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Beebe – Trademark Law: An Open-Source Casebook

Trademark Law: An Open-Source CasebookVersion 6.0 (Summer 2019)

Barton Beebe

John M. Desmarais Professor of Intellectual Property Law

New York University School of Law

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

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I. Establishing Trademark Rights

3. National Borders and Trademark Rights

We have focused so far on trademark uses within the territorial borders of the U.S. and the geographical extent of rights established by such uses. We turn now to trademark uses outside the territorial borders of the U.S. and to the question of whether such uses can form the basis for exclusive rights within the U.S.

As set forth below in Part I.E.3.a and as exemplified in Person’s Co., Ltd. v. Christman, 900 F.2d 1565 (Fed. Cir. 1990), the traditional view has long been that trademark rights are generally limited to national borders and that foreign uses of trademarks generally do not confer exclusive rights within the U.S. However, as discussed in Part I.E.3.b, the “well-known marks doctrine” holds that foreign uses of trademarks that become very well-known in the U.S. may form the basis for exclusive rights within the U.S. even when the foreign user is not making any actual use of the mark within the U.S. Finally, as presented in Part I.E.3.c, a recent opinion from the Fourth Circuit, Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697 (4th Cir. 2016), cert. denied, __ S. Ct. __, 2017 WL 737826 (U.S. Feb. 27, 2017) (No. 16-548), has the potential profoundly to change our traditional understanding of the national limits of trademark rights (and of the relation between Lanham Act §§ 32 and 43(a)). Belmora has recently been denied certiorari review. If its reasoning is adopted by other circuits, it may significantly lessen the importance of much of the doctrine discussed in Parts I.E.3.a & b.

a. National-Border Limits on Trademark Rights

The opinion below, Person’s Co., Ltd. v. Christman, 900 F.2d 1565 (Fed. Cir. 1990), is frequently cited as standing for the proposition that foreign uses do not establish exclusive rights within the U.S. In reading through the opinion, consider the following questions:

Does the outcome in Person’s strike you as fair?

Alternatively, has the Federal Circuit chosen the economically efficient outcome? If not, what would that outcome be?

Is the Person’s holding still viable in a globalized, internet-based economy?

Person’s Co., Ltd. v. Christman900 F.2d 1565 (Fed. Cir. 1990)

EDWARD S. SMITH, Senior Circuit Judge.

[1] Person’s Co., Ltd. appeals from the decision of the Patent and Trademark Office Trademark Trial and Appeal Board (Board) which granted summary judgment in favor of Larry Christman and ordered the cancellation of appellant’s registration2 for the mark “PERSON’S” for various apparel items. Appellant Person’s Co. seeks cancellation of Christman’s registration3 for the mark “PERSON’S” for wearing apparel on the following grounds: likelihood of confusion based on its prior foreign use, abandonment, and unfair competition within the meaning of the Paris Convention. We affirm the Board’s decision.

2 Registration No. 1,354,062, issued August 13, 1985.33 Registration No. 1,297,698, issued September 25, 1984.

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Background

[2] The facts pertinent to this appeal are as follows: In 1977, Takaya Iwasaki first applied a stylized logo bearing the name “PERSON’S” to clothing in his native Japan. Two years later Iwasaki formed Person’s Co., Ltd., a Japanese corporation, to market and distribute the clothing items in retail stores located in Japan.

[3] In 1981, Larry Christman, a U.S. citizen and employee of a sportswear wholesaler, visited a Person’s Co. retail store while on a business trip to Japan. Christman purchased several clothing items bearing the “PERSON’S” logo and returned with them to the United States. After consulting with legal counsel and being advised that no one had yet established a claim to the logo in the United States, Christman developed designs for his own “PERSON’S” brand sportswear line based on appellant’s products he had purchased in Japan. In February 1982, Christman contracted with a clothing manufacturer to produce clothing articles with the “PERSON’S” logo attached. These clothing items were sold, beginning in April 1982, to sportswear retailers in the northwestern United States. Christman formed Team Concepts, Ltd., a Washington corporation, in May 1983 to continue merchandising his sportswear line, which had expanded to include additional articles such as shoulder bags. All the sportswear marketed by Team Concepts bore either the mark “PERSON’S” or a copy of appellant’s globe logo; many of the clothing styles were apparently copied directly from appellant’s designs.

[4] In April 1983, Christman filed an application for U.S. trademark registration in an effort to protect the “PERSON’S” mark. Christman believed himself to be the exclusive owner of the right to use and register the mark in the United States and apparently had no knowledge that appellant soon intended to introduce its similar sportswear line under the identical mark in the U.S. market. Christman’s registration issued in September 1984 for use on wearing apparel.

[5] In the interim between Christman’s first sale and the issuance of his registration, Person’s Co., Ltd. became a well known and highly respected force in the Japanese fashion industry. The company, which had previously sold garments under the “PERSON’S” mark only in Japan, began implementing its plan to sell goods under this mark in the United States. According to Mr. Iwasaki, purchases by buyers for resale in the United States occurred as early as November 1982. This was some seven months subsequent to Christman’s first sales in the United States. Person’s Co. filed an application for U.S. trademark registration in the following year, and, in 1985, engaged an export trading company to introduce its goods into the U.S. market. The registration for the mark “PERSON’S” issued in August 1985 for use on luggage, clothing and accessories. After recording U.S. sales near 4 million dollars in 1985, Person’s Co. granted California distributor Zip Zone International a license to manufacture and sell goods under the “PERSON’S” mark in the United States.

[6] In early 1986, appellant’s advertising in the U.S. became known to Christman and both parties became aware of confusion in the marketplace. Person’s Co. initiated an action to cancel Christman’s registration on the following grounds: (1) likelihood of confusion; (2) abandonment; and (3) unfair competition within the meaning of the Paris Convention. Christman counterclaimed and asserted prior use and likelihood of confusion as grounds for cancellation of the Person’s Co. registration.

[7] After some discovery, Christman filed a motion with the Board for summary judgment on all counts. In a well reasoned decision, the Board held for Christman on the grounds that Person’s use of the mark in Japan could not be used to establish priority against a “good faith” senior user in U.S. commerce. The Board found no evidence to suggest that the

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“PERSON’S” mark had acquired any notoriety in this country at the time of its adoption by Christman. Therefore, appellant had no reputation or goodwill upon which Christman could have intended to trade, rendering the unfair competition provisions of the Paris Convention inapplicable. The Board also found that Christman had not abandoned the mark, although sales of articles bearing the mark were often intermittent. The Board granted summary judgment to Christman and ordered appellant’s registration cancelled.

[8] The Board held in its opinion on reconsideration that Christman had not adopted the mark in bad faith despite his appropriation of a mark in use by appellant in a foreign country. The Board adopted the view that copying a mark in use in a foreign country is not in bad faith unless the foreign mark is famous in the United States or the copying is undertaken for the purpose of interfering with the prior user’s planned expansion into the United States. Person’s Co. appeals and requests that this court direct the Board to enter summary judgment in its favor.

Issues

[9] 1. Does knowledge of a mark’s use outside U.S. commerce preclude good faith adoption and use of the identical mark in the United States prior to the entry of the foreign user into the domestic market?

[10] 2. Did the Board properly grant summary judgment in favor of Christman on the issue of abandonment?

Cancellation

[11] The Board may properly cancel a trademark registration within five years of issue when, e.g. (1) there is a valid ground why the trademark should not continue to be registered and (2) the party petitioning for cancellation has standing. Such cancellation of the marks’ registrations may be based upon any ground which could have prevented registration initially. The legal issue in a cancellation proceeding is the right to register a mark, which may be based on either (1) ownership of a foreign registration of the mark in question or (2) use of the mark in United States commerce.

Priority

[12] The first ground asserted for cancellation in the present action is § 2(d) of the Lanham Act; each party claims prior use of registered marks which unquestionably are confusingly similar and affixed to similar goods.

[13] Section 1 of the Lanham Act1010 states that “[t]he owner of a trademark used in commerce may register his trademark . . . .” The term “commerce” is defined in Section 45 of the Act as “. . . all commerce which may be lawfully regulated by Congress.” No specific Constitutional language gives Congress power to regulate trademarks, so the power of the federal government to provide for trademark registration comes only under its commerce power. The term “used in commerce” in the Lanham Act refers to a sale or transportation of goods bearing the mark in or having an effect on: (1) United States interstate commerce; (2) United States commerce with foreign nations; or (3) United States commerce with the Indian Tribes.

[14] In the present case, appellant Person’s Co. relies on its use of the mark in Japan in an attempt to support its claim for priority in the United States. Such foreign use has no effect on U.S. commerce and cannot form the basis for a holding that appellant has priority

1010 The case at bar is decided under the provisions of the Act in force prior to the enactment of the Trademark Law Revision Act of 1988.

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here. The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country’s statutory scheme. Christman was the first to use the mark in United States commerce and the first to obtain a federal registration thereon. Appellant has no basis upon which to claim priority and is the junior user under these facts.1616

Bad Faith

[15] Appellant vigorously asserts that Christman’s adoption and use of the mark in the United States subsequent to Person’s Co.’s adoption in Japan is tainted with “bad faith” and that the priority in the United States obtained thereby is insufficient to establish rights superior to those arising from Person’s Co.’s prior adoption in a foreign country. Relying on Woman’s World Shops, Inc. v. Lane Bryant, Inc., 5 USPQ2d 1985 (TTAB 1988), Person’s Co. argues that a “remote junior user” of a mark obtains no right superior to the “senior user” if the “junior user” has adopted the mark with knowledge of the “senior user’s” prior use.1818 In Woman’s World, the senior user utilized the mark within a limited geographical area. A junior user from a different geographical area of the United States sought unrestricted federal registration for a nearly identical mark, with the exception to its virtually exclusive rights being those of the known senior user. The Board held that such an appropriation with knowledge failed to satisfy the good faith requirements of the Lanham Act and denied the concurrent use rights sought by the junior user. 5 USPQ2d at 1988. Person’s Co. cites Woman’s World for the proposition that a junior user’s adoption and use of a mark with knowledge of another’s prior use constitutes bad faith. It is urged that this principle is equitable in nature and should not be limited to knowledge of use within the territory of the United States.

[16] While the facts of the present case are analogous to those in Woman’s World, the case is distinguishable in one significant respect. In Woman’s World, the first use of the mark by both the junior and senior users was in United States commerce. In the case at bar, appellant Person’s Co., while first to adopt the mark, was not the first user in the United States. Christman is the senior user, and we are aware of no case where a senior user has been charged with bad faith. The concept of bad faith adoption applies to remote junior users seeking concurrent use registrations; in such cases, the likelihood of customer confusion in the remote area may be presumed from proof of the junior user’s knowledge.2020 In the present case, when Christman initiated use of the mark, Person’s Co. had not yet entered U.S. commerce. The Person’s Co. had no goodwill in the United States

1616 Section 44 of the Lanham Act, 15 U.S.C. § 1126 (1982), permits qualified foreign applicants who own a registered mark in their country of origin to obtain a U.S. trademark registration without alleging actual use in U.S. commerce. If a U.S. application is filed within six months of the filing of the foreign application, such U.S. registration will be accorded the same force and effect as if filed in the United States on the same date on which the application was first filed in the foreign country. The statutory scheme set forth in § 44 is in place to lower barriers to entry and assist foreign applicants in establishing business goodwill in the United States. Person’s Co. does not assert rights under § 44, which if properly applied, might have been used to secure priority over Christman.

1818 Appellant repeatedly makes reference to a “world economy” and considers Christman to be the remote junior user of the mark. Although Person’s did adopt the mark in Japan prior to Christman’s use in United States commerce, the use in Japan cannot be relied upon to acquire U.S. trademark rights. Christman is the senior user as that term is defined under U.S. trademark law.

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and the “PERSON’S” mark had no reputation here. Appellant’s argument ignores the territorial nature of trademark rights.

[17] Appellant next asserts that Christman’s knowledge of its prior use of the mark in Japan should preclude his acquisition of superior trademark rights in the United States. The Board found that, at the time of registration, Christman was not aware of appellant’s intention to enter the U.S. clothing and accessories market in the future. Christman obtained a trademark search on the “PERSON’S” mark and an opinion of competent counsel that the mark was “available” in the United States. Since Appellant had taken no steps to secure registration of the mark in the United States, Christman was aware of no basis for Person’s Co. to assert superior rights to use and registration here. Appellant would have us infer bad faith adoption because of Christman’s awareness of its use of the mark in Japan, but an inference of bad faith requires something more than mere knowledge of prior use of a similar mark in a foreign country.

[18] As the Board noted below, Christman’s prior use in U.S. commerce cannot be discounted solely because he was aware of appellant’s use of the mark in Japan. While adoption of a mark with knowledge of a prior actual user in U.S. commerce may give rise to cognizable equities as between the parties, no such equities may be based upon knowledge of a similar mark’s existence or on a problematical intent to use such a similar mark in the future. Knowledge of a foreign use does not preclude good faith adoption and use in the United States. While there is some case law supporting a finding of bad faith where (1) the foreign mark is famous here2323 or (2) the use is a nominal one made solely to block the prior foreign user’s planned expansion into the United States, 2424 as the Board correctly found, neither of these circumstances is present in this case.

[19] We agree with the Board’s conclusion that Christman’s adoption and use of the mark were in good faith. Christman’s adoption of the mark occurred at a time when appellant had not yet entered U.S. commerce; therefore, no prior user was in place to give Christman notice of appellant’s potential U.S. rights. Christman’s conduct in appropriating and using appellant’s mark in a market where he believed the Japanese manufacturer did not compete can hardly be considered unscrupulous commercial conduct. Christman adopted the trademark being used by appellant in Japan, but appellant has not identified any aspect of U.S. trademark law violated by such action. Trademark rights under the Lanham Act arise solely out of use of the mark in U.S. commerce or from ownership of a foreign registration thereon; “[t]he law pertaining to registration of trademarks does not regulate all aspects of business morality.” [citation omitted] When the law has been crafted with the clarity of crystal, it also has the qualities of a glass slipper: it cannot be shoe-horned onto facts it does not fit, no matter how appealing they might appear.

. . . .

Conclusion

[20] In United Drug Co. v. Rectanus Co., 248 U.S. 90 (1918), the Supreme Court of the United States determined that “[t]here is no such thing as property in a trademark except as

2020 See 2 J. McCarthy, Trademarks and Unfair Competition § 26:4 (2d ed. 1984); Restatement of Torts § 732 comment a (1938).

2323 See, e.g., Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332, 123 USPQ 357 (N.Y.Sup.Ct. 1959); Mother’s Restaurants, Inc. v. Mother’s Other Kitchen, Inc., 218 USPQ 1046 (TTAB 1983).

2424 See Davidoff Extension, S.A. v. Davidoff Int’l., 221 USPQ 465 (S.D.Fla. 1983).

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a right appurtenant to an established business or trade in connection with which the mark is employed . . . . [I]ts function is simply to designate the goods as the product of a particular trader and to protect his goodwill against the sale of another’s product as his; and it is not the subject of property except in connection with an existing business.”3636 In the present case, appellant failed to secure protection for its mark through use in U.S. commerce; therefore, no established business or product line was in place from which trademark rights could arise. Christman was the first to use the mark in U.S. commerce. This first use was not tainted with bad faith by Christman’s mere knowledge of appellant’s prior foreign use, so the Board’s conclusion on the issue of priority was correct . . . . Accordingly, the grant of summary judgment was entirely in order, and the Board’s decision is affirmed.

AFFIRMED.

b. The Well-Known Marks Doctrine

Though it is rarely invoked, the well-known marks doctrine constitutes an important exception to—or variation on—the territoriality principle in trademark law. It is also the source of a basic split between the Ninth and Second Circuits on whether U.S. federal trademark law incorporates well-known marks protection. As you read through the opinions below, consider the following questions:

As a policy matter, for a foreign mark not used in the U.S., how well-known should such a mark be in the U.S. for it to qualify for protection in the U.S.? Should mere secondary meaning in a particular geographic location be sufficient? “Secondary meaning plus”? Nationwide fame?

What is the particular statutory or common law basis for the Ninth Circuit’s application of the well-known marks doctrine?

Is the New York Court of Appeals approach to the issue persuasive?

Is the well-known marks doctrine simply a transnational extension of the Tea Rose-Rectanus doctrine? Is there any way in which the well-known marks doctrine is different?

i. The Well-Known Marks Doctrine in the Ninth Circuit

Grupo Gigante SA De CV v. Dallo & Co., Inc.391 F.3d 1088 (9th Cir. 2004)

KLEINFELD, Circuit Judge.

[1] This is a trademark case. The contest is between a large Mexican grocery chain that has long used the mark, but not in the United States, and a small American chain that was the first to use the mark in the United States, but did so, long after the Mexican chain began using it, in a locality where shoppers were familiar with the Mexican mark.

Facts

[2] Grupo Gigante S.A. de C.V. (“Grupo Gigante”) operates a large chain of grocery stores in Mexico, called “Gigante,” meaning “Giant” in Spanish. Grupo Gigante first called a store “Gigante” in Mexico City in 1962. In 1963, Grupo Gigante registered the “Gigante” mark as a

3636 248 U.S. at 97. It goes without saying that the underlying policy upon which this function is grounded is the protection of the public in its purchase of a service or product. See, e.g. In re Canadian Pacific Ltd., 754 F.2d 992, 994 (Fed.Cir. 1985).

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trade name in Mexico, and has kept its registration current ever since. The chain was quite successful, and it had expanded into Baja California, Mexico by 1987. By 1991, Grupo Gigante had almost 100 stores in Mexico, including six in Baja, all using the mark “Gigante.” Two of the Baja stores were in Tijuana, a city on the U.S.-Mexican border, just south of San Diego.

[3] As of August 1991, Grupo Gigante had not opened any stores in the United States. That month, Michael Dallo began operating a grocery store in San Diego, using the name “Gigante Market.” In October 1996, Dallo and one of his brothers, Chris Dallo, opened a second store in San Diego, also under the name Gigante Market. The Dallo brothers—who include Michael, Chris, and their two other brothers, Douray and Rafid—have since controlled the two stores through various limited liability corporations.

[4] In 1995, which was after the opening of the Dallos’ first store and before the opening of their second, Grupo Gigante began exploring the possibility of expanding into Southern California. It learned of the Dallos’ Gigante Market in San Diego. Grupo Gigante decided against entering the California market at that time. It did nothing about the Dallos’ store despite Grupo Gigante’s knowledge that the Dallos were using “Gigante” in the store’s name.

[5] In 1998, Grupo Gigante decided that the time had come to enter the Southern California market. It arranged a meeting with Michael Dallo in June 1998 to discuss the Dallos’ use of the name “Gigante.” Grupo Gigante was unsuccessful at this meeting in its attempt to convince Dallo to stop using the “Gigante” mark. Also in June 1998, Grupo Gigante registered the “Gigante” mark with the state of California. The Dallos did likewise in July 1998. Neither has registered the mark federally.

[6] About one year later, in May 1999, Grupo Gigante opened its first U.S. store. That store was followed by a second later that year, and then by a third in 2000. All three stores were in the Los Angeles area. All were called “Gigante,” like Grupo Gigante’s Mexican stores.

[7] In July 1999, after learning of the opening of Grupo Gigante’s first U.S. store, the Dallos sent Grupo Gigante a cease-and-desist letter, making the same demand of Grupo Gigante that Grupo Gigante had made of them earlier: stop using the name Gigante. Grupo Gigante responded several days later by filing this lawsuit. Its claim was based on numerous federal and state theories, including trademark infringement under the Lanham Act.3 It sought compensatory and punitive damages, a declaratory judgment that it had the superior right to the Gigante mark, and an injunction against the Dallos’ use of the mark. The Dallos counterclaimed, on similar theories, asserting it had the superior right to the mark in

33 Specifically, Grupo Gigante asserted the following causes of action: (1) improper use of a well-known mark, under Article 6 bis of the Paris Convention; (2) unfair competition, under Article 10 bis of the Paris Convention; (3) trademark infringement, under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (4) false designation of origin, misrepresentation, and unfair competition, under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (5) violation of the Federal Trademark Dilution Act of 1996, 15 U.S.C. § 1125(c); (6) common law unfair competition; (7) unfair competition under California law; (8) dilution under California law; and (9) common law misappropriation.

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Southern California.4 The Dallos sought a declaratory judgment, injunctive relief, damages, and cancellation of Grupo Gigante’s California registration of the mark.

[8] The district court disposed of the case in a published decision on cross motions for summary judgment.5 The court recognized that under the “territoriality principle,” use of a mark in another country generally does not serve to give the user trademark rights in the United States. Thus, the territoriality principle suggests that the Dallos’ use of the mark, which was the first in the United States, would entitle them to claim the mark. But it held that because Grupo Gigante had already made Gigante a well-known mark in Southern California by the time the Dallos began using it, an exception to the territoriality principle applied. As the district court interpreted what is known as the “famous-mark” or “well-known mark” exception to the territoriality principle, Grupo Gigante’s earlier use in Mexico was sufficient to give it the superior claim to the mark in Southern California. The court held, therefore, that Grupo Gigante was entitled to a declaratory judgment that it had a valid, protectable interest in the Gigante name. Nevertheless, the court held that laches barred Grupo Gigante from enjoining the Dallos from using the mark at their two existing stores. The Dallos appeal the holding that Grupo Gigante has a protectable right to use the mark in Southern California. Grupo Gigante appeals the laches holding. We agree in large part with the district court’s excellent opinion, but some necessary qualifications to it require a remand.

Analysis

The exception for famous and well-known foreign marks

[9] We review the summary judgment decision de novo.

[10] A fundamental principle of trademark law is first in time equals first in right. But things get more complicated when to time we add considerations of place, as when one user is first in time in one place while another is first in time in a different place. The complexity swells when the two places are two different countries, as in the case at bar.

[11] Under the principle of first in time equals first in right, priority ordinarily comes with earlier use of a mark in commerce. It is “not enough to have invented the mark first or even to have registered it first.” If the first-in-time principle were all that mattered, this case would end there. It is undisputed that Grupo Gigante used the mark in commerce for decades before the Dallos did. But the facts of this case implicate another well-established principle of trademark law, the “territoriality principle.” The territoriality principle, as stated in a treatise, says that “[p]riority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world.”9 Earlier use in another country usually just does not count.1010 Although we have not had occasion to

44 The Dallos asserted the following causes of action: (1) trademark infringement, under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (2) false designation of origin, misrepresentation, and unfair competition, under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) common law unfair competition; (4) trademark infringement and unfair competition under California law; (5) dilution under California law; and (6) common law misappropriation.

55 Grupo Gigante S.A. de C.V. v. Dallo & Co., Inc., 119 F.Supp.2d 1083 (C.D.Cal.2000).99 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 29:2, at 29–6

(4th ed. 2002) (internal footnote omitted).1010 See Person’s Co., Ltd. v. Christman, 900 F.2d 1565, 1569–70 (Fed.Cir. 1990); Buti v.

Perosa, S.R.L., 139 F.3d 98, 103–05 (2d Cir. 1998); Fuji Photo Film Co., Inc. v. Shinohara Shoji

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address this principle, it has been described by our sister circuits as “basic to trademark law,” in large part because “trademark rights exist in each country solely according to that country’s statutory scheme.”1111 While Grupo Gigante used the mark for decades before the Dallos used it, Grupo Gigante’s use was in Mexico, not in the United States. Within the San Diego area, on the northern side of the border, the Dallos were the first users of the “Gigante” mark. Thus, according to the territoriality principle, the Dallos’ rights to use the mark would trump Grupo Gigante’s.

[12] Grupo Gigante does not contest the existence of the territoriality principle. But like the first-in-time, first-in-right principle, it is not absolute. The exception, as Grupo Gigante presents it, is that when foreign use of a mark achieves a certain level of fame for that mark within the United States, the territoriality principle no longer serves to deny priority to the earlier foreign user. The Dallos concede that there is such an exception, but dispute what it takes for a mark to qualify for it. Grupo Gigante would interpret the exception broadly, while the Dallos would interpret it narrowly.

[13] Grupo Gigante does not argue to this court that it used the mark in the United States in a way that qualifies for protection regardless of the territoriality principle and any exception to it. While the district court opinion suggests that Grupo Gigante made an alternative argument of this sort below, its argument on appeal is limited to whether the mark has become well-known enough to overcome the territoriality principle. For example, while the statement of facts in Grupo Gigante’s brief claims that Grupo Gigante engaged in advertising in Mexico that reached United States consumers, Grupo Gigante does not assert that this advertising, combined with other activities, constitutes domestic use of the mark.1313 Thus, while Grupo Gigante does not appear to concede explicitly that application of the famous-mark exception is necessary to its success on appeal, the structure of its argument suggests as much. Since the district court based its holding on an interpretation of the exception, and since Grupo Gigante does not urge us to consider alternative ways it might be eligible for protection, we have no occasion to decide, and do not decide, whether Grupo Gigante could establish protection for its mark apart from application of the famous-mark exception to the territoriality principle.

[14] There is no circuit-court authority—from this or any other circuit—applying a famous-mark exception to the territoriality principle. At least one circuit judge has, in a dissent, called into question whether there actually is any meaningful famous-mark exception.1414 We hold, however, that there is a famous mark exception to the territoriality principle. While the territoriality principle is a long-standing and important doctrine within trademark law, it cannot be absolute. An absolute territoriality rule without a famous-mark exception would promote consumer confusion and fraud. Commerce crosses borders. In this nation of immigrants, so do people. Trademark is, at its core, about protecting against consumer confusion and “palming off.”1515 There can be no justification for using trademark

Kabushiki Kaisha, 754 F.2d 591, 599 (5th Cir. 1985).1111 Fuji Photo, 754 F.2d at 599; see also Person’s, 900 F.2d at 1569.1313 See, e.g., Int’l Bancorp, LLC v. Societe des Bains de Mer, 329 F.3d 359, 370 (4th Cir.

2003).1414 Int’l Bancorp, 329 F.3d at 389 n. 9 (Motz, J., dissenting) (“Nor does the ‘famous

marks’ doctrine provide SBM any refuge. That doctrine has been applied so seldom (never by a federal appellate court and only by a handful of district courts) that its viability is uncertain.”).

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law to fool immigrants into thinking that they are buying from the store they liked back home.

[15] It might not matter if someone visiting Fairbanks, Alaska from Wellington, New Zealand saw a cute hair-salon name—”Hair Today, Gone Tomorrow,” “Mane Place,” “Hair on Earth,” “Mary’s Hair’em,” or “Shear Heaven”—and decided to use the name on her own salon back home in New Zealand. The ladies in New Zealand would not likely think they were going to a branch of a Fairbanks hair salon. But if someone opened a high-end salon with a red door in Wellington and called it Elizabeth Arden’s, women might very well go there because they thought they were going to an affiliate of the Elizabeth Arden chain, even if there had not been any other Elizabeth Ardens in New Zealand prior to the salon’s opening. If it was not an affiliate, just a local store with no connection, customers would be fooled. The real Elizabeth Arden chain might lose business if word spread that the Wellington salon was nothing special.

[16] The most cited case for the famous-mark exception is Vaudable v. Montmartre, Inc., a 1959 trial court decision from New York.1616 A New York restaurant had opened under the name “Maxim’s,” the same name as the well-known Parisian restaurant in operation since 1893, and still in operation today. The New York Maxim’s used similar typography for its sign, as well as other features likely to evoke the Paris Maxim’s—particularly among what the court called “the class of people residing in the cosmopolitan city of New York who dine out”1717 (by which it apparently meant the sort of people who spend for dinner what some people spend for a month’s rent). The court enjoined the New York use, even though the Paris restaurant did not operate in New York, or in the United States, because the Maxim’s mark was “famous.”1818

[17] While Vaudable stands for the principle that even those who use marks in other countries can sometimes—when their marks are famous enough—gain exclusive rights to the marks in this country, the case itself tells us little about just how famous or well-known the foreign mark must be. The opinion states in rather conclusory terms that the Paris Maxim’s “is, of course, well known in this country,” and that “[t]here is no doubt as to its unique and eminent position as a restaurant of international fame and prestige.”1919 This language suggests that Maxim’s had achieved quite a high degree of fame here, and certainly enough to qualify for the exception to the territoriality principle, but it suggests nothing about just how much fame was necessary. It does not suggest where the line is between “Shear Heaven” and Maxim’s.

[18] The Patent and Trademark Office’s Trademark Trial and Appeal Board, whose expertise we respect and whose decisions create expectations, has recognized the validity of the famous-mark exception.2020 But as with Vaudable, none of these cases helps us to establish a clear threshold for just how famous a mark must be to qualify for the exception.

1515 See Thane Int’l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 (9th Cir. 2002).1616 Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332 (N.Y.Sup.Ct.1959).1717 Id. at 334.1818 Id. at 335.1919 Id. at 334 (emphasis added).2020 See, e.g., The All England Lawn Tennis Club (Wimbledon) Ltd. v. Creations

Aromatiques, Inc., 220 U.S.P.Q. 1069, 1072, 1983 WL 51903 (TTAB 1983); Mother’s Rests. Inc. v. Mother’s Other Kitchen, Inc., 218 U.S.P.Q. 1046, 1048, 1983 WL 51992 (TTAB 1983).

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[19] Grupo Gigante urges us to adopt the approach the district court took. The district court held that the correct inquiry was to determine whether the mark had attained secondary meaning in the San Diego area. Secondary meaning refers to a mark’s actual ability to trigger in consumers’ minds a link between a product or service and the source of that product or service. That is, a mark has secondary meaning “when, in the minds of the public, the primary significance of a mark is to identify the source of the product rather than the product itself.”2121 Determining whether a mark has secondary meaning requires taking into account at least seven considerations, which the district court did in this case.2222

[20] Applying its interpretation of the famous-mark exception, the district court concluded that Grupo Gigante’s use of the mark had achieved secondary meaning in the San Diego area by the time the Dallos opened their first store, and thus the court held that Grupo Gigante’s use was eligible for the exception to the territoriality principle. Grupo Gigante asserts that we, too, should adopt secondary meaning as the definition of the exception. We decline to go quite this far, however, because following the district court’s lead would effectively cause the exception to eclipse the territoriality rule entirely.

[21] Secondary meaning has two functions. First, it serves to determine whether certain marks are distinctive enough to warrant protection. Some marks—those that are arbitrary, fanciful, or suggestive—are deemed inherently distinctive. Others—including those that are descriptive of some feature of the products or services to which they are attached—require some indication of distinctiveness before trademark protection is available. That required indication is that the mark have acquired secondary meaning. Thus, before Grupo Gigante (or for that matter the Dallos) could have a protectable interest in “Gigante” at all, Grupo Gigante would have to show that the mark has acquired secondary meaning by demonstrating that it has come to identify to consumers Grupo Gigante’s particular brand of store, not merely a characteristic of Grupo Gigante’s stores and others like them.

[22] Second, and most relevant to this case, secondary meaning defines the geographic area in which a user has priority, regardless of who uses the mark first. Under what has become known as the Tea Rose–Rectanus doctrine, priority of use in one geographic area within the United States does not necessarily suffice to establish priority in another area. Thus, the first user of a mark will not necessarily be able to stop a subsequent user, where the subsequent user is in an area of the country “remote” from the first user’s area.2626 The practical effect is that one user may have priority in one area, while another user has priority over the very same mark in a different area. The point of this doctrine is that in the remote area, where no one is likely to know of the earlier user, it is unlikely that consumers would be confused by the second user’s use of the mark. Secondary meaning comes into play in determining just how far each user’s priority extends. Courts ask whether the first, geographically limited use of the mark is well-known enough that it has gained secondary

2121 Wal–Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 211 (2000) (internal quotation and editing omitted).

2222 See Filipino Yellow Pages, Inc. v. Asian Journal Publ’ns, Inc., 198 F.3d 1143 (9th Cir. 1999).

2626 Good faith may also be an issue in such cases. See Hanover Star, 240 U.S. at 415, 36 S.Ct. 357 (excepting from the general Tea Rose–Rectanus principle cases in which “the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like.”). Good faith is not raised in this appeal (perhaps because the appeal comes up on summary judgment) and is irrelevant to our analysis.

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meaning not just within the area where it has been used, but also within the remote area, which is usually the area where a subsequent user is claiming the right to use the mark.

[23] Assume, for example, that Grupo Gigante had been using the mark in Arizona as well as in various parts of Mexico, and that it had met all the other requirements of having a protectable interest in the mark, including having established secondary meaning throughout Arizona. If the Dallos later began using the same mark in San Diego without knowledge of Grupo Gigante’s earlier “remote” use in Arizona, whether Grupo Gigante could stop them would depend on what the mark meant to consumers in San Diego. Under the Tea Rose–Rectanus doctrine, Grupo Gigante would have priority in San Diego, and thus be able to stop the Dallos’ use of the mark, only if the secondary meaning from Grupo Gigante’s use of the mark in Arizona extended to San Diego as well. If, on the other hand, the secondary meaning from Grupo Gigante’s use were limited to Arizona, then the Dallos might be free to continue using the mark in San Diego.

[24] Thus, if the dispute before us were between a Mexican and Arizonan Grupo Gigante on the one hand, and the Dallos on the other, we would analyze, under the Tea Rose–Rectanus doctrine, whether Grupo Gigante’s use of the mark had achieved secondary meaning in San Diego. This is how the district court analyzed the actual dispute, as a result of having defined the exception to the territoriality principle in terms of secondary meaning. In other words, the district court treated Grupo Gigante’s use of the mark exactly as it would have had Grupo Gigante used the mark not only in Mexico, but also in another part of the United States. Under the district court’s interpretation of the exception to the territoriality principle, the fact that Grupo Gigante’s earlier use of the mark was entirely outside of the United States becomes irrelevant.

[25] The problem with this is that treating international use differently is what the territoriality principle does. This interpretation of the exception would effectively eliminate the territoriality principle by eliminating any effect of international borders on protectability. We would end up treating foreign uses of the mark just as we treat domestic uses under the Tea Rose–Rectanus doctrine, asking in both cases whether the use elsewhere resulted in secondary meaning in the local market.

[26] We would go too far if we did away with the territoriality principle altogether by expanding the famous-mark exception this much. The territoriality principle has a long history in the common law,3030 and at least two circuits have described it as “basic to trademark law.”3131 That status reflects the lack of a uniform trademark regime across international borders. What one must do to acquire trademark rights in one country will not always be the same as what one must do in another. And once acquired, trademark rights gained in other countries are governed by each country’s own set of laws.3232 Furthermore,

3030 As McCarthy has noted, traces of the territoriality principle appear in Justice Holmes’s opinion for the U.S. Supreme Court in A. Bourjois & Co. v. Katzel, 260 U.S. 689, 692, 43 S.Ct. 244, 67 L.Ed. 464 (1923). McCarthy, supra, at § 29:1, p. 29–4; see also Philip Morris Inc. v. Allen Distribs., Inc., 48 F.Supp.2d 844, 850 (S.D.Ind. 1999) (identifying Bourjois as marking the shift from “the ‘universality’ principle [to] a ‘territoriality principle’ that recognizes a separate legal existence for a trademark in each country whose laws afford protection to the mark”).

3131 Fuji Photo, 754 F.2d at 599; Person’s, 900 F.2d at 1569.3232 See Ingenohl v. Walter E. Olsen & Co., Inc., 273 U.S. 541, 544, (1927) (“A trademark

started elsewhere would depend for its protection in Hongkong upon the law prevailing in

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we are arguably required by the Paris Convention, of which the United States is a signatory, to preserve the territoriality principle in some form.3333 Thus, we reject Grupo Gigante’s argument that we should define the well-known mark exception as merely an inquiry into whether the mark has achieved secondary meaning in the area where the foreign user wishes to assert protection.

[27] To determine whether the famous-mark exception to the territoriality rule applies, the district court must determine whether the mark satisfies the secondary meaning test. The district court determined that it did in this case, and we agree with its persuasive analysis. But secondary meaning is not enough.

[28] In addition, 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. In making this determination, the court should consider such factors as the intentional copying of the mark by the defendant, and whether customers of the American firm are likely to think they are patronizing the same firm that uses the mark in another country. While these factors are not necessarily determinative, they are particularly relevant because they bear heavily on the risks of consumer confusion and fraud, which are the reasons for having a famous-mark exception.

[29] Because the district court did not have the benefit of this additional test, we vacate and remand so that it may be applied. We intimate no judgment on whether further motion practice and some additions to what the district court has already written in its published opinion will suffice, or whether trial will be needed to apply this new test. Nor do we intimate what the result should be. The concurring opinion is incorrect in its suggestion that the case necessarily must go to trial because distinctiveness of a mark is a question of fact and defendants have contested the reliability of plaintiffs’ survey evidence. That conclusion flies in the face of the 1986 triumvirate of summary judgment cases.3434 Regardless of whether questions are factual, there is nothing to try unless there is a genuine issue of material fact. One survey that is impeachable, but still good enough to get to a jury, weighed against no survey evidence at all on the other side, along with all the other evidence in the record, does not necessarily add up to a genuine issue of fact. . . .

VACATED AND REMANDED.

GRABER, Circuit Judge, concurring:

[30] I concur in the majority’s opinion because I agree that a foreign owner of a supposedly famous or well-known foreign trademark must show a higher level of “fame” or recognition than that required to establish secondary meaning. Ultimately, the standard for

Hongkong and would confer no rights except by the consent of that law.”); Fuji Photo, 754 F.2d at 599 (“[T]rademark rights exist in each country solely according to that country’s statutory scheme.”).

3333 Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, as revised at Stockholm, July 14, 1967, art. 6(3), 21 U.S.T. 1583, § 6(3) (“A mark duly registered in a country of the Union shall be regarded as independent of marks registered in the other countries of the Union, including the country of origin.”).

3434 See Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (1986).

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famous or well-known marks is an intermediate one. To 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.

[31] Nonetheless, I write separately to express my view that the evidence that Plaintiffs have presented thus far is insufficient as a matter of law to establish that their mark is famous or well-known. The survey population and the survey’s results establish little more than the fact that Plaintiffs’ customers are familiar with Plaintiffs’ stores. In an abundance of caution, the majority does not intimate whether that evidence is sufficient to warrant a grant of summary judgment in Plaintiffs’ favor on the issue of the famous mark exception. I would go beyond intimation and hold directly that Plaintiffs’ evidence is insufficient to support a grant of summary judgment in its favor. I would further hold that, unless the district court entertains a renewed motion for summary judgment on a considerably expanded record, this case should proceed to trial.

[32] The district court, relying entirely on survey evidence, concluded that Plaintiffs’ trademark had acquired secondary meaning and was thus entitled to protection from domestic users.1 The survey population consisted of only 78 people in San Diego County who were “Spanish-speaking, and had recently purchased Mexican-style food at a supermarket or other food store.” Grupo Gigante S.A. de C.V. v. Dallo & Co., Inc., 119 F.Supp.2d 1083, 1093 (C.D.Cal. 2000). Twenty-four respondents from that population “(1) had recently shopped at a Gigante store in Mexico; (2) believed that the Gigante name was affiliated with an entity that had at least one store located in Mexico; or (3) were aware of a Gigante supermarket located in Mexico.” Id. However, the survey was conducted in 2000, nine years after Defendants first began using the Gigante name in the United States. When testing for awareness of the Gigante mark before Defendants’ entry into the San Diego market in 1991, the awareness level dropped to 20 to 22 percent of the respondents. Id. That is, the district court based its conclusion that Plaintiffs’ mark was well known on a survey that turned up just seventeen people who had heard of Gigante before 1991.

[33] That evidence is insufficient in two important respects. First, the survey result is highly questionable in view of its narrowly defined survey population. Plaintiffs’ own description of their stores makes clear that the goods sold are little different from those available in any large retail grocery store: “Product offerings in the Gigante stores generally include a complete selection of perishable and non-perishable foods and a wide selection of general merchandise, as well as clothing and fashion items.” Further, Plaintiffs admit in their briefs that the clientele of their Mexican stores includes “both Hispanic and non-Hispanic” customers. Consequently, nothing about either the nature of the goods sold by Plaintiffs or its customer base warrants limiting the relevant public to Mexican–Americans.

. . . .

[34] Because Plaintiffs sell widely-available, non-specialized goods to the general public, it is uninformative to focus exclusively on Mexican–Americans living in San Diego

11 Expert surveys can provide the most persuasive evidence of secondary meaning. Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 822 (9th Cir. 1996). “However, survey data is not a requirement and secondary meaning can be, and often is, proven by circumstantial evidence.” 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 32:190, at 32–319 to 32–320 (4th ed.2002).

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County. The district court’s reliance on Plaintiffs’ survey is especially problematic because its population was limited to Mexican–Americans who had recently purchased Mexican-style food at a supermarket or grocery store. That survey is only very slightly more informative than the study whose probative value we dismissed entirely in Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999), because it focused exclusively on the plaintiff’s existing customers: “Avery Dennison’s marketing reports are comparable to a survey we discussed in Anti–Monopoly, Inc. v. General Mills Fun Group, Inc., 684 F.2d 1316 (9th Cir. 1982), proving only the near tautology that consumers already acquainted with Avery and Avery Dennison products are familiar with Avery Dennison.” 189 F.3d at 879.

[35] Because a conclusion that Plaintiffs have a protectable interest would prohibit Defendants from selling groceries under that mark to any residents of San Diego County—not just to Mexican–Americans—it makes little sense to define the relevant public so narrowly. Comprised of all grocery shoppers, the “relevant sector of the public” in this case is the very antithesis of a specialized market; because everyone eats, the relevant sector of the public consists of all residents of San Diego County, without qualification.

[36] Second, in view of the standard we announce today, I do not believe that a showing that 20 to 22 percent of the relevant market is familiar with the foreign mark establishes that a “significant” or “substantial” percentage of that market is familiar with the foreign mark. On that ground alone, I would conclude that Plaintiffs have failed, so far, to show that their mark is famous or well-known.

[37] In terms of the level of fame, trademark dilution cases often speak of a “significant percentage of the defendant’s market.” Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir. 1989). Discussing the level of recognition required to establish “niche fame,” McCarthy argues that “a mark should not be categorized as ‘famous’ unless it is known to more than 50 percent of the defendant’s potential customers.” 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 24:112, at 24–271 (4th ed. 2002).

[38] I would adopt a similar standard for the exception for famous or well-known foreign marks. When a foreign mark has not been used in the United States, I would require the owner of the foreign mark to show, through surveys and other evidence, that a majority of the defendant’s customers and potential customers, on aggregate, were familiar with the foreign mark when the defendant began its allegedly infringing use. Admittedly, that is a high standard. However, I believe that a stringent standard is required when conferring trademark protection to a mark that has never been, and perhaps never may be, used in this country. A conclusion that Plaintiffs’ mark is well-known in the relevant sector brings with it the right to oust Defendants from their own market, notwithstanding the fact that they have established priority of use. A bare showing of acquired distinctiveness should not suffice to invert the ordinary allocation of trademark rights.

[39] Of course, I recognize that the doctrine of “niche fame” has received heavy, and in the context of domestic trademark law, deserved criticism. However, the niche fame cases may provide the district court with an instructive benchmark against which to measure an intermediate standard of fame.2

22 There are no other cases that directly guide us here. Although international trademark law has recognized both the territoriality principle and the exception for famous and well-known marks since 1925, remarkably, no case addressed meaningfully the exception before the district court’s decision below. Since that decision, only one case has

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[40] In summary, I agree with the majority’s conclusion that this case must be remanded and the evidence reevaluated under a heightened standard for the famous or well-known marks exception. However, I would hold directly that the evidence presented thus far does not meet that standard and thus does not suffice to warrant protection for Plaintiff’s mark. Finally, in determining whether a foreign mark has met the standard for famous or well-known foreign trademarks, I would look to precedent from this court and others addressing whether a mark has become famous in its market niche.

ii. The Well-Known Marks Doctrine in the Second Circuit

ITC Ltd. v. Punchgini, Inc.482 F.3d 135 (2d Cir. 2007)

RAGGI, Circuit Judge.

[1] This case requires us to decide, among other things, the applicability of the “famous marks” doctrine to a claim for unfair competition under federal and state law. Plaintiffs ITC Limited and ITC Hotels Limited (collectively “ITC”) held a registered United States trademark for restaurant services: “Bukhara.” They sued defendants, Punchgini, Inc., Bukhara Grill II, Inc., and certain named individuals associated with these businesses, in the United States District Court for the Southern District of New York (Gerard E. Lynch, Judge ) claiming that defendants’ use of a similar mark and related trade dress constituted trademark infringement, unfair competition, and false advertising in violation of federal and state law. ITC now appeals from the district court’s award of summary judgment in favor of defendants on all claims. See ITC Ltd. v. Punchgini, Inc., 373 F.Supp.2d 275 (S.D.N.Y. 2005).

[2] Having reviewed the record de novo, we affirm the award of summary judgment on ITC’s infringement claim, concluding, as did the district court, that ITC abandoned its Bukhara mark for restaurant services in the United States. To the extent ITC insists that the “famous marks” doctrine nevertheless permits it to sue defendants for unfair competition because its continued international use of the mark led to a federally protected right, we conclude that Congress has not yet incorporated that doctrine into federal trademark law.2 Therefore, we affirm the award of summary judgment on ITC’s federal unfair competition claim. Whether the famous marks doctrine applies to a New York common law claim for unfair competition and, if so, how famous a mark must be to trigger that application, are issues not easily resolved by reference to existing state law. Accordingly, we certify questions relating to these issues to the New York Court of Appeals, reserving our decision on this part of ITC’s appeal pending the state court’s response.

confronted the issue. Empresa Cubana del Tabaca v. Culbro Corp., 70 U.S.P.Q.2d 1650, 2004 WL 602295 (S.D.N.Y.2004). Empresa Cubana adhered closely to the reasoning and conclusion of the district court in this case. Id. at 1676–77.

22 Although the term “famous marks” is often used to describe marks that qualify for protection under the federal anti-dilution statute, see 15 U.S.C. § 1125(c), the “famous marks” doctrine is, in fact, a different and distinct “legal concept under which a trademark or service mark is protected within a nation if it is well known in that nation even though the mark is not actually used or registered in that nation,” 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 29.2, at 29–164 (4th ed.2002). Thus, the famous marks doctrine might more aptly be described as the famous foreign marks doctrine. It is in this latter sense that we reference the famous marks doctrine on this appeal.

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I. Factual Background

A. The Bukhara Restaurant in New Delhi

[3] ITC Limited is a corporation organized under the laws of India. Through its subsidiary, ITC Hotels Limited, it owns and operates the Maurya Sheraton & Towers, a five-star hotel in New Delhi, India. One of the restaurants in the Maurya Sheraton complex is “Bukhara.” Named after a city in Uzbekistan on the legendary Silk Road between China and the West, Bukhara offers a cuisine and decor inspired by the northwest frontier region of India. Since its opening in 1977, the New Delhi Bukhara has remained in continuous operation, acquiring a measure of international renown.4

[4] Over the past three decades, ITC has sought to extend the international reach of the Bukhara brand. At various times, it has opened or, through franchise agreements, authorized Bukhara restaurants in Hong Kong, Bangkok, Bahrain, Montreal, Bangladesh, Singapore, Kathmandu, Ajman, New York, and Chicago. As of May 2004, however, ITC-owned or -authorized Bukhara restaurants were in operation only in New Delhi, Singapore, Kathmandu, and Ajman.

B. ITC’s Use of the Bukhara Mark in the United States

1. ITC’s Use and Registration of the Mark for Restaurants

[5] In 1986, an ITC-owned and -operated Bukhara restaurant opened in Manhattan. In 1987, ITC entered into a franchise agreement for a Bukhara restaurant in Chicago. Shortly after opening its New York restaurant, ITC sought to register the Bukhara mark with the United States Patent and Trademark Office (“Patent and Trademark Office”). On October 13, 1987, ITC obtained United States trademark registration for the Bukhara mark in connection with “restaurant services.” See United States Trademark Registration No. 1,461,445 (Oct. 13, 1987). The Manhattan restaurant remained in operation for only five years, closing on December 17, 1991. On August 28, 1997, after a decade in business, ITC cancelled its Chicago franchise. Notwithstanding its registration, ITC concedes that it has not owned, operated, or licensed any restaurant in the United States using the Bukhara mark since terminating the Chicago restaurant franchise.

2. Use of the Mark for Packaged Foods

[6] Over three years later, in 2001, ITC commissioned a marketing study to determine the viability of selling packaged food products in the United States under the Bukhara label, including “Dal Bukhara.”5 In that same year, ITC filed an application with the Patent and Trademark Office to register a “Dal Bukhara” mark in connection with packaged, ready-to-serve foods. In May 2003, ITC sold packaged Dal Bukhara food products to two distributors, one in California and the other in New Jersey. One month later, in June 2003, ITC exhibited Dal Bukhara products at the International Fancy Foods Show in New York City.

C. The Opening of “Bukhara Grill”

[7] Meanwhile, in 1999, named defendants Raja Jhanjee, Vicky Vij, Dhandu Ram, and Paragnesh Desai, together with Vijay Roa, incorporated “Punchgini, Inc.” for the purpose of opening an Indian restaurant in New York City. Jhanjee, Vij, and Ram had all previously worked at the New Delhi Bukhara, and Vij had also previously worked at ITC’s New York

44 The record indicates that in 2002 and 2003, the New Delhi Bukhara was named one of the world’s fifty best restaurants by London-based “Restaurant” magazine.

55 This product takes its name from a lentil dish served at the New Delhi Bukhara restaurant.

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Bukhara. In selecting a name for their restaurant, the Punchgini shareholders purportedly considered “Far Pavilions” and “Passage to India” before settling on “Bukhara Grill.” As Vij candidly acknowledged at his deposition, there was then “no restaurant Bukhara in New York, and we just thought we will take the name.” Vij Dep. 25:7–11, May 5, 2004. After some initial success with “Bukhara Grill,” several Punchgini shareholders, with the support of two additional partners, defendants Mahendra Singh and Bachan Rawat, organized a second corporation, “Bukhara Grill II, Inc.,” in order to open a second New York restaurant, “Bukhara Grill II.”

[8] When the record is viewed in the light most favorable to ITC, numerous similarities suggestive of deliberate copying can readily be identified between the defendants’ Bukhara Grill restaurants and the Bukhara restaurants owned or licensed by ITC. Quite apart from the obvious similarity in name, defendants’ restaurants mimic the ITC Bukharas’ logos, decor, staff uniforms, wood-slab menus, and red-checkered customer bibs. Indeed, the similarities were sufficiently obvious to be noted in a press report, wherein defendant Jhanjee is quoted acknowledging that the New York Bukhara Grill restaurant “is quite like Delhi’s Bukhara.”

D. Plaintiffs’ Cease and Desist Letter

[9] By letter dated March 22, 2000, ITC, through counsel, demanded that defendants refrain from further use of the Bukhara mark. The letter accused defendants of unlawfully appropriating the reputation and goodwill of ITC’s Bukhara restaurants in India and the United States by adopting a virtually identical name for their New York Bukhara Grill restaurants. It further demanded, under threat of legal action, that defendants acknowledge ITC’s exclusive rights to the Bukhara mark, disclose the period for which defendants had used the mark, and remit to ITC any profits derived therefrom.

[10] In a response dated March 30, 2000, defendants’ counsel expressed an interest in avoiding litigation. Nevertheless, counsel observed that ITC appeared to have abandoned the Bukhara mark by not using it in the United States for several years. Receiving no reply, defendants’ counsel sent a second letter to ITC dated June 22, 2000, stating that, if no response was forthcoming “by June 28, 2000, we will assume that ITC Limited has abandoned rights it may have had in the alleged mark and any alleged claim against our client.” Marsh Letter to Horwitz, June 22, 2000. The record indicates no timely reply.

[11] Instead, almost two years later, on April 15, 2002, ITC’s counsel wrote to defendants reiterating the demands made in March 2000 and complaining of defendants’ failure formally to respond to that initial letter. Defendants’ counsel promptly challenged the latter assertion; faulted ITC for failing to reply to his March 22, 2000 letter; and reasserted his abandonment contention, a position that he claimed was now bolstered by the passage of additional time. There was apparently no further communication among the parties until this lawsuit.

E. The Instant Lawsuit

[12] On February 26, 2003, ITC filed the instant lawsuit. In the amended complaint that is the controlling pleading for purposes of our review, ITC charged defendants with trademark infringement under section 32(1)(a) of the Lanham Act, see 15 U.S.C. § 1114(1)(a), as well as unfair competition and false advertising under sections 43(a) and 44(h) of the Lanham Act, see 15 U.S.C. §§ 1125(a), 1126(h). ITC also pursued parallel actions under New York common law.6 As an affirmative defense, defendants charged ITC with abandonment of

66 ITC’s amended complaint also charged defendants with false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125(a), and deceptive acts and practices in violation

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its United States rights to the Bukhara mark and, on that ground, they filed a counterclaim seeking cancellation of the ITC registration.

[13] Following discovery, defendants successfully moved for summary judgment. In a detailed published decision, the district court ruled that ITC could not pursue an infringement claim because the record conclusively demonstrated its abandonment of the Bukhara mark as applied to restaurants in the United States. See ITC Ltd. v. Punchgini, Inc., 373 F.Supp.2d at 285. To the extent ITC asserted that its continued operation of Bukhara restaurants outside the United States allowed it to sue defendants for unfair competition under the famous marks doctrine, the district court was not convinced. It observed that, even if it were to assume the applicability of the famous marks doctrine, ITC had failed to adduce sufficient evidence to permit a reasonable jury to conclude that the name or trade dress of its foreign restaurants had attained the requisite level of United States recognition to trigger the doctrine. See id. at 291. Finally, the district court found that ITC lacked standing to pursue its false advertising claim. See id. at 291–92. This appeal followed.

[14] Before this court, ITC advances essentially three arguments. It submits that (1) the record does not conclusively establish its abandonment of United States rights in the Bukhara mark, (2) the district court misapplied applicable federal and state law regarding the famous marks doctrine, and (3) it has standing to sue defendants for false advertising.

II. Discussion

{The court determined that ITC had abandoned its registered Bukhara mark. We will address abandonment in Part III below.}

C. Unfair Competition

1. Federal Claim Under Section 43(a)(1)(A) of the Lanham Act

[15] ITC claims that defendants violated section 43(a)(1)(A) of the Lanham Act by engaging in unfair competition in the use of its Bukhara mark and its related trade dress. Section 43(a)(1)(A) allows the producer of a product or service to initiate a cause of action against a person who uses “any word, term name, symbol, or device, or any combination thereof . . . which . . . is likely to cause confusion . . . as to the origin, sponsorship, or approval of [the producer’s] . . . services.” 15 U.S.C. § 1125(a)(1)(A). This protection is broader than that afforded by section 32(1)(a), which prohibits only infringement of marks actually registered with the Patent and Trademark Office. See Two Pesos v. Taco Cabana, 505 U.S. 763, 768 (1992) (“Section 43(a) prohibits a broader range of practices than does § 32, which applies to registered marks, but it is common ground that § 43(a) protects qualifying unregistered trademarks” (internal citations and quotation marks omitted)); accord Chambers v. Time Warner, Inc., 282 F.3d 147, 155 (2d Cir. 2002).

[16] To succeed on a section 43(a)(1)(A) claim, a plaintiff must prove (1) that the mark or dress is distinctive as to the source of the good or service at issue, and (2) that there is the likelihood of confusion between the plaintiff’s good or service and that of the defendant. See Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 115 (2d Cir. 2001) (citing Wal–Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 210 (2000)); see also Two Pesos v. Taco Cabana, 505 U.S. at 768; Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 115 (2d Cir. 2006). Preliminary to making this showing, however, a plaintiff must demonstrate its own right to use the mark or dress in question. . . .

of New York General Business Law § 349, but it appears to have abandoned those claims in otherwise opposing defendants’ motion for summary judgment. See ITC Ltd. v. Punchgini, Inc., 373 F.Supp.2d at 278.

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[17] In light of our conclusion that, as a matter of law, ITC abandoned its registered Bukhara mark as of August 28, 2000, ITC confronts a high hurdle in demonstrating that, at the time of defendants’ challenged actions, it possessed a priority right to the use of the Bukhara mark and related trade dress for restaurants in the United States. See Vais Arms, Inc. v. Vais, 383 F.3d at 292 n. 8 (noting that “abandonment results in a break in the chain of priority”) (quoting 2 McCarthy, supra, § 17:4); Emergency One, Inc. v. American Fire Eagle Engine Co., 332 F.3d 264, 268 (4th Cir. 2003) (“The priority to use a mark . . . can be lost through abandonment.”). To clear this hurdle, ITC invokes the famous marks doctrine. It submits that, because (1) since 1977, it has continuously used its Bukhara mark and trade dress outside the United States; and (2) that mark was renowned in the United States before defendants opened their first Bukhara Grill restaurant in New York in 1999, it has a priority right to the mark sufficient to claim section 43(a)(1)(A) protection in this country.

[18] To explain why we disagree, we begin by discussing the principle of trademark territoriality. We then discuss the famous marks exception to this principle and the international treaties, implementing legislation, and policy concerns relied on by ITC in urging the application of this exception to this case.

a. The Territoriality Principle

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

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

Osawa & Co. v. B & H Photo, 589 F.Supp. 1163, 1171–72 (S.D.N.Y. 1984).1414

[20] Precisely because a trademark has a separate legal existence under each country’s laws, ownership of a mark in one country does not automatically confer upon the owner the exclusive right to use that mark in another country. Rather, a mark owner must take the proper steps to ensure that its rights to that mark are recognized in any country in which it seeks to assert them. Cf. Barcelona.com, Inc. v. Excelentisimo Ayuntamiento De Barcelona, 330 F.3d 617, 628 (4th Cir. 2003) (“United States courts do not entertain actions seeking to enforce trademark rights that exist only under foreign law.”); E. Remy Martin & Co., S.A. v.

1414 The “territoriality principle” stands in contrast to the so-called “universality principle,” which posits that “if a trademark [is] lawfully affixed to merchandise in one country, the merchandise would carry that mark lawfully wherever it went and could not be deemed an infringer although transported to another country where the exclusive right to the mark was held by someone other than the owner of the merchandise.” Osawa & Co. v. B & H Photo, 589 F.Supp. at 1171. The universality principle has been rejected in American trademark law. See American Circuit Breaker Corp. v. Or. Breakers, Inc., 406 F.3d at 581 (citing A. Bourjois & Co. v. Katzel, 260 U.S. 689, 43 S.Ct. 244, 67 L.Ed. 464 (1923)).

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Shaw–Ross Int’l Imports, Inc., 756 F.2d 1525, 1531 (11th Cir. 1985) (“Our concern must be the business and goodwill attached to United States trademarks, not French trademark rights under French law.” (internal quotation marks omitted)).

[21] As we have already noted, United States trademark rights are acquired by, and dependent upon, priority of use. See supra at 146–47. The territoriality principle requires the use to be in the United States for the owner to assert priority rights to the mark under the Lanham Act. See Buti v. Impressa Perosa, S.R.L., 139 F.3d at 103 (noting that “Impressa’s registration and use of the Fashion Café name in Italy has not, given the territorial nature of trademark rights, secured it any rights in the name under the Lanham Act”); La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d at 1271 n. 4 (“It is well-settled that foreign use is ineffectual to create trademark rights in the United States.”); . . . cf. Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d 1088, 1093 (9th Cir. 2004) (stating general proposition that “priority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world,” although recognizing famous marks doctrine as an exception to territoriality principle (quoting 4 McCarthy, supra, § 29:2, at 29–6)). But see International Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d 359, 381 (4th Cir. 2003) (concluding that United States trademark rights can be acquired merely through advertising in the United States combined with rendering of services abroad to American customers). Thus, absent some use of its mark in the United States, a foreign mark holder generally may not assert priority rights under federal law, even if a United States competitor has knowingly appropriated that mark for his own use. See Person’s Co. v. Christman, 900 F.2d at 1569–70 (holding that foreign use is not sufficient to establish priority rights even over a United States competitor who took mark in bad faith).

b. The Famous Marks Doctrine as an Exception to the Territoriality Principle

[22] ITC urges us to recognize an exception to the territoriality 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.

(1) Origin of the Famous Marks Doctrine

[23] The famous marks doctrine is no new concept. It originated in the 1925 addition of Article 6bis to the Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, as rev. at Stockholm, July 14, 1967, 21 U.S.T. 1583, 828 U.N.T.S. 305 (“Paris Convention”). Article 6bis, which by its terms applies only to trademarks, requires member states

ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith.

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Paris Convention, art. 6bis.1515 One commentator has observed that the “purpose” of Article 6bis “is to avoid the registration and use of a trademark, liable to create confusion with another mark already well known in the country of such registration or use, although the latter well-known mark is not, or not yet, protected in that country by a registration which would normally prevent the registration or use of the conflicting mark.” G.H.C. Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property 90 (1968).

(2) The Famous Marks Doctrine in the United States

(a) State Common Law

[24] The famous marks doctrine appears first to have been recognized in the United States by a New York trial court in a common law action for unfair competition in the use of a trademark. See Maison Prunier v. Prunier’s Rest. & Café, 159 Misc. 551, 557–58, 288 N.Y.S. 529, 535–36 (N.Y.Sup.Ct. 1936). The owner of “Maison Prunier,” a Paris restaurant with a branch in London, sought to enjoin defendants’ operation of a New York City restaurant named “Prunier’s Restaurant and Café.” The New York restaurant had apparently adopted both the Paris restaurant’s name and slogan (“Tout ce qui vient de la mer”1616) and boldly advertised itself as “The Famous French Sea Food Restaurant.” While the French plaintiff conceded that it had never operated a restaurant in the United States, it nevertheless sought relief for the unauthorized use of its name and mark under the common law of unfair competition.

[25] In ruling in favor of the plaintiff, the trial court first observed that “the right of a French corporation to sue here for protection against unfair competition was expressly granted in [Article 10bis of] the [Paris] convention between the United States and various other powers for the protection of industrial property.” Id. at 554, 288 N.Y.S. at 532.1717 It then ruled that “actual competition in a product is not essential to relief under the doctrine of unfair competition.” Id. at 555, 288 N.Y.S. at 533. The plaintiff was entitled to protection from “‘any injury which might result to it from the deception of the public through the unauthorized use of its trade name, or a trade name which would lead the public to believe that it was in some way connected with the plaintiff.’” Id. at 556, 288 N.Y.S. at 534 (quoting Long’s Hat Stores Corp. v. Long’s Clothes, Inc., 224 A.D. 497, 498, 231 N.Y.S. 107, 107 (1st Dep’t 1928)). Although the court acknowledged the general rule of territoriality, see id. at 557, 288 N.Y.S. 529, 288 N.Y.S. at 535 (noting no “right to protection against the use of a trade-mark or trade name beyond the territory in which it operates”), it recognized an exception to the rule where the second user was guilty of bad faith, see id. at 557–58, 288 N.Y.S. at 536–37. The court identified the fame of the mark as a factor relevant to deciding whether the second user had, in good faith, made use of a mark without knowing of its prior use by another party. See id. at 559, 288 N.Y.S. at 537. The Prunier court concluded that the French plaintiff

1515 The reach of Article 6bis was extended to service marks by Article 16(2) of the Agreement on Trade–Related Aspects of Intellectual Property Rights (“TRIPs”), see generally Uruguay Round Agreements Act, Pub.L. No. 103–465, 108 Stat. 4809 (1994) (codified as amended at scattered sections of the United States Code), which states that “Article 6bis of the Paris Convention shall apply, mutatis mutandis, to services.”

1616 “Everything that comes from the sea.”1717 Article 10bis of the Paris Convention requires member states to “assure to nationals

[of other member states] effective protection against unfair competition.” Paris Convention, art. 10bis.

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was entitled to protection against unfair competition because its trademark enjoyed “wide repute” and the facts of the case indicated a total lack of good faith on the part of the defendants. Id. at 559, 288 N.Y.S. at 537. The basis of this holding, it should be noted, was not Article 6bis of the Paris Convention. Instead, the holding was based entirely on New York common law principles of unfair competition.

[26] More than twenty years later, in Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332 (N.Y.Sup.Ct. 1959), another New York trial court granted a different Paris restaurant, “Maxim’s,” injunctive relief against a New York City restaurant that had appropriated its name, decor, and distinctive script style, all without permission. The court concluded that the lack of direct competition between the two restaurants was “immaterial” to a common law claim for unfair competition. Id. at 759, 193 N.Y.S.2d at 335. The only relevant question was whether “there had been a misappropriation, for the advantage of one person, of a property right belonging to another.” Id. at 759, 193 N.Y.S.2d at 335. Noting that the Paris Maxim’s had been in continuous operation since 1946, when it reopened after World War II, the court concluded that its owners had priority rights as against the junior American user by virtue of (1) their uninterrupted use of the mark abroad, and (2) the fame of the “Maxim’s” mark among “the class of people residing in the cosmopolitan city of New York who dine out.” Id. at 758, 193 N.Y.S.2d at 334.

(b) Federal Actions

(i) Trademark Board Rulings

[27] A quarter century later, the federal Trademark Trial and Appeal Board (“Trademark Board”) invoked Vaudable’s recognition of the famous marks doctrine in several inter partes proceedings.1818 In Mother’s Rests., Inc. v. Mother’s Other Kitchen, Inc., the Trademark Board stated in dictum that:

[I]t is our view that prior use and advertising of a mark in connection with goods or services marketed in a foreign country (whether said advertising occurs inside or outside the United States) creates no priority rights in said mark in the United States as against one who, in good faith, has adopted the same or similar mark for the same or similar goods or services in the United States prior to the foreigner’s first use of the mark on goods or services sold and/or offered in the United States at least unless it can be shown that the foreign party’s mark was, at the time of the adoption and first use of a similar mark by the first user in the United States, a “famous” mark within the meaning of Vaudable v. Montmartre, Inc.

218 U.S.P.Q 1046, at *8 (TTAB 1983) (concluding that customers would be likely to confuse the “Mother’s Pizza Parlour” trademark with the “Mother’s Other Kitchen” trademark) (internal citation omitted).

[28] That same year, the Trademark Board applied the same reasoning in All England Lawn Tennis Club, Ltd. v. Creations Aromatiques, 220 U.S.P.Q. 1069 (1983), granting plaintiff’s request to block registration of a trademark for “Wimbledon Cologne” even though plaintiff was not itself using the Wimbledon mark on any product sold in the United States. The Trademark Board observed that the Wimbledon mark had “acquired fame and notoriety as used in association with the annual championships within the meaning of Vaudable” and

1818 The Trademark Board’s primary function is to determine whether trademarks are registerable and to conduct opposition and cancellation proceedings by which interested parties can dispute the claims of applicants and registrants. See 15 U.S.C. §§ 1051, 1063–64.

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that “purchasers of applicant’s cologne would incorrectly believe that said product was approved by or otherwise associated with the Wimbledon tennis championships and that allowance of the application would damage opposer’s rights to the mark.” Id. at *10.

[29] Recently, the Trademark Board has reiterated in dicta that owners of well known foreign marks need not use those marks in the United States to challenge the registration of marks likely to promote confusion on the part of consumers. See, e.g., First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc., 77 U.S.P.Q.2d 1334, *30–31 (2005), overruled on other grounds by First Niagara Ins. Brokers, Inc. v. First Niagara Fin. Group, Inc. , 476 F.3d 867 (Fed.Cir. Jan. 9, 2007), 2007 U.S.App. LEXIS 367.

[30] As this court has frequently observed, Trademark Board decisions, “while not binding on courts within this Circuit, are nevertheless ‘to be accorded great weight’” under general principles of administrative law requiring deference to an agency’s interpretation of the statutes it is charged with administering. Buti v. Impressa Perosa S.R.L., 139 F.3d at 105 (quoting Murphy Door Bed Co. v. Interior Sleep Sys., Inc., 874 F.2d 95, 101 (2d Cir. 1989)); see also In re Dr Pepper Co., 836 F.2d 508, 510 (Fed.Cir. 1987). In applying this principle to this case, however, we identify a significant concern: nowhere in the three cited rulings does the Trademark Board state that its recognition of the famous marks doctrine derives from any provision of the Lanham Act or other federal law. Indeed, the federal basis for the Trademark Board’s recognition of the famous marks doctrine is never expressly stated. Its reliance on Vaudable suggests that recognition derives from state common law. At least one Trademark Board member, however, has questioned whether state common law can support recognition of the famous marks doctrine as a matter of federal law:

[I]t seems to me that the Vaudable decision according protection to the famous Maxim’s restaurant in the United States . . . is inapplicable in this case since that decision was based on a theory of unfair competition, namely misappropriation, under the law of the State of New York. Under Federal law, it seems to me that application of the well-known marks doctrine depends on whether the applicable text of the Paris Convention . . . and, in particular, Article 6bis of that Convention, is self-executing [so as to become part of federal law].

Mother’s Rests., Inc. v. Mother’s Other Kitchen, Inc., 218 U.S.P.Q 1046, at *21 (Allen, concurring in part, dissenting in part) (internal citations omitted). Because we conclude that the Trademark Board’s reliance on state law to recognize the famous marks doctrine falls outside the sphere to which we owe deference, we consider de novo the question of that doctrine’s existence within federal trademark law.

(ii) Federal Case Law

[31] To date, the Ninth Circuit Court of Appeals is the only federal appeals court to have recognized the famous marks doctrine as a matter of federal law. See Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d at 1088; cf. International Bancorp, LLC v. Societe des Bains de Mer et du Cercle des Estrangers a Monaco, 329 F.3d at 389 n. 9 (Motz, J., dissenting) (noting that the famous marks doctrine has been applied so infrequently that its viability is uncertain). In Grupo Gigante, 391 F.3d at 1088, the Ninth Circuit considered whether the “Gigante” mark—registered and used by a large chain of grocery stores in Mexico since 1963—was sufficiently well known among Mexican–Americans in Southern California to afford it priority over a competing “Gigante” mark used by a separate chain of Los Angeles grocery stores. In resolving this question, the court ruled:

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[T]here is a famous mark exception to the territoriality principle. While the territoriality principle is a long-standing and important doctrine within trademark law, it cannot be absolute. An absolute territoriality rule without a famous-mark exception would promote consumer confusion and fraud. Commerce crosses borders. In this nation of immigrants, so do people. Trademark is, at its core, about protecting against consumer confusion and “palming off.” There can be no justification for using trademark law to fool immigrants into thinking that they are buying from the store they liked back home.

Id. at 1094 (footnotes omitted).

[32] In Grupo Gigante, the Ninth Circuit did not reference either the language of the Lanham Act nor Article 6bis of the Paris Convention to support recognition of the famous marks doctrine. Indeed, elsewhere in its opinion, the court specifically stated that the Paris Convention creates no “additional substantive rights” to those provided by the Lanham Act. Id. at 1100. The court also acknowledged that the famous marks doctrine is not recognized by California state law. See id. at 1101 (observing that cases cited by plaintiff “provide no support for the conclusion that use anywhere in the world suffices to establish priority in California”). Thus, it appears that the Ninth Circuit recognized the famous marks doctrine as a matter of sound policy: “An absolute territoriality rule without a famous marks exception would promote customer confusion and fraud.” Id. at 1094.

[33] This court has twice referenced the famous marks doctrine, but on neither occasion were we required to decide whether it does, in fact, provide a legal basis for acquiring priority rights in the United States for a foreign mark not used in this country. See Buti v. Impressa Perosa, S.R.L., 139 F.3d at 104 n. 2 (referencing Mother’s Restaurant and Vaudable but, in the end, concluding that famous marks doctrine “has no application here given that Impressa has made no claim under that doctrine”); see also Empresa Cubana del Tabaco v. Culbro Corp., 399 F.3d at 481 (declining to decide whether famous marks doctrine should be recognized because “even assuming that the famous marks doctrine is otherwise viable and applicable, the [Cuban] embargo bars [plaintiff] from acquiring property rights in the . . . mark through the doctrine”).1919

. . . .

(c) Treaties Protecting Famous Marks and United States Implementing Legislation

[34] ITC insists that Article 6bis of the Paris Convention, together with Article 16(2) of the Agreement on Trade–Related Aspects of Intellectual Property Rights (“TRIPs”), see Uruguay Round Agreements Act, Pub.L. No. 103–465, 108 Stat. 4809 (1994) (codified as amended at scattered sections of United States Code), provides legal support for its claim to famous marks protection. . . . Further, TRIPs Article 16(2) extends Article 6bis to service marks, see supra at 156 n. 15.

[35] At the outset, we observe that ITC does not specifically contend that these two treaty articles are self-executing. While Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633 (2d Cir. 1956), might support such an argument with respect to Article 6bis protection of trademarks, see id. at 640 (observing in dictum that, upon ratification by Congress, the Paris

1919 In Empresa Cubana, however, we did observe, in dictum, that “[t]o the extent that a foreign entity attempts to utilize the famous marks doctrine as [a] basis for its right to a U.S. trademark and seeks to prevent another entity from using the mark in the United States, the claim should be brought under Section 43(a).” Id. at 480 n. 10.

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Convention required “no special legislation in the United States . . . to make [it] effective here”), no similar conclusion can extend to Article 16(2) protection of service marks because TRIPs is plainly not a self-executing treaty. See In re Rath, 402 F.3d 1207, 1209 n. 2 (Fed.Cir. 2005); see also S.Rep. No. 103–412, at 13 (1994) (accompanying the Uruguay Round Agreements Act, Pub.L. No. 103–465, 108 Stat. 4809 (1994)) (stating that TRIPs and other GATT agreements “are not self-executing and thus their legal effect in the United States is governed by implementing legislation”). While Congress has amended numerous federal statutes to implement specific provisions of the TRIPs agreement, it appears to have enacted no legislation aimed directly at Article 16(2).2323

[36] ITC nevertheless submits that Lanham Act sections 44(b) and (h) effectively incorporate the protections afforded famous marks by the Paris Convention and TRIPs.

[In a lengthy analysis, the court concluded that §§ 44(b) & (h) do not provide a basis for famous marks protection.]

(d) Policy Rationales Cannot, by Themselves, Support Judicial Recognition of the Famous Marks Doctrine Under Federal Law

[37] Even if the Lanham Act does not specifically incorporate Article 6bis and Article 16(2) protections for famous foreign marks, ITC urges this court to follow the Ninth Circuit’s lead and to recognize the famous marks doctrine as a matter of sound policy. See Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d at 1094 (recognizing famous marks doctrine because “[t]here can be no justification for using trademark law to fool immigrants into thinking that they are buying from the store they liked back home”). ITC argues that the United States cannot expect other nations to protect famous American trademarks if United States courts decline to afford reciprocal protection to famous foreign marks.

[38] We acknowledge that a persuasive policy argument can be advanced in support of the famous marks doctrine. See, e.g., De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate, Inc., 2005 U.S. Dist. LEXIS 9307, at *25 (noting that “[r]ecognition of the famous marks doctrine is particularly desirable in a world where international travel is commonplace and where the Internet and other media facilitate the rapid creation of business goodwill that transcends borders”); Frederick W. Mostert, Well–Known and Famous Marks: Is Harmony Possible in the Global Village?, 86 Trademark Rep. 103, 106 (1996) (arguing that “protection of the global trading system through the prevention of piracy and unfair exploitation of well-known marks has become essential”). The fact that a doctrine may promote sound policy, however, is not a sufficient ground for its judicial recognition, particularly in an area regulated by statute. See, e.g., Badaracco v. Comm’r, 464 U.S. 386, 398 (1984) (“The relevant question is not whether, as an abstract matter, the rule advocated by petitioners accords with good policy. The question we must consider is whether the policy

2323 See, e.g., Pub.L. No. 103–465, 514, 108 Stat. 4809, 4976 (amending 17 U.S.C. § 104A, governing copyrights in restored works, to comport with TRIPs); Pub.L. No. 103–465, 532, 108 Stat. 4809, 4983 (amending 35 U.S.C. § 154, governing United States patents, to comport with TRIPs). Significantly, Congress has enacted legislation to implement TRIPs Article 16(3), which contemplates the extension of anti-dilution protection to certain famous marks. See Federal Trademark Dilution Act of 1995, Pub.L. No. 104–98, 109 Stat. 985 (1995) (codified at 15 U.S.C. § 1125(c)); see H. Rep. 104–374, reprinted in 1995 U.S.C.C.A.N. 1029 (indicating that anti-dilution act was intended to make United States law consistent with terms of TRIPs and Paris Convention). No comparable legislation exists with respect to Article 16(2).

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petitioners favor is that which Congress effectuated by its enactment of [the statute].”). In light of the comprehensive and frequently modified federal statutory scheme for trademark protection set forth in the Lanham Act, we conclude that any policy arguments in favor of the famous marks doctrine must be submitted to Congress for it to determine whether and under what circumstances to accord federal recognition to such an exception to the basic principle of territoriality. See Almacenes Exito S.A. v. El Gallo Meat Mkt., Inc., 381 F.Supp.2d at 326–28. Absent such Congressional recognition, we must decline ITC’s invitation to grant judicial recognition to the famous marks doctrine simply as a matter of sound policy.

[39] For all these reasons, we affirm the district court’s award of summary judgment in favor of defendants on ITC’s federal unfair competition claim.

2. State Common Law Claim for Unfair Competition

a. ITC’s Reliance on the Famous Marks Doctrine to Sue for Unfair Competition Under New York Law

[40] ITC submits that, even if we affirm the district court’s dismissal of its federal unfair competition claim, we must reverse the dismissal of its parallel state law claim. As it correctly observes, New York common law allows a plaintiff to sue for unfair competition where a “property right or a commercial advantage” has been “misappropriated.” Flexitized, Inc. v. National Flexitized Corp., 335 F.2d 774, 781–82 (2d Cir. 1964). Nevertheless, in light of ITC’s abandonment of the Bukhara mark and dress for restaurants in the United States, its common law assertion of a “property right or a commercial advantage” in these designations based on their foreign use depends on whether New York recognizes the famous marks doctrine in the circumstances here at issue.

[41] As we have already noted, at least two New York cases indicate such recognition as a general matter: Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332, and Maison Prunier v. Prunier’s Rest. & Café, 159 Misc. 551, 288 N.Y.S. 529. Neither the New York Court of Appeals nor any intermediate New York appellate court, however, has ever specifically adopted the views expressed in Prunier and Vaudable to accord common law protection to the owners of famous marks. Moreover, no New York court has clearly delineated a standard for determining when a mark becomes sufficiently famous to warrant protection. “In the absence of authoritative law from the state’s highest court, we must either (1) predict how the New York Court of Appeals would resolve the state law question, or, if state law is so uncertain that we can make no reasonable prediction, (2) certify the question to the New York Court of Appeals for a definitive resolution.” DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir. 2005). In this case, we opt for certification.

b. Certifying the Question of New York’s Common Law Recognition of the Famous Marks Doctrine

(1) Standard for Certification

[42] New York law and Second Circuit Local Rule § 0.27 permit us to certify to the New York Court of Appeals “determinative questions of New York law [that] are involved in a case pending before [us] for which no controlling precedent of the Court of Appeals exists.” N.Y. Comp.Codes R. & Regs. tit. 22, § 500.27(a). In deciding whether to certify a question, we consider, inter alia, “(1) the absence of authoritative state court interpretations of the [law in question]; (2) the importance of the issue to the state, and whether the question implicates issues of state public policy; and (3) the capacity of certification to resolve the litigation.” Morris v. Schroder Capital Mgmt. Int’l, 445 F.3d 525, 531 (2d Cir. 2006) (internal quotation marks omitted).

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(2) Certified Question 1: Does New York Recognize the Famous Marks Doctrine?

[43] In this case, we conclude that these factors weigh in favor of certifying the question of New York’s recognition of the famous marks doctrine. First, the only New York cases to address the question of whether state common law recognizes the famous marks doctrine, Vaudable and Prunier, are decades-old trial court decisions. While these decisions are routinely cited by non-New York courts as accurate statements of the state’s common law of unfair competition,2828 and while commentators routinely identify the cases as foundational in the development of the famous marks doctrine,2929 the lack of authoritative adoption of the famous marks doctrine by New York’s highest court weighs in favor of certification. Second, recognition of the famous marks doctrine as part of New York common law is plainly an important policy issue for a state that plays a pivotal role in international commerce. This factor strongly counsels in favor of our soliciting the views of the New York Court of Appeals. See generally Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) (observing that property interests “are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law”). Finally, certification will conclusively resolve the question of whether ITC’s state unfair competition claim was, in fact, properly dismissed.

[44] Accordingly, we 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?”

(3) Certified Question 2: How Famous Must a Mark Be to Come Within the Famous Marks Doctrine?

[45] If the New York Court of Appeals were to answer the first certified question in the affirmative, we ask it to consider a second query: “How famous must a foreign mark or trade dress be to permit its owner to sue for unfair competition?” 3030 Although we have had no prior occasion to address this question, we note the availability of a number of possible standards.

(a) Secondary Meaning

[46] If New York were inclined to recognize a broad famous marks doctrine, the Court of Appeals might conclude that a foreign mark’s acquisition of “secondary meaning” in the state was sufficient to accord it common law protection. “Secondary meaning” is a term of art referencing a trademark’s ability to “‘identify the source of the product rather than the product itself.’” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. at 766 n. 4 (quoting Inwood Labs., Inc., v. Ives Labs., Inc., 456 U.S. 844, 851 n. 11 (1982)); see Allied Maint. Corp. v. Allied Mech. Trades, Inc., 42 N.Y.2d 538, 545 (1977) (explicating “secondary meaning” under New

2828 See, e.g., Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d at 1095; Buti v. Impressa Perosa, S.R.L., 139 F.3d at 104; Person’s Co. v. Christman, 900 F.2d at 1570; Almacenes Exito S.A. v. El Gallo Meat Mkt., Inc., 381 F.Supp.2d at 328; De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate, Inc., 2005 U.S. Dist. LEXIS 9307 at *21–22.

2929 See, e.g., 4 McCarthy, supra, § 29:4, at 29–12; Graeme B. Dinwoodie et al., International Intellectual Property Law and Policy 108 (2001).

3030 In formulating both certified questions, we do not intend to limit the Court of Appeals’ analysis or its response. That court may expand or modify the certified questions as it deems appropriate to indicate whether state common law recognizes the famous marks doctrine and the scope of that recognition.

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York law); see also Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 143 n. 4 (2d Cir. 1997) (identifying factors relevant to determining secondary meaning). Under this standard, a court deciding whether to accord famous marks protection would consider only whether the source of the foreign mark is well known in New York. See generally Grupo Gigante S.A. De C.V. v. Dallo & Co., 391 F.3d at 1097.

[47] The Court of Appeals might note, however, that in Grupo Gigante the Ninth Circuit specifically rejected “secondary meaning” as the appropriate standard for application of the famous marks doctrine. That federal court explained that such an interpretation of the famous marks doctrine went “too far” because it effectively eliminated the territoriality principle that itself “has a long history in the common law.” Id. at 1097–98.

(b) Secondary Meaning Plus

[48] Instead, the Court of Appeals might consider the Ninth Circuit’s compromise standard, which can be described as “secondary meaning plus.” See id. at 1098 (holding that “secondary meaning is not enough”). Under this test, “where the mark has not before been used in the American market,3131 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.” Id. (emphasis added); see also 4 McCarthy, supra, § 29:4, at 29–17 (suggesting that a “substantial” percentage of consumers in the relevant American market would be at least 50%).

[49] Judge Graber, concurring in Grupo Gigante, emphasized the intermediate character of this standard:

I agree that a foreign owner of a supposedly famous or well-known foreign trademark must show a higher level of “fame” or recognition than that required to establish secondary meaning. Ultimately, the standard for famous or well-known marks is an intermediate one. To 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.

391 F.3d at 1106 (Graber, J., concurring).

(c) The Anti–Dilution Statute Standard

[50] Precisely because “secondary meaning plus” is an intermediate standard, the Court of Appeals might also consider the high standard of recognition established by section 43(c) of the Lanham Act, the federal anti-dilution statute. See 15 U.S.C. § 1125(c). Under that federal law, four non-exclusive factors are relevant when determining whether a mark is sufficiently famous for anti-dilution protection:

(i) The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties;

(ii) The amount, volume, and geographic extent of sales of goods or services offered under the mark;

(iii) The extent of actual recognition of the mark;

3131 New York could, of course, conclude that a “secondary meaning plus” standard also applied to a foreign mark or dress that had previously been used in the United States where, as in this case, such domestic use had been abandoned.

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(iv) Whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

Id. § 1125(c)(2).

[51] Under the federal anti-dilution statute, the holder of a mark deemed famous under this test may seek an injunction against another person who, “at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.” Id. § 1125(c)(1). ITC does not sue for dilution in this case. Nevertheless, the Court of Appeals might consider whether the factors set out in the statute provide a useful guide for defining famous marks generally.

(d) Recommendation of the World Intellectual Property Organization

[52] Finally, should the Court of Appeals decide to articulate an entirely new and different standard of recognition for the application of the famous marks doctrine, among the factors it might consider are those identified as relevant in the non-binding “Joint Recommendation Concerning Provisions on the Protection of Well–Known Marks,” adopted by the World Intellectual Property Organization in 1999:

(1) the degree of knowledge or recognition of the mark in the relevant sector of the public;

(2) the duration, extent and geographical area of any use of the mark;

(3) the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, or the goods and/or services to which the mark applies;

(4) the duration and geographical area of any registrations, and/or any application for registration, of the mark, to the extent that they reflect use or recognition of the mark;

(5) the record of successful enforcement of rights in the mark, in particular, the extent to which the mark was recognized as well known by competent authorities; [and]

(6) the value associated with the mark.

World Intellectual Property Organization, Joint Recommendation Concerning Provisions on the Protection of Well–Known Marks (Sept.1999), available at http:// www. wipo. int/ about- ip/ en/ development iplaw/ pub 833.htm.

[53] We express no view as to how New York should define its state common law. We simply reserve decision on ITC’s challenge to the district court’s dismissal of its state common law claim for unfair competition pending the New York Court of Appeals response to our certified questions.

______________________________________________________________________________

ITC Ltd. v. Punchgini, Inc.880 N.E.2d 852 (N.Y. 2007)

Read, J.

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. . . .

II.

Certified Question No. 1

[1] “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?”

[2] The Second Circuit’s first certified question calls upon us to define property rights in the context of a common-law unfair competition claim grounded on a theory of misappropriation. Thus, we must consider whether a famous foreign mark constitutes property or a commercial advantage protected from unfair competition under New York law.

[3] We have long recognized two theories of common-law unfair competition: palming off and misappropriation (see Electrolux Corp. v Val-Worth, Inc., 6 NY2d 556, 567-568 [1959] {discussing the acceptance of these theories of unfair competition in New York courts and collecting cases}). “Palming off”—that is, the sale of the goods of one manufacturer as those of another—was the first theory of unfair competition endorsed by New York courts, and “has been extended . . . to situations where the parties are not even in competition” (Electrolux, 6 NY2d at 567).

[4] After the United States Supreme Court sanctioned the misappropriation theory of unfair competition in International News Service v Associated Press (248 US 215 [1918]), “[t]he principle that one may not misappropriate the results of the skill, expenditures and labors of a competitor has . . . often been implemented in [New York] courts” (Electrolux, 6 NY2d at 567). Indeed, the New York cases cited by the District Court and the Second Circuit as embodying the famous or well-known marks doctrine in New York common law—Prunier and Vaudable—were, in fact, decided wholly on misappropriation theories.

[5] In Prunier, the plaintiff operated celebrated haute cuisine restaurants in Paris and London, but none in the United States. The defendants opened a restaurant in New York and

“appropriated to themselves the plaintiff’s name. . . . Indeed, it was admitted . . . that the name was intentionally selected because of plaintiff’s well-known reputation and good will which has been built up as the result of decades of honest business effort.

“The defendants den[ied], however, that they ever held themselves out as being Prunier’s of Paris” (159 Misc at 553).

The court upheld the legal viability of an unfair competition claim by the plaintiff—even though the two restaurants were not in direct competition—so long as “plaintiff[‘s] conten[tion] that its reputation extends far beyond the territorial limits of Paris and London and that it has a substantial following in New York city and in other parts of the world” was proved (id. at 559 [emphasis added]).

[6] In Vaudable, the plaintiff’s restaurant in Paris—Maxim’s—was internationally famous “in the high-class restaurant field” (20 Misc 2d at 758-759). The defendants “appropriate[d] the good will plaintiffs [had] created in the name Maxim’s as a restaurant,” and were therefore held liable for unfair competition based on misappropriation even though the parties were “not in present actual competition” (id. at 759). “The trend of the law, both statutory and decisional,” the court opined, “has been to extend the scope of the doctrine of unfair competition, whose basic principle is that commercial unfairness should be restrained whenever it appears that there has been a misappropriation, for the advantage

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of one person, of a property right belonging to another” (id. at 759 [citations omitted]; see also Roy Export Co. v Columbia Broadcasting Sys., 672 F2d 1095, 1105 [2d Cir 1982] [with decline of general federal common law after inception of misappropriation branch of unfair competition tort in International News Service, “the doctrine was developed by the states, New York in particular; there it has flourished in a variety of factual settings”]).

[7] While expositors of the famous marks doctrine point to Prunier and Vaudable (see 5 McCarthy on Trademarks and Unfair Competition § 29:4 n 2 [4th ed 2007] [citing Prunier and Vaudable as “(p)erhaps the most famous examples” of the “well known” marks doctrine]), Prunier and Vaudable themselves in no way explain or proclaim—let alone rely on—any famous or well-known marks doctrine for their holdings. Instead, Prunier and Vaudable fit logically and squarely within our time-honored misappropriation theory, which prohibits a defendant from using a plaintiff’s property right or commercial advantage—in Prunier and Vaudable, the goodwill attached to a famous name—to compete unfairly against the plaintiff in New York.

[8] Under New York law, “[a]n unfair competition claim involving misappropriation usually concerns the taking and use of the plaintiff’s property to compete against the plaintiff’s own use of the same property” (Roy Export, 672 F2d at 1105). The term “commercial advantage” has been used interchangeably with “property” within the meaning of the misappropriation theory (see Flexitized, Inc. v National Flexitized Corp., 335 F2d 774, 781-782 [2d Cir 1964]). What Prunier and Vaudable stand for, then, is the proposition that for certain kinds of businesses (particularly cachet goods/services with highly mobile clienteles), goodwill can, and does, cross state and national boundary lines.

[9] Accordingly, while we answer “Yes” to the first certified question, we are not thereby recognizing the famous or well-known marks doctrine, or any other new theory of liability under the New York law of unfair competition. Instead, we simply reaffirm that when a business, through renown in New York, possesses goodwill constituting property or a commercial advantage in this state, that goodwill is protected from misappropriation under New York unfair competition law. This is so whether the business is domestic or foreign.

III.

Certified Question No. 2

[10] “How famous must a foreign mark or trade dress be to permit its owner to sue for unfair competition?”

[11] Protection from misappropriation of a famous foreign mark presupposes the existence of actual goodwill in New York (see e.g. Roy Export, 672 F2d at 1105 [misappropriation under New York law usually requires use in state of plaintiff’s property or commercial advantage to compete against plaintiff]). If a foreign plaintiff has no goodwill in this state to appropriate, there can be no viable claim for unfair competition under a theory of misappropriation. At the very least, a plaintiff’s mark, when used in New York, must call to mind its goodwill. Otherwise, a plaintiff’s property right or commercial advantage based on the goodwill associated with its mark is not appropriated in this state when its unregistered mark is used here. Thus, at a minimum, consumers of the good or service provided under a certain mark by a defendant in New York must primarily associate the mark with the foreign plaintiff (cf. Allied Maintenance Corp. v Allied Mech. Trades, 42 NY2d 538, 545 [1977]).

[12] Whether consumers of a defendant’s goods or services primarily associate such goods or services with those provided by a foreign plaintiff is an inquiry that will, of

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necessity, vary with the facts of each case. Accordingly, we cannot—and do not—provide an exhaustive list of the factors relevant to such an inquiry. That said, some factors that would be relevant include evidence that the defendant intentionally associated its goods with those of the foreign plaintiff in the minds of the public, such as public statements or advertising stating or implying a connection with the foreign plaintiff; direct evidence, such as consumer surveys, indicating that consumers of defendant’s goods or services believe them to be associated with the plaintiff; and evidence of actual overlap between customers of the New York defendant and the foreign plaintiff.

[13] If the customers of a New York defendant do not identify a mark with the foreign plaintiff, then no use is being made of the plaintiff’s goodwill, and no cause of action lies under New York common law for unfair competition. As a result, to prevail against defendants on an unfair competition theory under New York law, ITC would have to show first, as an independent prerequisite, that defendants appropriated (i.e., deliberately copied), ITC’s Bukhara mark or dress for their New York restaurants. If they successfully make this showing, plaintiffs would then have to establish that the relevant consumer market for New York’s Bukhara restaurant primarily associates the Bukhara mark or dress with those Bukhara restaurants owned and operated by ITC.

[14] Accordingly, the certified questions should be answered in accordance with this opinion.

Comments and Questions

1. The final disposition of ITC v. Punchgini. The case returned to the Second Circuit, which affirmed the district court’s initial grant of summary judgment to the defendant on the ground, among others, that BUKARA for restaurant services had no secondary meaning in New York. ITC Ltd. v. Punchgini, Inc., 518 F.3d 159 (2d Cir. 2008), aff’g 373 F.Supp.2d 275 (S.D.N.Y. 2005).

2. “Well-known marks doctrine” or “famous marks doctrine”? In a footnote in a portion of the New York Court of Appeals opinion not included in the excerpt above, the court addressed the terminological ambiguity over the correct name of the doctrine at issue:

There is some ambiguity regarding the proper name for what has been variously called the “famous marks doctrine,” the “well-known marks doctrine” and the “famous mark doctrine” (see e.g. 5 McCarthy on Trademarks and Unfair Competition § 29:4 [4th ed 2007] [using the above names interchangeably]). Apparently, the use of “well-known” in place of “famous” took hold after the Lanham Act was amended by passage of the Federal Trademark Anti-Dilution Act of 2006, which uses “famous” as a term of art (see 15 USC § 1125 [c]). At any rate, “famous” and “well-known,” “mark” and “marks,” have been used interchangeably to describe the putative doctrine, and no distinction is intended by our choice of words here.

ITC Ltd. v. Punchgini, Inc., 880 N.E.2d 852, 856 n.1 (N.Y. 2007).

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