Itc Ltd. v. Punchgini, Inc.

• Decision Date: 13 December 2007
• Docket Number: 165.
• Citation: 880 N.E.2d 852,850 N.Y.S.2d 366,9 N.Y.3d 467
• Parties: ITC LIMITED et al., Appellants, v. PUNCHGINI, INC., et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

880 N.E.2d 852

9 N.Y.3d 467

850 N.Y.S.2d 366

ITC LIMITED et al., Appellants, v. PUNCHGINI, INC., et al., Respondents.

165.

Court of Appeals of New York.

December 13, 2007.

King & Spalding LLP, New York City (Ethan Horwitz, Jill Wasserman, Dana S. Gross and Charles A. Pannell, III, of counsel), for appellant.

Kenyon & Kenyon LLP, New York City (Michelle Mancino Marsh, Michael J. Freno and Matthew Moersfelder of counsel), for respondents.

Fross Zelnick Lehrman & Zissu, PC., New York City (J. Allison Strickland and Laura Popp-Rosenberg of counsel), for American Intellectual Property Law Association, amicus curiae.

Dorsey & Whitney LLP, New York City (Bruce R. Ewing of counsel), Theodore H. Davis, Jr., and David C. Stimson for International Trademark Association, amicus curiae.

[850 N.Y.S.2d 471]

OPINION OF THE COURT

READ, J.

The United States Court of Appeals for the Second Circuit has asked us to resolve two questions regarding New York common-law claims for unfair competition. We conclude that New York recognizes common-law unfair competition claims, but not the "famous" or "well-known" marks doctrine.

I.

ITC Limited, a corporation organized under the laws of India, owns and operates the Maurya Sheraton & Towers, a five-star luxury hotel in New Delhi, India, through its subsidiary, ITC Hotels Limited. One of the Maurya Sheraton's seven restaurants is Bukhara, a five-star restaurant named after a city in Uzbekistan located on the famous Silk Road between China and the West. The New Delhi Bukhara, which has attained some measure of renown among those with an avid interest in fine cuisine, was named one of the 50 best restaurants in the world by London-based "Restaurant" magazine in 2002 and 2003. In the three decades since the New Delhi Bukhara opened in 1977, ITC has sought to capitalize on the restaurant's prestige, with

[850 N.Y.S.2d 472]

mixed results: although ITC has opened or franchised Bukhara restaurants in Hong Kong, Bangkok, Bahrain, Montreal, Bangladesh, Singapore, Kathmandu, Ajman and the United States, as of May 2004 only the original restaurant in New Delhi and the restaurants in Singapore, Kathmandu and Ajman remained in business.

ITC established a Bukhara restaurant in Manhattan in 1986; in 1987 a Bukhara restaurant was opened in Chicago by a franchisee. On October 13, 1987 ITC obtained United States trademark registration for a Bukhara mark in connection with restaurant services; however, ITC closed its Bukhara restaurant in Manhattan on December 17, 1991, and cancelled the Chicago restaurant's franchise on August 28, 1997. ITC has not owned, operated or licensed any restaurant in the United States using the Bukhara mark since terminating the Chicago franchisee's licensing agreement in 1997.

In 1999, 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 midtown Manhattan, which they called Bukhara Grill. Jhanjee, Vij and Ram had all worked at the New Delhi Bukhara, and Vij had also worked at ITC's Bukhara restaurant in Manhattan. As Vij explained the origin of the new restaurant's name, in 1999 there was "no restaurant Bukhara in New York, and we just thought we [would] take the name" (ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 144 [2d Cir.2007] ). In 2001, several Punchgini shareholders and defendants Mahendra Singh and Bachan Rawat, also alumni of ITC's Bukhara, opened a second Indian restaurant in midtown Manhattan, called Bukhara Grill II (id.; ITC Ltd. v. Punchgini, Inc., 373 F.Supp.2d 275, 277 [S.D.N.Y.2005] ). Defendants have identified five other restaurants in the United States using Bukhara in their names, including one in Brooklyn. These restaurants are not affiliated with ITC. In addition, defendants have learned of more than 20 Bukhara restaurants unrelated to ITC outside the United States, including restaurants located in. Uzbekistan, Australia, Egypt, Pakistan, the United Kingdom and "a high-end ... chain" in South Africa, which "also sells prepackaged foods under the `Bukhara' name" and "owns the website www.bukhara.com."

The Bukhara Grill features many of the New Delhi Bukhara's signature dishes— which showcase the cuisine of the Northwest frontier region of India—and replicates many of its particular

[850 N.Y.S.2d 473]

design elements. Indeed, one press report quoted Jhanjee as describing the Bukhara Grill as "quite like Delhi's Bukhara," commenting that "[t]he food is similar ... and the waiters too are dressed in similar Pathani suits."

On March 22, 2000, ITC's attorney sent Jhanjee a letter accusing him of "passing off [his] new business [i.e., Bukhara Grill] as that of ITC, "piggy[ ]back[ing] on the tremendous reputation" of ITC's Bukhara restaurants, and "partak[ing] of the fame, goodwill and custom earned by [ITC], by the mere adoption of the identical name." He demanded that Jhanjee acknowledge ITC's exclusive rights to the Bukhara mark and refrain from further use of it; disclose how long he had used the Bukhara mark and render an accounting of sales and/or profits for this time period; and remit to ITC any such profits, plus estimated damages and attorneys' fees.

Bukhara Grill's counsel responded on March 30, 2000, observing that "preliminary investigation reveals that [ITC] does not presently use the mark BUKHARA in the United States nor has it been in use for more than two years." Nevertheless, counsel suggested that discussions be pursued to avoid costly litigation. On June 22, 2000, Bukhara Grill's counsel sent a follow-up letter, apparently to memorialize an oral request for ITC to "provide ... proof of use of the alleged mark BUKHARA in the United States over the last two years"; and to state that if there was no response "by June 28, 2000, we will assume that [ITC] has abandoned any rights it may have had in the alleged mark and any alleged claim against our client."

On April 15, 2002, almost two years later, ITC's attorney wrote to the Bukhara Grill's counsel, complaining that there had been "[n]o formal response" to ITC's 2000 cease-and-desist letter and reiterating ITC's demands. On April 18, 2002, Bukhara Grill's counsel replied, disputing the assertion that prior correspondence from ITC had been ignored, and reasserting abandonment, now claimed to have been "bolstered" by the passage of additional time.

On February 26, 2003, another 11 months later, ITC filed a lawsuit against defendants in the United States District Court for the Southern District of New York. The amended complaint alleged trademark infringement under section 32(1)(a) of the Lanham Act (codified at 15 USC § 1114[1][a] ); unfair competition and false advertising under sections 43(a) and 44(h) of the Lanham Act (codified at 15 USC § 1125[a]; § 1126[h] ); and

[850 N.Y.S.2d 474]

parallel actions under New York common law. As an affirmative defense, defendants charged ITC with abandonment of any rights in the United States to the Bukhara mark, and filed a counterclaim seeking cancellation of the mark's registration on that ground.

Following discovery, defendants moved for summary judgment. As an initial matter, the District Court Judge ruled that ITC could not pursue a trademark infringement claim because the record conclusively demonstrated its abandonment of the Bukhara mark and dress for restaurants in the United States. He then considered ITC's "assert[ions] that its unfair competition claims under section 43(a) of the Lanham Act and the New York common law provide a basis for liability independent of trademark law"; that is, ITC claimed that "[e]ven if it abandoned the 'Bukhara' mark and dress within the United States ... it [was] nonetheless protected from unfair competition by virtue of the 'well known' or `famous' marks doctrine" (373 F.Supp.2d at 285-286).¹

"The very existence of th[e well-known marks] doctrine is controversial," the District Court Judge opined, "as is its scope. Neither party cites, nor has the Court found, any Supreme Court or Second Circuit authority upholding liability on this theory, and it has been applied infrequently by the federal district courts" (id. at 286). He noted that the Ninth Circuit had recently countenanced the doctrine, but that it did so under "circumstances ... arguably different from those in this case" (id., citing Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088 [9th Cir. 2004] [apparently as matter of policy, court permitted Mexican grocery chain to establish whether its "Gigante" mark was sufficiently widely known among Mexican-Americans in Southern California to be protected from use by California grocery chain] ).

The Judge, however, remarked that "[t]wo early cases in New York state courts, with fact patterns strikingly similar to the

[850 N.Y.S.2d 475]

events alleged here by ITC, exemplify the doctrine" (373 F.Supp.2d at 286, citing Maison Prunier v. Prunier's Rest. & Cafe, Inc., 159 Misc. 551, 288 N.Y.S. 529 [Sup.Ct., N.Y. County 1936]; Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332 [Sup.Ct., N.Y. County 1959] ). But "[a]ssuming without deciding that these cases support the existence of an unfair competition claim, even in the absence of a viable U.S. trademark, on the basis of a foreign mark that is `well known' or `famous,' it remains unclear how to determine what foreign marks are sufficiently 'famous' to qualify" (373 F.Supp.2d at 287). After reviewing various possible standards for a mark to qualify for the putative doctrine, the District Court Judge recognized that an "apparent consensus" existed as to what "at the very least must be established in the relevant American market for a mark to qualify under the `well known' or `famous' mark doctrine"; and that "ITC [had] failed even to establish a triable issue" under that minimum standard (id. at 288). He also concluded that ITC lacked standing to press its claim under the Lanham Act for false advertising. The...