 3 of the Petition for Cancellation. Furthermore, Petitioner’s motion to dismiss (at
`
`pages 7 to 8) presents to the District Court the same assignment—in-gross arguments that are
`
`alleged in paragraphs 4 and 5 of the Petition for Cancellation. The District Court has not yet
`
`ruled on Petitioner’s motion to dismiss in those proceedings.
`
`I declare under penalty of perjury under the laws of the United States of America
`
`that the foregoing is true and correct.
`
`Executed this 24th day of May, 2005, at Los Angeles, California.
`
`4‘/fig. W /\—--a
`; Michael T. Zeller
`
`04635/652400
`
`3
`
`DECL. ISO PETITION FOR STAY
`
`

`
`EXHIBIT 1
`
`

`
`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 al.,
`
`Debtors.
`
`~/\/\a~.4\/\/
`
`)
`
`Chapter 11
`
`Jointly Administered
`Case No. 02-11573 (PJW)
`
`Objection Deadline: June 6, 2005 @ 4:00 pm
`Hearing Date: June 13, 2005 @ 2:30 p.m.
`
`NOTICE OF MOTION TO REOPEN CHAPTER 11
`CASE AND ENFORCE SALE ORDER
`
`PLEASE TAKE NOTICE that on May 19, 2005, Roxio, Inc. and Napster, LLC
`
`(collectively, the “Movants”) filed the attached Motion to Reopen Chapter 11 Case and Enforce
`
`Sale Order (the “Motion”) with the United States Bankruptcy Court for the District of Delaware,
`
`824 Market Street, 3rd Floor, Wilmington, Delaware 19801 (the “Bankruptcy Court”).
`
`PLEASE TAKE FURTHER NOTICE that a hearing on the Motion will be held
`
`before The Honorable Peter‘ .1. Walsh on June 13, 2005 at 2:30 p.m. (Eastern Time).
`
`PLEASE TAKE FURTHER NOTICE that any objections to the Motion must
`
`be in writing, filed with the Clerk of’ the Bankruptcy Court‘, 824 Market Street, 3rd Floor,
`
`Wilmington, Delaware 19801, and sewed upon and received by the undersigned counsel for the
`
`Movants on or before June 6, 2005 at 4:00 pm. (Eastern Time).
`
`RLFI-2878467-1
`
`:5/I9/05
`Date filed:
`Docket #2 .972
`
`

`
`IN THE EVENT THAT NO OB.IECTION IS FILED AND RECEIVED BY
`
`MOVANTS IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE
`
`RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING.
`
`Dated: May 16, 2005
`Wilmington, Delaware
`
`In
`
`
`
`Mark D. Co lins (No 2981)
`Mich I J.
`erchant (No. 3854)
`
`RIOEIQARD , LAYTON & FINGER, PA.
`
`0 e Rodne I Square
`P.
`.
`
`
`
`Wil
`
`n. Delaware 19899
`
`(302) 651-7700
`
`- and -
`
`Michael T. Zeller (pro hac application pending)
`QUINN EMANUEL URQUHART OLIVER &
`HEDGES, LLP
`865 S. Figueroa Street, 10th Floor
`Los Angeles, California 90017
`Telephone: 2l3—443~3100
`Facsimile: 213-443~.3200
`
`- and -
`
`Suzzanne Uhland (pro hac application pending)
`O’MELVENY & MYERS LLP
`
`400 South Hope St.
`Los Angeles, California 90071
`(213) 430-6000
`
`Attorneys for Plaintiffs
`ROXIO. INC. and NAPSTER, LILIICV
`
`RIF]-2878467-I
`
`

`
`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 al.,
`
`Debtors.
`
`&%/%\J%I\./
`
`l
`
`Chapter 11
`
`Jointly Administered
`Case No. 02-11573 (PJW)
`
`Objection Deadline: June 6, 2005 @ 4:00 p.m.
`Hearing Date: June 13, 2005 @ 2:30 pm.
`
`MOTION TO REOPEN CHAPTER 11
`CASE AND ENFORCE SALE ORDER
`
`Roxio, Inc. and Napster, LLC (collectively, the “Movants”), by and through their
`
`undersigned counsel, hereby move the Court, pursuant to sections 105, 350(_b) and 363 of title 1]
`
`of the United States Code (the “Bankruptcy Code”), and Rule 3020(d) of the Federal Rules of
`
`Bankruptcy Procedure (the “Bankruptcy Rules”), for the entry of an order (i) reopening the
`
`chapter 11 cases of Enco Recovery Corp. (f/k/a/ Napster, Inc-), Enco-2 Recovery Corp. (f/k/a
`
`Napster Music Company, Inc.) and Enco—3 Recovery Corp. (f/k/a Napster Mobile Company,
`
`Inc.) (collectively, the “Debtors”), and (ii) enforcing the Court’s Order approving the sale of the
`
`Debtors’ assets to Roxio, Inc. (the “Motion"). In support of the Motion, the Movants
`
`respectfully represent as follows:
`
`I.
`
`JURISDICTION AND VENUE
`
`1.
`
`This Court has jurisdiction over this proceeding pursuant to 28 U.S.C.
`
`§§ 157 and l334(b).
`
`2.
`
`This Court also has retained jurisdiction to grant the relief requested
`
`herein pursuant to Paragraph 22 of its Order Under 11 U.S.C. §§ lO5(a), 363, 365 and ll46(c),
`
`and Fed. R. Bankr. P. 2002, 6004, 6006, and 9014 (A) Approving Asset Purchase Agreemenzi.
`
`RLFI-2876225-2
`
`

`
`(B) Authorizing the Sale of'Substantially All of Debtors’ Assets; (C) Authorizing Assumption
`
`and Assignment of Certain Executory Contract; and (D) Granting Other Related Relief (the “Sale
`
`Order”) [Docket No. 423]..'
`
`3.
`
`Venue is proper in this Court pursuant to 28 U.SrC.. § 1409(a) because this
`
`Motion concerns a matter that arises in, and is related to, the Debtors’ chapter 1 1 cases.
`
`11.
`
`BACKGROUND
`
`4.
`
`On June 3, 2002, the Debtors filed voluntary petitions for reliefunder
`
`chapter 11 of the Bankruptcy Code in this Court. The chapter 11 cases were procedurally
`
`consolidated for administrative purposes. Prior to filing their bankruptcy petitions, the Debtors
`
`provided an online service whereby users could download and share music and other content via
`
`the Internet. See A&:M Records, Inc. v. Napster, Inc. , 114 F. Supp. 2d 896, 901-902 (N.D. Cal.
`
`2000).
`
`5.
`
`Following several eventful and contentious months during which, among
`
`other things, the Court rejected a proposed sale of the Debtors’ assets to Bertelsmann AG and
`
`appointed Hobart G. Truesdell as Chapter 11 trustee (the “Trustee”), the Court approved the sale
`
`of substantially all of the Debtors’ assets to Roxio, hic. (“Roxio"). The process leading to the
`
`sale involved substantial collaborative efforts by this Court, the Trustee and the Official
`
`states:
`
`' A true and correct copy of the Sale Order is attached hereto as Exhibit A. Paragraph 22 of the Sale Order
`
`This Court retains jurisdiction to enforce and implement the terms and
`provisions of the Asset Purchase Agreement, all amendments thereto, any
`waivers and consents thereunder, and of each of'the agreements executed in
`connection therewith in all respects, including, but not limited to, retaining
`jurisdiction to (a) compel delivery of the Assets to the Buyer, (b) resolve any
`disputes arising under or related to the Asset Purchase Agreement, except as
`otherwise provided therein, (c) interpret, implement, and enforce the provisions
`of this Sale Order, and (d) protect the Buyer against (i) any of the Excluded
`Liabilities or (ii) any interests in the Debtors or the Assets, ofany kind or nature
`whatsoever, attaching to the proceeds of the Sale.
`
`RLFI-28762250.
`
`

`
`Committee of Unsecured Creditors to maximize the value of the Debtors’ estate and to resolve
`
`their bankruptcy cases. These efforts included extensively marketing the Debtors’ assets and
`
`soliciting bids from interested parties for those assets.
`
`A.
`
`Roxio, Inc. Acquires Substantially All of the Debtor’s Assets, Including Their
`Marks and Associated Goodwill, Pursuant to This Court’s Sale Order.
`
`6.
`
`One bidder for the Debtors’ assets was Roxio, which provided debtor—in-
`
`possession financing to the Debtors so that they could continue business operations during the
`
`pendency of the bankruptcy proceedings (the “DIP Financing”). On November 27, 2002, afier
`
`notice and a lengthy hearing at which multiple parties appeared, Roxio’s bid for the Debtors’
`
`assets was deemed the highest and best offer, and the Court entered the Sale Order authorizing
`
`and approving that certain Asset Purchase Agreement dated as of November 15, 2002 between
`
`Napster, Inc., Napster Music Company, Inc., Napster Mobile Company, Inc. and Roxio, Inc. (the
`
`“Asset Purchase Agreement” or “APA”).3
`
`7.
`
`Pursuant to the Asset Purchase Agreement, Roxio acquired all of the
`
`Debtors’ assets except for certain excluded assets (the “Napster Assets”).’ _S_e_e_ Sale Order, 111] 4,
`
`9; M:_e a_sg APA, §§ 2.1, 2,2, 3.3.
`
`In exchange, Roxio paid substantial consideration:
`
`approximately $5 million in cash, a warrant for 100,000 common shares of Roxio (the
`
`“Warrant") and forgiveness of approximately $200,000 due under the DIP Financing provided
`
`by Roxio. fig APA, § 26.
`
`8.
`
`The Napster Assets acquired by Roxio consisted of the tangible and
`
`intangible property that fomied the core of the Debtors’ on~line services and related technology.
`
`2 A true and correct copy of" the Asset Purchase Agreement is attached hereto as Exhibit B.
`
`J The amounts paid by Roxio were ultimately used to fund the Debtors’ administrative expenses and to
`provide a distribution to creditors. Moreover, through the Warrant (which was exercised by the Trustee and
`generated additional cash proceeds of approximately $500,000), creditors were provided with a valuable interest in
`the going concern business that Roxio continued to operate following the acquisition of the Napster Assets.
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`RL.Fl-2876225-2
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`This included:
`
`“[A]ll of Sellers’ right, title and interest in, to and under the assets,
`properties, contract rights and Intended Business[‘] as of the
`commencement of the Bankruptcy Case, of every kind and description,
`wherever located, real, personal or mixed, tangible or intangible, owned,
`held or used by the Sellers in the conduct of their Intended Business as the
`same shall exist on the Closing Date, other than the Excluded Assets, but
`including, without limitation, (a) all assets shown on Schedule B of the
`Schedule of'Assets and Liabilities filed by each of the Sellers and
`Schedule 2.1 hereto and (b) all right, title and interest of Sellers in, to and
`under the following (collectively, the “Purchased Assets”).” APA § 2.1.
`
`“[A]ll of Sellers’ rights, title and interest in, to and under all Intellectual
`Property Rights owned, licensed or used by the Sellers (including the
`goodwill of the Intended Business in which any of the marks are
`used), including the items listed in Schedule 2.l(b).” APA, § 2.1(b)
`(emphasis added)?
`
`“[A]ll goodwill associated with the Purchased Assets, together with the
`right to represent to third parties that Buyer is the successor to the
`Intended Business operated by the Sellers.” APA § 2.1 (f) (emphasis
`added).
`
`4 The term “lntended Business" is defined in the Asset Purchase Agreement as “the Sellers’ intended
`business of operating a legal secure online subscription service for the distribution and sharing of music and other
`content." APA§ l.l(a)..
`
`5 The term “Intellectual Property Rights" is defined as
`
`all patents, patent applications and other patent rights (including any divisions,
`continuations, continuations—in—part, requests for continued examinations,
`substitutions, or reissues and reexaminations thereof, whether or not any such
`applications are modified, withdrawn or resubmitted), trademarks, trade dress,
`service marks, corporate names, domain names, trade names, brand names,
`service marks, service names, mask works, assumed names, logos, inventions,
`trade secrets, designs, technology, know—how, processes, procedures,
`techniques, methods, inventions, proprietary data, formulae, research and
`development data, computer software programs and other intangible property,
`copyrights (including all variants thereof and any registration or
`applications for registration of any of the foregoing and non-registered
`copyrights), including all files, manuals, documentation and source and object
`codes related to any of" the foregoing, or any other similar type of proprietary
`intellectual property right (whether or not patenlable or subject to copyright,
`mask work or trade secret protection) and the Assigned Intellectual Property, in
`each case which is owned, licensed or used by any Seller..
`
`APA, § 1.l(a) (emphasis added).
`
`RL F l-2876225-2
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`9.
`
`“[A]ll Books and Records, files and papers, whether in hard copy or
`computer format related to the Purchased Assets, including, without
`limitation, engineering information, sales and promotional literature,
`manuals and data, sales and purchase correspondence, lists of present and
`former suppliers, lists ofpresent and former customers, personnel and
`employment records, and any information relating to Tax imposed on the
`Purchased Assets.” APA, § 2.l(d).
`
`“[A]ny non-disclosure agreements entered into between any of the Sellers
`and any current or former employees or consultants or any other third
`parties to protect confidential information of Sellers.” APA, §§ 2..l(g).
`
`“[A]ny Intellectual Property Rights assigrmient agreements, including,
`without limitation, any agreements executed by employees or agents
`acknowledging the proprietary interest of Sellers in any Intellectual
`Property Rights.” APA, § 2.l(h).
`
`The Debtors’ subscriber lists, including (i) “[a] list of subscribers to the
`Napster beta service,” (ii) “[a] list of subscribers to the Napster
`newsletter,” (iii) “[a] list of subscribers to the Napster “Featured Music’
`mailing list,” (iv) “[a] list of subscribers to the ‘Political Action Network’
`mailing list,” (V) “[a] list of people who have emailed Napster’s customer
`service department” and (vi) “[a]ll other information Napster has collected
`and possesses regarding its users.” APA, Schedule 3.6(a).
`
`“[A]ll computer software programs and data used in connection with the
`Purchased Assets.” APA, § 2..l(e).
`
`Among the trademarks, trademark registrations and pending applications
`
`for registration which were transferred to Roxio under the terms of the Asset Purchase
`
`Agreement were each of the following:
`
`United States Trademark Registration No. 2575170 for the mark
`(i)
`NAPSTER, registered on the Principal Register of the United States Trademark
`Office on June 4, 2002 (the “NAPSTER Registration”) (APA, § 2.1(b), Schedule
`3.6(a));" and
`
`three then-pending Intent-to~Use applications that Napster, Inc. had filed
`(ii)
`with the United States Trademark Office (the “NAPSTER ITU Applications”) and
`
`6 A true and correct copy of the NAPSTER Registration is attached hereto as Exhibit C.
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`RLFI-2876225-2
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`that subsequently ripened into United States Trademark Registration Nos.
`2841431, 2843786 and 2843405 (APA, § 2.l(b), Schedule 3.6(a)).’
`
`10.
`
`In the Sale Order, the Court expressly approved the Asset Purchase
`
`Agreement and the transfer of the Napster Assets to Roxio. Sale Order ‘ll 4 (“The Asset Purchase
`
`Agreement, and all of the terms and conditions thereof, is hereby approved”). In doing so, the
`
`Court specifically found and ordered:
`
`“Pursuant to 11 U.S.C. §§ l05(a) and 363(f), the Assets shall be
`transferred to the Buyer” and “[t]he transfer of the Assets to the Buyer
`pursuant to the Asset Purchase Agreement constitutes a legal, valid, and
`effective transfer of the Assets, and shall vest the Buyer with all right,
`title, and interest of the Debtors in and to the Assets .
`.
`. 4.” Sale Order,
`111] 7, 9 (emphasis added).
`
`“The temrs and provisions of the Asset Purchase Agreement and this Sale
`Order shall be binding in all respects upon, and shall inure to the benefit
`ofl the Debtors, their estates, and their creditors, the Buyer, and their
`respective affiliates, successors and assigns, and any affected third
`parties .
`.
`. .” Sale Order, 1] 26 (emphasis added).
`
`“Each and every federal, state, and local governmental agency or
`department, registrar of intemet domain names and any other person or
`entity is hereby directed to accept any and all documents and instruments
`necessary and appropriate to consummate the transactions contemplated
`by the Asset Purchase Agreement” Sale Order, 1] 16.
`
`11.
`
`Following the sale, the Debtors changed their corporate names because
`
`they were among the Intellectual Property Rights acquired by Roxio. §e§ APA, § 5.7. Roxio
`
`subsequently assigned the Napster Assets to Napster, LLC, which currently offers music and
`
`other content for downloading on the Internet. The marks that are the subject of the NAPSTER
`
`Registration, and the then-pending NAPSTER ITU Applications, are being used, and at all
`
`relevant times have been used, in connection with the sale, advertisement, and marketing of
`
`7 True and correct copies ofeach of the foregoing registrations that resulted from the NAPSTER ITU
`Applications are attached hereto as Exhibits D, E and F.
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`RLFI-3876225-2
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`music and other content offered for downloading over the Internet.
`
`B.
`
`SightSound Technologies, Inc. Attacks the Sale Order and Alleges that the Debtors’
`Marks And Business Were Not Actually Transferred to Roxio.
`
`12.
`
`More than two years after the Court approved the Asset Purchase
`
`Agreement and entered the Sale Order —— and despite the explicit findings and rulings it made
`
`therein — Sightsound Technologies, Inc. (“Sightsound”) has recently launched an attack on the
`
`Sale Order and the validity of the sale and transfer of the Napster Assets to Roxio.
`
`13.
`
`Specifically, on or about March 22, 2005, SightSound filed a petition (the
`
`“Petition”) with the United States Trademark Trial and Appeal Board (“TTAB") seeking the
`
`cancellation of the NAPSTER Registration and the registrations upon which the NAPSTER ITU
`
`Applications were based that were included in the Napster Assets acquired by Roxio from the
`
`Debtors pursuant to the Sale Order and Asset Purchase Agreement.“
`
`14.
`
`In the Petition, SightSound makes two attacks that seek to undermine, and
`
`indeed nullify, the validity of the transfer of the Napster Assets to Roxio pursuant to the Sale
`
`Order and Asset Purchase Agreement.. Both of these challenges are based on the premise that the
`
`Court’s findings and rulings in the Sale Order, as well as its approval of the Asset Purchase
`
`Agreement (and the sale of the Napster Assets), are all without legal effect with respect to the
`
`NAPSTER Registration and NAPSTER ITU Applications —- except apparently to result in their
`
`cancellation.°
`
`15.
`
`First, SightSound asserts, quite remarkably, that the transfer of the
`
`NAPSTER Registration and NAPSTER ITU Applications was invalid because it was
`
`“ A true and correct copy of the Petition is attached hereto as Exhibit G.
`
`9 SightSound does not assert an interest in the NAPSTER Registration or NAPSTER ITU Applications, um
`does it claim any independent right in the registrations.
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`RLF|—'.’8762Z5—2
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`purportedly made without their accompanying goodwill and therefore constituted an “assignment
`
`in gross.” E Petition, W 5, 10. The Sale Order and Asset Purchase Agreement, however,
`
`expressly provide that Roxio did acquire such goodwill along with the other Napster
`
`Assets. ‘°
`
`16.
`
`Second, SightSound alleges that Roxio is “not a successor to the business
`
`of’ Napster, Inc. and therefore the NAPSTER ITU Applications are void ~ notwithstanding the
`
`fact that the Sale Order and Asset Purchase Agreem