Second and Ninth Circuits Part Ways on the Famous Marks Doctrine
With the Second Circuit's recent decision in ITC Ltd. v. Punchgini, Inc., No. 05-0933-cv, the Ninth Circuit (some might argue unsurprisingly) stands alone among the federal appeals courts in recognizing the so-called "famous marks doctrine" under federal trademark law. The famous mark doctrine provides an exception to the territoriality principle that a trademark has a separate legal existence under each country's laws and that ownership of a mark (even a famous one) in one country does not automatically confer the exclusive right to use that mark in another country. But the famous marks doctrine recognizes an exception to this principle "for those foreign marks that, even if not used in the United States by their owners, have achieved a certain measure of fame within this country."
ITC held a federal registration for the mark "BUKHARA" for restaurant services that it used in connection with two restaurants in New York and Chicago. But ITC closed the New York BUKHARA restaurant in 1991, followed by the cancellation of the franchise BUKHARA restaurant in Chicago in 1997. Since that time, ITC admittedly has not owned, operated or licensed any restaurant in the United States using the BUKHARA mark.
Meanwhile, in 1999, the defendants decide to open an Indian restaurant in New York City and apparently thought "Bukhara Grill" seemed like a fine name. Notably, each of the individual defendants had previously worked at ITC's New York Bukhara restaurant or the Bukhara restaurant in New Delhi. ITC, however, wasn't particularly pleased about the defendants' name choice or the decor of their restaurant and sued them for, among other things, federal trademark infringement, unfair competition and false advertisement as well as parallel claims under New York common law.
As to the claims asserted under federal law, the Second Circuit had no good news for ITC. It first affirmed the District Court's conclusion that ITC had abandoned its registered BUKHARA mark for restaurant services as well as its corresponding order that the registration be canceled. Then, in a detailed discussion, the Second Circuit declined to join with the Ninth Circuit in recognizing the famous mark doctrine noting that although a "persuasive policy argument" could be advanced for recognizing the doctrine, that alone "is not a sufficient ground for its judicial recognition, particularly in an area regulated by statute." And finally, the Second Circuit affirmed the District Court's conclusion that ITC lacked standing to assert a false advertising claim under the Lanham Act.
Happily for ITC though this isn't baseball and despite three strikes, all may not be lost for ITC. The Second Circuit concluded that it could not determine the propriety of the District Court's dismissal of ITC's parallel state unfair competition claim because that determination depended on whether New York recognized the famous mark doctrine as a matter of state law. Therefore, the Second Circuit chose to certify the following question to the New York Court of Appeals: "Does New York common law permit the owner of a famous 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?" If New York does recognize the famous mark doctrine, the Second Circuit also asked the New York Court of Appeals to indicate the scope of that doctrine.
Rebecca Tushnet also has a good synopsis of the case at the ever thorough 43(B)log.
