ITC Ltd. v. Punchgini, Inc.
2007 U.S. App. LEXIS 7215, 482 F.3d 135, 82 U.S.P.Q. 2d (BNA) 1414 (2007)
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Rule of Law:
Under federal law, the 'famous marks' doctrine, which would grant trademark protection based on a foreign mark's international renown and continuous foreign use, has not been incorporated into the Lanham Act by Congress, upholding the principle that U.S. trademark rights are acquired and maintained through domestic use, and can be abandoned by three consecutive years of non-use.
Facts:
- In 1977, ITC Limited, an Indian corporation, opened its 'Bukhara' restaurant in New Delhi, India, which has remained in continuous operation and achieved international renown.
- In 1986, an ITC-owned and operated 'Bukhara' restaurant opened in Manhattan, New York.
- In 1987, ITC licensed a 'Bukhara' restaurant in Chicago and obtained a United States trademark registration for the 'Bukhara' mark in connection with 'restaurant services'.
- On December 17, 1991, ITC's Manhattan 'Bukhara' restaurant closed.
- On August 28, 1997, ITC canceled its Chicago franchise, ceasing to own, operate, or license any restaurant using the 'Bukhara' mark in the United States.
- In 1999, Raja Jhanjee, Vicky Vij, Dhandu Ram, and Paragnesh Desai, some of whom had worked at ITC's New Delhi and New York Bukharas, incorporated Punchgini, Inc. and opened 'Bukhara Grill' in New York City, deliberately adopting names, logos, decor, and staff uniforms similar to ITC's Bukhara restaurants.
- On March 22, 2000, ITC, through counsel, demanded that Punchgini, Inc. cease further use of the Bukhara mark due to unlawful appropriation of ITC’s reputation and goodwill.
- In 2001, ITC commissioned a marketing study for packaged food products under the 'Bukhara' label in the U.S. and filed a trademark application for a 'Dal Bukhara' mark for packaged, ready-to-serve foods.
Procedural Posture:
- ITC Limited and ITC Hotels Limited (plaintiffs) sued Punehgini, Inc., Bukhara Grill II, Inc., and associated individuals (defendants) in the United States District Court for the Southern District of New York, alleging trademark infringement, unfair competition, and false advertising under federal and state law.
- Defendants asserted abandonment of the Bukhara mark as an affirmative defense and filed a counterclaim seeking cancellation of ITC's U.S. trademark registration.
- The District Court granted summary judgment in favor of the defendants on all claims, ruling that ITC had abandoned its U.S. Bukhara mark for restaurant services, that the famous marks doctrine was not applicable, and that ITC lacked standing for its false advertising claim.
- ITC appealed the district court's award of summary judgment to the United States Court of Appeals for the Second Circuit.
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Issue:
Does the Lanham Act incorporate the 'famous marks' doctrine, thereby granting federally protected priority rights against unfair competition to a foreign mark based solely on its international renown and continuous foreign use, even if the mark has been abandoned for similar services in the United States?
Opinions:
Majority - Raggi, Circuit Judge
No, the Lanham Act does not incorporate the 'famous marks' doctrine to grant federal trademark protection based on international renown without domestic use or explicit Congressional legislation, and ITC had abandoned its U.S. trademark rights for restaurant services. The court first affirmed summary judgment on ITC’s federal and state trademark infringement claims, concluding that ITC had abandoned its 'Bukhara' mark for restaurant services in the United States. ITC conceded non-use since August 1997, triggering a prima facie presumption of abandonment under 15 U.S.C. § 1127 due to more than three years of non-use. ITC failed to present sufficient objective evidence of an intent to resume use in the U.S. within a reasonably foreseeable future during the non-use period, as mere subjective intent or vague plans are insufficient to rebut the presumption. Regarding the federal unfair competition claim, the court rejected ITC's argument that the 'famous marks' doctrine provided a basis for protection. The court emphasized the 'territoriality principle' as fundamental to U.S. trademark law, stating that ownership and use of a mark in one country does not automatically confer rights in another. It concluded that Congress has not incorporated the famous marks doctrine into federal trademark law through the Lanham Act (specifically Sections 44(b) and 44(h)), despite its origin in international treaties like the Paris Convention Article 6bis and TRIPs Article 16(2). The court reiterated that the Lanham Act's Section 44 only provides 'national treatment,' giving foreign nationals the same rights as U.S. citizens under existing federal law, not additional substantive rights beyond those independently provided in the Act. The court declined to recognize the doctrine based on policy arguments, stating that such a significant departure from the territoriality principle must come from Congress. Finally, the court affirmed the dismissal of ITC’s false advertising claim for lack of standing. ITC failed to demonstrate a 'reasonable interest to be protected' or a 'reasonable basis for believing that this interest is likely to be damaged' by defendants’ advertising. Its plans for new U.S. restaurants were too ill-defined, and the alleged damage to its overseas restaurants or packaged food line due to defendants' statements was too speculative and attenuated.
Analysis:
This case strongly reinforces the 'territoriality principle' in U.S. trademark law, establishing that federal trademark rights are tied to domestic use rather than international fame. The Second Circuit explicitly declined to judicially create a 'famous marks' exception to this principle, leaving that decision to Congress, which creates a split with the Ninth Circuit on this issue. For law students, this case highlights the critical importance of a clear and consistent U.S. trademark strategy, including actual domestic use or specific intent-to-use registrations, for foreign companies seeking federal protection. It also underscores the procedural challenges of proving trademark abandonment and false advertising standing, particularly when a plaintiff's commercial interests are not clearly defined or directly competitive.
