The opinion of the court was delivered by: COTE
DENISE COTE, District Judge:
On April 17, 1996, plaintiff Aerogroup International, Inc. ("Aerogroup"), filed this action alleging violations of several provisions of the Lanham Act, 15 U.S.C. §§ 1114(1), 1120, 1125(a), and 1125(c); the Patent Act, 35 U.S.C. § 271; and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c) ("RICO"). Plaintiff also brought various state-law claims. All claims center around alleged violations of plaintiff's intellectual property rights in its Aerosoles shoes.
On October 21, 1996, after a hearing on Aerogroup's application for a preliminary injunction against Marlboro Footworks, Ltd., Laurence D. Koplan, and Steven Goldberg ("the Marlboro Defendants"), the parties consented to converting the hearing into a trial on the merits. The Court issued its Opinion on October 21, 1996, and signed a permanent injunction reflecting this ruling on November 15, 1996. That Opinion and Order has now been extended by the Opinion and Order of February 4, 1997 to the Marlboro Defendants' activities in Canada insofar as they violate the Lanham Act. Pursuant to their counterclaim and based on the record at trial, the Marlboro Defendants now move for an Order cancelling Aerogroup's federal and New York state trademark registrations for its "waffle" shoe sole design. For the reasons stated below, the motion is granted.
Aerogroup is in the business of purchasing and distributing shoes, including "Aerosoles," which plaintiff describes as a lightweight, flexible women's shoe. Aerosoles are manufactured in various factories in Europe and Sri Lanka, and sold in large quantities throughout the United States, Canada, and other parts of the world. Aerogroup claims intellectual property rights in connection with the Aerosoles shoe.
Aerogroup also acts as a buying agent for private label footwear. The designs Aerogroup offers to its private label customers are "knock offs" of the Aerosoles' designs. The Aerogroup private label shoes are manufactured in China and cost less at retail than Aerosoles.
Defendant Marlboro Footworks Ltd. ("Marlboro") is a buying agent. It is in the business of importing, selling, and distributing shoes from the Far East to the United States and Canada. The other corporate defendants are businesses for whom Marlboro has ordered shoes. Since 1994, Marlboro has engaged in an active campaign to knock off Aerosoles. It manufactures its Aerosoles knock offs at the same Chinese factory complex which manufactures plaintiff's private label shoes. Marlboro's customers sell to consumers in the United States and Canada.
One of the items of intellectual property claimed by Aerogroup at trial was a registered trademark, Reg. No. 1,953,875, covering the waffle-shaped pattern on the soles of its Aerosoles brand and private label shoes. The pattern can be described as "an array of a plurality of diamond or rhombic recessed patterns on the sole of women's low and high heel fashion shoes." Aerogroup first used the waffle pattern in 1985. In May 1991, the Patent and Trademark Office ("PTO") refused to register the waffle trademark because it found the design a "decorative or ornamental feature" of the shoes, and not an indicator of source. On July 25, 1991, the State of New York issued trademark registration No R-26601 on the waffle sole. On February 6, 1996, the PTO issued a Section 2(f) trademark registration for the waffle sole, No. 1,953,875, based on the ex parte submissions of Aerogroup which showed that the waffle sole had developed secondary meaning within the relevant market. As of the trial, Aerogroup had never used the waffle trademark with a "TM" symbol or the "registered" symbol.
After trial, this Court held, in the alternative: (1) that despite the fact that the waffle trademark was registered and entitled to a presumption of distinctiveness, it lacked both inherent and acquired distinctiveness and was thus not protectable; and (2) that the allegedly infringing Marlboro shoe sole was not similar in overall appearance to the Aerosoles waffle sole, and that therefore there was no likelihood of confusion.
In a counterclaim, the Marlboro Defendants' seek cancellation of the waffle sole trademark. The counterclaim alleges that Aerogroup's initial trademark application was rejected and that Aerogroup obtained the Section 2(f) registration without informing the PTO of its private label sales. The counterclaim states that the waffle sole trademark is invalid because it "lacks trademark distinctiveness and does not function as an indicator of a single source of products."
Aerogroup has asserted as its sole defense to this motion the argument that Marlboro lacks standing to challenge its trademark registration of the waffle sole. For the reasons stated below, I hold that Marlboro has standing and that the waffle trademark registration should be cancelled.
The Lanham Act permits courts to cancel the registration of a trademark. 15 U.S.C. § 1119 ("in any action involving a registered mark the court may . . . order the cancellation of registrations"); Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 13 (2d Cir. 1975); Gear, Inc. v. L.A. Gear Cal., Inc., 670 F. Supp. 508, 512 (S.D.N.Y. 1987), vacated in part pursuant to settlement, 1989 U.S. Dist. LEXIS 17312, 13 U.S.P.Q.2D (BNA) 1655 (S.D.N.Y. 1989). See also 15 U.S.C. § 1064 (noting that a party may petition to cancel the ...