All New Yorkers, and most tourists, know the famous restaurant Tavern On The Green. The name has been used in connection with the iconic Central Park restaurant since 1934, on premises owned by the City of New York and licensed to be operated by a succession of concessionaires through the years.
Readers may also be aware that the most recent licensee, Warner LeRoy/ LeRoy Adventures, Inc., filed for bankruptcy protection and sought a declaration that they have the exclusive right to use the name “Tavern on the Green” for restaurant services and an injuction against the City’s use of the name in commerce. The City then sought a declaration of its prior right under New York law to use the “Tavern on the Green” name for its restaurant facility in Central Park. The Debtor, LeRoy, unbeknownst to the City, filed a trademark application for “Tavern on the Green” back in 1981; it was registered on May 12, 1981 and subsequently achieved “incontestable” status pursuant to 15 U.S.C. §1065. The City also sought cancellation of the Debtor’s registered mark based on fraud and falsely suggesting a connection with an institution.
Of import, LeRoy (the Debtor) did not disclose to the USPTO a 1973 Agreement that essentially granted LeRoy the license to use the Tavern mark. LeRoy argues that his registration is “incontestable” pursuant to Section 1065 of Title 15, and that they are entitled to a declaration of their exclusive right to use the mark for restaurant services and an injunction against the City’s use of the trade name “Tavern on the Green.”
The City contended that 3 exceptions to statutory incontestability apply. First, the City argued that the Debtor’s mark infringes the City’s prior right to the trade name “Tavern on the Green” under New York law. Second, that the registration was obtained fraudulently, which is grounds for cancellation under Section 1064(3). Third, that the mark false suggests a connection with an institution, which is also grounds for cancellation under sections 1064(3) and 1052(a).
The Second Circuit has said that “New York’s law of unfair competition encompasses claims for infringement of an unregistered trade name or trademark.” 815 Tonawanda St. Corp. v. Fay’s Drug Co., Inc., 842 F.2d 643, 649 (2d Cir. 1988).
The Court found the City provided compelling evidence of a prior right to the name of its Central Park restaurant. Specifically, the applicable 1973 Agreement for the operation by Debtors of a restaurant in the building in Central Park known as “Tavern on the Green” required the City’s consent for the Debtor’s to change the restaurant’s name from “Tavern on the Green.” (emphasis added) The Agreement also contains provisions for City oversight of the restaurant, which is indicative of a licensor/licensee relationship (with the City as the licensor, and thus, ultimate owner of the trademark).
The City was also able to establish its continuing use of the “Tavern on the Green” mark dating back to 1934, a date long prior to the Debtor LeRoy’s registration of the mark in connection with restaurant services. In light of this, the Court opined that the Debtor’s registration for “Tavern on the Green” in connection with restaurant services was not incontestable as against the City, which successfully showed a prior right under New York law to the “Tavern on the Green” name in connection with its historic restaurant.
The City also moved for summary judgment on its motion for cancellation of the Debtor’s registration on the ground that it was obtained fraudulently. The standard of proof for fraud is clear and convincing evidence. See, Ushodaya Enters., Ltd. v. V.R.S. Int’l, Inc., 63 F. Supp. 2d 329, 335 (S.D.N.Y. 1999). Debtor LeRoy did not disclose the 1973 Agreement in his application to the USPTO (which was the license that granted him his right to use the mark in the first place). The Court found in the City’s favor on this point also, stating “…the Debtors have adduced no facts which would permit a reasonable fact finder to conclude that LeRoy’s conduct was anything but a deliberate attempt to mislead the PTO.” Therefore, Debtor LeRoy’s registration was ordered to be canceled.
While attaining incontestable status provides many statutory presumptions and benefits, this case illustrates that exceptions can apply, and fraud would be one of those exceptions. A registrant’s failure to disclose it status as a licensee (even if the controlling agreement is not explicitly labeled a trademark license agreement) will likely be considered fraud perpetrated upon the USPTO. And this fraud can be used as a basis to cancel a registered trademark, even if it has achieved “incontestable” status. Furthermore, there is no statute of limitations for asserting fraud as a claim for cancellation of a registered mark.
City of New York v. Tavern on the Green
U.S. District Court, Southern District
09 Civ. 9224
Decided: March 10, 2010 by Judge Miriam Goldmn Cedarbaum