Property, intangible

a blog about ownership of intellectual property rights and its licensing

Unlicensed, Confusing Trademarks

Can two restaurants use the same mark and confuse consumers when one is the unambiguous owner and the other not a licensee?  Yes, when a bankruptcy court makes it so.

The Siano family first opened “Vincent’s Clam Bar” in 1904 at 119 Mott Street in Little Italy, New York (the “Mott Street restaurant”). They then sold the restaurant and the mark to Andrew DeLillo. DeLillo opened more restaurants, including at the location involved in the suit at Carle Place, Long Island. In 1983 defendant/appellee Quadami, Inc. bought the Carle Place restaurant from DeLillo. In 1985, the Mott Street location filed for Chapter 11 bankruptcy and plaintiffs/appellants Vincent’s of Mott Street, Inc. and Vincent Generoso bought the restaurant. The trademark wasn’t part of the assets acquired though; instead trademark rights were governed by a stipulation with the following provisions, as described by the court of appeals:

First, Appellants agreed that they “shall use and operate [the Mott Street Restaurant] under the names VINCENT’S CLAM BAR, VINCENT’S CLAM BAR OF MOTT AND HESTER STREETS, and/or MOTT AND HESTER RESTAURANT” (collectively “Vincent’s Marks”). Second, Appellants agreed not to represent that they are affiliated or connected with any “other business” known by either the Vincent’s Marks or “facsimiles thereof.” Finally, Appellants agreed and acknowledged that Andrew DeLillo was the sole owner of the Vincent’s Marks and that he retained the sole and exclusive right to use the marks.
As these things go, the Mott Street restaurant changed the name, first calling it “The Original Vincent’s Clam Bar” and a few years later dropped the reference to a clam bar and identifying the restaurant as “The Original Vincent’s Established 1904.”  In 1992 Quadami acquired from DeLillo, subject to the stipulation:

all rights, title, interests and claims in the “Vincent’s Clam Bar” and “Vincent’s Clam Bar of Mott and Hester Streets” names and “any all [sic] variations thereto and derivatives thereof,” including “all trademarks, names, service marks” and the good will associated with the names.

Quadami then also started using “The Original Vincent’s Established 1904” at the Carle Place restaurant and filed applications to register “The Original Vincent’s Established 1904” and a logo form of “Vincent’s Clam Bar“:

Generoso and Mott Street Inc. opposed the Quadami applications and Generoso filed his own applications for “The Original Vincent’s Established 1904” and “Vincent’s Since 1904.” The opposition was sustained and Generoso’s marks registered. Undoubtedly buoyed by the TTAB decision, Mott Street, Inc. and Generoso of the Mott Street restaurant sued Quadami of the Carle Place restaurant for trademark infringement.

Bad move.

Though federal registration of a mark is prima facie evidence of ownership, that evidence is rebuttable. See 15 U.S.C. § 1115(a). In particular, as is the case here, parties may allocate rights in a trademark through private agreement. Times Mirror Magazines, Inc. v. Field & Stream Licenses Co., 294 F.3d 383, 395 (2d Cir. 2002). Provided the agreement does not violate public policy–and in this case there is no contention that it does–courts will give effect to agreements governing ownership and use of the mark without recourse to trademark law. See id. at 395-96. Thus, principles of contract interpretation govern the present dispute.

By its plain language, the Stipulation requires Appellants to use one of the three Vincent’s Marks and precludes Appellants from claiming affiliation with other restaurants using either any of the three Vincent’s Marks or “facsimiles thereof.”

It found that the restaurant name with the changes, adding “Original” and “1904” and dropping “Clam Bar,” were still “facsimiles” of the original DeLillo marks and therefore still governed by the stipulation. Thus Mott Street, Inc. and Vincent Generoso had no independent rights in the new denominations and could not enjoin Quadami from using them also, although the court was careful to circumscribe the scope of its decision: “In holding that Appellants have no claim against Appellee for infringement, we should not be taken to imply that Appellee has any claim against Appellants, a question not before us.” The Generoso registrations were also cancelled.

The court several times characterized the Mott Street restaurant has having “unlicensed” right to use the marks. The TTAB decision not to allow registration of the Quadami applications characterized the stipulation this way: “it is neither a license, a franchise nor an ownership right.” The dissent in the Board opinion read it the same way the Court of Appeals did, an “unlicensed” right to use the mark. The district court characterized it as consent to use agreement, but that’s not quite right either – a consent to use agreement is an agreement recognizing that concurrent usage does not create confusion, whereas here there was evidence of confusion. Also under a consent to use, both parties can have trademark ownership rights, which was not the outcome here.

But bankruptcy courts often aren’t particularly good at understanding trademark rights and how to circumscribe them, or have greater equitable concerns they are trying to resolve.  In this case, the bankruptcy court left three courts scratching their heads.

Vincent’s of Mott Street, Inc. v. Quadami, Inc., No. 10-3154-cv, (2d Cir. May 23, 2011).
Vincent’s of Mott Street, Inc. v. Quadami, Inc., No. 1:05-cv-04358-SLT -JO (E.D.N.Y. Sept. 28, 2009).
Vincent’s of Mott Street, Inc. v. Quadami, Inc., Opp. No. 97,805 (TTAB Sept. 30, 2002).

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