Levy v. Kosher Overseers Ass'n of America, Inc.

• Decision Date: 09 January 1997
• Docket Number: No. 103,D,103
• Citation: 104 F.3d 38
• Parties: Rabbi Don Yoel LEVY; Eliezer Levy, doing business as Organized Kashruth Laboratories, Plaintiffs/Counter-Defendants/Appellees, v. KOSHER OVERSEERS ASSOCIATION OF AMERICA, INC., Defendant/Counter-Claimant/Appellant. ocket 96-7051.
• Court: U.S. Court of Appeals — Second Circuit

Page 38

104 F.3d 38

41 U.S.P.Q.2d 1456

Rabbi Don Yoel LEVY; Eliezer Levy, doing business as Organized Kashruth Laboratories Plaintiffs/Counter-Defendants/Appellees, v. KOSHER OVERSEERS ASSOCIATION OF AMERICA, INC. Defendant/Counter-Claimant/Appellant.

No. 103, Docket 96-7051.

United States Court of Appeals Second Circuit.

Argued Oct. 3, 1996.

Decided Jan. 9, 1997.

Laurence S. Shtasel, Philadelphia, PA (Kevin P. Cronin, Timothy D. Pecsenye, Blank Rome Comisky & McCauley, Philadelphia, PA, of counsel), for plaintiffs/counter-defendants/appellees.

Bernard Malina, Malina & Wolson, New York City, for defendant/counter-claimant/appellant.

Before: KEARSE, LEVAL and CABRANES, Circuit Judges.

JOSE A. CABRANES, Circuit Judge:

The question presented is whether and when a decision of the Trademark Trial and Appeal Board of the United States Patent and Trademark Office should have collateral estoppel effect in a lawsuit claiming violations of the Lanham Act. We consider this question in a case involving conflicting claims with respect to marks used to designate food products as "kosher"--that is, prepared in compliance with Jewish dietary laws.

The defendant Kosher Overseers Association of America, Inc. ("defendant" or "KOA") appeals from an order of the United States District Court for the Southern District of New York (Lawrence M. McKenna, Judge ) granting the motion for summary judgment of the plaintiffs Rabbi Don Yoel Levy and Eliezer Levy, d.b.a. Organized Kashruth Laboratories ("plaintiffs" or "OK Labs"), and entering an injunction prohibiting the defendant from using certain certification marks. We conclude that the district court erred in granting summary judgment on collateral estoppel grounds and, accordingly, we vacate the judgment and the injunction and remand for further proceedings consistent with this opinion.

Background

This action, alleging the wrongful use of a trademark by the defendant, concerns two similar kosher "certification marks," also known as hechshers. ¹ Certification marks are generally treated the same as trademarks for purposes of trademark law. See 15 U.S.C. § 1054. ² Kosher certification marks are used to designate food items that comply with Judaism's strict dietary laws. A kosher certification mark informs the consumer that a certification agency has examined the manufacturing process, the ingredients, and the cleanliness of the production facilities of a product to insure that the product is kosher. Because the various kosher certification agencies employ their own standards for accepting products as kosher, according to their particular interpretation of Judaism's dietary requirements, it is important for a consumer to recognize the marks of the certification agencies that he trusts. See Ran-Dav's County Kosher, Inc. v. State, 129 N.J. 141, 608 A.2d 1353, 1356 (1992) (describing conflicts in Jewish community over legitimacy of various kosher certification authorities); see also Gerald F. Masoudi, Comment, Kosher Food Regulation and the Religion Clauses of the First Amendment, 60 U. CHI. L. REV. 667, 670-71 (1993) (describing differing interpretations of Jewish dietary laws).

In their complaint in this lawsuit, the plaintiffs alleged that the defendant was using a certification mark confusingly similar to theirs. The plaintiffs' mark, an encircled "K" (the "Circle-K"), has been used by OK Labs or its predecessors in interest since 1936:

(OK Labs' Circle-K certification mark)

The Circle-K mark has been registered in the United States Patent and Trademark Office ("PTO") since 1965. Since at least 1979, KOA, a competing kosher certification agency, has used a stylized encircled "half-moon" or "circle-crescent" K (the "encircled half-moon K") to signify that a product complies with its kosher standards:

(KOA's encircled half-moon K)

On May 26, 1989, KOA applied to the PTO to register its encircled half-moon K mark. OK Labs filed an "opposition" to the registration with the PTO's Trademark Trial and Appeal Board ("TTAB"). An application for registration may be refused if the mark

[c]onsists of or comprises a mark which so resembles a mark registered in the Patent and Trademark Office ... as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive....

15 U.S.C. § 1052(d). OK Labs claimed before the TTAB that defendant KOA's encircled half-moon K was too similar to its Circle-K and would therefore be likely to cause confusion among consumers. As part of its deliberations, the TTAB considered depositions, exhibits, and briefs, and compared the visual appearances of the two marks. In an initial decision dated December 11, 1991, the TTAB sustained the opposition of OK Labs and refused KOA's application for registration. In doing so, the TTAB rejected KOA's argument that the Circle-K mark was not entitled to protection under the Lanham Act because it is generic and has not acquired secondary meaning, see 15 U.S.C. § 1127; see also L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., 79 F.3d 258, 263 (2d Cir.1996), and concluded that it was "of the firm belief that consumers will be likely to confuse the source of the respective certification services." The TTAB denied KOA's petition for reconsideration on March 17, 1992.

KOA did not appeal these findings or decisions to the United States Court of Appeals for the Federal Circuit, see 15 U.S.C. § 1071, but did continue to use its encircled half-moon K mark. As a result, the plaintiffs brought this action to permanently enjoin KOA from "using a certification mark that the [TTAB had] found to be confusingly similar to the plaintiffs' certification mark." Following discovery, the plaintiffs moved for summary judgment on three of the six counts in their complaint: Counts I, II, and VI alleging violations of the Lanham Act, 15 U.S.C. §§ 1114 (providing cause of action for trademark infringement) and 1125(a) (providing cause of action for false or misleading use of a trademark), and of state unfair competition laws. The plaintiffs based their summary judgment motion on the asserted collateral estoppel effect of the TTAB decisions. Following briefing and oral argument, the district court granted the plaintiffs' motion in a Memorandum and Order dated July 7, 1994, and invited the parties to submit a proposed permanent injunction.

On July 18, 1994, defendant KOA filed a motion for reargument. While that motion was pending before the district court, the defendant submitted two motions for summary judgment, in which it claimed, inter alia, that the plaintiffs had no ownership interest in the Circle-K mark and that they had improperly used it as a trademark in violation of 15 U.S.C. § 1064(5)(B) and (C). ³

In a Memorandum and Order dated April 6, 1995, the district court denied KOA's motion for reargument, and noted that in light of the denial of the motion for reargument, KOA's summary judgment motions could only apply to the counts in the complaint on which summary judgment for the plaintiffs had not already been granted. ⁴ The court then stated that if the plaintiffs did not intend to pursue these remaining counts, the defendant's summary judgment motions would become moot. The plaintiffs and the defendant subsequently consented to the dismissal of the remaining counts, and on December 6, 1995, the court entered a Final Judgment and Order permanently enjoining the defendant's use of the encircled half-moon K mark. The defendant appeals from the orders (1) entering summary judgment for the plaintiffs on Counts I, II, and VI; (2) denying the defendant's summary judgment motions; and (3) entering the permanent injunction barring the defendant's use of the encircled half-moon K mark.

We vacate the district court's order granting summary judgment for the plaintiffs and the injunction entered by the court in favor of the plaintiffs and therefore do not reach the defendant's other claims on appeal.

Discussion

Where a district court enters summary judgment barring claims under the doctrine of collateral estoppel, we review the decision de novo. Valley Disposal, Inc. v. Central Vt. Solid Waste Management Dist., 31 F.3d 89, 93 (2d Cir.1994). See generally Gummo v. Village of Depew, 75 F.3d 98, 107 (2d Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 1678, 134 L.Ed.2d 780 (1996). The record must be considered in the light most favorable to the non-moving party, and all inferences are to be drawn in favor of that party.

The doctrine of collateral estoppel, or issue preclusion, provides that "[w]hen an action between two parties terminates in a valid judgment, a later action between the parties may be affected[,] [and possibly barred,] even though it involves a different claim or cause of action." FLEMING JAMES, JR., GEOFFREY C. HAZARD, JR., JOHN LEUBSDORF, CIVIL PROCEDURE § 11.17, at 607 (4th ed. 1992); see also Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979). In order to apply the doctrine of collateral estoppel to bar litigation of an issue,

(1) the issues in both proceedings must be identical, (2) the issue in the prior proceeding must have been actually litigated and actually decided, (3) there must have been a full and fair opportunity for litigation in the prior proceeding, and (4) the issue previously litigated must have been necessary to support a valid and final judgment on the merits.

Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 44 (2d Cir.1986); see also Central Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 368 (2d Cir.1995) (re-stating four-part test). KOA argues, among other things, that collateral estoppel is inappropriate in the instant case because the issues litigated in the two fora were not identical--it asserts that there was no finding by the TTAB of similarity based on commercial or actual use, as is necessary to find a violation of the Lanham Act or of state unfair competition...