raf@cup.portal.COM (Robert A Freed) (11/04/88)
This is the text of the order denying SEA's motion seeking a contempt
citation against PKWare and Phil Katz.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
_____________________________________________________
SYSTEM ENHANCEMENT
ASSOCIATES, INC.,
Plaintiff,
V. Case No. 88-C-447
PKWARE, INC. and
PHILLIP W. KATZ,
Defendants
_____________________________________________________
DECISION AND ORDER
The parties are each in the business of creating computer
software that maximizes the storage of information. The
plaintiff's is called "ARC," which is an abbreviation of the word
archive; plaintiff asserts that ARC is its trademark. After the
defendant created its own software program that utilized the
letters ARC in its name and throughout the program, the
plaintiff, April 25, 1988, initiated a lawsuit alleging copyright
infringement, trademark infringement, and unfair competition.
On August 1, 1988, the parties submitted for the court's
approval a document entitled, "Judgment for Plaintiff on Con-
sent"; attached and incorporated by reference was a second
document entitled, "Confidential Cross-License Agreement." The
terms of the settlement agreement are set forth in these two
documents. Upon request of the parties, these terms were
incorporated a judgment signed by me on August 2, 1988 and
entered by the clerk on the same day.
Currently before the court is plaintiff's motion for an
order holding the defendants in contempt for violating the
court's August 2, 1988 order. The plaintiff complains that the
defendants have violated and continue to violate the settlement
agreement by promoting a new version of its software program.
Specifically, the plaintiff points to instances in that program
where the defendant uses the letter combination ARC in its
filename extensions and its user's manual. After considering the
parties' briefs and their oral arguments, I find that the defen-
dants' actions do not violate the order of the court.
"[A] party may incur a legal duty by entering
into a settlement and agreement, and a court
may, pursuant to that agreement, incorporate
the terms of the party's obligation in its
judgment; but to furnish support for a con-
tempt order the judgment must set forth in
specific detail an unequivocal command."
H.K. Porter Co. Inc., v. National Friction Products, 569 F.2d 24,
27 (7th Cir. 1977).
In order to prevail, the plaintiff must prove, by clear and
convincing evidence, that the defendants violated a directive of
the court. Hayden v. Oak Terrace Apartments, 808 F.2d 1269, 1270
(7th Cir. 1987).
The judgment of the court in pertinent part, states:
"It is hereby ordered and decreed that:
"(1) Defendants and each of them, jointly
and severally, and any of their agents,
servants any in active concert or participa-
tion with any of them, be and hereby are
enjoined permanently from infringing Plain-
tiff's copyrights in any manner, and from
publishing, licensing, selling, distributing
or marketing or otherwise disposing of any
copies of Defendants' works PKARC and PKXARC,
except as expressly provided for otherwise in
the Agreement between the parties effective
as of August 1, 1988; and from infringing in
any manner Plaintiff's trademark ARC."
The agreement provides in part as follows:
"4. Termination of PK's License. After
January 31, 1989, PK agrees not distribute or
offer for license any program that: (1) cre-
ates ARC compatible archive files; (2) by
default adds a filename extension of ".ARC";
or (3) processes ARC format files.
"5. No Trademark License. AFter the effec-
tive date of this Agreement, PK agrees not to
distribute or offer for license any program
that carries a trademark, tradename or
filename the letter combination "ARC" or any
other trademark, tradename or filename the
use of which may be confusingly similar to
any of SEA's trademarks, or the use of which
may be likely to cause confusion or mistake
or to deceive with respect to SEA's
programs."
Plaintiff alleges that defendants' use of the letters ARC as
a filename extension violates paragraph 1 of the judgment which
prohibits the use of ARC in any manner except as otherwise ex-
pressly provided in the cross licensing agreement. Defendants
counter by asserting that paragraph 4 impliedly gave them
permission to use such extensions until January 31, 1989. I
agree with defendants' interpretation and am persuaded that the
defendants' use of ARC as a filename extension does not violate a
court directive.
Plaintiff also objects to defendant's use of the letters ARC
as a root word in defendants' user's manual. (e.g. arcing, unarc-
ing, arced, unarced.) Defendants assert that it uses the letters
ARC in a descriptive sense and in reference to the plaintiff's
program so that defendants' customers can compare the two
programs. Further, the defendants assert that it never antici-
pated that the use of ARC in the descriptive sense would be in
violation of the agreement because the parties had never dis-
cussed prohibiting the use of the letters in such a sense during
the extensive settlement negotiations. Since I can not point to
a proscription on the use of ARC in the descriptive sense and
also because I deem Mr. Katz's testimony on the issue to be
credible, I find that defendants have not violated a court com-
mand.
Therefore, IT IS ORDERED that plaintiff's motion for an
order adjudging defendants to be in contempt be and hereby is
denied. Defendants are entitled to costs on this motion in the
amount of $500.
Dated at Milwaukee, Wisconsin, this 31st day of October,
1988.
s/ Myron L. Gordon,
Senior U.S. District Judge
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Bob Freed Internet: raf@cup.portal.com
Newton Centre, MA UUCP: ...!sun!portal!cup!raf