The New York Court of Appeals has rejected the application of the “famous” or “well known” marks doctrine under New York law. Companies concerned about infringement of unregistered marks in New York state should be aware that claiming their mark is “famous” or “well-known” will not be sufficient to state a common law claim for unfair competition when a competitor uses the mark in New York. Instead, a business will have to demonstrate that in New York, there is actual good will attached to the name by New York residents.
ITC operates a five-star restaurant named Bukhara in New Delhi, India. According to the court, the restaurant “has attained some measure of renown among those with an avid interest in fine cuisine” and has been named as one of the 50 best restaurants in the world. ITC, however, has had little luck in capitalizing on the restaurant’s prestige. While it opened or franchised restaurants under the Bukhara name, most of those restaurants, including ones in the United States, have closed. ITC obtained a U.S. trademark in 1987 but has not operated a restaurant in the U.S. since 1997.
In 1999, some former employees of the New Delhi Bukhara restaurant opened the Bukhara Grill in Manhattan and later opened a second location. The Manhattan restaurant features many of the New Delhi restaurant’s signature dishes and replicates much of its décor. ITC filed suit in federal court against the Manhattan restaurant for trademark infringement, unfair competition, and false advertising under federal and New York law. The district court ruled that ITC could not pursue trademark or trade dress infringement claims because it had abandoned its mark and dress. The court also rejected ITC’s contention that it could nevertheless pursue claims under the “well known” or “famous” marks doctrine, a controversial and little-used doctrine that gives common law protection to marks that are famous or well-known. On appeal, the Second Circuit certified two questions to the New York Court of Appeals regarding the famous marks doctrine and the viability of ITC’s unfair competition claim.
In ITC Limited, v. Punchgini, Inc., 2007 WL 4334177 (N.Y. 2007), the Court of Appeals held that ITC could pursue a claim for unfair competition on a theory of misappropriation. Under New York law, a common law unfair competition claim may be based on palming off or misappropriation. New York, however, has not recognized the “famous” or “well-known” marks theory doctrine. The Court of Appeals explicitly stated that it was not recognizing this doctrine or any new theory of liability. Instead, New York recognizes a claim for unfair competition based on the idea that for certain kinds of businesses, goodwill attached to the name of the business has value and the name may not be misappropriated to compete unfairly against a party in New York. The court also recognized that such good will “can, and does, cross state and national boundary lines.”
To pursue a claim based on misappropriation of a famous foreign mark, a plaintiff must demonstrate that it does have goodwill associated with its mark in New York state. “At the very least, a plaintiff’s mark, when used in New York, must call to mind its goodwill. Otherwise, a plaintiff’s property right or commercial advantage based on the goodwill associated with its mark is not appropriated in this state when its unregistered mark is used here.” According to the court, at a minimum, consumers in New York must primarily associate the mark with the foreign plaintiff. In assessing whether such goodwill exists, a court should consider, among other things, public statements or advertising, direct evidence such as surveys, and evidence of actual overlap between customers of the New York defendant and the foreign plaintiff. ITC makes it plain that the fact that a “famous” foreign mark has been copied is not sufficient – the plaintiff must demonstrate that the mark has value in New York before a claim may proceed.
Full Opinion Text: http://www.nycourts.gov/ctapps/decisions/dec07/165opn07.pdf