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Second Circuit rejects famous marks doctrine

March 30, 2007
Post by Blog Staff

In a recent decision, the Second Circuit held that a trademark holder who has abandoned use of its mark in the United States cannot prevent others from using the mark because the mark is famous in the United States based on use in a foreign country. This concept is referred to as the "famous marks doctrine," and the court held that if it is to be incorporated into United States law, it must be done by legislation, not by judicial decision. As a result, the marks were held abandoned, and the defendants were permitted to use the marks over the original owner's objection, pending resolution of state trademark claims.

More details of the case after the jump.

The mark at issue in this case was Bukhara for restaurant services. In 1977, the plaintiffs, ITC Limited and ITC Hotels Limited, opened a restaurant named Bukhara at one of its hotels in New Delhi, India. According to the record, this restaurant was named one of the fifty best restaurants in the world by Restaurant magazine in 2002 and 2003 (and, although apparently outside the record, also in 2004 and 2006). Between 1977 and 2004, there were authorized Bukhara restaurants in New Delhi, Hong Kong, Bangkok, Bahrain, Montreal, Bangladesh, Singapore, Kathmandu, Ajman, New York, and Chicago, although in 2004, only those in New Delhi, Singapore, Kathmandu, and Ajman remained. The restaurant in New York City was open between 1986 and 1991, and the one in Chicago from 1987 to 1997. It is undisputed that ITC did not operate any restaurants under the Bukhara mark in the United States after the Chicago restaurant closed in 1997. In 2003, however, ITC began selling packaged food under a similar mark, Dal Bukhara.

In 1999, after ITC closed its U.S. restaurants, the defendants first opened a restaurant in New York called Bukhara Grill. After some initial successes, a second restaurant, the Bukhara Grill II opened. First, the court affirmed that there was no genuine issue of material fact that ITC had abandoned its Bukhara marks in the United States, based on the period of nonuse after the closing of its last restaurant in 1997. The more interesting issue from a legal perspective was whether ITC's trademark rights could subsist based on the mark's fame based on its foreign use, a concept known as the famous marks doctrine. The court first described the origin of the doctrine in the addition of Article 6bis to the Paris Convention for Protection of Industrial Property in 1925. The court also traced application of the doctrine through various cases, including those applying state trademark law and decisions on registration by the TTAB. The court also noted that a 2004 Ninth Circuit case Grupo Gigante S.A. de C.V. v. Dallo & Co., held that the famous marks doctrine did apply in the context of federal trademark rights, although that case noted that it did not apply in the context California state trademark law.

After examining the prior decisions as well as the history of the treaty and Lanham Act, the court found that the famous marks doctrine does not apply to federal trademark rights. The court noted that this decision placed it at odds with the Ninth Circuit (because of the Grupo Gigante decision referenced above), and also at odds with "one leading commentator," namely J. Thomas McCarthy, author of McCarthy on Trademarks and Unfair Competition. As a result, this may be an issue that would be appropriate for review by the Supreme Court, or at least clear legislative guidance by Congress. If the issue does go before the Supreme Court, it likely will not be in this case, however. That is because the Second Circuit certified the issue of whether the famous marks doctrine applied in the context of New York trademark law to the New York Court of Appeals. As a result, a petition for writ of certiorari to the Supreme Court is currently not possible for ITC until resolution of the state law issue. If the duration of this appeal is any indication (16 months between oral argument and decision), it could be a long time before Supreme Court review in this case is possible.

To read the full decision in ITC Ltd. v. Punchgini, Inc., click here.


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