GroupOn Sues Australian Companies for Trademark Infringement

Groupon, Inc. (“Groupon-US”), the Illinois-based company which specializes in offering daily group discounts and coupons for various goods and services to subscribing members of its website http://www.groupon.com/, filed suit in the U.S. District Court for the Northern District of Illinois against two Australian companies, Groupon Pty. Ltd. (“Groupon-Australia”) and Scoopon Pty., Ltd. (“Scoopon”), that are also in the business of offering “group coupon” services in Australia. See Groupon, Inc. v. Groupon Pty. Ltd. et al, Case No. 10-cv-05634 (N.D. Ill. Filed September 3, 2010). A copy of the complaint (without exhibits) can be downloaded here.

Groupon-US has a registration for the mark GROUPON (registered September 22, 2009) in connection with “promoting the goods and services of others by providing a website featuring coupons, rebates, price-comparison information, product reviews, links to the retail websites of others, and discount information.” Groupon-US also obtained a Community Trade Mark registration for the GROUPON mark (claiming priority to its March 13, 2009 U.S. application filing date). See CTM Reg. No. 008226508. Unfortunately for Groupon-US, the company did not have the foresight to also file an application to register the mark in Australia within the six month window of opportunity to claim priority to its U.S. trademark application. Groupon-US claims to operate in over 200 cities nationwide and in 29 countries throughout the world (although the complaint does not state whether or not Australia is one of those 29 countries where it offers its services).

The main crux of the current complaint is the fact that Scoopon, through the website http://www.scoopon.com.au/, offers the same type of daily discount/coupon services as Groupon-US using the similar mark SCOOPON (the complaint neglects to mention that Scoopon’s services appear to be currently limited to offerings in eight different Australian cities). Of course, what Groupon-US is probably more upset about is the fact that Groupon-Australia also registered the domain name http://www.groupon.com.au/, which currently displays a “Coming Soon” page “from the people behind Scoopon.” Causing Groupon-US further grief is the fact that on March 18, 2010, Scoopon filed an application with IP Australia (Australia’s version of the U.S. Patent and Trademark Office) to register the mark GROUPON (No. 1351539). Five days later, Groupon-US filed its own application with IP Australia to register the GROUPON mark (No. 1352123) and in July, Groupon filed an opposition against Scoopon’s application.

Groupon-US’s causes of action are for federal trademark infringement, unfair competition, and dilution, deceptive trade practices under Illinois law, and common law trademark infringement. Groupon-US also obtained two copyright registrations for its website -- VAu1-012-452 (registered February 18, 2010) and VAu1-015-272 (registered March 11, 2010). These copyright registrations also form the basis of a copyright infringement cause of action by Groupon-US which alleges that Scoopon’s website infringes Groupon-US’s copyrighted website.

The first thing that comes to mind when seeing Groupon-US’s attempt to have the scope of its trademark rights spread beyond the borders of the United States (and Europe) is the “terrioritality” principle articulated eloquently by the Second Circuit Court of Appeals in ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 155 (2nd Cir. 2007):

The principle of territoriality is basic to American trademark law. See American Circuit Breaker Corp. v. Or. Breakers, Inc., 406 F.3d 577, 581 (9th Cir. 2005); Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 714 (3d Cir. 2004); Buti v. Impressa Perosa, S.R.L., 139 F.3d 98, 103 (2d Cir. 1998); Person's Co. v. Christman, 900 F.2d 1565, 1568-69 (Fed. Cir. 1990). As our colleague, Judge Leval, has explained, this principle recognizes that

a trademark has a separate legal existence under each country's laws, and that its proper lawful function is not necessarily to specify the origin or manufacture of a good (although it may incidentally do that), but rather to symbolize the domestic goodwill of the domestic markholder so that the consuming public may rely with an expectation of consistency on the domestic reputation earned for the mark by its owner, and the owner of the mark may be confident that his goodwill and reputation (the value of the mark) will not be injured through use of the mark by others in domestic commerce.

Osawa & Co. v. B & H Photo, 589 F. Supp. 1163, 1171-72 (S.D.N.Y. 1984).

Precisely because a trademark has a separate legal existence under each country's laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to ensure that its rights to that mark are recognized in any country in which it seeks to assert them.

(footnote omitted); see also my prior blog post discussing the exceptions to the “terrioritality” principle.

Of course, in the instant lawsuit, however, Groupon-US is not claiming trademark rights in Australia (although that is probably the subject of the pending opposition). Rather, Groupon-US argues that the Defendants use of SCOOPON in Australia (and the registration of the groupon.com.au domain name) infringes Groupon-US’s U.S. trademark rights. The basis for such claims are reflected in the allegations set forth by Groupon-US to claim jurisdiction over these foreign defendants within the State of Illinois:

• [Scoopon] is doing business in this district, and defendant has promoted discounted goods and services of others on their website, and provided services allowing consumers to purchase coupons, in connection with marks confusingly similar to Groupon's mark, in this district. Further, defendants are foreign corporations, being incorporated in Australia, and provide an Internet website with a substantial effect on United States commerce, and a substantial effect on commerce in this district. [Comment—how exactly does the use of SCOOPON by an Australian company in connection with offering group coupons for goods and services in Australia have a substantial effect on United States commerce and specifically on commerce in Illinois?]


• Defendant Groupon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at www.groupon.com.au. which states that the website is "from the people behind Scoopon". [Comment—since when did a “Coming Soon” sign equate to regular and systematic engagement in business?]


• Defendant Scoopon Pty. Ltd. has regularly and systematically engaged in business in this district by offering its services to the citizens of Illinois through its website at http://www.scoopon.com.au/. [Comment—how many citizens of Illinois are going to be interested in coupons for goods and services offered by businesses which are located thousands of miles away?]

While Scoopon may have an interactive website accessible by Illinois residents, there is no indication that Scoopon directed its services at Illinois residents (none of the cities served by Scoopon are in Illinois, or even in the United States) or knew that its services would cause any harm to Groupon-US (assuming that Groupon-US had no presence in Australia – other than its own internet presence – before Scoopon began using the SCOOPON Mark or registered the groupon.com.au domain name).

So would an Illinois court’s exercise of personal jurisdiction over these Australian companies comport with the principles of “fair play and substantial justice” (especially given that Groupon-US is already engaged in a battle over the GROUPON name in Australia and could just as easily pursue a civil action against the Defendants in Australia)? We shall see.

District Court finds that Casino De Monte Carlo owner has no enforceable trademark rights to CASINO DE MONACO

The Casino de Monte Carlo in Monaco

A New York District Court has determined that the owner of the Casino De Monte Carlo does not have enforceable trademark rights in the mark CASINO DE MONACO and has granted summary judgment in favor of a UK company that had been sued for trademark infringement and cybersquatting over its use of the name GRAND MONACO CASINO in connection with an online casino. See In re. Casino de Monaco Trademark Litigation, 2010 U.S. Dist. LEXIS 33950 (S.D.N.Y. March 31, 2010).

Societe des Bains de Mer et du Cercle des Etrangers a Monaco’s (“SBM”) is the operator of all casino properties in the Principality of Monaco, most notably the Casino De Monte Carlo. Playshare PLC (“Playshare”) is a UK company that acquired an online casino that has used or is using various online designations including GRAND MONACO, GRAND MONACO CASINO, GRAND MONDIAL and GRAND MONDIAL CASINO and related domain names.

SBM holds a U.S. trademark registration for the mark CASINO DE MONACO for “providing casino services within a hotel resort environment” which issued on December 20, 2005, under Section 44(e) of the Lanham Act based on SBM’s registration of the mark in Monaco but also with a claim of acquired distinctiveness based on Section 2(f) of the Lanham Act. SBM also has a second application pending for CASINO DE MONACO for “casino services” but that application (filed in the midst of the dispute at issue) has been opposed by Playshare. See Societe Anonyme Des Bains De Mer Et Du Cercle Des Etrangers v. PlayShare PLC, Opposition No. 91188636 (T.T.A.B. Filed Jan. 30, 2009).

On March 21, 2007, SBM filed a Uniform Domain Name Dispute Resolution Policy (“UDRP”) complaint with the World Intellectual Property Organization (“WIPO”) against the approximately 65 domain names that Playshare acquired as part of the online casino it acquired which included the words “grand” and/or “monaco” with “casino” as part of a URL that led to Playshare’s online casino. In response to SBM’s UDRP complaint, Playshare made a decision to change the name of its online casino to GRAND MONDIAL and even registered the name as a trademark (although the opinion is not clear where the mark was registered and no records appear with the PTO). Despite the name change, SBM continued forward with its claims regarding the “monaco casino” domain names. On May 25, 2007, the WIPO arbitration panel decided in favor of SBM finding Playshare’s domain names confusingly similar to SBM’s trademark and ordered Playshare’s domain names transferred to SBM. See Société des Bains de Mer et du Cercle des Etrangers à Monaco v. Lucan Toh and Max Wright, Case No. D2007-0249 (WIPO May 25, 2007).

On June 6, 2007, SBM sued Playshare alleging that Playshare’s use of the aforementioned names and domain names infringed its trademark rights to the mark CASINO DE MONACO, including even Playshare’s new name GRAND MONDIAL. On June 19, 2007, Playshare filed its own declaratory judgment action against SBM in Arizona district court seeking a declaratory judgment that its use of the domain names did not violate the Anticybersquatting Consumer Protection Act (“ACPA”) and that SBM’s registered mark for CASINO DE MONACO is invalid and unenforceable. The Arizona action was consolidated with the New York action and Playshare’s declaratory judgment causes of actions were treated as counterclaims.

Both sides filed cross motions for summary judgment. The Court denied SBM’s motion and granted Playshare’s motion with respect to SBM’s claims and Playshare’s counterclaims related to CASINO DE MONACO.

The court first addressed the validity of SBM’s CASINO DE MONACO mark. Playshare argued that despite SBM’s registration of CASINO DE MONACO, SBM has no protectable rights under the Lanham Act in its mark since it does not provide any goods or services using the mark in the U.S. SBM does not operate an on-line gaming business, does not operate any casinos in the U.S and has no casino by the name of Casino de Monaco

Nonetheless, SBM argued that it did use the mark as a service mark in the U.S. in connection with an established business or trade.SBM focused on its New York subsidiary that engages in “sales offerings” to U.S. residents of casino services at SBM’s casinos in Monaco. SBM also contended that the name CASINO DE MONACO is an umbrella term for all its Monaco-based casinos, that the mark is used on SBM’s website and verbally when promoting its casino and casino-related services, and that CASINO DE MONACO is a nickname for the Casino de Monte-Carlo, and many people, including Americans, use the name CASINO DE MONACO to refer to the Casino de Monte-Carlo “which embodies tremendous goodwill, glamour, elegance and style in the gaming industry.”

In the end, however, the court rejected SBM’s arguments and concluded that SBM’s activities in the United States relating to SBM’s mark CASINO DE MONACO did not constitute “services” within the meaning of the Lanham Act (services that are not “solely for the benefit of the performer” but rather services “rendered to others”). The court also rejected SBM’s attempt to conflate its CASINO DE MONACO mark with its more established CASINO DE MONTE-CARLO service mark. CASINO DE MONACO is not an actual casino unlike Casino de Monte-Carlo. The court also noted that “any secondary meaning that the mark CASINO DE MONACO can acquire vis-a-vis the use of the mark CASINO DE MONTE-CARLO is limited by the fact that SBM is in an on-going dispute with U.S.-based Victoria Partners over the Monte-Carlo designation when used with the casino business. Without some resolution, the mark CASINO DE MONTE-CARLO can be reasonably construed as not “identifying a single source of origin.” (italics in original). [For prior blog posts on this ongoing dispute, click here and here].

The court noted that SBM’s Section 44(e) based registration only required it to affirm that it had a bona fide intent to use its foreign registered mark. The court went on the state:

However, regardless of SBM’s intent, which is disputed, SBM has not used the mark in any meaningful way anywhere. And SBM has not shown that it has used the mark in the United States at all. SBM argues that its “U.S. based direct sales activities represent ‘material aspects’ of SBM’s casino business...and thus are properly considered ‘services...rendered in commerce.” for SBM’s mark CASINO DE MONACO. However, the record is devoid of evidence that would create a genuine issue of material fact that SBM uses the mark CASINO DE MONACO to identify its services, anywhere, but particularly in the United States. First, there does not exist in Monaco, or anywhere else, a casino identified by the name Casino de Monaco. Nevertheless, SBM asserts that the mark CASINO DE MONACO is: (1) used as a nickname or moniker for Casino de Monte-Carlo; (2) employed on casino website(s); and (3) an umbrella term/brand to refer to SBM’s five casinos in Monaco. However, all that SBM can show to support these representations are self-serving affidavits. Even if this claimed use of the mark CASINO DE MONACO was not insignificant on this record, which it is, all of its use of the mark occurs outside of the United States. There is no real evidence that the claimed nickname/moniker/umbrella term that signifies CASINO DE MONACO has ever existed in the United States.

(internal citations omitted) (emphasis in original).

Furthermore, regarding the one example that SBM could show of use in the United States of the mark CASINO DE MONACO on SBM’s own website, it turns out that such webpages were created on or after April 14, 2008 (almost a year after the lawsuit was filed) and SBM did not show any evidence that anyone in the U.S. ever viewed the pages. The court added that “[i]t does not bolster SMB’s [sic] position that all activity SBM engages in the United States amounts to nothing more than advertising and promotion of SBM’s operations outside the U.S., i.e., in Monaco. What is clear is that there is no evidence on the record that this limited activity ever implicated the mark CASINO DE MONACO.” (emphasis in original).

The court decided that SBM’s “utter lack of use of the mark CASINO DE MONACO anywhere, let alone in the United States,” required it to refuse to enforce any purported trademarks rights by SBM in the mark. Accordingly, the court did not have to engage in any likelihood of confusion analysis. The court did find enough limited activity to protect SBM’s purported right to the unregistered mark CASINO DE MONTE-CARLO because SBM actually utilizes that mark in the United States – but since SBM’s complaint did not allege any infringement of this mark, such rights were irrelevant for purposes of deciding the motions.

Based on its determination that SBM held no enforceable trademark rights to the mark CASINO DE MONACO, the court granted summary judgment on Playshare’s declaratory judgment causes of actions direct to SBM’s CASINO DE MONACO mark. The court found SBM’s trademark registration for CASINO DE MONACO invalid and unenforceable and ordered it to be canceled. The court further granted Playshare’s Motion for Summary Judgment on all of SBM’s federal claims based on the CASINO DE MONACO mark (and choosing to dismiss all state claims by declining to exercise supplemental jurisdiction). Moreover, the court declared that Playshare’s use of the designations GRAND MONACO, GRAND MONACO CASINO, GRAND MONDIAL CASINO and GRAND MONDIAL does not infringe on SBM’s (now cancelled) mark CASINO DE MONACO. Finally, because SBM’s entire basis for its cybersquatting claim was based on rights to the mark CASINO DE MONACO and since the mark was found invalid and unenforceable, then, as a matter of law, Playshare cannot be in violation of the ACPA with respect to its domain names. The court vacated the WIPO decision and ordered the domain names to remain with Playshare.

Las Vegas Review Journal Article Spotlights Local Man’s Trademark Battle in England

This makes two posts in a row regarding trademark battles outside of the United States.

The Las Vegas Review Journal ran a story today (link here) about Las Vegas exporter Panch Prasad whose company, U.S. International Trading Corp., is the owner of the DuBarry brand of cosmetics which it purchased in 1997. The brand is described as the first American brand of cosmetics established in 1903 named by its founder, Richard Hudnut, after Comtesse Jeanne du Barry, the mistress of King Louis XV of France who killed by guillotine in 1793 during the French Revolution.

Prasad was apparently contacted in 2007 by a Englishman name Michael Miller who said he had investors who could help expand the sales of DuBarry in the U.K. Prasad later discovered that on June 13, 2007, Miller (through the company The Dubarry Perfumery Company Limited) went ahead and filed an application to register the mark DUBARRY in the United Kingdom. Prasad’s company already owned a UK registration for the mark DUBARRY ALL CLEAR (for Non-medicated toilet and cosmetic preparations) dating back to 1963, but that apparently was not enough for the UK Intellectual Property Office to refuse registration of Miller’s application.

Prasad filed a timely opposition to registration, but the article highlights the ever growing cost of the legal battle to protect his brand ($35,000 in legal fees so far). The article also focuses on the problems faced by exporters who sell their products in foreign countries without first securing trademark protection for their brands and the systems in place to allow trademark holders to protect their marks worldwide such as the Madrid System for the International Registration of Marks administered through the World Intellectual Property Organization or the Community Trade Mark system administered through the Office for Harmonization in the Internal Market (Trade Marks and Designs).

Indeed, earlier this year, Prasad’s company filed a Community Trade Mark Application for the DUBARRY mark, which if it registers will protect the name throughout the European Union (including the U.K.). But as noted by Prasad (who claims to spend $15,000 to $20,000 a month on attorneys to protect 100 trademarks worldwide), it’s not enough to obtain trademark registration protection for your brands – you have to continuously monitor the marketplace to ensure that there are no other companies attempting to infringe on and/or take advantage of the reputation and goodwill of those brands.

Gallup Survives Motion to Dismiss in Trademark Infringement Lawsuit Against Gallup Pakistan

Gallup, Inc. (“Gallup”), the organization famous for its surveys and public opinion polls, filed a trademark infringement and trademark dilution lawsuit in March against Business Research Bureau and Ijaz Shafi Gilani (the “Defendants”) over the use of the mark GALLUP.

Gallup owns numerous United States trademark registrations and applications containing the GALLUP mark including, among other goods and services, public opinion polls and business management consulting services.

Defendants, operating under the name Gallup Pakistan, provide survey and opinion polls on political, social, and business topics to international agencies and educational institutions, including some in the United States. Between January 11 and February 22, 2008, Defendants released six polls regarding Pakistani public opinion of issues surrounding the Pakistani parliamentary elections. The polls were promoted on Defendants’ website, which is in English and accessible to the United States. Defendant Gilani, the chairman of Gallup Pakistan, also made an appearance at a conference in Chicago in 2007 where he presented a paper that bore the Gallup Pakistan name. He also spoke on National Public Radio on February 12, 2008, to discuss his organization’s poll results and was introduced as the head of “the Pakistani chapter of the Gallup polling organization.” Gilani also made an appearance on an internet broadcast around the same time. Gilani was not in the United States during either of those broadcasts.

In response to Gallup’s lawsuit for trademark infringement and dilution, the Defendants moved to dismiss the complaint on the ground that the court did not have subject-matter jurisdiction (Defendants did not challenge the exercise of personal jurisdiction – possibly because Gilani appeared pro se). Specifically, Defendants argued that there was no basis to exercise extraterritorial jurisdiction under the Lanham Act. Gallup countered by arguing that the exercise of extraterritorial jurisdiction was not necessary because Defendants’ committed infringing acts in the United States sufficient to establish subject-matter jurisdiction.

U.S. District Court Judge William Alsup found that Gallup’s complaint had sufficiently alleged that Defendants’ infringing activities occurred in the United States to meet its burden of establish subject-matter jurisdiction under the Lanham Act. See Gallup, Inc. v. Business Research Bureau et al, Case No. 08-cv-01577, 2008 U.S. Dist. LEXIS 93462 (N.D. Cal. November 10, 2008).

Under the Lanham Act, courts have jurisdiction which extends to “all commerce which may lawfully be regulated by Congress.” (see 15 U.S.C. 1127). The court noted that the phrase “in commerce” does not necessarily require that the infringing acts take place “‘in commerce’ which is subject to congressional regulation, but that the acts have an adverse effect on that commerce.” Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 427 (9th Cir. 1977).

Gallup alleged that Defendants’ trademark infringement occurred “in commerce” in three ways. The first way was Defendants’ publishing of poll results in the United States using the Gallup name. Gallup alleged that Defendants’ trademark infringement not only occurred in commerce, but also has the potential to adversely affect that commerce. The infringement was “in commerce” because Congress regulates the use of trademarks on published materials and the infringement adversely affects that commerce by impairing Gallup’s right to capitalize on its registered mark in its publications. Further, it did not matter that the Defendants do not advertise, market, or promote any goods or services in the United States: “The test is whether the alleged infringement occurred within an area of commerce that Congress regulates or whether the infringement adversely affected that commerce. Even if defendants did not ‘advertise, market, or promote’ their services in the United States, plaintiff sufficiently alleges that defendants’ use of the Gallup mark occurred within commerce and adversely affected that commerce.”

The second way was Defendant Gilani’s appearance in the U.S. promoting his poll results under the Gallup mark. The court found that Gallup had sufficiently alleged that Defendants’ presentations at conferences in the United States using the Gallup mark as well as Gilani’s interview on NPR and participation in the internet broadcast adversely affected commerce regulated by Congress. Specifically, Gallup’s allegations that a) Defendants’ use of the Gallup mark in connection with opinion polls, surveys, and management consulting occurs in the same markets and channels of trade as those offered by Gallup under the Gallup mark and b) Defendants’ use of the Gallup mark has caused or is likely to cause confusion, to cause mistake, or to deceive customers of both Gallup and the defendants and to cause the dilution of the distinctive quality of the Gallup mark.

The third way in which Gallup argued that Defendants’ trademark infringement occurred “in commerce” was Defendants’ operating of a website prominently featuring the Gallup mark. The court found that Gallup had sufficiently alleged that Defendants’ trademark infringement occurred “in commerce” by alleging that the web site was accessible in the United States and that use of the Gallup mark had an adverse effect on commerce.

Because the court found that Gallup’s complaint sufficiently alleged actions “in commerce” and action having an adverse effect on commerce in order to give the court subject-matter jurisdiction over Gallup’s claims against the Defendants, the court did not consider Defendants’ argument that there was no basis for extraterritorial jurisdiction. The court noted that the question of whether a court can exercise extraterritorial jurisdiction under the Lanham Act is only reviewed if the plaintiff seeks to reach foreign activities of the defendant, and, in this case, Gallup clarified in its opposition brief that it was not seeking to enjoin Defendants’ activities in Pakistan or to determine rights to the Gallup mark in Pakistan.

Second Circuit renders final decision in BUKHARA “famous marks doctrine” appeal – Is the U.S. Supreme Court next?

In a decision that will undoubtedly come as no surprise to followers of this case, the United States Court of Appeals for the Second Circuit affirmed a New York district court’s decision to grant summary judgment in favor of the defendants on the issue of unfair competition under New York state law. See ITC Limited v. Punchgini, Inc., Case No. 05-0933 (2nd Cir. February 26, 2008).

As a brief summary, the plaintiffs (“ITC”) sued the defendants on federal and state claims of trademark infringement, unfair competition, and false advertising in connection with the mark BUKHARA and related trade dress for use in restaurant services even though ITC had not used the mark in the United States for more than three years. ITC has operated a restaurant under the name Bukhara in New Delhi, India since 1977. ITC opened and franchised other locations worldwide, including New York and Chicago, but all but 3 closed. The New York restaurant opened in 1986, but closed in 1991; the Chicago franchise opened in 1987, but closed in 1997. In 1999, the defendants, who had worked at ITC’s New Delhi Bukhara location and one of whom had worked at the New York Bukhara restaurant, opened an Indian restaurant named Bukhara Grill since there was no other restaurant in the New York City area named Bukhara. While ITC first objected to defendants’ use of the name Bukhara in 2000, ITC did not bring suit until 2003. ITC argued that its Bukhara mark qualified for protection in the U.S. under the “famous mark” doctrine (described herein) based on the fame of the Bukhara name for restaurants services in the U.S. even though ITC’s current use was outside the U.S. The district court granted summary judgment in favor of the defendants on all claims. See ITC Ltd. v. Punchgini, Inc., 373 F. Supp. 2d 275 (S.D.N.Y. 2005).

In the Second Circuit’s 2007 decision, ITC Limited v. Punchgini, Inc., 482 F.3d 135 (2nd Cir. March 28, 2007), the court affirmed the grant of summary judgment on ITC’s federal and state trademark infringement claims on the basis that ITC had abandoned its Bukhara mark for restaurant services in the United States. More detailed summaries of the Second Circuit’s initial decision can be found at The TTABlog, 43(b)log, Intellectual Property Law Blog, and Filewrapper Blog.

More controversial, however, was the court’s decision to affirm summary judgment on ITC’s federal unfair competition claim because it depended on the “famous marks” doctrine, which the court found was not recognized under current federal trademark law. The “famous marks” doctrine is actually an exception to the “territoriality principle” whereby priority of U.S. trademark rights depends on priority of use in the U.S., not use anywhere else. Under the “famous marks” doctrine, a trademark owner not currently using a mark in the U.S. can nonetheless stop any infringing use in the U.S. if the mark at issue is famous or has acquired secondary meaning within the U.S. The court even acknowledged that its decision to reject the “famous marks” doctrine conflicts with the Ninth Circuit’s decision in Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088, (9th Cir. 2004) which recognized the “famous marks” doctrine with respect to federal trademark rights, and goes against famed trademark treatise author J. Thomas McCarthy, who has apparently called the decision “embarrassing” (see write-up by Seattle Trademark Lawyer and contrasting write-up by Likelihood of Confusion). This circuit conflict alone leads some (myself included) to believe that a grant of certiorari from the U.S. Supreme Court is in the future.

While the court’s decision to reject the “famous marks” doctrine for purposes of federal trademark law was significant, it was not the end of the case. The court recognized that the famous marks doctrine might support ITC’s state unfair competition claim under New York common law, and certified two question to the New York Court of Appeals (the highest court of the State of New York): (1) “Does New York common law permit the owner of a federal mark or trade dress to assert property rights therein by virtue of the owner’s prior use of the mark or dress in a foreign country?”; and (2) “If so, how famous must a foreign mark be to permit a foreign mark owner to bring a claim for unfair competition?”

The New York Court of Appeals (“NYCA”) rendered its decision on December 13, 2007. See ITC Ltd. v. Punchgini, Inc., 2007 N.Y. Slip Op. 09813 (N.Y. December 13, 2007). Detailed summaries of this decision can be found at The TTABlog, Intellectual Property Law Blog, and 43(b)log.

The NYCA answered the first question in the affirmative – then qualified its answer to make clear that it was not recognizing the “famous marks” doctrine, but instead reaffirming established state law prohibiting unfair competition (“when a business, through renown in New York, possesses goodwill constituting property or commercial advantage in this state, that goodwill is protected from misappropriation under New York unfair competition law. This is so whether the business is domestic or foreign.” 2007 N.Y. Slip Op. 09813 at *13-14).

As for the court’s second question, the NYCA stated that protection for unfair competition by misappropriation of a famous foreign mark presupposes the existence of actual goodwill in New York and that if a foreign plaintiff has no goodwill in New York to appropriate, there can be no viable claim for unfair competition under a theory of misappropriation. The NYCA further stated that a plaintiff’s mark, when used in New York, must call to mind the plaintiff’s goodwill – consumers of goods or services provided under a certain mark used by a defendant in New York “must primarily associate the mark with the foreign plaintiff.”

The NYCA identified several relevant factors to determine whether consumers of a defendant's goods or services would primarily associate such goods or services with those provided by a foreign plaintiff, including “evidence that the defendant intentionally associated its goods with those of the foreign plaintiff in the minds of the public, such as public statements or advertising stating or implying a connection with the foreign plaintiff; direct evidence, such as consumer surveys, indicating that consumers of defendant's goods or services believe them to be associated with the plaintiff; and evidence of actual overlap between customers of the New York defendant and the foreign plaintiff.” 2007 N.Y. Slip Op. 09813 at *15

The NYCA concluded by stating that for ITC to prevail on its unfair competition claim under New York common law, ITC would have to 1) prove that defendants deliberately copied ITC’s Bukhara mark or trade dress for their New York restaurants and 2) establish that the relevant consumer market for New York’s Bukhara restaurant primarily associates the Bukhara mark or trade dress with those Bukhara restaurants owned and operated by ITC outside of the United States. 2007 N.Y. Slip Op. 09813 at *15-16. Stated another way by the court, for ITC to pursue an unfair competition claim under New York law, it must provide evidence of deliberate copying and secondary meaning.

In light of the NYCA’s response, the court affirmed the district court’s award of summary judgment in its entirety (including the New York state unfair competition claim). The court agreed with the district court’s decision that ITC had provided sufficient evidence of deliberate copying, so the primary issue was ITC’s evidence of secondary meaning. The district court had also concluded that ITC failed to establish a triable issue as to the existence of “secondary meaning” in the New York market in which the defendants operated.

ITC had originally tried to argue that no proof of secondary meaning was required when a New York unfair competition claim is based on intentional copying. Because the NYCA determined otherwise, ITC attempted to argue that the district court had erroneously applied a stricter standard to its secondary meaning analysis than what the NYCA identified as the relevant test and erred in concluding that ITC could not establish secondary meaning. ITC tried to argue that had it had the benefit of the NYCA decision, it would have submitted sufficient evidence to withstand summary judgment.

In rejecting ITC’s pleas that it could have provided additional evidence that would have allowed it to withstand summary judgment, the court noted that ITC had the same incentive to provide evidence of secondary meaning in order to support its argument that the “famous marks” doctrine applied at the federal and state level. In addition, the court found that the district court did not hold ITC to an unduly strict standard of secondary meaning, but instead considered the evidence in light of the six factors typically analyzed to decide whether a mark has acquired secondary meaning: “(1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and (6) length and exclusivity of the mark’s use.” Slip op. at *8 (citing ITC Ltd. v. Punchgini, Inc., 373 F. Supp. 2d at 288 (quoting Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 143 (2d Cir. 1997))). The court found this standard to be no different than the factors stated by the NYCA

The court also made clear that for purposes of determining secondary meaning “in the New York market” both the district court and the NYCA were referring to potential customers for defendants’ New York restaurant (i.e., the NYCA’s opinion was not limiting the relevant market to persons who had already eaten in defendants’ restaurants nor was the district court’s decision improperly including every New York resident in the relevant market).

And even if the district court did err in defining the relevant market, the court held that ITC failed to provide evidence that was sufficient to create a genuine issue of material fact on the question of whether the Bukhara mark and trade dress used by the defendants in New York brings to mind ITC’s goodwill for defendants’ potential customers or that defendants’ customers primarily associate the Bukhara mark and trade dress with ITC.

The court noted that ITC’s evidence of goodwill came entirely from foreign media reports and sources – ITC did not include any evidence that would permit an inference that such reports or sources have reached the relevant consumer market in New York. ITC also provided no evidence that it had advertised its foreign “Bukhara” restaurants in the U.S. nor did ITC make any attempt to show either New York based goodwill or any kind of name recognition through consumer surveys. The court also noted the lack of any evidence of actual overlap between customers of defendants’ restaurant and ITC’s Bukhara “aside from ITC’s own inadmissible speculation

The court stated: “Absent admissible evidence, however, a reasonable factfinder could not conclude that potential customers of defendants’ restaurant would primarily associate the Bukhara mark with ITC, particularly in light of evidence that numerous Indian restaurants in Massachusetts, Washington, Virginia, and around the world have used the name ‘Bukhara,’ all without any affiliation or association with ITC.” Slip op. at 10.

The court rejected as belated ITC’s attempts to identify admissible evidence of secondary meaning. The court found that ITC provided no evidence other than “conjecture” (insufficient to withstand summary judgment) that the alleged well-traveled customers patronizing defendants’ restaurant would primarily associate the mark Bukhara and the accompanying trade dress with ITC.

In response to ITC’s argument that the district court failed to consider the public statement and advertisements which stated or implied a connection with ITC, the court noted that the district court did consider such evidence in concluding that defendants had intentionally copied ITC’s mark and trade dress, but found that intentional copying alone would not be enough to demonstrate the necessary “secondary meaning” to set forth a claim for unfair competition where the “copying” at issue is prohibited based on the application of the “famous marks” doctrine for marks that have acquired a “secondary meaning.” The court found this reasoning to be consistent with the NYCA’s opinion that a famous foreign mark holder must show more than copying in order to pursue a claim for unfair competition under New York state law. In other words, ITC cannot prove “secondary meaning” solely with evidence of similarities between the defendants’ Bukhara restaurant and ITC’s Bukhara restaurant because such evidence does not show that defendants’ potential customers were even aware of ITC’s mark.

In addition, ITC failed to show any evidence that the goodwill that had been generated when ITC’s Bukhara restaurants were operating in New York and Chicago had lingered long enough such that defendants’ potential customers “primarily associated” defendants’ Bukhara restaurant with ITC’s former restaurants.

Finding that the evidence failed as a matter of law to raise a triable question of fact on the issue of secondary meaning necessary to establish a New York common law unfair competition claim, the court affirmed the district court’s grant of summary judgment on this claim, which affirmed the district court’s decision in all respects.

Next stop: Petition for writ of certiorari to the U.S. Supreme Court.