Dean Richlin, Boston, Mass., with whom Craig R. Browne and Budd, Wiley & Richlin, Boston, Mass., were on brief for Ricardo Bell.

A. Van C. Lanckton, Boston, Mass., with whom Thomas S. Francis and Craig & Maccauley, P.C., Boston, Mass., were on brief for Boston International Music, Inc.

Michael Arthur Walsh, Boston, Mass., with whom Mark A. Michelson and Choate, Hall & Stewart, Boston, Mass., were on brief for Streetwise Records, Ltd.

Before COFFIN and BREYER, Circuit Judges, and WYZANSKI,* Senior District Judge.

WYZANSKI, Senior District Judge.

These are appeals from denials of motions for preliminary injunctions in a case alleged to be within the district court's jurisdiction under 28 U.S.C. Sec. 1338(a) and jurisdiction pendent thereto.

The plaintiffs--Ricardo Bell, Michael Bivins, Robert Brown, Ronald DeVoe, and Ralph Tresvant--are black males not of full age, each of whom is a citizen of Massachusetts, each of whom brings suit by his "best friend" William E. Dern of New York, and all of whom constitute the song-and-dance group which calls itself NEW EDITION. The defendants and counterclaimants are StreetWise Records, Ltd. (StreetWise), a New York corporation, which produces and markets phonorecords, and Boston International Music, Inc. (BIM Inc.), a Massachusetts corporation, of which the president is Larry Johnson, also known as Maurice Starr, who is by profession a singer, musician, producer, songwriter, recording artist, and arranger.

This controversy involves the use in the national phonorecord market--not in viva voce performances--of the two words NEW EDITION as an unregistered trademark. The plaintiffs and the defendants, alike, seek preliminary and permanent injunctions to prevent their adversaries from using that mark on phonorecords. However, the plaintiffs do not seek any injunction restraining use of records in which they sing. Each side presents a claim allegedly based on Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a). The plaintiffs present also a second claim arising under Sec. 12 of the Massachusetts anti-dilution law, Mass.Gen.L. c. 110B, Sec. 12, and a third claim alleged to be "based upon principles of pendent jurisdiction" and seeming to arise under the Massachusetts non-statutory law of unfair competition.

In the district court the plaintiffs and the defendants, on the basis of only affidavits and written exhibits, moved, respectively, for preliminary injunctions. The magistrate made findings of fact and recommended that the district judge should issue a preliminary injunction restraining the defendants from using the trademark NEW EDITION in connection with musical entertainers other than the plaintiffs, and further recommended that the district judge should not issue the preliminary injunction sought by the defendant-counterclaimants. The district judge adopted the magistrate's findings of fact but denied all preliminary injunctive relief on the ground that although the plaintiffs jointly were the exclusive owners of the trademark NEW EDITION, they, by disaffirming their employment contracts, had unclean hands which precluded them from being awarded equitable relief.

The affidavits and exhibits tell this story.

In 1980 in the Roxbury section of Boston five adolescent black males--whom correctly their counsel, using legal terminology, calls "infants"--appeared as a group under the name NEW EDITION (or, as the plaintiff Brown testified, THE NEW EDITION) first at Roscoe's Lounge and subsequently in other places of entertainment to give a song-and-dance act. Some of the original five members of the group dropped out, but the remainder together with substitutes for the drop-outs continued in 1980, 1981 and 1982 jointly to give song-and-dance performances at lounges, clubs, and schools in and around Boston.

The group gave in the three years 1980-82 roughly a dozen performances, for which they were often but not invariably paid, under the name NEW EDITION or THE NEW EDITION. Audience association of that name with the plaintiffs was testified to by only one member of the public, Roscoe Gorham, the manager of Roscoe's Lounge. On the other hand, Starr (without denying that in the local Boston live entertainment market the words NEW EDITION were associated in the minds of the local audience with the plaintiffs) testified that the plaintiffs "had absolutely no reputation in the music business. They had never made a commercial musical recording ...".

During the period from the 1970's through 1981 Starr had conceived what he called a "Concept" of writing music in a style to which he referred as "80's black bubblegum" music, and which he describes as a "style and type of music ... produced by combining elements of the type of music performed and recorded by the 'Jackson 5' in the decade of the 1960's with elements of current musical trends and techniques, such as 'rap' music and the use of synthesizer instrumentation." Using that concept, he in conjunction with his brother wrote a song they called "Candy Girl".

In 1981 Starr employed the plaintiff Tresvant to sing "Candy Girl" with himself and his brother on a demonstration record, in which the instrumental music was played by Starr and his brother. To produce this demonstration record cost Starr over $5000.

In the same year, 1981, Starr had become acquainted with plaintiffs Brown, Bell, and Bivins. In the fall of that year the plaintiff Tresvant and later the plaintiff DeVoe jointly appeared with Brown, Bell, and Bivins under the name NEW EDITION, in live shows produced by Starr.

At about the same time Starr and Streetwise decided to have a group of young black males sing "Candy Girl" and such other songs as Starr might compose in his "80's black bubblegum" music style. Starr had a plan to use black youths as a "suitable marketing tool", that is, they were "to serve as the marketing vehicle for the musical recordings" which would embody what Starr denominates "the Concept" of "80's black bubblegum" music.

On October 8, 1982 Starr, apparently as a partner in a partnership known as Boston International Records (BIR), entered into a contract--not offered in evidence--with StreetWise, providing for the former to compose "80's black bubblegum" music and the latter to produce and nationally market phonorecords of that music. Starr testified, without contradiction, that--presumably pursuant to a specific provision of the foregoing unexhibited contract--"By express agreement, StreetWise and BIR jointly hold the exclusive rights to the use of the "New Edition" mark in the musical recording industry." While the judicial record does not specifically so show, the parties and the district court have assumed and we shall also assume that BIR's and Starr's rights and obligations under that contract with StreetWise were, by a novation, respectively assigned to and undertaken by BIM Inc. when it was organized by Starr and his partners in 1983.

As contemplated by Starr and StreetWise in the October 8, 1982 contract, StreetWise in November and December 1982 entered into separate contracts to employ each of the plaintiffs. In making those contracts the plaintiffs were represented by counsel. Those employment contracts--with one exception about to be mentioned--parallel one another. Each in similar language defines the term of the contract, provides that the particular plaintiff covered by the contract shall be called "Artist", specifies his royalties, prohibits the Artist from making master recordings for others than StreetWise during the term of the contract and for some years afterward, and grants to StreetWise the right to couple performances rendered by Artist with performances rendered by others.

The contracts have in paragraph 9 this provision:

Artist hereby grants to Company the sole and exclusive right to use and permit others to use Artist's name (including any professional names now or hereafter adopted by Artist), likeness, biographical material and facsimile signature for advertising and trade purposes in connection with the manufacture, distribution, sale and exploitation (individually and as a member of the group) of phonograph records embodying Artist's performances recorded hereunder, and in advertising Company, its artists and products.

Except in Tresvant's case, each of the employment contracts also specifically notes in paragraph 1.d.:

Artist performs in a musical group named The New Edition and confirms that the name is wholly owned by Boston International Records Inc. [sic], and that Artist has no right or interest in and to the name.

No such provision is included in Tresvant's employment contract.

Thereafter StreetWise, at an expense of over $330,000 of its own funds, produced and marketed nationally "Candy Girl" and like records. Over a million records were thus sold throughout this country. The judicial record before us does not show whether in accordance with their employment contracts the plaintiffs have ever received and are currently receiving from StreetWise royalties on the records.

To promote the sales of records and undoubtedly also to make profits for themselves directly through tickets sold for admission to their live appearances, the plaintiffs sang and danced under the name NEW EDITION, beginning in 1983, in many places in the United States.

There are affidavits from several persons to the effect that (after the defendants had marketed their phonorecords and the plaintiffs had sung viva voce in live performances throughout the country) the general music public associated the name NEW EDITION with the plaintiffs as a group, and not with Starr's concept of musical composition.

Under date of November 15, 1983 Fletcher H. Wiley, Esq. a member of the law firm known as Budd & Wiley, acting as the legal representative of the five plaintiffs wrote to StreetWise that the firm's clients, the five plaintiffs, "have requested that we advise you that by reason of their infancy, they hereby disaffirm each and every contract between you and them for their services." Robert C. Alexander, chairman of StreetWise, acknowledged that he received that letter signed by Wiley.

On December 22, 1983 the plaintiffs filed in this action their complaint which sets forth claims under Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), the Massachusetts anti-dilution statute, (Mass.Gen.L. c. 110B Sec. 12) and the Massachusetts non-statutory law of unfair competition. Only StreetWise was originally named as defendant, but later BIM Inc. was joined as a defendant. Each defendant answered and also filed a counterclaim setting forth a claim under Sec. 43(a) of the Lanham Act.

As we have already recited, the magistrate recommended that the district judge should grant plaintiffs' prayer for a preliminary injunction and should deny the counterclaimants' prayers for a preliminary injunction. The district judge followed the magistrate's recommendation to deny the counterclaimants' prayers, but, contrary to the magistrate's recommendation, denied, on the ground of unclean hands, the plaintiffs' prayers. These appeals followed. I would affirm, although on different grounds, the district court's denial of the plaintiffs' prayers for a preliminary injunction; but I would reverse the district court's denial of the defendants' prayers for a preliminary injunction.

We now analyze the facts in the light of what we regard as controlling legal principles.

The first questions relate to the interests of the plaintiffs before they were employed by StreetWise in November 1982.

At the outset of their professional career the five plaintiffs were a song-and-dance group which performed solely in Greater Boston. We need not pause to consider whether any significance is to be attributed to the fluctuations in the membership of that group, or to the confusion respecting the precise name under which the plaintiffs performed, or even to the plaintiffs' failure to offer any evidence--other than the skimpy affidavit of Roscoe Gorham--as to the association, in the mind of any member of the public, of the words NEW EDITION with any source whatsoever, much less with the plaintiffs. For our purposes it suffices to note that indisputably the trade name, if such it was, had no secondary meaning outside of Boston lounges, clubs, and schools. There is no evidence that the trade name was known to a larger music world; on the contrary Starr swore, without contradiction, that it was not so known. Thus the plaintiffs have failed to prove that their trade name had any secondary meaning in the phonorecord world either locally or nationally. We need not consider what would have been the effect of testimony that, like some other adolescents, the plaintiffs had dreamed of becoming nationally known and featured on phonorecords and that experience of other youngsters in the music world gave those dreams substance. The judicial record in this case contains no such evidence, and we are not free without testimonial support to speculate about the possibility of the plaintiffs' entry into markets which they are not shown to have considered before November 1982, much less to have entered.

Taking the record as we find it, we apply Massachusetts law to decide whether the plaintiffs as a result of their dozen or so Boston performances had a trade name which entitled them to some protection, and if so whether the defendants unfairly competed against the plaintiffs.

Inasmuch as before November 1982 so far as the record shows all the conduct of the plaintiffs occurred in Massachusetts, all their plans related to activities by them or others in Massachusetts, and all the persons who knew of them were in Massachusetts, and no extrastate dealings by them or any competitors were involved, it is plain that the law of the Commonwealth of Massachusetts governs the situation as of November 1982. As of that date the Lanham Act had no applicability. See DeCosta v. Columbia Broadcasting System, Inc., 520 F.2d 499, 513 col. 1 lines 3-5 (1st Cir.1975).

We shall assume that under Massachusetts law the plaintiffs as of November 1982 were entitled to protection against the use by others of the words NEW EDITION in connection with song-and-dance performances in Greater Boston. But Massachusetts authorities, in line with authorities elsewhere, make clear that the plaintiffs as of the date they entered into the employment contracts with StreetWise had no right to preclude the defendants or anyone else from using NEW EDITION in the national phonorecord market--because they had no reputation or interest in that market. Skil Corporation v. Barnet, 337 Mass. 485, 488, 493 first full paragraph, 494 first full paragraph, 150 N.E.2d 551 (1958); 265 Tremont Street, Inc. v. Hamilburg, 321 Mass. 353, 356-358, 73 N.E.2d 828 (1947); Pignons S.A. de Mecanique v. Polaroid Corp., 657 F.2d 482 (1st Cir.1981); Raxton Corp. v. Anania Assoc., Inc., 635 F.2d 924, 929 (1st Cir.1980) appeal after remand 668 F.2d 622 (1st Cir.1982); McGregor-Doniger Inc. v. Drizzle Inc., 599 F.2d 1126, 1130, 1131, 1137 (2d Cir.1979); Hyde Park Clothes v. Hyde Park Fashions, 204 F.2d 223, 228-229 (2nd Cir.1953) cert. den. 346 U.S. 827, 74 S. Ct. 46, 98 L. Ed. 351 (1953); Dwinell-Wright Co. v. National Food Product Co. 140 F.2d 618, 622-623 (1st Cir.1944); Restatement, Torts Sec. 717 (1)(b)(ii), Sec. 730, Sec. 730 comment b, Sec. 733.

We now examine the rights of the parties immediately after the execution in November and December 1982 of the five plaintiff's separate employment contracts with StreetWise.

When the plaintiffs, assisted by counsel, executed those contracts they did not suppose that with respect to the phonorecord market they had any trade name to contribute. Four of the plaintiffs specifically recognized that this was the case; they acknowledged that the name "NEW EDITION" "is wholly owned by Boston International Records, Inc." [sic]. Insofar as that admission referred to the phonorecord market that was a precisely correct statement for as of November 1982 only Starr and StreetWise had ever thought of using those two words as a symbol in the phonorecord market--and in that market no plaintiff had any claim. We need not pursue the point by observing that the situation is not different with respect to plaintiff Brown even though he testified that he never intended to be bound by the admission that he had no claim in the phonorecord market. Nor is the situation different with respect to plaintiff Tresvant although he never signed an admission against interest. Regardless of what Brown and Tresvant did or did not admit, there is no evidence that they had before November 1982 any claims staked out in the phonorecord market which they could have contributed to the development of the StreetWise--BIR trademark.

All that the five plaintiffs had to offer were their services as singers. Starr (first through his partnership BIR and later through his corporation BIM Inc.) and StreetWise were the organizers of the enterprise who jointly had the idea of using as a symbol in the phonorecord field the two words NEW EDITION into which they were planning to put legal life as a trademark by affixing the words to records and getting the public in the phonorecord world to associate those words with the source of the phonorecords. In this undertaking, of course, STREETWISE, being a corporation, had to use as agents human beings. Therefore it offered separate contracts of employment to the plaintiffs.

Those contracts explicitly contemplated the right of StreetWise to couple each individual plaintiff with whichever fellow "Artists" StreetWise should select. As a matter of fact, from the physical phonorecords which are in the judicial record we know that StreetWise did not always, if ever, use only the five plaintiffs. In "Candy Girl", for example, the principal vocal parts were sung by plaintiff Tresvant, Starr, and his brother Jonzun, incidental background vocal parts were sung by plaintiffs Bell, Bivins, Brown and DeVoe, and musical instruments were played by Starr and one other person.

On their face those employment contracts refute any contention that the plaintiffs were partners of the defendants, or were employed as a partnership, or were joint venturers with the defendants, or were employed as a team of joint venturers.

Furthermore, paragraph 9 of each of those employment contracts granted to StreetWise the exclusive right to use and permit others to use the "Artist's" professional name. This is in line with what is recited in Shemel and Krasilovsky, Revised and Enlarged New Copyright Act Edition, This Business of Music, published by Billboard Publications, Inc. N.Y.1977 at p. 309:

So that the record company can protect its investment in recordings and promotion, the typical artist's contract with a record company specifies that the record company has exclusive rights to use the artist's name in connection with the recordings made thereunder. Sometimes, the right to the artist's name is limited to use in connection with the recordings of the particular artist. More often, the record company will obtain the right to exploit the name for its own institutional advertising purposes, even without reference to specific recordings of the artist.

Each of the employment contracts implies that each party will in good faith seek to maximize the sales of the records so that the royalties earned will be as high as is economically possible. On the part of the plaintiffs as well as the defendants, the contract is "instinct" with that obligation. See Wood v. Lucy, Lady Duff-Gordon, 222 N.Y. 88, 118 N.E. 214 (1917) (per Cardozo, J.)