ITC LIMITED and ITC Hotels Limited v. PUNCHGINI, INC., et al.

United States Court of Appeals, Second Circuit
482 F.3d 135 (2007)

ELI5:

Rule of Law:

Under the Lanham Act, a foreign trademark holder who has abandoned a mark in the United States through non-use cannot claim unfair competition protection under the famous marks doctrine, as this doctrine has not been incorporated into federal law by Congress. Trademark rights in the United States are established and maintained through use in the United States, not through foreign use or fame.

Facts:

ITC Limited, an Indian corporation, established the internationally renowned 'Bukhara' restaurant in New Delhi, India, in 1977.
ITC expanded internationally, opening a 'Bukhara' restaurant in Manhattan in 1986 and licensing one in Chicago in 1987.
In 1987, ITC obtained a United States trademark registration for the 'Bukhara' mark for restaurant services.
The Manhattan restaurant closed in 1991, and ITC cancelled the Chicago franchise on August 28, 1997.
After 1997, ITC did not own, operate, or license any restaurant in the United States under the 'Bukhara' mark.
In 1999, defendants, some of whom were former employees of ITC's New Delhi restaurant, formed Punchgini, Inc. and opened 'Bukhara Grill' in New York City.
The 'Bukhara Grill' restaurants mimicked the name, logo, decor, menus, and staff uniforms of ITC's 'Bukhara' restaurants.
In 2001, ITC began exploring the sale of packaged food products in the U.S. under the 'Bukhara' label, which it began selling in limited quantities in 2003.

Procedural Posture:

ITC Limited filed a lawsuit against Punchgini, Inc. and others in the U.S. District Court for the Southern District of New York.
The complaint alleged trademark infringement, unfair competition, and false advertising under the Lanham Act and New York common law.
Defendants raised the affirmative defense of abandonment and filed a counterclaim seeking cancellation of ITC's 'Bukhara' trademark registration.
The district court granted summary judgment for the defendants on all claims, ruling that ITC had abandoned the mark as a matter of law and failed to present sufficient evidence for protection under the famous marks doctrine.
The district court ordered the cancellation of ITC's trademark registration.
ITC Limited, as the appellant, appealed the district court's judgment to the U.S. Court of Appeals for the Second Circuit.

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Issue:

Does the famous marks doctrine, which protects well-known foreign marks not used in the United States, provide a basis for a federal unfair competition claim under the Lanham Act for a mark that has been abandoned in the U.S.?

Opinions:

Majority - Raggi, J.

No, the famous marks doctrine does not provide a basis for a federal unfair competition claim for a mark abandoned in the U.S. The court first affirmed that ITC had abandoned its 'Bukhara' mark for restaurant services in the U.S. as a matter of law. ITC's non-use for over three consecutive years created a statutory presumption of abandonment, which ITC failed to rebut. ITC's subjective assertions of intent to resume use, evidence of unsolicited franchise inquiries, and continued use of the mark outside the U.S. were insufficient to create a genuine issue of material fact regarding its intent to resume use in the U.S. in the reasonably foreseeable future. The court then held that the 'famous marks' doctrine is an exception to the fundamental principle of trademark territoriality, which requires use in the U.S. to establish rights. While international treaties like the Paris Convention and TRIPs provide for protection of well-known marks, the Lanham Act only requires 'national treatment,' meaning foreign nationals receive the same protections as U.S. citizens, but no additional substantive rights. Congress has not enacted legislation to incorporate the famous marks doctrine into federal law, and the court declined to do so judicially, stating that such a significant change to bedrock trademark principles must come from the legislature. Therefore, ITC's unfair competition claim based on its foreign fame failed. The court certified questions to the New York Court of Appeals regarding whether New York common law recognizes the doctrine.

Analysis:

This decision reinforces the primacy of the territoriality principle in American trademark law, affirming that rights are geographically limited and based on actual use within the U.S. market. By explicitly refusing to judicially incorporate the 'famous marks' doctrine into federal law, the Second Circuit created a split with the Ninth Circuit's more policy-driven approach in Grupo Gigante. This ruling signals to international brand owners that they cannot rely on foreign fame to protect their marks in the U.S. under federal law; they must either maintain use in the U.S. or persuade Congress to legislate such protection. The decision thus preserves a 'use it or lose it' framework and places a high burden on mark owners to rebut the presumption of abandonment with concrete evidence of intent to resume use.

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