Court Rules Defendants’ Tax Returns Are Relevant and Discoverable in “The Roots” Trademark Dispute
In Hubbard v. Gee, et. al., No. 2443 EDA 2017, the Court of Common Pleas of Philadelphia County recommended quashing an appeal filed by the Defendants.
Defendants appealed a court order that ordered them to provide their personal federal and state income tax returns from 2010 to the present. The court held that the tax returns were relevant because they relate to and could prove damages for the claim that Defendants have used the trademark “The Roots” with complete disregard for ownership of the trademark by GNI.
In 1996, GNI had the mark “The Roots” registered with the United States Patent and Trademark office. In 2007, Plaintiff stopped performing with the musical act “The Roots.” In January of 2017, Plaintiff served Defendants with a second request for production of documents, including the aforementioned tax returns. Defendants objected to the Plaintiff’s request for documents, claiming they were irrelevant to Plaintiff’s claims in this case. The Court decided to appoint a Special Discovery Master.
Plaintiff argued the information is relevant where, as here, the individual defendants have treated as their personal property the registered mark ‘The Roots,” disregarding the fact that the mark is owned by a corporation with other shareholders. Plaintiff is entitled to their tax returns to discover sources of revenue from that use, and other diversions of income to them from the corporation.
This is not like a case where a discovery order required the disclosure of a defendant’s medical expert witness’s personal income tax returns for purposes of impeachment in a personal injury case. and the issue was found to be irrelevant. Rather, this is a case where the discovery issues go to the heart of Plaintiff’s claims.
Courts have applied a two-part test. First, the party seeking the discovery must demonstrate relevance. Second, if relevant, the returns will be discoverable unless the party resisting discovery meets its burden of proving that there is no compelling need for the returns because an alternative source for the information exists. Here, the Court recognizes that there are other sources of information available that might shine a light on how Defendants used the name ‘The Root,” however, none as thorough as the tax returns. This Court finds no reversible error and recommends quashing the appeal. If not quashed, then it should be denied.