Juicy Trademark Dispute Over SMASHBURGER

Icon Burger Development Company, LLC (“Icon”), the owner of the burger chain “Smashburger,” filed a declaratory judgment action in U.S. District Court for the Eastern District of Kentucky against Dairy Cheer Stores Inc. (“Dairy Cheer”), the owner of several “Dairy Cheer” restaurants in Kentucky. See Icon Burger Development Company, LLC v. Dairy Cheer Stores Inc., Case No. 10-cv-00345 (E.D. Ky. Filed September 29, 2010). A copy of the complaint can be downloaded here (via Courthousenews.com).

The dispute centers around the name SMASHBURGER. Icon began its SMASHBURGER restaurant chain in June 2007 and now has locations in major urban cities in 16 states (including right here in Las Vegas). Icon holds trademark registrations for the SMASHBURGER word mark and design mark (pictured above) in connection with restaurant services.

Dairy Cheer operates four soft-serve ice cream stands/fast food restaurants in the State of Kentucky under the name “Dairy Cheer” – the name came from the fact that the first restaurant opened by Dairy Cheer was a former “Dairy Queen” restaurant that was rebranded “Dairy Queen.” Specifically, Dairy Cheer restaurants are located in the rural areas of Pikeville, Carlisle, West Liberty and Prestonsburg, Kentucky.

Relevant to the instant dispute is that part of Dairy Cheer’s storefront signage for its restaurants states “Home of the Smashburger” – with “Smashburger” identifying one of Dairy Cheer’s menu items.

What prompted the dispute is that Icon notified Dairy Cheer earlier this year about its plans to open a “Smashburger” store in Lexington, Kentucky. Not surprisingly, Dairy Cheer, recognizing that it did have some limited prior user rights to the name “Smashburger,” saw this as an opportunity to get a big windfall from a nationwide company with deep pockets that was eager to use the name for a Kentucky-based location. According to the complaint, representatives of Dairy Cheer demanded a “substantial monetary payment” from Icon to settle the dispute over Icon’s Lexington SMASHBURGER location.

Icon apparently refused to give in to Dairy Cheer’s demands, and so on June 18, 2010, Dairy Cheer filed a Petition for Cancellation with the Trademark Trial and Appeal Board to cancel Icon’s SMASHBURGER word mark registration. See Dairy Cheer Stores Inc. v. Icon Burger Development Company, LLC, Cancellation No. 92052579 (Filed June 18, 2010). Dairy Cheer claims that Icon’s registration of the SMASHBURGER mark for restaurant services so resembles Dairy Cheer’s common law trademarks SMASHBURGER and HOME OF THE SMASHBURGER (which Dairy Cheer claims go back to 1992) as to cause a likelihood of confusion, and thus the registration should be canceled.

With Icon’s federal action seeking a declaratory judgment that its use of SMASHBURGER does not infringe any trademark rights held by Dairy Cheer, the dispute now moves to a federal court (and the Cancellation will certainly be suspended pending the outcome of the civil case).

Sidenote: For those of you who live in a city which has a “Smashburger” location (Icon's “Smashburger” -- not Dairy Cheer's “Smashburger”), I highly recommend giving it a try. It’s rare that a new restaurant chain impresses me with its food offerings, especially hamburgers. After having eaten a fair share of “so-so” and “ok” hamburgers for many years, Smashburger reminded me that, when prepared properly, an ordinary hamburger can be incredibly delicious. I consider the burgers made by Smashburger to be the best tasting hamburgers I’ve ever eaten . . . so far anyway (although hamburger connoisseurs wanting to judge my credibility for judging hamburgers should know that I am one of the few people in the world that does not like hamburgers from In-N-Out Burger – and it has nothing to do with their overly aggressive trademark enforcement).

The Material Girl’s Battle For MATERIAL GIRL

The trademark lawsuit story du jour was the complaint filed by L.A. Triumph, Inc. (“LA Triumph”) against Madonna and her company, Material Girl Brand, LLC, over the trademark MATERIAL GIRL in connection with clothing. See L.A. Triumph, Inc. v. Material Girl Brand, LLC et al, Case No. 10-cv-6195 (C.D. Cal. Filed August 19, 2010). Complaint can be viewed here (via Courthousenews). Multiple news outlets, blogs and gossip sources ran stories about the suit today (ABC News, Fox News, Huffington Post, RadarOnline, and TMZ)

In short, the complaint alleges that a California company named OC Mercantile Corporation started selling a line of MATERIAL GIRL clothes in 1997 – and even registered the name as a trademark with the California Secretary of State that same year (Reg. No. 102808 for women’s apparel). In 2003, LA Triumph became the successor-in-interest to OC Mercantile and purportedly has continued using the mark in connection with the sale of clothing items to the present day and claims that its clothing line has received national exposure. [Interestingly, LA Triumph does not appear to have any online presence where it sells its clothing goods – Google search results only came back with the published stories about this lawsuit. Of course, LA Triumph might argue that MGB’s recent nationwide marketing blitz have overwhelmed LA Triumph’s use of the mark – so called, reversed confusion.]

The complaint goes on to state that sometime in 2010, LA Triumph became aware that the Defendants were going to start selling a line of young women’s clothing using the MATERIAL GIRL mark. The website promoting Madonna’s brand is found at http://www.materialgirlcollection.com/ (as opposed to the website promoting LA Triumph’s clothing which is found . . . umm, anybody have any idea where LA Triumph’s MATERIAL GIRL clothing is promoted online? The closest I could come – based on the fact that L.A. Triumph, Inc. does business in California under the name MedGear – is a website http://www.medgear.com/ which sells clothing for hospital and medical industry workers, but I did not see anything using the mark MATERIAL GIRL.)

LA Triumph also alleges that MGB improperly filed to register the mark MATERIAL GIRL with the United State Patent and Trademark Office (“USPTO”). Interestingly, MGB’s current application (the one cited in the case) was not the first application in line to register the mark MATERIAL GIRL. On May 11, 2009, Audigier Brand Management Group, LLC filed a trademark application for MATERIAL GIRL (covering 7 different classes of goods including clothing). The USPTO initially refused registration in a non-final office action dated August 13, 2009, but only because the description needed some clarification and not based on a Section 2(d) likelihood of confusion refusal.

Subsequently, the Audigier application was assigned to MGB on December 1, 2009. And within days of this assignment, MGB then filed its own intent-to-use application for the mark MATERIAL GIRL (for 4 classes of goods including clothing) on December 4, 2009. This explains why MGB did not file a timely response to the PTO’s office action in the “Audigier” application, which went abandoned on March 26, 2010.

So why, you ask, would MGB file a new intent-to-use application for MATERIAL GIRL when Audigier’s earlier filed MATERIAL GIRL application had already been assigned to MGB? Most likely because the Audigier application was an intent-to-use application and MGB was not really the successor to any kind of ongoing and existing business by Audigier to which the applied-for mark pertained. Under §10 of the Trademark Act (15 U.S.C. § 1060), an application filed under §1(b) (intent-to-use) may not be assigned before a statement of use has been filed except to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing. See 15 U.S.C. §1060(a)(1). The law is quite clear that the assignment of a §1(b) application to an entity that is not the successor to the applicant’s business, before filing an allegation of use, renders the application and any resulting registration void. See The Clorox Co. v. Chem. Bank, 40 USPQ2d 1098 (TTAB 1996). By MGB filing a brand new application, MGB could start fresh without having to be concerned about any resulting registration being deemed void on the basis of improper assignment of a §1(b) application.

Of course, once MGB’s own application was published for opposition on July 20, 2010, LA Triumph timely filed an opposition – filed the same day that LA Triumph’s district court lawsuit was filed. See L.A. Triumph, Inc. v. Material Girl Brand, LLC, Opposition No. 91196172 (T.T.A.B. Filed August 19, 2010). [As a sidenote, another party, Rwachsberg Holdings Inc., filed an Extension of Time to oppose registration of MGB’s mark. Rwachsberg owns the mark MATERIAL GIRLS for cosmetic products and nutritional food products. ]

But the real question is this – why didn’t either OC Mercantile or even LA Triumph seek to register the mark MATERIAL GIRL in connection with clothing with the USPTO?

While one could speculate that neither company bothered to register because they weren’t actively using the mark on clothing and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned, another very likely answer was that the mark could not have been registered by either company with the USPTO because there was already an existing trademark registration for the identical mark for the identical goods. A Canadian company name Les Ventes Universelles S.H. Inc. had a trademark registration for MATERIAL GIRL in connection with clothing (registered July 8, 1997) based on the company’s foreign registration of the same mark (dating back to May 1990). The company filed the necessary Section 8 Declaration of Use at the 5 year mark, but did not renew the mark by the 10 year renewal deadline and the mark was canceled April 12, 2008.

So the natural follow-up question is this – why didn’t LA Triumph run out right away and seek to file a federal trademark application to register the mark once Les Ventes’ registration was canceled – during the window between April 12, 2008 and May 11, 2009 (when Audigier filed its first application)? Again, perhaps it was because LA Triumph was not really actively using the mark in connection with clothing, and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned – but again that would be just pure speculation. [Did I neglect to mention that according to the California Secretary of State’s records the state registration for MATERIAL GIRL expired August 9, 2007?]

So where can I buy LA Triumph’s MATERIAL GIRL clothing again?

Court Decision Upholds Jus Tertii Defense in BASMA Trademark Lawsuit

United Food Imports, Inc. (“United Food”), a wholesale distributor of packaged food products imported from Egypt, sued several food distributors alleging trademark infringement for the unauthorized use of the mark BASMA in connection with products being sold to members of the Middle Eastern community residing in the United States. See United Food Imports, Inc. v. Baroody Imports, Inc. et al, Case No. 09-cv-02835 (D. N.J.).

As part of the Defendants’ counterclaims against United Food, Defendants claimed that a company named Orouba Agrifoods Processing Co. (“Orouba”), which produced the allegedly infringing goods distributed by the Defendants, is the rightful owner of the BASMA mark which United Food is claiming as its trademark. United Food filed a motion to dismiss Defendants’ counterclaims arguing that Defendants’ counterclaims improperly asserted a jus tertii defense (i.e., a claim asserting that a third party has rights in a trademark superior to the party claiming trademark rights).

Defendants allegations incorporated the factual allegations that Orouba set forth in its own petition to cancel United Food’s U.S. trademark registration of the BASMA mark. See Orouba Agrifoods Processing Company v. United Food, Cancellation No. 92050739 (T.T.A.B. Filed March 23, 2009). In short, Orouba claimed that it began using the BASMA mark in the United States in late 1999 (although its own application for the BASMA mark currently reflects date of first use anywhere as December 31, 1999 and use in commerce as February 17, 2003) and owns several foreign registrations of such mark (in Egypt, Turkey, United Arab Emirates, and Germany). In 1998, Orouba entered into an agreement to supply United Food with goods for resale in the United States. In 2004, United Food filed a trademark registration application with the United States Patent and Trademark Office (“PTO”) to register the BASMA mark in connection with various frozen fruits and vegetables (claiming use since January 1, 1998). Orouba terminated its agreement with United Food in September 2005. Orouba attempted to oppose United Food’s application (see Orouba Agrifoods Processing Company v. United Food, Opposition No. 91172895 (T.T.A.B. Filed September 15, 2006), but the opposition was dismissed with prejudice by the Board on February 12, 2008, after Orouba failed to file a brief on the merits in the case. The mark was then registered by the PTO on March 18, 2008. On March 23, 2009, Orouba filed the aforementioned cancellation petition, which was suspended in July 2009 pending the outcome of a separate lawsuit by United Food alleging trademark infringement against Orouba. See United Food Imports, Inc. v. Orouba Agrifoods Processing Co., Case No. 09-cv-04484 (S.D.N.Y.).

Defendants’ counterclaims in the instant case sought a judgment declaring that Orouba is the rightful owner of the BASMA trademark, cancellation of United Food’s registration, and damages arising from United Food’s fraudulent registration (pursuant to 15 U.S.C. § 1120).

While the court granted United Food’s motion to dismiss the counterclaims on the grounds that Defendants do not have standing to bring claims that affirmatively assert Orouba’s rights, the court chose not to prevent Defendants from asserting its arguments as an affirmative defense since the Defendants were in privity with Orouba. See United Food Imports, Inc. v. Baroody Imports, Inc. et al, 2010 U.S. Dist. LEXIS 33585 (D. N.J. April 6, 2010) (unpublished).

The court noted that Defendants’ counterclaims were essentially claims against United Food on behalf of Orouba. As such, the court dismissed such counterclaims outright for lack of third party standing on the part of the Defendants to bring these claims on behalf of Orouba. Moreover, the rare exceptions where third party standing is acceptable (i.e., where the third party is unable to assert their rights and there is an identity of interests between the third party and the party bringing claims) did not apply in light of the ongoing litigation between United Food and Orouba in which Orouba could assert such claims against United Food.

Defendants then argued in the alternative that their arguments should be allowed as an affirmative defense instead of a counterclaim. United Food argued that Defendants should not be allowed to assert any arguments regarding Orouba’s rights on the basis that it would constitute an improper jus tertii defense:

“Jus tertii in the trademark context arises when defendant alleges that plaintiff has no ‘title’ because plaintiff itself is an infringer of a third party with rights allegedly superior to plaintiff.” McCarthy, § 31:157. Thus, “[d]efendant in effect argues that, ‘Somebody has a right to sue me, but it’s not you.” McCarthy, § 31:158.

The court decided in favor of allowing Defendants to assert Orouba’s rights as a jus tertii defense given the contractual relationship that allegedly existed between Defendants and Orouba in that Orouba supplied the Defendants with the allegedly infringing goods. This contractual relationship placed the Defendants in privity with Orouba such that Defendants could claim some entitlement to the priority rights of Orouba with respect to the BASMA mark.

Accordingly, while the court dismissed Defendants’ counterclaims, because the court could infer from the allegations that Orouba and Defendants were in privity with one another, the court decided not to preclude the Defendants at this pleading stage of the case from presenting their arguments as an affirmative defense to the suit.

Trademark Battle Over the Fame of “Atlantis” for Casino Services Headed to Trial In Nevada District Court

Two casino companies fighting over the right to use the service mark ATLANTIS in connection with casino services are heading for trial after two Nevada District Court orders ruled on multiple motions filed by the parties and set the stage for the parties to proceed to trial. See Kerzner Int'l, Inc. v. Monarch Casino & Resort, Inc., 2009 U.S. Dist. LEXIS 116622 (D. Nev. December 14, 2009); Kerzner Int'l, Inc. v. Monarch Casino & Resort, Inc., 2009 U.S. Dist. LEXIS 116624 (D. Nev. December 14, 2009).

Atlantis Resort & Casino - Paradise Island, Bahamas

On one side are Kerzner International Limited and Kerzner International Resorts, Inc. (together “Kerzner”), the owners of the Atlantis Resort and Casino on Paradise Island in The Bahamas. On the other side is Monarch Casino & Resort, Inc. and Golden Road Motor Inn, Inc. (together “Monarch”) which own and operate the Atlantis Casino Resort Spa in Reno, Nevada.

Atlantis Casino Resort in Reno, Nevada

The origins of the dispute date back to a trademark registration for the mark ATLANTIS for lodging services which was originally registered with the U.S. Patent and Trademark Office by Atlantis Lodge, Inc. (“Lodge”) on October 11, 1994. Lodge had been using the Atlantis mark in connection with lodging services in North Carolina since June 6, 1963. Lodge’s subsequent licensing of its Atlantis mark to both Kerzner and Monarch set the foundation for the eventual dispute between Kerzner and Monarch.

Monarch had been offering lodging services in Reno, Nevada since 1972 and casino services since 1986, but when Monarch first used the Atlantis mark in 1992, it was in connection with restaurant, bar, lounge, and nightclub services, not lodging or casino services. In February 1996, Monarch entered into a license agreement with Lodge for the exclusive right to use the Atlantis mark in connection with lodging services in all of Nevada. In April 1996, Monarch Reno casino resort (which at the time was operating under the “Clarion” mark) began operating under the name “Atlantis Casino Resort.” In July 1997, Monarch obtained a Nevada state trademark registration for the mark “Atlantis Casino Resort” for casino services, but never sought federal registration of the Atlantis mark for casino services.

In October 1994, Kerzner entered into a license agreement with Lodge for use of the Atlantis mark at its casino resort in The Bahamas (which at the time was under the name “Paradise Island Resort and Casino”). Kerzner began advertising the rebranding of its casino resort under the Atlantis name in October 1994 with the officially reopening occurring in December 1994.

In July 1996, Kerzner entered into an assignment and license agreement with Lodge whereby Kerzner acquired the ATLANTIS trademark registration for lodging services from Lodge and licensed the mark back to Lodge for use in North Carolina. The license agreement between Lodge and Monarch was attached as an exhibit to the Lodge/Kerzner assignment agreement, and Lodge’s representations of its right to assign the Atlantis mark were made subject to Monarch’s exclusive license to use the mark for lodging services in Nevada.

In February 1997, Kerzner filed an intent-to-use application to register the mark ATLANTIS in connection with, among other things, providing casino facilities, which issued on February 3, 2004, after Kerzner filed a Statement of Use in September 2003, claiming a first use date of October 1994.

The parties apparently coexisted in their respective markets without any problems until each side started taking steps towards expanding their respective Atlantis brand into the Las Vegas market.

Kerzner’s first amended complaint against Monarch was filed on February 14, 2006, and sought declaratory judgments that Monarch’s use of the Atlantis mark infringed Kerzner’s trademark right. Monarch fought back by filing counterclaims on December 28, 2006, seeking cancellation of Kerzner’s trademark registration and its own declaratory relief with respect to its own trademark rights to the Atlantis mark that Monarch had developed in connection with casino services. Monarch also filed a cancellation petition with the Trademark Trial and Appeal Board to cancel Kerzner’s trademark registration. See Monarch Casino & Resort, Inc. et al v. Kerzner International Resorts, Inc., Cancellation No. 92045869 (T.T.A.B. Filed May 31, 2006). The TTAB proceeding is stayed pending the outcome of the civil action.

In one of Monarch’s Motions for Partial Summary Judgment, Monarch claimed that it was entitled to a judgment as a matter of law that it had priority of use of the Atlantis mark for casino services. Monarch argued that its use of the Atlantis mark for casino services dated back to 1992 – the date when it first used the mark in connection with restaurant services (and which was before the date Kerzner began to use the Atlantis mark in The Bahamas).

The court, however, rejected Monarch’s argument that its use of the Atlantis mark for a restaurant gave it priority of use in connection with casino services under the “related goods” or “natural expansion” doctrine. The court concluded that restaurant services and casino services are not closely related and that Monarch only began to develop trademark rights in the Atlantis mark for casino services when it actually began using the mark in connection with casino services in April 1996.

Monarch also argued that its April 1996 had priority over Kerzner’s first use of December 1994 under the territoriality principle – Kerzner’s use was outside the United States and thus it use was not use of the Atlantis mark for casino services in the United States.

The court rejected Kernzer’s counterargument that activities conducted by it in the United States which are “integral” to its casino services in the Bahamas constitutes use of the Atlantis mark in the United States in connection with casino services. Since Kernzer’s “casino services” were clearly rendered outside the United States, Kerzner had to rely upon an exception to the territoriality principle to claim that its use of the Atlantis mark outside the United States gave it trademark rights in the United States..

With respect to one noted exception to the territoriality principle – described in International Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d 359 (4th Cir. 2003) where the court found that use of a mark in advertising or sale of services in the United States, coupled with the rendering of those services abroad to United States citizens, is sufficient to give rise to trademark rights in the United States – the court noted that the decision was not binding in the Ninth Circuit and, in light of the fact that the Ninth Circuit had even explicitly declined to adopt the reasoning and noted that the decision had been called into question, the Ninth Circuit would decline to adopt such reasoning if presented with the question. Thus, the district court declined to adopt it as well.

As for the other exception to the territoriality principle, that would be the “famous marks” exception to the territoriality principle which was recognized by the Ninth Circuti in Grupo Gigante SA de CV v. Dallo & Co., Inc., 391 F.3d 1088, 1093 (9th Cir. 2004), and thus binding precedent on this district court.

Grupo Gigante describes a two-step analytical process to determine whether a mark falls under the famous-mark exception. First, the district court must determine whether the mark has achieved the level of recognition that would be necessary in a domestic trademark infringement case. Id. at 1098; see also id. at 1106 (Graber, J., concurring). Second, “where the mark has not before been used in the American market, the court must be satisfied, by a preponderance of the evidence, that a substantial percentage of consumers in the relevant American market is familiar with the foreign mark. The relevant American market is the geographic area where the defendant uses the alleged infringing mark.” Id. at 1098. Thus, the standard for famous marks is an intermediate one: “[t]o enjoy extraterritorial trademark protection, the owner of a foreign trademark need not show the level of recognition necessary to receive nation-wide protection against trademark dilution. On the other hand, the foreign trademark owner who does not use a mark in the United States must show more than the level of recognition that is necessary in a domestic trademark infringement case.” Id. at 1106 (Graber, J., concurring).

The district court clarified that Kerzner must show that its mark was “famous” as of April 1996 – the date when Monarch began to use the Atlantis mark in connection with casino services.

And while Kerzner performed some surveys which tended to show that a “substantial percentage of consumers” surveyed were familiar with Kerzner’s use of the Atlantis mark (especially in the Las Vegas market, which was the more relevant market at issue in the case), the survey, conducted in 2007, did not ask questions about when the consumers became aware of the mark, and thus the survey lacked probative value about whether the mark qualifies for the famous-mark exception as of April 1996. The court did note that there was some evidence of the extensive promotional campaign that Kerzner engaged in to promoted its remodeled Atlantis casino resort, which could be reasonably inferred to have penetrated the Las Vegas market.

In the end, the court concluded that there was a genuine issue of material fact regarding when, if ever, Kerzner’s casino resort acquired the status of a famous mark in the meaning of Grupo Gigante. The court found that taking all reasonable inferences in Kerzner’s favor, a jury could conclude that by April 1996 a substantial percentage of consumers in the Las Vegas market were familiar with Kerzner’s mark based on the evidence of Kerzner’s substantial national advertising campaign and media coverage of the opening., and thus Kerzner might have priority of use in the Atlantis mark for casino services in the United States under the Grupo Gigante famous marks exception. Based on this finding, the court denied Monarch’s motion.

For similar reasons, the court also denied Monarch’s Motion that Kernzer does not have standing to bring its trademark infringement lawsuit.

Monarch filed another summary judgment motion arguing that Kerzner cannot show that it is entitled to injunctive relief as a matter of law.

Monarch first argued that Kerzner never had any plans to develop a casino resort in Las Vegas, much less one using the Atlantis mark, and thus Kerzner cannot demonstrate a likelihood of irreparable harm if the injunction did not issue. However, the court disagreed finding that, taking all reasonable inferences in Kerzner’s favor, the evidence submitted by Kerzner could demonstrate that Monarch had relatively immediate intentions either to open a casino resort under the Atlantis mark in Las Vegas or to sell rights in the mark to someone who would, and thus an injunction might well be an appropriate remedy after the conclusion of this lawsuit if Kerzner convinces the jury that it has senior rights in the mark.

Monarch next argued that since it is undisputed that Monarch has the exclusive right under its license agreement with Kerzner (as Lodge’s assignee in interest) to use the Atlantis mark for lodging services in Nevada (including Las Vegas), a Las Vegas resort hotel and casino under the Atlantis mark would create no greater likelihood of confusion than a facility which offers only lodging services, and thus Kerzner cannot demonstrate any additional likelihood of confusion that Kerzner might be entitled to enjoin.

In essence, Monarch argued that its license for lodging services gave Monarch leeway to create a certain likelihood of consumer confusion through providing lodging service, and only activities that would create an additional likelihood of consumer confusion could give rise to liability sufficient to merit an injunction. The court noted the obvious with respect to lodging services – to the extent that a consumer might believe that such a hotel is associated with Kerzner’s Atlantis mark, that consumer would not be confused at all given that Monarch is Kerzner’s licensee of the Atlantis mark for lodging services. The court then rejected Monarch’s argument by noting that Monarch’s license did not give it any rights to use the Atlantis mark in connection with both casino services and lodging services. Moreover, a consumer who believed casino services provided at a Monarch Atlantis casino resort in Las Vegas to be associated with Kerzner would be confused in a way that the consumer making the same association with regard to lodging services alone would not be, and if Kerzner prevails at trial, it may be entitled to an injunction to prevent such consumer confusion.

Monarch’s last argument in an attempt to persuade the court that injunctive relief should not be issued was the “Dawn Donut” rule and Kerzner’s lack of plans to offer casino services to consumers in Las Vegas. The Dawn Donut rule comes from the Second Circuit Court of Appeals decision in Dawn Donut Co., Inc. v. Hart’s Food Stores, Inc. 267 F.2d 358 (2d Cir. 1959):

Under the Dawn Donut rule, even if a federal registrant has rights in a mark, it is not necessarily entitled to an injunction against an unauthorized user: “if the use of the marks by the registrant and the unauthorized user are confined to two sufficiently distinct and geographically separate markets, with no likelihood that the registrant will expand his use into the defendant’s market, so that no public confusion is possible, then the registrant is not entitled to enjoin the junior user’s use of the mark.” Dawn Donut, 267 F.2d at 364 (footnote omitted); see also Fairway Foods, Inc. v. Fairway Markets, Inc., 227 F.2d 193, 198 (9th Cir. 1955) (vacating injunction issued to prevailing plaintiff on essentially the same basis as later became known as the Dawn Donut rule). Only once the federal registrant has expanded its use of the mark, so that the market areas of the two users are no longer separate and distinct, will the registrant be entitled to an injunction. Mister Donut of Am., Inc. v. Mr. Donut, Inc., 418 F.2d 838, 844 (9th Cir. 1969) (citing Dawn Donut).

However, in rejecting Monarch’s argument, the court noted that the Grupo Gigante famous marks exception to the territoriality principle necessarily implies an exception to the Dawn Donut rule – the court in Grupo Gigante recognized that consumer confusion can occur with respect to a famous mark abroad even if the user of the mark has no intention of ever using the mark in the United States. The court held that an injunction in the U.S. where a mark used exclusively abroad is determined to be famous under Grupo Gigante would be appropriate to prevent the consumer confusion.

Monarch also filed a motion seeking summary judgment on its counterclaim for a declaratory judgment that Monarch’s Nevada state trademark registration is valid and enforceable. While there was no dispute over the validity of Monarch’s state registration, there was a dispute over Monarch’s position that its state law rights trump Kerzner’s federal rights.

Monarch argued that its Nevada state trademark rights do not yield to Kerzner’s rights reflected in its federal registration because Kerzner could not use its Atlantis mark in Las Vegas under Nevada law. Monarch’s unique argument comes from the fact that under Nevada law, in order to obtain an unrestricted gaming license in a county of more than 100,000 population (i.e., Las Vegas), the casino must be associated with a hotel with at least 200 rooms. And since Monarch has the exclusive right to use the Atlantis mark for lodging services in Nevada (pursuant to its agreement with Kerzner), Kerzner could not build a casino resort which includes both a casino and a 200-room hotel in Las Vegas under the Atlantis mark, and could not use the Atlantis mark for casino services in Las Vegas or anywhere else in Nevada where the 200-room hotel requirement applies. Monarch’s position is that if Kerzner cannot use the Atlantis mark in Nevada, then Monarch is not blocked from doing so by any federal trademark rights Kerzner may have outside of Nevada.

For similar reasons described above, the court rejected Monarch’s argument based on the Grupo Gigante famous marks exception. Even if Kerzner is unable or unwilling to operate a casino in Nevada, it may still have federal trademark rights enforceable in Nevada under the famous marks exception. And those federal trademark rights would preempt Monarch’s state trademark rights.

The court also rejected Monarch’s invocation of the “natural zone of expansion” doctrine to argue that Monarch is entitled to statewide rights in the Atlantis mark because Las Vegas is within its “natural zone of expansion,” and therefore Monarch should be treated as if Las Vegas is within the territory where it has already used the mark in connection with casino services, even though Monarch does not actually operate a casino in Las Vegas.

In rejecting Monarch’s argument, the court noted the following about the “natural zone of expansion” doctrine:

The doctrine is normally invoked by senior users seeking to expand their federal statutory trademark rights into areas where a junior user is already using the mark under the protection of the common law. See 5 McCarthy, supra, § 26:20. Here, Monarch turns the doctrine on its head, seeking to leverage its state trademark rights to expand the geographic area in which it is entitled to trademark protections in derogation of Kerzner’s federal rights. Monarch has not cited, nor have we discovered, any authority for so applying the natural zone of expansion doctrine.

So while the court granted Monarch’s motion to the extent that the state registration was found to be valid and enforceable under Nevada law, it denied the motion to the extent that there are genuine issues of material fact about whether Kerzner’s mark falls within the Grupo Gigante famous marks exception (and when it became famous) in which case Kerzner would have federal trademark rights which preempt Monarch’s state trademark rights.

The court’s decision in a parallel order dealt with additional motions to exclude certain evidence and motions for summary judgment by Monarch and Kerzner. While I won’t go into detail regarding that order in this blog post (isn’t this one already long enough?), the court did decide as a matter of law that Monarch has continuously used the Atlantis mark for casino services from April 1996 to the present and that Kerzner’s trademark application date (and thus its constructive use date of the mark in the United States) was February 1997.

The court’s decisions now push the case towards trial on the issue of whether Kerzner acquired priority of use in the Atlantis mark under the Grupo Gigante famous marks exception.

Ninth Circuit Tackles Trademark Tacking in “O'” Trademark Dispute

The Ninth Circuit addressed the unique issue of trademark tacking in affirming a lower court’s decision on a trademark lawsuit between two companies that produce clothing aimed towards participants of motor cross racing. See One Industries, LLC v. Jim O’Neal Distributing, Inc., No 08-55316, 2009 U.S. App. LEXIS 18967 (9th Cir. August 24, 2009).

On the one side is Jim O’Neal Distributing, Inc. (“O’Neal”), an apparent leader in the industry with 17.5% of the market for motocross apparel and helmets in 1998. Since 1991, O’Neal has used a stylized “O” followed by an apostrophe (the “O’ mark”) on its products. However, over the years, O’Neal used several different version of this O’ mark.

For purposes of this case, the relevant marks were the 1997 version – a thicker, boxier O’ mark with rounded corners (the “Rounded O’ mark”) – and the 2003 version – which abandoned the rounded corners of the 1997 mark in favor of an angular approach (the “Angular O’ mark”).

One Industries, LLC (“One Industries”) was originally founded in 1997 and began by selling stickers and decals; however, by 2003, One Industries had added helmets and clothing to its product lines which made it a competitor with O’Neal.

In 1999, One Industries developed the “One Icon” mark, which it describes as two interlacing number ones (pictured above), and also developed an angular version of the word “One” in its name (the “One Angular” mark) (pictured below). One Industries uses both of these marks on motorcycle-related apparel and headgear.

In 2006, O’Neal accused One Industries of infringing the 2003 Angular O’ mark as well as the O’NEAL mark. One Industries believed that O’Neal was misrepresenting the length of time that it had been using its O’ mark and that the One Icon and One Angular marks, which were created and registered in 1999, were actually senior to the Angular O’ mark created in 2003. One Industries filed a declaratory judgment action that its One Icon and One Angular marks did not infringe O’Neal’s trademarks. O’Neal in turn asserted counterclaims for trademark infringement.

Before discovery commenced, One Industries moved for a more definite statement under Federal Rule of Civil Procedure 12(e), arguing that O’Neal’s complaint did not identify the particular O’ mark that it claimed was allegedly infringed. O’Neal claimed that the O’ mark, with some slight changes over the years, was always the same mark.

The district court granted One Industries’ motion for a more definite statement reasoning that the two of the marks appear to be more than slightly different. O’Neal then amended its counterclaims to assert infringement of the 1997 Rounded O’ mark (in order to get around One Industries’ 1999 priority date for its own marks). The district court subsequently granted summary judgment to One Industries on all claims and O’Neal appealed.

O’Neal maintained that the district court erred by refusing to “tack” the different versions of the O’ mark dating back to 1991 since, according to O’Neal, each iteration of the O’ mark constituted a continuation of the same mark rather than a creation of a new mark.

As the Court of Appeals explains,

Tacking matters because One Industries first used the One Icon in 1999 -- after O’Neal developed the 1997 Rounded O’ mark but before O’Neal created the 2003 Angular O’ mark. It is a cardinal principle of federal trademark law that the party who uses the mark first gets priority. See Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1047 (9th Cir. 1999) (“It is axiomatic . . . that the standard test of ownership is priority of use . . . [T]he party claiming ownership must have been the first to actually use the mark in the sale of goods or services.” (internal quotation marks omitted)). Thus, if the Rounded and Angular O’ marks are the same mark, then the district court should have compared the One Icon with the 2003 Angular O’ mark; if the marks are different, however, then the district court correctly compared the One Icon with the 1997 Rounded O’ mark.

One issue raised by O’Neal was the fact that the district court resolved the issue on a Rule 12(e) motion for a more definite statement rather than in the context of a summary judgment motion. O’Neal felt that summary judgment was premature because discovery had not yet been completed and O’Neal had been deprived of the opportunity to demonstrate that evolving versions of the O’ mark created the same, continuing commercial impression to consumers. While the Ninth Circuit acknowledged that “tacking requires a highly fact-sensitive inquiry” and that the “better practice is to resolve it on summary judgment, after full discovery,” in this case, the court was persuaded that there was no reversible error because O’Neal failed to ask the district court to postpone ruling until after discovery and did not move for reconsideration. “Having acquiesced in the resolution of the issue in the disposition of the Rule 12(e) motion, O’Neal cannot now complain that the district court should have acted differently.”

As for the merits of O’Neal’s tacking claim, the court laid out the legal standard as follows:

A trademark owner may “claim priority in a mark based on the first use date of a similar, but technically distinct, mark--but only in the exceptionally narrow instance where the previously used mark is the legal equivalent of the mark in question or indistinguishable therefrom such that consumers consider both as the same mark.” Brookfield, 174 F.3d at 1047-48 (internal quotation marks omitted). Tacking is a question of fact. See Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 759 (9th Cir. 2006). “A question of fact may be resolved as a matter of law if reasonable minds cannot differ and the evidence permits only one conclusion.” Id.

“The standard for ‘tacking’ . . . is exceedingly strict: [t]he marks must create the same, continuing commercial impression, and the later mark should not materially differ from or alter the character of the mark attempted to be tacked.” Brookfield, 174 F.3d at 1048 (internal quotation marks omitted). Our precedent demonstrates that tacking is allowed only in narrow circumstances. In Brookfield, we concluded that “moviebuff.com” cannot be tacked onto “The Movie Buff’s Movie Store.” Id. at 1049. There, we reasoned that “ ‘The Movie Buff’s Movie Store’ and ‘moviebuff.com’ are very different, in that the latter contains three fewer words, drops the possessive, omits a space, and adds ‘.com’ to the end.” Id. Similarly, in Quiksilver, we held that the district court erred in tacking “QUIKSILVER ROXY” onto “ROXY.” Quiksilver, 466 F.3d at 760. We reasoned that “a reasonable jury could easily conclude that ‘QUIKSILVER ROXY’ and ‘ROXY’ did not create the ‘same, continuing commercial impression’ at the time the ‘ROXY’ brand was introduced.” Id.

Because the district court decided the tacking issue as a matter of law, the court was faced with deciding whether O’Neal’s Rounded O’ mark, developed in 1997, and the Angular O’ mark, developed in 2003, differ to such a degree that no reasonable jury could conclude that they create the “same, continuing commercial impression.”

In affirming the lower court’s decision, the Ninth Circuit panel stated the following regarding O’Neal’s two marks:

We recognize that this is a close case, but we agree with One Industries and with the district court that O’Neal cannot meet the “exceedingly strict” standard for tacking. Although both marks consist of a styled O followed by an apostrophe, the similarities largely end there. The apostrophes are markedly different: in the Rounded O’ mark it is entirely separated from the O and appears to be a standard apostrophe. In contrast, the Angular O’ mark’s apostrophe is connected to the main image and looks like a triangle. The lower and upper horizontal lines on the Rounded O’ mark are thinner than the corresponding lines on the Angular O’ mark. While the Rounded O’ mark is boxy, the Angular O’ mark looks like the outline of a lemon. These differences, in our view, establish that the two marks are not “indistinguishable.” Brookfield, 174 F.3d at 1047. Like the marks at issue in Brookfield and Quiksilver, the Rounded O’ mark and the Angular O’ mark differ in several material respects.

The court also noted that cases from other circuits and from the Trademark Trial and Appeal Board have only allowed tacking when the marks are “virtually identical.” As such, the court concluded that the district court properly granted One Industries’ motion for a more definite statement because the differences between O’Neal’s Rounded O’ mark and Angular O’ mark are so material that they do not meet the “exceptional” instances where tacking should be allowed.

The remainder of the court’s decision addresses the district court’s decision finding no likelihood of confusion with O’Neal’s marks. The court, reviewing the lower court’s summary judgment decision de novo and applying the eight factor test used by the Ninth Circuit for determining “likelihood of confusion” set forth in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), concluded that there was no likelihood of confusion in this case – primarily based on the dissimilarity of the marks, the lack of evidence of actual confusion, and the weakness of the mark given the presence of other similar O marks in the marketplace. “In the absence of evidence of actual confusion or intent to deceive, we decline to grant O’Neal a virtual monopoly on the use of the letter “O” on motorcycle helmets. The mere fact that the two companies are direct competitors and happen to use the same letter on their products is not sufficient to show infringement.” The same was true for the claims that One Industries’ marks infringed on O’Neal’s O’NEAL mark (marks were entirely different). And such lack of confusion also refuted O’Neal’s claims of trade dress infringement (which were based on the position of the O’NEAL on a helmet).

Accordingly, the Court of Appeals affirmed the district court’s granting of the motion for more definite statement and motion for summary judgment in favor of One Industries.

Judge Graber, concurring in part and dissenting in part, believed that the district court erred in resolving the tacking question as a matter of law in a motion for a more definite statement:

In my view, it was inappropriate for the court to decide that O’Neal was not permitted to tack its 2003 mark to its older marks as a matter of law in a pre-discovery Federal Rule of Civil Procedure 12(e) order. At that stage in the litigation, it would have been impossible for the district court to conclude that reasonable minds could not differ and that the evidence permitted only one conclusion regarding tacking. Indeed, the court made no such finding, and the majority itself concedes that this is a “close case.” Maj. op. at 11609. The order granting the motion states only that the “Court is unpersuaded by O’Neal’s claim that it uses only one mark that has been slightly altered over the years.” That conclusory statement, unsupported by any evidence in the record at that time, is not enough to decide the highly fact-dependent question of tacking as a matter of law. I would therefore reverse and remand.

New York Federal Court Grants Preliminary Injunction in JAPONAIS Trademark Dispute

I have previously written (link here) about the ongoing dispute between Roy Tuccillo and Geisha NYC, LLC (“Geisha NYC”) over the restaurant name “Japonais” (the “JAPONAIS mark”). In short, Geisha first opened its “Japonais” restaurant in Chicago in 2003. However, due to an oversight on the part of Geisha in not seeking to register its trademark with the USPTO right away, Tuccillo was able to file an intent-to-use trademark application in 2004 for the identical JAPONAIS mark before Geisha NYC had the chance to file its own registration application. Tuccillo’s application ultimately registered in March of this year. Tuccillo filed an action against Geisha for trademark infringement, and Geisha came back with counterclaims for cancellation of Tuccillo’s registration as well as trademark infringement.

On July 22, 2009, a federal court judge in the Eastern District of New York, in a very comprehensive and detailed opinion (and one that holds back no punches against Tuccillo), granted Geisha’s motion for preliminary injunction to enjoin Tuccillo from using the name “Japonais” in connection with restaurant and lounge services after finding a likelihood of success on the merits of Geisha’s counterclaim to cancel Tuccillo’s trademark registration on the basis of fraud. A copy of the court’s decision can be downloaded here. (HT: Marty Schwimmer).

In short, the court found Tuccillo’s evidence and testimony “incredible” (and not in the good way). In particular, the court did not believe Tuccillo’s claims that he was unaware of anyone else using the JAPONAIS mark when he filed his application in June 2004 . The court also found his statements for why he decided to use the word “Japonais” or how he developed the particular stylized lettering in his application completely lacking in credibility – and not helped out by the fact that there was evidence that he had copied and tried to register a different company’s unique logo as well.

Moreover, Tuccillo claimed in May 2008 that he had been using the JAPONAIS mark since April 1, 2008, in connection with restaurant and lounge services – a claim that the court found completely undermined the lack of any advertising, the lack of any sales records attributable to the restaurant, the lack of any health department permit, the fact that the telephone number listed on the menus were for Tuccillo’s “frozen food” business, and pictures showing that on March 23, 2009, at a time when the restaurant was purportedly open for lunch, there was a closed sign out on the front door with no employees and no food in sight.

All of this evidence paled in comparison to the evidence submitted by Geisha demonstrating the creation and development of the JAPONAIS mark in 2003 in connection with its Chicago restaurant, the subsequent opening of restaurants in New York City and Las Vegas in 2006, and Geisha's expert witness testimony that Tuccillo could not have created the JAPONAIS mark in the manner in which he stated he did.

In sum, the court agreed that the evidence supported the argument that Tuccillo submitted the trademark registration application for the identical JAPONAIS mark created by Geisha in a bad faith effort to “squat” on the mark in order to capitalize on Geisha’s failure to register the mark. And thus, Geisha demonstrated a likelihood of success on its counterclaims for cancellation of Tuccillo’s registration of the JAPONAIS mark based on Tuccillo’s false statements to the USPTO claiming to be the senior user of the mark.

New England Patriots Lose TTAB Opposition Over 19-0 THE PERFECT SEASON

Followers of John Welch’s The TTABlog® are probably familiar with his ongoing series of decisions filed under the category of WYHA (“Would You Have Appealed?”). Well, after reading his write-up here on the TTAB’s recent precedential decision in Kraft Group LLC v. William A. Harpole, Opposition No. 91185033 (April 22, 2009) (precedential), there may be a new category – “Would You Have Opposed?”

Back on February 1, 2008, with the New England Patriots on the verge of becoming only the second team in NFL history to go undefeated, I wrote (link here) about the Section 1(b) intent-to-use applications filed on January 17, 2008, by Kraft Group, LLC (“Kraft”), the owner of the New England Patriots NFL franchise, for the marks 19-0 and 19-0 THE PERFECT SEASON. The same post also mentioned the earlier filed application to register the mark THE PERFECT SEASON 19-0 filed William Harpole on November 8, 2007, on the Supplemental Register.

Well, Harpole apparently figured out that he meant to file for registration on the Principal Register and that he could amend his application to be on the basis of intent-to-use on the Principal Register. Harpole’s application was published for opposition and Kraft promptly opposed.

In the TTAB opposition, Kraft attempted to argue that Harpole’s application was void ab initio or alternatively that the application's effective filing date must be deemed to be the date on which he amended the application to seek registration on the Principal Register (in April 2008 – well after Kraft’s applications were filed). The TTAB rejected Kraft’s arguments finding that Harpole's original application, even though it originally sought Supplemental Registration, nonetheless had all the information that was necessary to receive a filing date under Trademark Rule 2.21(a) and that the PTO’s Rules and Practices allow applicants the opportunity to provide information missing in the original application so that the mark can be registered without losing the original filing date.

Of course, one wonders why Kraft even bothered to oppose this mark at this stage – after all, by that time (as we all now know full well) all hopes of THE PERFECT SEASON 19-0 were dashed when the New York Giants defeated the New England Patriots in that year’s Super Bowl® brand championship football game. Perhaps Kraft was hoping to knock out Harpole’s application and keep its own applications alive in hopes that the team might pull off another perfect season in the three year time frame following the eventual Notice of Allowance (certainly they have a bona fide intent to achieve another perfect season, right?). Of course, as things stand, Kraft’s application will now be suspended until such time as Harpole’s application is either abandoned for failure to file a Statement of Use or until such time as Harpole files a Statement of Use and the mark registers (at which time Kraft’s application will most likely be rejected over Harpole’s then registered mark). So there is still the chance that Kraft's applications might be allowed eventually (does anybody really think that Harpole intends on putting out THE PERFECT SEASON 19-0 brand clothing?).

So I ask again, given the above – Would You Have Opposed?

And as a final sidenote, while no one has applied for 18-1 THE IMPERFECT SEASON (as noted by the TTABlog), there was no shortage of enterprising (but misdirected from a trademark perspective) persons who forsaw the possibility of the New England Patriots not having a perfect season.

One individual filed for 18-1 THE PERFECT UPSET on February 3, 2008, but the application went abandoned when no statement of use was filed. Another individual filed for 18-1 WORLD CHAMPIONS on February 4, 2008, but that application was also abandoned when no statement of use was filed. Same for 18 AND NO filed on February 4, 2008 – allowed but no statement of use. The New York Post had its three applications (mentioned in this article here) for 18-1 filed February 4, 2008 (here, here, and here), but all three have been abandoned. Which leaves only two applications pending: one company filed for 18-1 on February 4, 2008 (the application is currently suspended, but all cited pending applications have not been abandoned so it should be allowed to proceed) and the remaining applicant filed for WORLD CHUMPS 18-1 on February 21, 2008 (also suspended pending the outcome of the remaining 18-1).

And just because you don’t have a trademark registration for 18-1 for clothing goods doesn’t mean you can get out there and sell them anyway (although I don’t think any of these would qualify as 18-1™ brand clothing).

Geisha LLC Denied Summary Judgment Over New York Man’s JAPONAIS Trademark Registration

There was another court decision in the long running battle between the founders of the restaurant Japonais and a New York man who was first to file a trademark registration application for the JAPONAIS mark with the U.S. Patent and Trademark Office (“USPTO”). See Geisha LLC. v. Tuccillo, 2009 U.S. Dist. LEXIS 20300, Case No. 05-cv-05529 (N.D. Ill. March 13, 2009). The decision was a setback for the Japonais restaurant founders and underscores the importance of businesses taking the steps to seek trademark registrations early for their intended their trademarks and service marks in order to protect their subsequent ability to expand the use of such marks nationwide.

Geisha LLC (“Geisha”) is the founder of the European/Japanese fusion restaurant “Japonais.” The company was formed in December 2001 and sometime thereafter selected “Japonais” (English for “Japanese”) as the name for its planned restaurant. In early 2003, Geisha created the JAPONAIS design mark pictured above. Unfortunately, Geisha did not seek to apply for registration of its name or logo sometime before it opened its first restaurant in downtown Chicago on September 23, 2003. While the Japonais restaurant received some nationwide press from Bon Appetit magazine, Conde Nast Traveler, and Time magazine, Geisha’s JAPONAIS design mark only appeared in advertisements in the Chicago market

On June 25, 2004 – nine months after the restaurant opened (and two weeks after an article about the restaurant appeared in Time magazine) – a man named Roy Tuccillo, owner of Anchor Frozen Foods, a New York-based frozen seafood supply company, filed an intent-to-use application with the USPTO for the mark JAPONAIS (coincidentally with the same style as the logo created by Geisha having an inverted V in place of the A) in connection with restaurant and lounge services. Tuccillo testified in deposition that he had used his JAPONAIS mark as far back as 2000 when he put it on a store front window where he sold his frozen seafood (Tuccillo offered an undated photo of a unidentified store front window as evidence).

Geisha did not discover Tuccillo’s intent-to-use application until September 2005 – long after the period for Geisha to file an opposition to registration had expired. The PTO issued a Notice of Allowance on August 23, 2005. Geisha’s counsel notified Tucillo’s attorney about Geisha’s rights to the JAPONAIS mark to which Tucillo apparently replied that he intended to use the name in connection with a future restaurant and lounge. Geisha then filed the instant action against Tucillo on September 26, 2005, claiming, among its ten causes of action, false designation of origin under 15 U.S.C. § 1125(a). While the case was proceeding, Geisha opened two additional Japonais restaurants – one in New York City and the other in Las Vegas – using its JAPONAIS design mark.

Geisha’s complaint had also sought declaratory relief that Geisha possessed superior rights in the mark and that Tuccillo’s intended use of the mark would constitute infringement – relief that was preliminarily denied because Tuccillo had not yet used the mark and was not immediately threatening to do so.

On May 2, 2008, however, Tuccillo filed a Statement of Use declaring that he was using the mark in commerce in connection with restaurant and lounge services. Tuccillo’s specimen of use was a menu showing the JAPONAIS mark as well as a photo of the mark etched onto a window. Geisha subsequently moved for summary judgment on its false designation of origin claim arguing that Tuccillo’s conduct in registering and using the mark constituted false designation of origin.

The court denied Geisha’s motion for summary judgment based on genuine disputed issues of material fact, particularly on the issue of whether the geographic reputation of Geisha’s restaurant and the JAPONAIS mark had penetrated the New York area such that Geisha could claim prior common law trademark rights.

The court first analyzed Geisha’s rights in the JAPONAIS mark at the time Tuccillo filed his application. Because Geisha did not apply to register the mark with the USPTO, Geisha was not entitled to the presumption of constructive notice nationwide, and thus must show evidence that its rights extended beyond the Chicago area. While the general rule is that a junior user who is unaware of the senior user’s use may adopt a mark in a geographically distinct area provided that the mark has not been registered, one exception to this rule is where the senior user’s reputation extends beyond the immediate geographic area where the mark is employed.

In analyzing Geisha’s reputation, the court noted that by June 2004, most of Japonais’s publicity had been in the Chicago media and in trade publications and the particular stylized JAPONAIS mark appeared in only three advertisements in Chicago-based publications before Tuccillo filed his application. In the end, the court found that it could not conclude, as a matter of law, based on the evidence in the record that the JAPONAIS mark had obtained such widespread notoriety by June 2004 that Geisha possessed common law rights in the mark in New York at the time Tuccillo filed his application.

The court further noted that Geisha’s expansion to New York and Las Vegas does not create enforceable trademark rights in New York that Tuccillo violated by opening his restaurant because Tuccillo had filed an intent-to-use application giving him an effective date of first use of June 2004 with respect to the JAPONAIS mark despite not actually using it until May 2008 – the wonderful benefit of the intent-to-use trademark laws. Indeed, any party that begins using the mark after an intent-to-use application is filed will be treated as a junior user with respect to such intent-to-use trademark applicant.

The court then eloquently explained an important distinction (often misunderstood) between constructive use and constructive notice (citations omitted):

Constructive notice, obtained when a mark is actually registered on the principal registry, prevents further use of the mark by others. Even senior users may be restricted to the areas they operated in at the time of registration. Constructive use, by contrast, prevents a third party from acquiring any rights in the trademark as of the date the intent-to-use application was filed. Under this doctrine, Tuccillo will have a constructive use date of June 25, 2004, the date he filed the ITU application. Constructive use is subject to two important limitations that are relevant here: first, constructive use is contingent upon actual registration of the mark, and second, constructive use does not bar use of the mark by senior users.

At the time of the court’s decision, Tuccillo’s mark had not yet registered, which left the question of Tuccillo’s constructive use priority in question. Well, there is no longer any doubt because Tuccillo’s mark was registered yesterday, March 17, 2008 (U.S. Registration No. 3,591,621). [Geisha has promised to initiate a cancellation proceeding with the Trademark Trial and Appeal Board -- meanwhile, Geisha's own trademark registration applications (here and here) are suspended].

Nonetheless, there was sufficient uncertainty that the court was able to conclude that Geisha was not entitled to judgment as a matter of law on its false designation of origin claim. The court held that Tuccillo could not have violated Geisha’s rights in the mark in New York unless Geisha possessed common law rights in New York prior to the constructive use date of June 25, 2004 – and that the extent of Geisha’s common law rights is a contested issue of material fact that precludes summary judgment.

The court further noted that while Geisha’s expanding use of the Japonais mark in New York would ordinarily not be precluded because it occurred before Tuccillo’s date of registration (i.e., the date of constructive notice), in this case, Geisha had actual notice of Tuccillo’s pending application prior to its expansion. As the court stated, “If constructive notice that Tuccillo possesses rights in the mark bars Geisha from expanding its use of the mark, surely Geisha is under similar constraints where it has actual notice of Tuccillo’s application.” (italics in original). The court added that “It would be inequitable to hold Tuccillo in violation of Geisha’s trademark rights in these circumstances. Geisha did not operate in New York prior to Tuccillo’s filing the ITU application, in which Tuccillo swore he had a bona fide intention to use the mark in the restaurant and lounge industry and that he had no knowledge of any other use of that mark in the industry.”

In the end, the court was unable to conclude, as a matter of law, that Tuccillo had no rights to the JAPONAIS mark or that Tuccillo infringed Geisha’s trademark rights when he opened his restaurant, and therefore, denied Geisha’s motion for summary judgment.

Computer Company Sues Apple and CBS over MIGHTY MOUSE computer mouse

On March 20, 2008, Man & Machine, Inc. (“M&M”), a Maryland-based computer accessories provider, filed a trademark infringement lawsuit Apple, Inc. (“Apple”), CBS Corporation, and CBS Operations Inc. (“CBS Operations”) over the word mark MIGHTY MOUSE to identify a computer mouse. See Man & Machine, Inc. v. Apple, Inc. et al, Case No. 08-cv-01311 (D. Md. May 20, 2008). A copy of the complaint can be downloaded here.

According to the complaint, M&M began selling a waterproof, chemical-resistant computer mouse using the mark MIGHTY MOUSE on or before March 16, 2004.

M&M's MIGHTY MOUSE computer mouse

On August 2, 2005, Apple announced and began selling a new computer mouse with multiple buttons (breaking a long-standing Apple tradition of computer mice with only a single button) under the name MIGHTY MOUSE (see also Wikipedia write-up on Apple’s Mighty Mouse).

Apple's MIGHTY MOUSE computer mouse

CBS Operations is the owner of several registrations directed to MIGHTY MOUSE including for watches and tee shirts; dolls, jigsaw puzzles, and plush toys; and toy vehicles. The oldest registration for the MIGHTY MOUSE trademark (for film series of animated cartoons for motion pictures and television, for comic magazines and color books, and toy puzzles) expired in July 1999 when the registration was not renewed. CBS Operations also still holds a design mark registration for the famed “Mighty Mouse” cartoon character – the well-recognized cartoon mouse with the red cape and yellow tights.

The Real Mighty Mouse

At some point, Apple entered into a license agreement with CBS Operations to use the phrase MIGHTY MOUSE on its computer mice. It is not clear whether Apple recognized from the outset that CBS Operations’ had trademark rights to the MIGHTY MOUSE mark (albeit not necessarily for computer mice) or whether CBS Operations staked its claim against Apple soon after sales began.

On July 9, 2007, CBS Operations filed a §1(a) use-in-commerce trademark application to register the MIGHTY MOUSE mark for computer cursor control devices, namely, computer mouse (claiming a first use in commerce date of August 2, 2005). For reasons not entirely clear, the application was initially based on a claim of acquired distinctiveness under §2(f), for which CBS claimed the following: The mark has become distinctive of the goods/services as evidenced by the ownership on the Principal Register for the same mark for related goods or services of U.S. Registration No(s). 1533890.” The registration cited by CBS Operations is for the design mark of the Mighty Mouse cartoon character (pictured above). The goods for which such design mark remains active are “film series of animated cartoons for motion pictures and television; sunglasses; watches; tee shirts; and sweatshirts.” However, an Examiner’s Amendment was later entered that removed the Section 2(f) claim; instead, CBS Operations disclaimed the word MOUSE. The mark was published for opposition on December 18, 2007.

Someone must have notified M&M about CBS Operations’ pending application because that same day (December 18, 2007), M&M filed a §1(a) use-in-commerce trademark application to register the MIGHTY MOUSE mark for computer cursor control devices, namely, computer mice (claiming a first use in commerce date of March 16, 2004). This mark is scheduled to be published for opposition May 27, 2008.

In addition, on December 26, 2007, M&M filed an opposition against CBS Operations’ application. See Man & Machine, Inc. v. CBS Operations Inc., Opposition No. 91181500 (TTAB Dec. 26, 2007). A copy of the opposition can be downloaded here.

In M&M’s current complaint, M&M claims trademark infringement and unfair competitions under §43(a) of the Lanham Act (15 U.S.C. §1125(a)) against Apple for its use of the MIGHTY MOUSE mark in connection with computer mice. In addition, anticipating an obvious trademark dilution counterclaim by CBS Operations under §43(c) of the Lanham Act (15 U.S.C. §1125(c)), M&M also seeks a declaratory judgment of non-dilution against CBS Corporation and CBS Operations.

While the basis for M&M’s contention that its use of the MIGHTY MOUSE name does not dilute CBS Operations’ MIGHTY MOUSE mark is not entirely clear from the complaint, a review of M&M’s opposition provides some insight. In opposing CBS Operations’ MIGHTY MOUSE application, M&M cites to a TTAB opposition filed by Viacom International, Inc. (CBS Operations’ predecessor-in-interest) back in 1995 against a company that sought to register the mark MY-T-MOUSE THE SOFTWARE THAT MAKES YOUR MOUSE A MOUSE THAT TYPES! (and Design). See Viacom International, Inc. v. Komm, et al., Opposition No. 91098994 (TTAB Feb. 5, 1998).

In that decision, the Board found no likelihood of confusion between the Applicant’s mark and Viacom’s MIGHTY MOUSE mark. In analyzing one of the du Pont likelihood of confusion factors (fame of the mark), the Board stated the following:

However, MIGHTY MOUSE is not a famous mark in the legal sense that other marks have been found to be famous. The evidence shows that MIGHTY MOUSE achieved its fame as a cartoon character of the 1940s, '50s and early '60s. Opposer has provided little evidence of the extent of the use of the mark in the United States since that time. For example, although there was testimony that the mark was used on toy puzzles and vitamins, there was no evidence as to the amount of sales of these products. Ms. Petrasek gave only the copyright date shown on the labels of the packaging. Nor did opposer provide evidence of how often, or where, the MIGHTY MOUSE cartoon programs were shown when they were in syndication. As opposer itself has recognized, MIGHTY MOUSE is one of its nostalgic television properties, and its appeal is to adults because it is they who remember the first television series.

M&M will apparently be relying on this determination by the Board to support a finding that CBS Operation’s MIGHTY MOUSE mark is not famous for dilution purposes, and therefore, M&M’s use of the mark for its computer mice does not dilute CBS Operations’ “famous” MIGHTY MOUSE mark.

In M&M’s opposition, M&M also attacks CBS Operations’ application on the basis of misstatements to the PTO – specifically CBS Operations’ §2(f) claim that its MIGHTY MOUSE mark (for computer mice) has become distinctive of such goods as evidence by CBS Operations’ ownership of the not-so-same mark for goods that are not related to computer mice. However, given that this claim of acquired distinctiveness was deleted from the application before publication, it is not likely to help M&M with its opposition.

M&M seeks injunctive relief to stop Apple and CBS Operations. M&M specifically notes that Apple, through its monstrous marketing efforts, has made it virtually impossible for M&M to market its MIGHTY MOUSE mark online (any search engine search for MIGHTY MOUSE will find Apple’s mouse, but not M&M’s mouse).

Vegas™Esq. Comments:
Looks like M&M, anticipating an opposition by CBS Operations against its own pending application, decided to be proactive and file a lawsuit instead – possibly bringing the matter into a more convenient forum.

This case illustrates once again the importance of businesses applying for federal trademark registration as early as possible. Had M&M filed an application for the mark back in 2004 when it first began selling computer mice under the mark, it may have been in a better position with respect to its MIGHTY MOUSE computer mouse. Either M&M would have acquired a federal registration and would have the exclusive right to use the mark nationwide or CBS Operations would have filed an opposition to the M&M's application to register the mark and the parties would be battling it out now – in either case, Apple would have been put on notice of the conflict and may have been more inclined not to use the name in the first place. Instead, M&M did not file any application until CBS Operations own application (which also, in my opinion, was not filed in a timely manner) was published for opposition.

As it stands, M&M will have to rely upon its common law rights to the name, which will entail a showing by M&M of its market penetration with respect to its MIGHTY MOUSE mark before Apple began selling a mouse with the same name (an uphill battle given that M&M acknowledges that it has only sold tens of thousands of its computer mice).

Is a trademark battle brewing over KNUT?

There is an interesting trademark battle possibly brewing for fans of the famed polar bear cub KNUT (pictured above).

Knut was born at the Berlin Zoo in December 2006. After Knut was born, Knut’s mother rejected and abandoned the newly born cub. The Berlin Zoo had not had a polar bear cub survive past infancy in more than 30 years, so zookeepers opted to raise him. Knut’s story garnered international attention, however, after a German tabloid in March 2007 quoted an animal rights activist saying that Knut should have been killed rather than being raised like a domestic pet. This led to an outpouring of support in favor of keeping Knut alive, including a letter campaign to the Berlin Zoo and protests outside the zoo by children.

The Berlin zoo unveiled Knut to the public on March 23, 2007. That same day, the Berlin Zoo filed two German trademark applications for the mark KNUT for various goods (see Registration No. 30720102.3, registered May 29, 2007 and published June 29, 2007; and Registration No. 30720189.9, registered July 24, 2007 and published August 24, 2007) (click here for search engine to search German trademark filings). The branding of Knut led to a doubling of the Berlin Zoo’s stock on the German stock exchange.

Soonafter, in the United States, an enterprising company and an individual with no apparent connection whatsoever to the Berlin Zoo decided to file federal trademark applications on the name KNUT.

One application was a Section 1(b) intent-to-use application filed May 2, 2007 by an individual named Joseph Dominick Castano for the mark KNUT THE POLAR BEAR. The description of goods was the following: “Motion picture films about Knut the Polar Bear; Digital materials, namely, DVD featuring Knut the Polar Bear; Downloadable MP3 files, MP3 recordings, online discussion boards, web casts, pod casts featuring music, audio books and news broadcasts.” Not surprisingly, the U.S. Patent and Trademark Office (“PTO”) refused registration under Section 2(e)(1) on the grounds that the mark was merely descriptive: “Here, the mark ‘KNUT THE POLAR BEAR’ is descriptive of applicant’s goods because the goods presumably feature the famous Berlin Zoo polar bear, Knut.” The applicant did not respond to the office action and the application went abandoned.

However, the more interesting application is the one that was filed even earlier. On April 9, 2007, a Section 1(b) intent-to-use application was filed by a California corporation named Transpo Products for the mark KNUT for “Stuffed toy bears; Teddy bears”. After being published for opposition on September 19, 2007, a notice of allowance was issued January 1, 2008. The applicant’s first specimen was rejected by the PTO because it was a catalog page advertising the Knut teddy bear (promoting the “Official U.S. Knut polar bear stuffed toy animal”), but did not show the necessary ordering information. The second specimens, submitted March 18, 2008, were two pictures of what looks like a panda bear (one with a stitched-on label reading “KNUT” and the second with a price tag that reads “KNUT”). The specimens apparently satisfied the PTO, and the mark was registered last Monday, May 13, 2008.

Trasnpos's first specimen of use

Transpo's second specimen of use

What makes this particular registration interesting is that the Berlin Zoo, having branded the name KNUT in Germany, announced on May 1, 2007, that New York-based Turtle Pond Publications LLC (“Turtle Pond”) had acquired the world-wide publishing rights to Knut. Apparently, the deal may have been worked out a little sooner because on April 16, 2007, Turtle Pond filed with the USPTO five Section 1(b) intent-to-use trademark applications in its name directed to the KNUT mark including for prerecorded videotapes, electronic publications, motion picture films and computer games; children’s books; theme park services, motion picture productions, ongoing TV program and motion picture series and live performances; clothing; and, of course, stuffed toy animals. On July 19, 2007, Turtle Pond filed two additional applications for the KNUT mark for foods (later amended to cookies, candy, cereal, ice cream, chewing gum and cakes) and non-alcoholic beverages (later amended to carbonated beverages, bottled waters, vitamin waters and fruit juices). The applications do not claim any priority filing date to the foreign trademark application filed by the Berlin Zoo.

For Turtle Pond’s five April 2007 applications, non-final office actions were issued August 6, 2007. Transpo’s pending application was cited at the time as a possible grounds for refusal, so Turtle Pond certainly had notice of Transpo’s application and its earlier filing date before Transpo’s application was published for opposition. On February 14, 2008, the PTO suspended prosecution of these five applications pending the outcome of Transpo’s application noting that because Transpo’s effective filing date was subsequent to Turtle Pond’s filing dates, Transpo’s registration could be grounds for refusing Turtle Pond’s applications on the basis of likelihood of confusion.

As for Turtle Pond’s two July 2007 applications, non-final office actions were issued October 3, 2007; however, the Examining Attorney did not cite to Transpo’s then pending application. Both have received final actions, but the necessary changes relate to the identification of goods and not to any substantive refusals to register.

While the registration of Transpo’s KNUT mark now raises an issue for Turtle Pond’s five April 2007 application, the only application that is likely to be in serious jeopardy is Turtle Pond’s application for the mark KNUT for stuffed toy animals because Transpo’s registration for the mark KNUT for “stuffed toy bears” and “teddy bears” will certainly be cited as a grounds for refusing registration of Turtle Pond’s KNUT mark under Section 2(d) likelihood of confusion (identical marks, identical goods).

It will be interesting to see how far Turtle Pond is willing to go to assert its “legitimate” rights to the name KNUT against this company that got an advantage by being a little faster to file at the PTO. An investigation into Transpo’s “bona fide intent” to use the mark when it originally filed the application as well as its claimed date of first use in commerce (May 15, 2007) may be worthwhile if Turtle Pond desires to file a petition to cancel Transpo’s registration.

Of course, the bigger lesson here is that this entire situation could have been avoided had the applications instead been filed by the Berlin Zoo under Section 44(d) of the Lanham Act, 15 U.S.C. §1125(d). Under Section 44(d), foreign applicants can claim a priority date based on an earlier filed foreign application so long as the U.S. application is filed within 6 months from the filing date of the foreign application. Here, the Berlin Zoo could have filed trademark applications as late as September 23, 2007 (after Turtle Pond had received notice of Transpo’s pending application and even after Transpo’s application had been published for opposition) and still received a priority filing date before Transpo’s effective filing date.

A grown up Knut (not quite as cute)