Sunday, April 13, 2008

What’s in a name? Ask Roscoe and Patsy.

It was quite a week for restaurant name trademark disputes.

Earlier this week, I wrote (link here) about a North Carolina pancake house that was doing business under the name “It’s Hop’n” that was sued for trademark infringement by IHOP

On Thursday, the big story (here and here) was about the Los Angeles-based chicken and waffles chain “Roscoe's House of Chicken 'n Waffles” (“Roscoe’s”) The restaurant chain filed a trademark infringement lawsuit against the owner of “Rosscoe's House of Chicken and Waffles” (“Rosscoe’s”) in Chicago (two “S”’s and the word “and” instead of an ampersand), for infringement of its service mark ROSCOE'S HOUSE OF CHICKEN N WAFFLES (pictured below). See East Coast Foods, Inc. v. VFJ Enterprises, Inc. et al, Case No. 08-cv-01990 (N.D. Ill. April 8, 2008).

At the court’s hearing on Roscoe’s motion for a temporary restraining order, it was announced that the parties had reached an agreement as to a temporary restraining order. Rosscoe’s agreed to remove the name from all signs and menus by next Wednesday and change the name to Chicago's House of Chicken and Waffles. Meanwhile, attorneys for Roscoe's are indicating that they still plan to seek damages for Rosscoe’s infringement of its trademark. At the conclusion of the hearing, U.S. District Judge Samuel Der-Yeghiayan was quoted as saying: "I see that both parties understand the issues and facts of life and none of the parties are waffling on the issue."

One interesting aspect of the case is that Roscoe's apparently allowed Rosscoe's to operate a “Rosscoe's House of Chicken and Waffles” in New York for eight years without any claims of infringement. Roscoe's founder and long-time owner, Herb Hudson, was quoted as saying that he had no plans to expand to the New York market, and thus did not have a problem with the New York Rosscoe’s. But Hudson did have plans to open in Chicago next year, thus the reason behind the lawsuit to stop Rosscoe's this time.

One wonders whether Roscoe's considered the consequences of not enforcing its trademark rights throughout the entire U.S. Roscoe's lack of enforcement with respect to a confusingly similar mark in New York ultimately diminishes the ability of the mark to serve as a unique source identifier, and thus it value as a service mark. The story below demonstrates what can happen to a prior user’s trademark rights when an owner does not take steps to vigorously enforce such rights.

The dueling "Patsy's"

On Friday, the trademark news story of the day (link here) was about a jury verdict in an ongoing trademark battle in the New York city area over the name “Patsy’s” between Patsy's Italian Restaurant and Patsy's Pizzeria (background articles here, here, here, and here). Patsy's Italian Restaurant filed this particular trademark infringement lawsuit against the owners of Patsy's Pizzeria in October 2006. See Patsy's Italian Restaurant, Inc. v. Banas et al, Case No. 06-cv-05857 (E.D.N.Y. October 30, 2006).

Patsy's Italian Restaurant, located in Manhattan's theater district, was founded in 1944 by Pasquale "Patsy" Scognamillo and claims to have been patronized by celebrities from Frank Sinatra and Tony Bennett to Jennifer Lopez and George Clooney. Patsy's Pizzeria, on the other hand, opened up in Syosset, New York in 2006, after obtaining a license to use the name from the owner of the original Patsy's Pizzeria located in East Harlem which was founded in 1933 by Patsy Lancieri. In 1991, Lancieri's widow sold Patsy's Pizzeria, and the new owner soon after began expanding the pizzeria chain to six locations in Manhattan, one in Long Island, and then to Syosset.

While the jury found that there was a likelihood of confusion between the two restaurant names, the court did not yet order an injunction stopping Patsy's Pizzeria from using the name nor has the issue of damages been determined. A hearing on Patsy's Italian Restaurant’s request for injunctive relief is set for sometime in August.

This dispute between the two “Patsy’s” restaurants goes back almost ten years, and has quite an interesting procedural posture both in federal court and at the Trademark Trial and Appeal Board (“TTAB”). For a detailed background on one part of the dispute, read the published decision Patsy’s Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 65 USPQ2d 1442 (2d Cir. 2003).

The two businesses coexisted for nearly half a century. In 1993, the owners of Patsy's Italian Restaurant decided to begin selling pasta sauces in jars for retail distribution and formed Patsy's Brand Inc. (“PBI”), which filed an intent-to-use application to register its mark PATSY’S PR SINCE 1944 (stylized) for sauces. The mark was registered January 17, 1995 (with Patsy’s claiming first use in February 1994). Meanwhile, Patsy’s Pizzeria, through I.O.B. Realty, Inc. (“IOB”), had received two registrations for the marks PATSY’S and PATSY’S PIZZERIA (both for restaurant services) registered in May 21, 1996 and December 29, 1998, respectively.

On October 9, 1998, IOB filed a petition to cancel PBI’s registration for sauces alleging likelihood of confusion over its registrations. See I.O.B. Realty, Inc. v. Patsy's Brand, Inc., Cancellation No. 92028142 (TTAB October 9, 1998). Not only did PBI deny the allegations and assert the affirmative defense of estoppel, laches, and acquiescence, PBI turned around and filed its own petition to cancel IOB’s two registrations based on likelihood of confusion over its registered mark as well as fraud on the part of IOB. See Patsy's Brand, Inc. v. I.O.B. Realty, Inc., Cancellation No. 92029614 (TTAB October 28, 1999).

Theses cancellation proceedings were suspended sua sponte by the TTAB on June 21, 2000, when the TTAB was informed of a lawsuit filed by PBI on September 30, 1999 in the U.S. District Court for the Southern District of New York, alleging inter alia, trademark infringement, seeking cancellation of IOB’s registered mark PATSY’S, and seeking an order withdrawing IOB’s cancellation petition. See Patsy's Italian Restaurant, Inc. v. IOB Realty et al, Case No. 99-cv-10175 (JSM) (S.D.N.Y.). The district court in that case granted PBI’s motion for summary judgment, finding infringement, entered an injunction, and ordered the PTO to cancel IOB’s PATSY’S registration.

On appeal to the Second Circuit, the court affirmed the district court’s decision regarding likelihood of confusion. The court also held that while IOB may have originally had priority with respect to the name PATSY’S, its long-standing tolerance of the use by Patsy’s Italian Restaurant prevented IOB from stopping Patsy’s Italian Restaurant from using the name for restaurant services. Because the parties’ rights to use the PATSY’S name for restaurant services was equal, IOB had no grounds for objecting to Patsy’s Italian Restaurant's expansion into the “related market” for sauces. The Court of Appeals, however, did find the district court exceeded the scope of the litigation by restricting IOB’s use of the mark PATSY’S in connection with restaurant services and modified the district court’s injunction to remove the order to the PTO to cancel IOB’s PATSY’S registration.

Unfortunately, PBI, soon after the district court’s decision but before IOB had filed its appeal, filed a motion with the TTAB on October 18, 2001, to resume the cancellation proceeding. PBI did not notify the TTAB of IOB’s appeal to the Second Circuit. Because IOB did not file a response to PBI’s motion, the TTAB granted PBI's motion and granted PBI's petition to cancel IOB’s PATSY’S registration and dimissed with prejudice IOB’s cancellation proceeding against PBI.

On March 28, 2003, the TTAB sua sponte issued an order to IOB to show cause why judgment should not be entered against IOB on the PATSY’S PIZZERIA registration, which was also part of PBI’s original cancellation petition. By this time, the Second Circuit decision had been rendered, and IOB informed the TTAB of the decision by the Court of Appeals reversing the district court’s order to cancel IOB’s registration. PBI continued to maintain that IOB’s registrations should be canceled because IOB “had lost interest” and because of IOB’s false statement that it had exclusive right to use the mark, when the Second Circuit had held that both parties have an equal claim to the name.

Unfortunately for IOB, on May 27, 2003, the Commissioner for Trademarks went ahead and ordered the cancellation of both of IOB’s registrations because the TTAB had erroneously prepared and forwarded an order for the Commissioner to sign – even though the TTAB’s original order did not formally order IOB’s PATSY’S PIZZERIA registration to be canceled.

Further complicating matters is that when PBI filed its lawsuit against IOB, PBI also filed a new application to register the mark PATSY’S PR (stylized) for restaurant services and for PATSY’S (for restaurant services not including pizza). While these applications were at first rejected as likely to be confused with IOB’s registrations, when those registrations were prematurely canceled, the PTO withdrew its rejections and allowed PBI’s marks to be published and subsequently registered on November 1, 2005.

On that same day, IOB filed another application to register the mark PATSY’S PIZZERIA for (restaurant services, namely, take-out restaurant services). That application was rejected by the PTO on grounds of likelihood of confusion over the above two registrations held by PBI for restaurant services as well as two additional pending applicaitons filed by PBI (PATSY'S OF NEW YORK for restaurant services and PATSY'S for frozen eggplant parmigiana). Perhaps because of the PTO's rejections, on January 9, 2007, I.O.B. Realty filed two petitions to cancel each of PBI’s new registered marks. See I.O.B. Realty, Inc. v. Patsy’s Italian Restaurant, Cancellation Nos. 92046912 and 92046867 (TTAB Jan. 9, 2007). Of course, these cancellations were subsequently suspended once they became the subject matter of the federal district court lawsuit filed by Patsy’s Italian Restaurant. Interestingly, the Examining Attorney, in a subsequent non-final office action, maintained the 2(d) refusal to register IOB's mark, but only citing the PATSY'S OF NEW YORK and PATSY'S (eggplant parmigiana) registrations. Further proceedings on this particular application were suspended December 30, 2007.

To add insult to IOB’s injury, the TTAB, on June 28, 2007, upon reviewing and recounting the “tortured procedural history” of the case (link here), cancelled IOB’s registrations under §8. After PBI noted that IOB had not made the required filings under §8 (declaration of use) of the Lanham Act, the TTAB ordered the register to be corrected to reflect that IOB’s registrations were canceled on such basis – even though such a filing would not have been approved given its cancelled status. The TTAB refused IOB’s request for reconsideration.

On August 28, 2007, the judge in the above district court case ordered the PATSY’S PIZZERIA registration restored under §37 of the Lanham Act (15 USC §1119), but no action has been taken until such time as the court’s order is final (the court was unwilling to certify the order as final to allow IOB to pursue an immediate appeal).

Only time will tell if the most recent jury verdict will start to bring some order to the "procedural morass" (the TTAB's own words) in this case. Given the long-running nature of the dispute, however, one highly doubts that this dispute will end at the district court level.

No comments: