August 23, 1999

DEFENDANTS ANSWER AND GROUNDS OF DEFENSE
TO PLAINTIFF'S MOTION TO SHOW CAUSE

Defendants SKIPPY INCORPORATED and JOAN CROSBY TIBBETTS

(hereinafter "Defendants"), answer Plaintiff CPC INTERNATIONAL ("CPC") and its

Motion and Memorandum of Points and Authorities in Support of Motion for an Order to

Show Cause as follows:

FIRST DEFENSE

Plaintiff's alleged rights to promote, advertise, and distribute the mark "SKIPPY" is

contested as a matter of law. The Court's Order, dated September 4, 1986 ("Final Order"),

wherein Plaintiff seeks to enjoin Defendants "from communicating in any manner with

anyone that S.I.'s rights in the trademark SKIPPY include the right to use SKIPPY on . . .

food products, and conversely, that CPC has no rights in the SKIPPY trademark in

connection with these products" directly contradicts the holding of the U.S. Court of

Appeals for the Fourth Circuit, vacating this "court's order granting CPC a declaratory

judgment that its rights in the mark SKIPPY had become incontestable." Skippy, Inc. v.

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CPC International, Inc., 674 F.2d 209,216(1980) cert denied 459 U.S. 969,103 S.Ct. 298,

74 L.Ed2d 280 (1982) (incontestability affidavit stating there had been no final decision

adverse to affiant's registration rights found false where a final decision against registration

had been made 21 years earlier).

SECOND DEFENSE

Plaintiff's alleged rights to restrict Defendants from promoting, distributing,

advertising or licensing the mark "SKIPPY" is contested as a matter of law. The Final

Order, on which Plaintiff relies to enjoin Defendants "from continuing to offer to license,

offer to sell, distribute, advertise or promote . . . any other food product under the

trademark SKIPPY or any mark confusingly similar thereto," directly contradicts the

holding of the Fourth Circuit which sustained the Defendant's continued right to use,

license, distribute, and promote its distinctive trademark "SKIPPY" on products and

merchandise from the date of the company's inception in 1932 to the present. Skippy, Inc.

v. CPC International, Inc., supra, 674 F.2d at 216 (evidence of continuing efforts of

company to market its registered cartoon character sustained a determination that it had not

intended to abandon its mark). In short, Defendants' right to use the trade name and

trademark "SKIPPY" predates Plaintiff's alleged right by ten years. Id. at 210-211.

The U.S. Court of Appeals, Fourth Circuit, further sustained Defendant's 1932

Delaware Articles of Incorporation of Skippy, Inc., 674 F.2d at 216, that recognized

Defendants' right to conduct, transact, promote, and exploit the licensing of the mark of

"SKIPPY" as follows:

1. To manufacture, purchase or otherwise acquire, deal in and in and with, sell or
otherwise dispose of books, periodicals, magazines, newspapers, lithographs,
electrotypes and any other publications, and to transact a general printing and

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publishing business; to make, enter into, perform, carry out or cancel contracts of
any kind for any lawful purpose with any person, firm, association, corporation,
body politic or division thereof, or other entity, domestic or foreign; to enter into
and carry out any arrangements deemed to be for the benefit of the corporation with
any person, firm association, corporation, body politic or division thereof, domestic
or foreign; to acquire from such person or entity any powers, rights, privileges,
immunities, franchises, guarantees, grants and concessions; to hold, own exercise,
exploit, to dispose of and realize upon the same; and to enter into and conduct
any business in connection with any or all of the foregoing making use of the
character and the name "Skippy" [emphasis added]

2. To purchase or otherwise acquire, hold, own, sell, transfer or otherwise
dispose of any commodity, merchandise or produce through an agent or exchange
or otherwise; to purchase or otherwise acquire, hold, own, develop, lease, improve,
sell transfer or otherwise dispose of, mortgage, pledge or otherwise encumber,
property of any kind, real or personal, wherever located; to manufacture, produce
acquire, dispose of, deal in and with, whether as principle or agent, goods, wares,
merchandise and materials of any kind, whether now known or hereafter invented,
and license any individual, firm, corporation or association to do so; . . . .

3. To acquire, hold, use, sell, assign, lease, mortgage, grant or otherwise
dispose of, or acquire licenses in respect of, patents, patent rights, licenses and
privileges, invention, improvements and processes, copyrights, trade marks
and trade names and/or pending applications therefore, whether granted,
registered or established by or under the laws of the United States or of any
state thereof, or of nay other country or place (emphasis added);

CERTIFICATE OF INCORPORATION OF SKIPPY, INC., State of Delaware, May 11,

1932, Exhibit A hereto.

Moreover, Percy L. Crosby, creator of the famous Skippy character, assigned all

rights titles, and interest to Defendant Skippy, Inc. on May 16, 1932, which included food

licenses in ice cream, candy, cereal, bread, and toothpaste, children's toy products, wheeled

goods, board games, and clothing apparel, and all rights to radio broadcasts, movies and

films. Percy Crosby's Assignment of Rights to Skippy, Inc, Pltf's Pretrial Exhibit, May

1980. Accordingly, the Fourth Circuit reversed the district court's finding of fact on

March 5, 1982, holding that the Defendants "did not intend to abandon" the aforesaid

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trademark rights, 674 F.2d at 216, and further affirmed Defendants' challenge to the

Plaintiff's use of the mark "SKIPPY." 674 F.2d at 216 ("that portion of the district court's

order granting CPC a declaratory judgment that its rights in the mark Skippy had become

incontestable must be vacated"). The Supreme Court further affirmed the holding that

CPC's rights to the mark SKIPPY is no longer "incontestable." 459 U.S. 969, 103 S.Ct.

298, 74 L.Ed.2d 280 (1982).

THIRD DEFENSE

Whereas Plaintiff has reopened Civil Action Number 1:86CV-0109-A in an attempt

to enforce a motion to show cause, based upon the Final Order of September 4, 1986, it

would be an abuse of discretion for the Court to continue further proceedings to enforce the

Final Order, which directly contradicts the decisions of the U.S. Court of Appeals, Fourth

Circuit, and the U.S. Supreme Court, vacating the Plaintiff's allegedly incontestable rights

to use the mark "SKIPPY." Skippy, Inc., supra 674 F.2d at 216 (1980) cert denied 459

U.S. 969 (1982).

FOURTH DEFENSE

Plaintiff and its agents have perpetrated a fraud upon this Court as well as federal

and state regulatory agencies, by concealing, destroying, and altering pertinent evidence

and information in the underlying causes of action, that includes, but is not limited to

Skippy, Inc. v. CPC International, Inc., 674 F.2d 209, 216 (1982) cert denied 459 U.S. 969,

103 S.Ct. 298, 74 L.Ed.2d 280 (1982); CPC International, Inc. v. Skippy, Inc., 651 F. Supp.

62 (E.D. Va. 1986); CPC International Inc., v. Skippy, Inc., 3 USPQ 1456 (PTO/TTAB

1987).

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FIFTH DEFENSE

By way of separate motion, and pursuant to Rules 52(a) and (b) of the Federal Rules

of Civil Procedure, Defendants move the Court to amend or set aside the findings of fact

and conclusions of law in the Court's Final Order of September 4, 1986, on the grounds

that they are clearly erroneous and contrary to the previous holding of the U.S. Court of

Appeals, Fourth Circuit, and the U.S. Supreme Court.

SIXTH DEFENSE

By way of separate motion, and pursuant to Rule 60(b) of the Federal Rules of Civil

Procedure, Defendants move this Court for relief from the findings of fact and conclusions

of law in the instant action (1:86CV-0109-A) on the basis of newly discovered evidence

that is germane to the justiciable issues before this Court.

SEVENTH DEFENSE

Plaintiff's claims for damages in its motion to show cause is barred by the doctrine

of unclean hands.

EIGHTH DEFENSE

Defendants assert the affirmative defense of truth in its statements and publications

on its Internet websites www.Skippy.com. Defendants did not knowingly or willfully

violate any valid decree issued by this Court.

NINTH DEFENSE

Plaintiff's claim for damages cannot be sustained by clear and convincing evidence

of willful misconduct attributable to Defendants.

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TENTH DEFENSE

Plaintiff 's motion has failed to state a claim upon which relief can be granted.

ELEVENTH DEFENSE

Plaintiff is not entitled to punitive or compensatory damages with respect to its

motion to show cause.

TWELVTH DEFENSE

By way of separate motion, Defendants move to bar and prohibit the law firm of

SUGHRUE, MION, ZINN, MACPEAK & SEAS ("SUGHRUE et al.") from representing

Plaintiff on the grounds of a prior conflict of interest. SUGHRUE et al. was retained by

and provided expect witness for Plaintiff Skippy Inc. in Skippy, Inc. v. CPC International,

Inc. 210 USPQ 589 (E.D. Va 1980).

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CERTIFICATE OF SERVICE

A true and correct copy of the foregoing Answer and Grounds of Defense was

hereby served on the (23^rd) day of August, 1999, by First Class U.S. Mail, postage prepaid,

upon plaintiff's counsel of record:

W. Mack Webner, VSB 16455
Howard L. Bernstein, VSB 04541
SUGHRUE, MION, ZINN, MACPEAK & SEAS
2100 Pennsylvania Ave., NW
Washington, DC 20037

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