ITC Ltd. v. Punchgini, Inc.
518 F.3d 159, 2008 U.S. App. LEXIS 5359, 86 U.S.P.Q. 2d (BNA) 1115 (2008)
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Rule of Law:
Under New York common law, the owner of a famous foreign mark that has been abandoned in the U.S. cannot succeed on an unfair competition claim based on misappropriation without proving both that the defendant deliberately copied the mark and that the mark has acquired 'secondary meaning,' meaning the relevant domestic consumer market primarily associates the mark with the foreign owner.
Facts:
- ITC Limited and ITC Hotels Limited ('ITC') are an Indian company that owns and operates a well-known chain of 'Bukhara' restaurants outside of the United States.
- ITC previously operated 'Bukhara' restaurants in New York and Chicago but had not used the mark or its associated trade dress in the United States for over three years.
- Punchgini Inc. and Bukhara Grill II, Inc. ('Punchgini') opened restaurants in New York under the name 'Bukhara Grill.'
- Punchgini allegedly copied the 'Bukhara' trademark and trade dress used by ITC's foreign restaurants.
- ITC's reputation and goodwill associated with the 'Bukhara' mark were primarily established through foreign media and sources.
Procedural Posture:
- ITC sued Punchgini in the U.S. District Court for the Southern District of New York for trademark infringement and unfair competition.
- The district court (a federal trial court) granted summary judgment in favor of the defendants, Punchgini.
- ITC, as the appellant, appealed the decision to the U.S. Court of Appeals for the Second Circuit.
- In a prior decision, the Second Circuit affirmed the summary judgment on ITC's federal claims, finding ITC had abandoned its U.S. trademark.
- The Second Circuit then certified two questions to the New York Court of Appeals (New York's highest court) to clarify the state common law on unfair competition for famous foreign marks.
- The New York Court of Appeals answered the certified questions, outlining the legal standard for such claims.
- The case returned to the Second Circuit for a final decision on the state law claim based on the guidance from the New York Court of Appeals.
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Issue:
Does a foreign mark owner have a viable New York common law claim for unfair competition against a defendant who deliberately copied the mark, if the owner fails to show that the relevant New York consumer market primarily associates the mark with the foreign owner?
Opinions:
Majority - Judge Reena Raggi
No. A foreign mark owner does not have a viable New York common law claim for unfair competition without proving secondary meaning in the relevant New York market. The New York Court of Appeals established that a claim for unfair competition based on misappropriation of a famous foreign mark requires proof of two elements: (1) deliberate copying by the defendant, and (2) secondary meaning, which is that the relevant consumer market primarily associates the mark with the foreign plaintiff. While ITC presented sufficient evidence to raise a triable issue on deliberate copying, it failed to produce any evidence of secondary meaning in the New York market. ITC's evidence of goodwill was based on foreign media with no proof it reached New York consumers, and it offered no consumer surveys or evidence of customer overlap. Mere conjecture that defendants' well-traveled customers might know of ITC's foreign restaurants is insufficient to survive summary judgment. Therefore, without evidence that potential customers of the defendants' restaurant would primarily associate the 'Bukhara' mark with ITC, the claim fails.
Analysis:
This decision clarifies the high evidentiary bar for owners of famous foreign marks seeking protection under New York's unfair competition law after abandoning U.S. trademark rights. It confirms that the 'famous marks' doctrine is not a standalone cause of action but is integrated into the traditional misappropriation tort, requiring a concrete showing of domestic consumer recognition ('secondary meaning'). The ruling establishes that intentional copying alone is insufficient; foreign plaintiffs must produce tangible evidence that their brand's fame has actually penetrated the specific U.S. market where protection is sought. This precedent makes it significantly more difficult for foreign brands without a current U.S. presence to prevent domestic businesses from using their marks.
