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BUTI v. IMPRESSA PEROSA

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


July 18, 1996

TOMMASO BUTI and FASHION WORLD COMPANY, Plaintiffs, against IMPRESSA PEROSA, S.R.L., Defendant.

The opinion of the court was delivered by: PECK

REPORT AND RECOMMENDATION

 TO THE HONORABLE ALLEN G. SCHWARTZ, United States District Judge:

 Plaintiffs Tommaso Buti and Fashion World Company (collectively "Buti"), owners of the "Fashion Cafe" in Rockefeller Center in Manhattan, brought this action seeking a declaratory judgment that defendant Impressa Perosa, owner of a "Fashion Cafe" in Milan, Italy, does not have rights in the trademark "Fashion Cafe" for restaurant services and clothing in the United States. Defendant Impressa Perosa asserted counterclaims against Buti for, inter alia, misappropriation and false designation of origin in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125.

 Presently before the Court is plaintiff Buti's motion for summary judgment on all claims in the complaint and in Impressa Perosa's counterclaims. *fn1" For the reasons set forth below, I recommend that the Court grant plaintiff Buti's summary judgment motion as to Impressa Perosa's federal trademark counterclaims since Impressa Perosa did not "use" Fashion Cafe in the United States prior to Buti's trademark registration and use. I further recommend that plaintiff Buti be awarded a declaratory judgment that Impressa Perosa does not have any trademark in the name "Fashion Cafe" in the United States, and thus that plaintiff Buti did not infringe on any such rights. Finally, I recommend that the Court dismiss Impressa Perosa's state law counterclaims without prejudice.

 FACTS

 While certain facts are hotly disputed, summary judgment is not precluded because the disputed facts are not material to the legal issues necessary to decide the pending motion. Indeed, even assuming the version of the facts most favorable to defendant, Buti still is entitled to summary judgment as a matter of law. As both parties' agree, the "factual crux of this case is whether the defendant used the name 'Fashion Cafe' in commerce, as defined by the trademark statute, 15 U.S.C. § 1127, before the plaintiff began using the name in commerce." (Def's S.J. Br. at 2.)

 Plaintiff Buti's Miami Beach and New York Fashion Cafes

 In May 1993, plaintiff Tommaso Buti opened a restaurant named the "Fashion Cafe" in Miami Beach, Florida. *fn2" (Buti 3(g) P 1; Buti Aff. P 2.) Buti maintains that he chose the name to identify with South Beach's flourishing modeling industry and to capitalize on his associations with the fashion industry (he is married to fashion model Daniela Pestova). (Buti S.J. Br. at 2; Buti 3(g) PP 2-3; Buti Aff. P 4; Buti Dep. at 68-69.)

 Buti maintains that when he opened his Miami "Fashion Cafe," he had never heard of or patronized the defendant's Milan "Fashion Cafe." (Buti 3(g) P 4; Buti Aff. P 3.)

 In June-July 1994, "Buti commenced plans to open a franchise of theme restaurants, similar to Hard Rock Cafe or Planet Hollywood, but focusing on the fashion model industry instead of rock and roll or film." (Buti 3(g) P 7; Buti Aff. PP 5, 8, 9.) Buti hired the law firm of Stroock Stroock & Lavan ("Stroock") to perform a trademark search of the "Fashion Cafe" name. (Buti 3(g) P 8; Buti Aff. PP 5-6; Affidavit of Steven Pokotilow, a Stroock partner, P 3.) After Stroock reported that there was no use or registration of the "Fashion Cafe" mark in the United States, Buti filed an application with the U.S. Patent and Trademark Office for registration of the mark "Fashion Cafe." (Buti 3(g) PP 9-10; Pokotilow Aff. PP 4-5; Buti Aff. P 6.)

 In early December 1994, Buti publicized the ground-breaking for the New York Fashion Cafe, including promotion by "supermodels" Claudia Shiffer, Elle Macpherson, Naomi Campbell and Christy Turlington. (Buti 3(g) P 11; Buti Aff. PP 11, 13.) *fn3" This generated thousands of television, newspaper and magazine articles worldwide. (Buti 3(g) P 12; Buti Aff. P 13; Buti S.J. Mtn. Ex. E: Affidavit of Celia A. Maiset, PP 4-5 & attachments thereto.)

 Plaintiff Buti's Fashion Cafe restaurant opened in New York on April 7, 1995. (Buti 3(g) P 13; Buti Aff. P 8; see Defs' 3(g) PP 11-12.) The New York Fashion Cafe features a "fashion model motif" with fashion photographs displayed, fashion shows on large-screen televisions, and a large camera lens as the restaurant's entrance. (Buti 3(g) P 13; Buti Aff. P 9; see Defs' 3(g) PP 11-12.) "A key feature of [plaintiff's] Fashion Cafe restaurants is the marketing of an extensive line of apparel and souvenirs bearing the Fashion Cafe logo. The restaurants also serve high quality American cuisine in an elegant setting." (Buti Aff. P 10.) Buti invested over ten million dollars to open and operate the New York Fashion Cafe, which in its first year of operation had sales exceeding ten million dollars. (Buti 3(g) PP 15, 16; Francesco Buti Aff. PP 4, 6.) Buti has opened another Fashion Cafe in New Orleans, and several others are under construction. (Buti 3(g) P 18; Francesco Buti Aff. P 7.)

 Defendant Santambrogio's Milan Fashion Cafe

 Giorgio Santambrogio is an officer and 33% owner of defendant Impressa Perosa, an Italian company. *fn4" (Santambrogio Aff. at p. 1; Santambrogio Dep. at 111.) Santambrogio has ownership interests in several businesses including the Fashion Model Management modeling agency located in Milan, Italy, and two restaurants/cafes in Milan known as the Fashion Cafe and the Grand Fashion Cafe. (Santambrogio Aff. at p. 2.) The Fashion Cafe is a "bar with a cafeteria," not a restaurant, which opened in Milan in 1987; the Grand Fashion Cafe is a restaurant which opened in Milan for one night in October 1994 and then formally opened on February 17, 1995. (Santambrogio Aff. at p. 2; Santambrogio Dep. at 101, 122, 172, 185-89, 231; Defs' 3(g) P 15; Buti 3(g) P 19, 28.) This litigation centers on the Milan "Fashion Cafe" bar-cafeteria, not the 1995 Milan Grand Fashion Cafe restaurant. (See Santambrogio Dep. at 228.)

 Impressa Perosa registered the Fashion Cafe trademark in Italy in April 1988. (Santambrogio Aff. at 9; Santambrogio Aff. Ex. C; Santambrogio Dep. at 55, 61; Buti 3(g) P 21.) Santambrogio maintains that he purchased the name "Fashion Cafe" from Impressa Perosa two to four years ago so that he could develop the business "all over the world." (Santambrogio Dep. at 39-40.) *fn5"

  Santambrogio never opened a restaurant in the United States, nor did he ever sell any food or other merchandise in the U.S. (Santambrogio Dep. at 107; Santambrogio Aff. at p. 8; Def's S.J. Br. at 6.) Santambrogio never hired a public relations firm or advertising agency in the United States to promote the Fashion Cafe, and no newspaper articles were ever written about his Fashion Cafe. (Santambrogio Dep. at 222; see Buti S.J. Mtn. Ex. I: Affidavit of Miguel de la O, PP 3-5.)

 When Santambrogio visited the U.S., he promoted his Milan Fashion Cafe by giving to models free T-shirts, small gift items with the Milan Fashion Cafe name, business cards and "vouchers" for free food and beverages. (Santambrogio Dep. at 220-21; Santambrogio Aff. at p. 3.) Santambrogio maintains that he distributed "literally thousands of T-shirts, cards, and key chains with the [Milan] Fashion Cafe name and logo to persons associated with the modeling and fashion industry which entitled them to free meals at the Fashion Cafe(s) in Milan . . ." (Santambrogio Aff. at p. 9; see also Affidavit of Faith Kates, at p. 2.)

 Santambrogio had a "fantasy" "in his brain" that he would approach American hotel chains such as Hilton or Sheraton and try to expand his Milan restaurant into a United States chain, but he admits that he never approached any of the hotel chains about his idea. (Santambrogio Dep. at 161-62, 319-20.) *fn6"

 When Impressa Perosa heard of Buti's plans to open the New York Fashion Cafe, Impressa Perosa attempted to register the name Fashion Cafe in the United States in December 1994, after Buti had registered his name with the Patent and Trademark Office. (Buti 3(g) P 29; Santambrogio Dep. at 64, 250; Santambrogio Aff. at p. 6.)

 Buti's Knowledge of the Milan Cafe

 Buti claims that when he "opened the Fashion Cafe restaurant in Miami Beach [in 1993], [he] had never visited the Fashion Cafe in Milan, nor was [he] aware of its existence." (Buti Aff. P 3; Buti 3(g) P 4.) Buti further testified that he had never discussed his Miami restaurant with Santambrogio. (Buti Dep. at 22.)

 Santambrogio responds that "Mr. Buti's statement that he never visited the Fashion Cafe in Milan, Italy is simply false because I, and hundreds of other persons, personally witnessed his presence there on more than one occasion." (Santambrogio Aff. at p. 3; see also id. at p. 2, 4, 9.) This testimony, however, is directly contradicted by Santambrogio's deposition testimony in which he admits that he never saw Buti (or Buti's wife) in the Milan Fashion Cafe. (Santambrogio Dep. at 147-48.)

 According to Santambrogio: He and Buti met in late 1993 at the Milan Fashion Cafe and Buti "proudly displayed to me a postcard showing a restaurant cafe he had opened in Miami Beach, Florida, also named the Fashion Cafe." (Santambrogio Aff. at p. 4.) Santambrogio advised Buti that "he had no rights to use the name Fashion Cafe because that name had been trademarked by [Santambrogio] . . . and that [Santambrogio] intended to file a trademark for the name in the United States. . . ." (Id.) Buti apologized and "stated he would stop using the name of Fashion Cafe in the United States." (Id. at p. 4-5.) Buti later advised Santambrogio that he had changed the name of the Miami restaurant to "Fashion on the Beach," which he hoped would satisfy Santambrogio. (Id. at p. 5.) After Santambrogio advised Buti that he would prefer that the restaurant not have the word "fashion" in the title, Buti again changed the restaurant name. (Id.)

 Santambrogio's Threat of Litigation and This Lawsuit

 On January 19, 1995 -- one month after the groundbreaking for the New York Fashion Cafe and its attendant worldwide publicity -- counsel for Impressa Perosa wrote to Buti demanding that Buti "cease and desist" from using the "Fashion Cafe" name, and threatened litigation if Buti did not comply. (Santambrogio Aff. at p. 6 & Ex. A; Buti 3(g) P 30.) Buti filed this declaratory judgment action in response. (Buti 3(g) P 31; Buti Aff. P 14.)

 Plaintiff Buti's complaint seeks, inter alia, a declaratory judgment that "Defendant does not have rights in the trademark 'Fashion Cafe' for restaurant services or clothing in the United States" and that "Plaintiffs do not infringe trademark rights of Defendant, if such rights exist, . . ." (Cplt., "Wherefore" PP A-B.)

 Defendant Impressa Perosa asserts six counterclaims. The first counterclaim, for misappropriation and false designation of origin, alleges that Buti deliberately and willfully violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125, by infringing on defendant's rights in the name "Fashion Cafe." (Counterclaims PP 23-51.) Defendant's second counterclaim alleges that Buti's trademark application contained false and fraudulent declarations (i.e., that no one else was using that mark), which damaged defendant. (Counterclaims PP 52-58.) The third counterclaim alleges that Buti misappropriated defendant's concepts and the name "Fashion Cafe." (Counterclaims PP 59-65.) The fourth counterclaim alleges that Buti engaged in unfair and deceptive business practices in violation of N.Y. General Business Law § 349 et seq. (Counterclaims PP 66-73.) The fifth counterclaim alleges unfair competition. (Counterclaims PP 74-78.) Finally, the sixth counterclaim seeks injunctive relief for violation of the Lanham Act, 15 U.S.C. § 1115, and N.Y. General Business Law § 349. (Counterclaims PP 79-84.)

 ANALYSIS

 I. BUTI'S SUMMARY JUDGMENT MOTION SHOULD BE GRANTED ON THE FEDERAL TRADEMARK LAW CLAIMS AND COUNTER-CLAIMS BECAUSE IMPRESSA PEROSA DID NOT USE THE "FASHION CAFE" MARK IN THE UNITED STATES

 

A. Buti Should Be Granted Summary Judgment on Buti's Federal Trademark Claim and Defendant's First Counterclaim (Under 15 U.S.C. § 1125)

 The central issue on plaintiff's declaratory judgment claim, and on defendant's first counterclaim for misappropriation and false designation of origin pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), is whether plaintiff or defendant has superior rights to the name "Fashion Cafe" in the United States.

 Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1), provides:

 

Any person who, on or in connection with any goods or services, . . . uses in commerce any word, term, name, symbol, or device . . . or any false designation of origin . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

 "Ownership of trademark or trade dress rights in the United States is obtained by actual use of a symbol to identify the goods or services of one seller. . . . The way to obtain rights in a business symbol is to actually use it as a mark. 2 J. McCarthy, McCarthy on Trademarks & Unfair Competition [hereafter "McCarthy"] § 16.01[1] (3d ed. 1996) (emphasis in original) "Use" means "'the bona fide use of a mark in the ordinary course of trade, and not merely to reserve a right in a mark.'" 2 McCarthy § 16.02[2], quoting 15 U.S.C. § 1127. "Unlike patent law, rights in trademarks are not gained through discovery or invention of the mark, but only through actual usage. Trademark priority is not automatically granted to the person who was first to conceive of the idea of using a given symbol as a mark. . . . To acquire ownership of a trademark, one must actually use the mark in the sale of goods or services." Id. § 16.03.

 When two or more companies adopt the same mark, basic rules of trademark priority determine use and ownership of the mark. E.g., McKay v. Mad Murphy's, Inc., 899 F. Supp. 872, 881 (D. Conn. 1995) (citing McCarthy). The Second Circuit has outlined the criteria to determine priority in a mark:

 

Under familiar trademark principles, the right to exclusive use of a trademark derives from its appropriation and subsequent use in the marketplace. The user who first appropriates the mark obtains an enforceable right to exclude others from using it, as long as the initial appropriation and use are accompanied by an intention to continue exploiting the mark commercially . . . . Adoption and a single use of the mark may be sufficient to entitle the user to register the mark . . . . To prove bona fide usage, the proponent of the trademark must demonstrate that his use of the mark has been deliberate and continuous, not sporadic, casual or transitory.

 La Societe Anonyme des Parfums Le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1271-72 (2d Cir. 1974).

 Determination of priority here depends on the meaning of the "use" of a mark "in commerce." The Lanham Act provides in 15 U.S.C. § 1127 that:

 

[A] mark shall be deemed to be in use in commerce --

 

(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.

 Indeed, Impressa Perosa "has no quarrel with the plaintiffs . . . that an allegation of actual use of a trademark, service mark or trade name in commerce is necessary to assert a claim pursuant to § 43(a) of the Lanham Act, 15 U.S.C. § 1125, or that the required sort of commerce is commerce within the United States or commerce between the United States and a foreign country." (Def's Br. in Opposition to Plaintiffs' Motion to Dismiss, at 11 & n.9, citing Person's Co. v. Christman, 900 F.2d 1565, 1568 (Fed. Cir. 1990); see also Def's S.J. Br. at 2, 6, 8.)

 

1. Impressa Perosa's 1988 Italian Trademark Registration and Use of the Mark in Italy Do Not Give It Rights to the Mark in the United States

 As explained in McCarthy's trademark treatise:

 

Under the territoriality doctrine, a trademark is recognized as having a separate existence in each sovereign territory in which it is registered or legally recognized as a mark. . . .

 

Priority of trademark rights in the United States depends solely upon priority of use in the United States, not on priority of use anywhere in the world. Prior use in a foreign nation does not establish priority of use in America.

 4 McCarthy §§ 29.01[1], 29.01[2]; see also, e.g., 2 McCarthy § 16.07; 3 McCarthy § 26.02; Person's v. Christman, 900 F.2d at 1568-69 ("foreign use has no effect on U.S. commerce and cannot form the basis for a holding that appellant has priority here. The concept of territoriality is basic to trademark law; trademark rights exist in each country solely according to that country's statutory scheme."); La Societe Anonyme v. Jean Patou, 495 F.2d at 1270 n.4 ("It is well settled that foreign use is ineffectual to create trademark rights in the United States."); Financial Matters, Inc. v. Pepsico, Inc., 806 F. Supp. 480, 485 (S.D.N.Y. 1992); Scholastic, Inc. v. MacMillan, Inc., 650 F. Supp. 866, 873 n.6 (S.D.N.Y. 1987).

  It is clear that, without more, Impressa Perosa does not derive any right to the "Fashion Cafe" mark in the United States from either its trademark registration of "Fashion Cafe" in Italy in 1988 or from its operation since 1987 of the Milan Fashion Cafe.

 

2. Impressa Perosa's Efforts to Advertise the Milan "Fashion Cafe" in the United States and to Negotiate to Establish a United States Restaurant Do Not Constitute "Use" of the Mark in the United States

 Impressa Perosa asserts that it established its senior right to use the name "Fashion Cafe" in the United States through its promotional efforts of the Milan Fashion Cafe, including distribution in the United States of promotional materials (T-shirts, key chains, business cards and vouchers to models for free meals at the Milan Fashion Cafe), "formulating a plan to put a Fashion Cafe establishment in hotels in major cities," and "actively negotiating with restauranteurs . . . which negotiation is itself use of the name Fashion Cafe in New York." (Def's S.J. Br. at 5.)

 

a. "Mere Advertising" Unconnected to an Established Business Is Not "Use "

 Impressa Perosa "advertised" on behalf of the Milan Fashion Cafe by handing out free promotional materials in the United States to those involved in the fashion industry. However, advertising alone that is not connected to an established United States business does not constitute "use" under the Lanham Act. See, e.g., Pirone v. MacMillan, Inc., 894 F.2d 579, 583 (2d Cir. 1990) ("The purpose of a trademark is to designate the source of a product and it has no existence apart from the trade 'in connection with which the mark is employed.'") (quoting United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97, 39 S. Ct. 48, 50, 63 L. Ed. 141 (1918)); Cullman Ventures, Inc. v. Columbian Art Works, Inc., 717 F. Supp. 96, 112 (S.D.N.Y. 1989) ("Mere advertisement of a product by use of a mark would not constitute common law trademark use. Common law trademark rights develop when goods bearing the mark are placed in the market and followed by continuous commercial utilization."); Sunbeam Corp. v. Merit Enterprises, Inc., 451 F. Supp. 571, 574 (S.D.N.Y. 1978) ("'the mere advertisement of a product does not constitute trademark use.'") (quoting Modular Cinemas of America, Inc. v. Mini Cinemas Corp., 348 F. Supp. 578, 582 (S.D.N.Y. 1972) ("service mark use . . . is still predicated upon the existence of an established operating business. For only then does a mark function to identify the source of one's trade in the marketplace.") *fn7"

 Thus, Santambrogio's United States advertising efforts (via T-shirt, business card and other give-aways to those in the fashion industry) do not suffice in the absence of an operating business using the trademark "Fashion Cafe." It is undisputed that Santambrogio had no such operating business in the United States. (Santambrogio Dep. at 107; Santambrogio Aff. at p. 8.) The issue, therefore, is whether Santambrogio's advertisement in the United States of his Milan Fashion Cafe constitutes sufficient "use" to give Santambrogio United States trademark rights.

 

b. United States Advertising of A Foreign Business is Not "Use" in the United States

 While the courts do not appear to have addressed the issue of whether U.S. advertising of a foreign business establishes United States trademark rights, the Patent and Trademark Office's Trademark Trial and Appeal Board has, adversely to Impressa Perosa. The Court notes that neither party cited to these directly on point decisions.

 In Mother's Restaurants Inc. v. Mother's Other Kitchen, Inc., 218 U.S.P.Q. 1046 (TTAB 1983), a Canadian pizza restaurant that used the name "Mother's Pizza Parlor" opposed trademark registration of the name "Mother's Other Kitchen for an American carry out restaurant on the grounds that the mark resembled the Canadian restaurant's mark. 218 U.S.P.Q. at 1047. The Canadian corporation asserted that it had made prior use of its mark in the United States through: radio advertisements on Canadian stations whose signals reached the U.S.; the distribution of promotional materials at tourist information booths in Canada directed at U.S. citizens; serving Americans dining at the Canadian restaurants; and fielding inquiries from Americans as to franchise opportunities in the U.S Id. at 1047-48.

 The Trademark Trial and Appeal Board held that the Canadian corporation's advertising efforts were not a sufficient use of the mark in the U.S., stating:

 

It is our view that prior use and advertising of a mark in connection with goods or services marketed in a foreign country (whether said advertising occurs inside or outside the United States) creates no priority rights in said mark in the United States as against one who, in good faith, has adopted the same or similar mark for the same or similar goods or services in the United States prior to the foreigner's first use of the mark on goods or services sold and/or offered in the United States . . ., at least unless it can be shown that the foreign party's mark was, at the time of the adoption and first use of a similar mark by the first user in the United States, a "famous" mark within the meaning of Vaudable v. Montmartre, Inc., 20 Misc. 2d 757, 193 N.Y.S.2d 332, 123 U.S.P.Q. 357 (N.Y. Sup. Ct. 1959).

 218 U.S.P.Q. at 1048 (emphasis added). *fn8"

 Likewise, in Linville v. Rivard, 1993 TTAB LEXIS 5, 26 U.S.P.Q.2D (BNA) 1508 (TTAB), vacated and remanded on other grounds, 11 F.3d 1074 (Fed. Cir. 1993), an American beauty salon using the name "Ultracuts" filed a petition to cancel a Canadian corporation's U.S. trademark registration with the same name on the grounds that the Canadian corporation had never made use of the name in the United States. 26 U.S.P.Q.2D (BNA) at 1509. The Canadian corporation argued that it had made use of the mark through: meetings in the U.S. with possible franchisees; review of possible sites for stores in the United States; advertisements on Canadian radio stations that also are heard in the U.S.; advertisements in Canadian newspapers read in the U.S.; servicing U.S. citizens who had travelled over the border to his Canadian stores, resulting in $ 25,000 of annual revenue; and "promotional give-aways and coupons" at a fair in the United States. Id. at 1510-11. The Trademark Trial and Appeal Board rejected the Canadian corporation's argument that advertising was use of the mark in the United States. Id. at 1512. The Board also held that no United States trademark rights were acquired by United States residents using the Canadian company's services while in Canada, because of the concept of territoriality. Id. The Board concluded by quoting the passage from Mother's that is quoted above. 26 U.S.P.Q.2D (BNA) at 1512-13. *fn9"

  Although the Court recognizes that the decisions of the TTAB are not binding on this Court, "they are nevertheless entitled to 'great weight.'" E.g., GMT Productions, L.P. v. Cablevision of New York City, Inc., 816 F. Supp. 207, 212 (S.D.N.Y. 1993).

 The Mother's and Linville decisions by the Trademark Trial and Appeal Board are directly applicable to this "Fashion Cafe" case. *fn10" If anything, those cases involved even stronger facts for the foreign corporations than the case at bar since in both cases the Canadian corporations placed radio and newspaper advertisements that reached American customers. By contrast, Impressa Perosa's distribution of T-shirts, business cards and other give-aways appears to be a much weaker advertising effort; its purpose was not to attract paying United States customers but to attract models with free food, so their presence would attract people in Milan to attend the Milan Fashion Cafe. Moreover, given the geographic proximity between Canada and the United States, a stronger case could be made that "goodwill" in the mark was established through the American customers who patronized the Canadian shops. Defendant Santambrogio has not alleged that the Milan Fashion Cafe attracted any paying customers from the United States (as opposed to United States fashion models to whom he offered free services). Even if he had, however, these two cases clearly hold that neither advertising efforts nor American patronage in foreign businesses suffice to establish use of the mark in the United States.

 

c. Buti is Not Guilty of "Bad Faith" So As to Constitute An Exception to the Mother's Rule

 In Mother's Restaurant v. Mother's Other Kitchen, discussed above, the Trademark Trial and Appeal Board implicitly stated that a party attempting to establish priority rights to a mark in the U.S. must meet a "good faith" requirement as against a prior foreign user. See 218 U.S.P.Q. at 1048 ("It is our view that prior use and advertising of a mark in connection with goods or services marketed in a foreign country . . . creates no priority rights in said mark in the United States as against one whom, in good faith, has adopted the same or similar mark. . .") (emphasis added).

 Impressa Perosa argues that Buti can not establish good faith since Buti had knowledge of the existence of the Milan Fashion Cafe prior to his establishment of the Miami Beach or New York Fashion Cafes.

 First, Santambrogio has not presented any admissible evidence that Buti was in or knew of the Milan Fashion Cafe. Buti submitted an affidavit that he never visited or was aware of the Milan Fashion Cafe before he opened his Fashion Cafe in Miami Beach in 1993. (Buti Aff. P 3; Buti 3(g) P 4; see also Buti Dep. at 22.) Santambrogio submitted an affidavit that he "personally witnessed [Buti's] presence [at the Milan Fashion Cafe] on more than one occasion. " (Santambrogio Aff. at p. 3; see also id. at p. 2, 4, 9.) That testimony, however, is directly contradicted by Santambrogio's deposition testimony in which he admits that he never saw Buti in the Milan Fashion Cafe. (Santambrogio Dep. at 147-48.)

 The Second Circuit has ruled that "a party may not create an issue of fact by submitting an affidavit in opposition to a summary judgment motion that, by omission or addition, contradicts that affiant's previous deposition testimony." Hayes v. New York City Department of Corrections, 84 F.3d 614, 619 (2d Cir. 1996) (citing cases). "'If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact.'" Id. (quoting Perma Research & Dev. Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969)). Therefore, under Hayes, the Court cannot, and does not, accept Santambrogio's affidavit testimony that he saw Buti in the Milan Fashion Cafe. Without that testimony, there is no evidence that Buti was aware of defendant's Milan Fashion Cafe before he opened a United States Fashion Cafe.

 Second, the Court finds that, even if Santambrogio's claims of Buti's prior knowledge of the use of the Fashion Cafe mark in Italy are accepted, that does not establish bad faith on Buti's part. In Person's Co. v. Christman, 900 F.2d 1565 (Fed. Cir. 1990), the Court considered the good faith issue on similar facts. In Person's, Larry Christman, an employee of a U.S. sportswear wholesaler, visited Japan in 1981 and purchased several clothing items bearing that mark "Person's" from a Japanese sportswear line by the same name. Id. at 1567. Upon returning to the United States, and discovering through counsel that no one had yet established a claim to the logo in the U.S., Christman began to market a sportswear line in the United States bearing the "Person's" logo. Id. Christman filed an application for the U.S. trademark registration in 1983, and the registration issued in 1984. Id.

 The Japanese Person's began a plan to sell goods under the "Person's" mark in the U.S. Purchases of the Japanese "Person's" line in the U.S. occurred as early as November 1982, seven months after Christman's first use in the U.S. Id.

 In early 1986, the Japanese corporation learned of Christman's advertising and filed an action to cancel Christman's registration. Id. The TTAB issued a "well reasoned" decision (in the opinion of the Federal Circuit) for Christman on the grounds that Person's use of the mark in Japan could not be used to establish priority against a "good faith" senior user. Id. The Federal Circuit upheld the reasoning and holding of the TTAB. The Court held that Christman's use of the mark was not in bad faith because:

 

The concept of bad faith adoption applies to remote junior users seeking concurrent use registrations; in such cases, the likelihood of customer confusion in the remote area may be presumed from proof of the junior user's knowledge. In the present case, when Christman initiated use of the mark, Person's Co. had not yet entered U.S. commerce. The Person's Co. had no goodwill in the United States and the "PERSON'S" mark had no reputation here. Appellant's argument ignores the territorial nature of trademark rights.

 

Appellant next asserts that Christman's knowledge of its prior use of the mark in Japan should preclude his acquisition of superior trademark rights in the United States. The Board found that, at the time of registration, Christman was not aware of appellant's intention to enter the U.S. clothing and accessories market in the future. Christman obtained a trademark search on the "PERSON'S" mark and an opinion of competent counsel that the mark was "available" in the United States. Since Appellant had taken no steps to secure registration of the mark in the United States, Christman was aware of no basis for Person's Co. to assert superior rights to use and registration here. Appellant would have us infer bad faith adoption because of Christman's awareness of its use of the mark in Japan, but an inference of bad faith requires something more than mere knowledge of prior use of a similar mark in a foreign country. . . .

 

Knowledge of a foreign use does not preclude good faith adoption and use in the United States. While there is some case law supporting a finding of bad faith where (1) the foreign mark is famous here [citing Vaudable and Mother's] or (2) the use is a nominal one made solely to block the prior foreign user's planned expansion into the United States, as the Board correctly found, neither of these circumstances is present in this case.

 

We agree with the Board's conclusion that Christman's adoption and use of the mark were in good faith. Christman's adoption of the mark occurred at a time when appellant had not yet entered U.S. commerce; therefore, no prior user was in place to give Christman notice of appellant's potential U.S. rights. Christman's conduct in appropriating and using appellant's mark in a market where he believed the Japanese manufacturer did not compete can hardly be considered unscrupulous commercial conduct.

 900 F.2d at 1569-70 (emphasis added & fns. omitted).

 Person's reasoning is directly applicable to this case. Here, as in Person's, Impressa Perosa had not used its mark in the U.S. when Buti initiated use of "Fashion Cafe" in the U.S. Santambrogio conceded at his deposition that, before the December 1994 groundbreaking for Buti's Fashion Cafe, Buti had no way to know of Santambrogio's plan to open a United States Fashion Cafe. (Santambrogio Dep. at 318-19.) Thus, Impressa Perosa has not established Buti's bad faith merely by asserting Buti's knowledge of Impressa Perosa's prior use of the Fashion Cafe name in Italy.

 

d. The Milan "Fashion Cafe" is Not A "Famous" Mark So As to Come Within the Vaudable Exception to the Mother's Rule

 Finally, Impressa Perosa has not argued that the "Fashion Cafe" mark was "famous" as defined by Vaudable v. Montmartre, 20 Misc. 2d 757, 193 N.Y.S.2d 332 (Sup. Ct. N.Y. Co. 1959), so as to bring it within the exception described in Mother's and Person's. See also 4 McCarthy § 29.01[4].

 In Vaudable v. Montmartre, the plaintiff, owner and operator of "Maxim's" restaurant in Paris, moved for a permanent injunction restraining the defendants, the owner and operator of a newly opened New York "Maxim's," from using the name. 20 Misc. 2d at 758, 193 N.Y.S.2d at 334. The Court noted that the French restaurant "Maxim's" was established in 1893 and had received wide publicity in the United States over a long period of years through newspaper and magazine articles, and as a prominently featured location in movies, television and in opera. Id. Indeed, the Maxim's plaintiff had "registered the Mark Maxim's with the United States Patent Office for catering services and wines and have merchandised and sold food products under the name or a variant thereof, in the United States." Id. The Court found that Maxim's was "well known in this country" and particularly in New York. Id. Given this level of recognition in the U.S., the Court found that plaintiff's Paris "Maxim's" had secondary meaning in the United States, that defendant's use of it constituted unfair competition, and the Court therefore enjoined defendant from use of the name "Maxim's." 20 Misc. 2d at 759-60, 193 N.Y.S.2d at 335-36.

 The Court finds that there is no evidence in the record that Santambrogio's Milan Fashion Cafe ever achieved any level of recognition approaching that of Maxim's so as to be a "famous" foreign mark in the United States. Santambrogio admitted that he never bought advertising in the U.S., never hired a public relations firm, and that no newspaper articles had ever been published in the U.S. referring to the Milan Fashion Cafe. (Santambrogio Dep. at 222, 232-33.) *fn11" Santambrogio has failed to offer admissible evidence of any "secondary meaning" of its Fashion Cafe in the United States. *fn12" Accordingly, the Court cannot find the Vaudable exception applicable here.

 

B. Impressa Perosa's Counterclaim Pursuant to 15 U.S.C. § 1120 Must Be Dismissed Because Any False Representations Were Not Material to the Registration

 Impressa Perosa's second counterclaim, pursuant to 15 U.S.C. § 1120, alleges that Buti made "false and fraudulent representations to the Patent and Trademark Office." Impressa Perosa asserts that, in filing their trademark application, plaintiff Buti made the false representations that (i) Fashion Cafe" was not being used in commerce by other persons and (ii) Buti had a right to register "Fashion Cafe" as his trademark. (Counterclaims P 54.)

 15 U.S.C. § 1120 establishes a private right of action for anyone injured by "any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation." *fn13" "A registered mark may be cancelled based upon misstatements in a trademark application if the plaintiff demonstrates that the statements '(1) were made with knowledge of their falsity, and (2) were material to the determination to grant the application.'" West Indian Sea Island Cotton Ass'n Inc. v. Threadtex, Inc., 761 F. Supp. 1041, 1052 (S.D.N.Y. 1991) (quoting Marshak v. Sheppard, 666 F. Supp. 590, 598 (S.D.N.Y. 1987)). Stated another way, "the concept of fraud upon the Patent & Trademark Office involves a willful withholding by the applicant, with intent to deceive, of material facts which, if disclosed, would result in refusal by the Office to register the mark." Lafont v. S.A.C.S.E., 228 U.S.P.Q. 589, 593 (TTAB 1985) (citing Rogers Corp. v. Fields Plastics & Chemicals, Inc., 176 U.S.P.Q. 280, 283 (TTAB 1972)).

 Even assuming that Buti had knowledge of Santambrogio's use of the Fashion Cafe mark in Milan, Santambrogio cannot show that such false statements were "material to the determination to grant the application." Since the Court has determined that Impressa Perosa had not made prior use of the mark "Fashion Cafe" in the U.S., Buti had the right to use that mark in the United States, and the Patent and Trademark Office would have awarded the trademark to Buti in any event. Indeed, in Lafont v. S.A.C.S.E., the TTAB held, on nearly identical facts, that:

 

Because the question of who had the superior right to U.S. registration was not affected by respondent's knowledge of petitioner's European use and registration, we cannot conclude from this record that respondent's statement in its applications was an attempt to deceive the Office by withholding material facts which would lead to a refusal to register respondent's marks. Even if the Examining Attorney had been aware of respondent's European use and registration, this would not have led to a refusal of registration, because these facts are immaterial to the issue of respondent's right to register in the U.S.

 228 U.S.P.Q. at 593 (emphasis added). See also Bonaventure Assoc. v. Westin Hotel Co., 218 U.S.P.Q. 537, 540-51 (TTAB 1983) (U.S. registrant of a trademark did not obtain registration fraudulently despite the fact that applicant had knowledge of use of the mark in Canada, because "mere knowledge" of existence of foreign corporation's use of same name "can hardly equate to fraudulent registration of the same mark in the United States.")

 Thus, even if Buti should have revealed his alleged knowledge of Impressa Perosa's use of the Fashion Cafe mark in Italy in his United States trademark application, such an omission was not "material."

  II. DEFENDANT'S STATE LAW COUNTERCLAIMS SHOULD BE DISMISSED WITHOUT PREJUDICE

 Defendant's third, fourth and fifth counterclaims raise state, not federal, claims. *fn14"

 A district court may exercise pendent jurisdiction over state law claims "whenever the federal-law claims and state-law claims in the case 'derive from a common nucleus of operative fact' and are 'such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.'" Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349, 108 S. Ct. 614, 618, 98 L. Ed. 2d 720 (1988) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S. Ct. 1130, 1138, 16 L. Ed. 2d 218 (1966)). The decision whether to exercise pendent jurisdiction, however, is within the discretion of the district court, which should consider such factors as "judicial economy, convenience, fairness and comity." Carnegie-Mellon, 484 U.S. at 349-50, 108 S. Ct. at 618-19; Block v. First Blood Assocs., 988 F.2d 344, 351 (2d Cir. 1993).

 When the federal claims are dismissed before trial, the Supreme Court has stated that the District Court ordinarily should decline the exercise of jurisdiction by dismissing the state claims without prejudice. Carnegie-Mellon, 484 U.S. at 350 n.7, 108 S. Ct. at 619 n.7 ("in the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine -- judicial economy, convenience, fairness, and comity -- will point toward declining to exercise jurisdiction over the remaining state-law claims."); Gibbs, 383 U.S. at 726, 86 S. Ct. at 1139 ("if the federal claims are dismissed before trial . . . the state claims should be dismissed as well.").

 Thus, I recommend that in the exercise of its discretion, the Court dismiss defendant's pendent state law counterclaims without prejudice.

  III. BUTI'S MOTION TO STRIKE AFFIDAVITS IS GRANTED IN PART AD SANCTIONS ARE GRANTED

  Plaintiff Buti has moved to strike two of defendant's affidavits and has requested sanctions.

  The Court agrees that the affidavit of defendant's counsel Mr. Jaroslawicz is incompetent and impermissible to the extent it purports to set forth facts. "Attorneys' affidavits not based upon personal knowledge have been held not to comply with Rule 56(e) at least since Automatic Radio Manufacturing Co. v. Hazeltine Research, Inc., 339 U.S. 827, 831, 70 S. Ct. 894, 896, 94 L. Ed. 1312 (1950), a position this court has frequently reiterated." Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1010 (2d Cir. 1986) (citing cases); accord, e.g., Burger v. Health Ins. Plan of Greater N.Y., 684 F. Supp. 46, 54 (S.D.N.Y. 1988); 10A C. Wright, A. Miller & M. Kane, Federal Practice & Procedure § 2738 at 495-96 (2d ed. 1983). *fn15" Accordingly, the Jaroslawicz affidavit is struck, except for its submission of exhibits containing discovery material (the Buti and Santambrogio deposition transcripts and documents produced in discovery).

  As for the Kates Affidavit, whether or not it contains hearsay, the Court need not strike it because nothing in it creates a dispute as to an issue of material fact. The Court also declines to strike defendant's counter Rule 3(g) statement.

  Plaintiff's request for sanctions is granted to the limited extent of the reasonable cost of researching and preparing that portion of the motion to strike dealing with defense counsel's affidavit. Plaintiff's counsel shall file an affidavit, attaching contemporaneous time records, if counsel desires to pursue the sanctions request. Such affidavit must be submitted within ten days hereof and any response from defendant's counsel must be submitted within 7 days thereof. (All papers shall be served on opposing counsel by hand, fax, or by next day delivery service.)

  CONCLUSION

  For the reasons set forth above, plaintiff Buti is the senior user of the mark "Fashion Cafe" in the United States. I recommend that the Court grant plaintiff Buti summary judgment on its declaratory judgment claims and further recommend that the Court grant plaintiff summary judgment dismissing defendant Impressa Perosa's federal trademark claims with prejudice and state law claims without prejudice. Finally, I also recommend that the Court deny defendant Impressa Perosa's cross-request for summary judgment.

  FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION

  Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from receipt of this Report to file written objections. See also Fed. R. Civ. P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Allen G. Schwartz, 500 Pearl Street, Room 1350, and to the chambers of the undersigned, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Schwartz. Failure to file objections may result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993), cert. denied, 130 L. Ed. 2d 38, 115 S. Ct. 86 (1994); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S. Ct. 825, 121 L. Ed. 2d 696 (1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).

  Dated: New York, New York

  July 18, 1996

  Respectfully submitted,

  Andrew J. Peck

  United States Magistrate Judge


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