Mother's Restaurant, Inc. v. Mama's Pizza, Inc.

• Decision Date: 21 December 1983
• Docket Number: No. 83-948,83-948
• Parties: MOTHER'S RESTAURANT INCORPORATED, Appellant, v. MAMA'S PIZZA, INC., Appellee. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1566

723 F.2d 1566

221 U.S.P.Q. 394

MOTHER'S RESTAURANT INCORPORATED, Appellant, v. MAMA'S PIZZA, INC., Appellee.

Appeal No. 83-948.

United States Court of Appeals, Federal Circuit.

Dec. 21, 1983.

George Gottlieb, New York City, argued for appellant; with him on brief, were Barry A. Cooper and David S. Kashman, New York City.

J. Shelby Sharpe, Fort Worth, Tex., argued for appellee; with him on brief, was William T. Wofford, Fort Worth, Tex.

Before DAVIS, Circuit Judge, NICHOLS, Senior Circuit Judge and BALDWIN, Circuit Judge.

DAVIS, Circuit Judge.

This is an appeal from two decisions of the Trademark Trial and Appeal Board (TTAB or Board) made in the course of proceedings on a petition by appellee Mama's Pizza, Inc. (Mama's) to cancel a service mark registration held by appellant Mother's Restaurants, Inc. (MRI). In the first decision, dated December 24, 1980, the TTAB dismissed MRI's counterclaim for concurrent use. In the second decision of January 24, 1983, the Board granted Mama's motion for summary judgment on its petition for cancellation, giving collateral estoppel effect to state court findings of prior use and confusing similarity. We affirm both decisions.

I Background

MRI is the owner of United States Registration No. 1,040,322 for the mark MOTHER'S PIZZA PARLOUR, registered May 25, 1976, for restaurant services. On July 27, 1979, Mama's filed a petition with the Patent and Trademark Office (PTO) asking that MRI's registration be cancelled. Mama's later filed an Amended Petition for Cancellation in February 1980. In its amended petition, Mama's alleged that it provided restaurant services under the service mark MAMA'S PIZZA, that it had used this mark (through its predecessors in title) prior to any use of the MRI mark, and that the MRI mark was confusingly similar to Mama's mark.

In its answer to Mama's petition, MRI requested that the petition be dismissed, or, in the alternative, that a concurrent use proceeding be instituted to restrict the geographical scope of MRI's trademark registration. This request for alternative relief, styled as a counterclaim, was dismissed by the TTAB on December 24, 1980, under Selfway, Inc. v. Travelers Petroleum, Inc., 579 F.2d 75, 198 USPQ 271 (Cust. & Pat.App.1978), which had held that geographical restriction of a registration is not an appropriate form of relief in a cancellation proceeding. MRI's subsequent appeal of the TTAB's dismissal of its counterclaim was dismissed by the Court of Customs and Patent Appeals in June 1981, on the ground that the TTAB order was interlocutory and not an appealable final decision.

PTO proceedings on the cancellation petition were then suspended for some months pending the disposition of related state and federal litigation. At the state level, Mama's and its affiliated company, Mama's Pizza Franchise Company, sought an injunction in a Texas state district court to prohibit Mother's Restaurants of Texas, Inc. (MRT) (a licensee of MRI) from using the name MOTHER'S PIZZA PARLOUR or any similar name in its restaurant, then under construction. ¹ In its answer and counterclaim to Mama's state court petition, MRT asserted that it had violated no rights belonging to Mama's or Mama's Pizza Franchise Company, and asked that the court, in the event it found confusion between the two marks, enjoin Mama's from using its mark on businesses established after September 17, 1971, or, at least, after May 25, 1976. ²

On July 15, 1981, the Texas court entered its final judgment. The court found that the plaintiffs, Mama's Pizza and Mama's Pizza Franchise Company, had failed to sustain their burden of proof regarding the allegations they had made that the trademark MOTHER'S PIZZA PARLOUR & SPAGHETTI HOUSE was deceptively similar to the trademark MAMA'S PIZZA. The court denied the relief sought by the plaintiffs in their petition and also by the defendants in their counterclaim.

At the request of Mama's, the state trial judge issued findings of fact and conclusions of law on July 30, 1981. These findings of fact and conclusions of law included the following:

Findings of Fact

1. Mother's Restaurants, Incorporated, a Canadian corporation, is the owner of United States service mark registration no. 1,040,322 registered on May 25, 1976 for the mark "Mother's Pizza Parlour".

2. Defendant Mother's Restaurants of Texas, Inc., by mesne agreements with Mother's Restaurants, Incorporated acts on behalf of said Canadian corporation with respect to the rights to use the mark "Mother's Pizza Parlour" in the State of Texas.

* * *

* * *

4. Mother's Restaurants, Incorporated is the real party in interest in this cause, having financed and provided for the investigation and legal services of counsel for the preparation and trial of this cause.

* * *

* * *

7. The service mark to be used for the restaurant in Tarrant County, Texas is the "Mother's Pizza Parlour & Spaghetti House" logo, which is the subject of United States service mark application serial no. 195,990.

* * *

* * *

9. Plaintiff Mama's Pizza, Inc. is the owner of Texas service mark Registration No. 32,855 dated June 16, 1976 for "Mama's Pizza".

* * *

* * *

11. The mark "Mama's Pizza" has been in continuous use in commerce by Mama's Pizza, Inc. and its predecessors in title since October of 1968.

12. If the service mark "Mother's Pizza Parlour & Spaghetti House" logo signage is used together with the distinctive outside appearance of the restaurant building, its distinctive interior decor, menu and manner of service as presented to the Court, it is not likely that the public will confuse the Mother's Pizza Parlour & Spaghetti House restaurant in Tarrant County, Texas with a "Mama's Pizza" restaurant.

* * *

* * *

14. The service mark "Mother's Pizza Parlour" which is the subject of United States Registration No. 1,040,322 registered May 25, 1976 in the United States Patent and Trademark Office is confusingly similar to the service mark "Mama's Pizza" which is the subject of United States Service mark application serial No. 90,753 filed June 17, 1978 in the United States Patent and Trademark Office.

* * *

* * *

Conclusions of Law

1. Plaintiffs failed to discharge their burden of proof that defendant Mother's Restaurants of Texas, Inc. is going to use the name "Mother's Pizza Parlour" or any colorable imitation of plaintiff's service mark in the operation of any business establishment in the State of Texas.

2. Defendant Mother's Restaurants of Texas, Inc. is not entitled to enjoin plaintiffs Mama's Pizza, Inc. and Mama's Pizza Franchise Company from using the service mark "Mama's Pizza" because said service mark has been in continuous use in commerce by Mama's Pizza, Inc. and its predecessors in title since October of 1968, which is prior to any use date established by defendant Mother's Restaurants of Texas, Inc. regarding United States Registration No. 1,040,322 for "Mother's Pizza Parlour".

Neither party appealed from the court's final judgment. MRT did file an "Original Equitable Bill of Review" with the Texas court on October 19, 1981, asking that the court set aside its findings of fact and conclusions of law (including those listed above) on the ground that they did not reflect the evidence presented at trial or accurately set forth the basis upon which relief was granted by the court. On February 25, 1982, the Texas court granted Mama's motion for summary judgment and dismissed MRT's Equitable Bill of Review on the ground that MRT was not seeking to "alter, change, or modify" the final judgment of July 15, 1981.

On January 22, 1981, after the state court proceeding had been commenced, but prior to the state trial, MRI filed a civil action against Mama's in the U.S. District Court for the Northern District of Texas, seeking a declaratory judgment that its marks, MOTHER'S PIZZA PARLOUR & SPAGHETTI HOUSE and MOTHER'S PIZZA PARLOUR, did not interfere with or infringe any trademark of Mama's. The federal court dismissed that action on July 27, 1981, saying that no purpose would be served by asserting jurisdiction since the Texas state court action would dispose of the issues as a matter of collateral estoppel. On September 10, 1981, (after and in the light of the state court's final decision), the district court denied MRI's request for reconsideration of the order of dismissal.

Upon the conclusion of the state and federal court actions, Mama's filed a motion with the PTO entitled "Petitioner's Motion For Consideration Of Cancellation On Merits In View Of Outcome Of Concurrent State And Federal Court Proceedings". The Board considered this motion as a motion for summary judgment on the cancellation petition.

In its opinion of January 24, 1983, the Board held that the state court findings of confusing similarity and priority of use should be accorded collateral estoppel effect in the cancellation proceeding. Accordingly, it granted Mama's summary judgment motion on the petition for cancellation of MRI's Registration No. 1,040,322.

II Former Adjudication

Under the doctrine of issue preclusion, traditionally called "collateral estoppel", ³ issues which are actually and necessarily determined by a court of competent jurisdiction are conclusive in a subsequent suit involving the parties to the prior litigation. Restatement (Second) of Judgments Sec. 27 (1980). The underlying rationale is that a party who has litigated an issue and lost should be bound by that decision and cannot demand that the issue be decided over again. Warthen v. United States, 157 Ct.Cl. 798, 800 (1962); 1B J. Moore, J. Lucas & T. Currier, Moore's Federal Practice p 0.443 (2d ed. 1983). Here, the Board properly decided that MRI had already had its day in the state court. All the essential requirements for the application of issue preclusion have been met: (1) the issues to be concluded are identical to those involved in the prior action; (2) in that action the issues were raised and ...