Appeal from a judgment and orders entered following a bench trial in the United States District Court for the Southern District of New York, Motley, J., cancelling nineteen registered trademarks and dismissing claims of trademark and service mark infringement and unfair competition. The appeal also challenges the award of attorneys' fees. Affirmed. Published as Table Case at:,.
Meskill, Kearse and Mahoney, Circuit Judges.
This appeal arises out of a trademark dispute involving the use of the name "Orient Express" in connection with the sale of various articles of retail merchandise. The plaintiffs-appellants appeal from a judgment and orders entered in the United States District Court for the Southern District of New York, Motley, J., cancelling nineteen of their registered trademarks and dismissing their claims of trademark and service mark infringement and unfair competition. They also challenge Judge Motley's award of attorneys' fees to the defendants-appellees
Following oral argument, we remanded this case to the district court for clarification as to the standard of proof employed in the appellees' counterclaim seeking cancellation of appellants' registered marks. In response to that remand, Judge Motley amended her opinion and an accompanying order. For the following reasons, we now affirm.
Appellant Robert M. Lee is the sole owner of appellant Hunting World, Inc., a merchandising business that operates through a New York City retail outlet and an annual mail order catalog. Based on Lee's self-styled reputation as a hunter and outdoorsman, the company specializes in clothing, luggage and giftware related to sporting and safaris. Lee also is majority owner of appellant Orient Express Trading Co., which was set up to import goods from China for sale in this country.
In 1975, Lee applied to the United States Patent and Trademark Office (PTO) for registration of a trademark using the name "Orient Express." The words were in an Oriental-style script and appeared with a picture of a train. Lee said in his application that he had first used the mark on December 31, 1974, and that he would continue to use it in connection with the sale of five classes of articles -- cosmetics, jewelry, luggage, giftware and clothing. The so-called "Chinese train logo" was registered by the PTO in 1976. During this same time period, Lee also sought registration of a service mark that read "Canton Fair at Orient Express," for use at the New York Hunting World store. The PTO registered the mark in 1978.
In 1977, defendant-appellee SeaCo, Inc. purchased two of the original cars from the famous Orient Express train that traveled between Paris and Istanbul from 1883 until 1977. SeaCo planned to use the cars as part of a commercial re-creation of the train that would travel between London and Venice. SeaCo also planned to market a travel-related line of products called "Collection Orient Express." The company conducted a trademark search and discovered the American registration of Lee's Chinese train logo. SeaCo officials subsequently wrote to Lee to see if he would either sell any rights he might have in the name Orient Express or enter into a joint venture with SeaCo. Thereafter, the parties held three meetings in New York in late 1981.
After those meetings, and after two visits to the New York Hunting World store, SeaCo officials became skeptical about Lee's financial resources and about the scope of his use of the Orient Express marks. They became convinced that Lee had used the Chinese train logo infrequently and that it only had been used in connection with a narrow range of imported Chinese items and not in connection with any goods comparable to those that SeaCo planned to sell. SeaCo thereafter notified Lee that it was no longer interested in a joint business relationship. SeaCo also changed the name of its product line to "Collection Venice Simplon-Orient-Express." The name of the train, which had its inaugural run in May 1982, was similarly changed, to reflect the fact that it would travel through the Simplon tunnel in Switzerland.
Meanwhile, on the day before the parties' third 1981 meeting, as it apparently was becoming clear that a joint venture was unlikely, Lee filed seventeen PTO applications for the registration of trademarks using the name Orient Express in connection with the sale of a wide variety of goods. He again claimed to have first used the name in connection with those goods on December 31, 1974. The PTO registered those marks at various times between 1983 and 1985. Furthermore, in 1982, Lee filed affidavits with the PTO pursuant to sections 8 and 15 of the Lanham Act, 15 U.S.C. §§ 1058, 1065 (1982), claiming that the original Chinese train logo had been in continuous use for five years since the date of its registration, in connection with all the goods listed in his 1975 application. In 1984, he filed similar affidavits concerning the Canton Fair service mark. The effect of these affidavits was to establish a twenty year period of duration on the marks, see 15 U.S.C. § 1058, and to establish their incontestability, see 15 U.S.C. § 1065.
Subsequently, Lee and his two companies instituted this action against SeaCo and its marketing affiliates. Appellants claimed: (1) infringement of registered trademarks, in violation of 15 U.S.C. § 1114 (1982); (2) unfair competition and false designations of origin, in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1982); (3) common law unfair competition and trademark infringement; and (4) unfair competition in violation of N.Y. Gen. Bus. Law § 368-d (McKinney 1984). The appellees counterclaimed, seeking a declaratory judgment of non-infringement and cancellation of all of appellants' registered trademarks, pursuant to 15 U.S.C. §§ 1064(c), 1115 (1982 & Supp. IV 1986). After a nine day bench trial, Judge Motley entered an order cancelling nineteen of appellants' registered trademarks for fraudulent statements made to the PTO. Thus, appellants' claims for infringement of the registered marks were dismissed. As to all other claims, Judge Motley entered judgment for the appellees. Finally, she awarded attorneys' fees to the appellees pursuant to 15 U.S.C. § 1117 (1982 & Supp. IV 1986).
First, we find no error in Judge Motley's decision to cancel appellants' nineteen registered marks. Although Lee had obtained incontestable status for two of the marks, such marks are still subject to the defense of fraud. See 15 U.S.C. § 1115(b)(1). Moreover, any other registered mark is subject to "any legal or equitable defense or defect which might have been asserted if such mark had not been registered." 15 U.S.C. § 1115(a). A party seeking cancellation of a registered trademark on grounds of fraud must demonstrate the alleged fraud by "clear and convincing evidence." Beer Nuts, Inc. v. Clover Club Foods Co., 711 F.2d 934, 942 (10th Cir. 1983); Money Store v. Harriscorp Finance, Inc., 689 F.2d 666, 670 (7th Cir. 1982); Knorr-Nahrmittel Aktiengesellschaft v. Havland International, Inc., 206 U.S.P.Q. 827, 834 (T.T.A.B. 1980). Cf. Jaskiewicz v. Mossinghoff, 822 F.2d 1053, 1058 (Fed.Cir. 1987) (applying same standard to attorney fraud before PTO). The allegedly fraudulent statements may not be the product of mere error or inadvertence, but must indicate a "deliberate attempt to mislead the [PTO]." Money Store, 689 F.2d at 670. Moreover, the knowing misstatement must ...