The opinion of the court was delivered by: Cedarbaum, District Judge.
Ushodaya Enterprises, Ltd. ("Ushodaya") sues its former United States
V.R.S. International, Inc. ("VRS") and Aramudh Vasudevan, for, the use of
the "Priya" name in connection with the sale of Indian pickles in the
United States. Ushodaya seeks to cancel VRS's registrations for the
"Priya" trademark, and to recover related damages, on the ground that
defendants fraudulently procured the registrations from the United States
Patent and Trademark Office ("PTO"). Ushodaya also asserts claims for
trademark infringement and false designation of origin under the Lanham
Act, 15 U.S.C. § 1051 et seq.; copyright infringement under title 17
of the United States Code; trademark infringement, unfair competition and
deceptive business practices under the "common law;" and dilution and
false advertising under the New York General Business Law. The defendants
assert counterclaims, principally alleging trademark infringement,
dilution and false advertising.
From June 7 through June 10, 1999, a bench trial was held. Plaintiff
called as witnesses Shankar Melkote, managing director of Margadarsi
Marketing Private Limited, Ushodaya's former exporter and marketing
firm, Ananta Mangalampalli, a manager in Ushodaya's export division,
Bharat Joshi of Indian Groceries & Spices, Inc., Ushodaya's former U.S.
distributor, and Cherukuri Kiron, the managing director of Ushodaya.
Defendants presented the testimony of Vel Vasan, Vasudevan's
brother-in-law, Bargavi Sundararajan, one of Vasudevan's daughters,
Satinder Sharma, a former owner of an Indian grocery store in Chicago,
and Aramudh Vasudevan, the individual defendant who is the president and
sole employee of the corporate defendant.
After considering all the evidence, observing the demeanor of the
witnesses, and considering the plausibility and credibility of the
testimony, I conclude that plaintiff has proven its claim of fraudulent
procurement of the trademark registrations and a portion of its copyright
claim by a preponderance of the credible evidence, but that plaintiff and
defendants have both failed to bear their burdens of proving their other
claims by a preponderance of the credible evidence. I make the following
findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
This case concerns what the parties call Indian pickles. Indian pickles
consist of pieces of vegetables or fruit, such as mango, garlic or chili
peppers, which are steeped in oil, salt and various spices. Pickles are
used for flavoring rice in southern Indian cuisine.
I. Ushodaya's Pickle Sales Prior to 1988
Ushodaya is a company in southern India that was previously
incorporated under the name of "Priya Foods Private Limited." It has
manufactured pickles with the "Priya" name in India since approximately
1980. (Tr. 30). From 1981 to 1984, Ushodaya sold "Priya" pickles to
Margadarsi Marketing Private Limited which in turn exported and marketed
the product to the United States and the Arabian Gulf states. (Tr.
22-24). From 1985 to 1987, Ushodaya exported its pickles to the United
States through Eswar International, Inc. (Tr. 74). The evidence produced
on the volume of sales in the United States comprised (1) receipts dated
May 25, 1983 and December 12, 1983 for two shipments of "Priya" pickles
from Margadarsi to its agent in the United States, with a total price of
$24,510 each, and (2) various invoices and canceled checks dated 1985 and
thereafter showing sales of "Priya" pickles by Eswar to Indian Groceries
& Spices, Inc., an American wholesale distributor. (Pl.Exs. 77A & 4A).
II. Vasudevan Family Pickle Production
Beginning in approximately 1972, the wife and eldest daughter of
defendant Vasudevan began making lemon and tomato pickles in the basement
of their home for their family and friends. (Tr. 309-12). In
approximately 1974, the eldest daughter, Marla, began packaging the
mason jars, with typed white labels reading "Priya Pickles, Homemade by
Vasudevan Family," for sale by consignment in at least one local Indian
grocery store no more than 25 minutes from their home in Chicago. (Tr.
314-15, 329, 341, 379-80). Satinder Sharma, who operated an Indian
grocery store in Chicago, testified that Maria delivered one or two dozen
jars of pickles "maybe twice a month." (Tr. 378-84). He would pay Marla
for each jar of pickles he sold by applying one dollar to reduce the
price of the groceries she bought at the store. (Tr. 378, 388, 394).
"Priya" was the nickname of Vasudevan's youngest daughter. (Tr.
317-18, 335). It is a commonly used nickname in India. (Tr. 318). VRS
represented to the PTO that the word "priya" means "beauty."*fn1
(Pl.Ex.89). At trial, Vel Vasan testified that it means "I like it," and
derives from the Sanskrit word "priya." (Tr. 316-7).
Sales in Chicago stopped in 1982 when Bargavi, another of Vasudevan's
daughters who had been involved in preparing pickles, moved to Altamonte
Springs, Florida, where she continued to prepare pickles in her house.
(Tr. 319, 326, 331). Vasudevan moved to Florida in approximately 1984,
and Bargavi and her father sold the pickles "in small quantities" to "a
couple of stores" in the Altamonte Springs area, within a five- to
ten-mile radius of their house. (Tr. 397-402, 337). In 1985, Bargavi,
Vasudevan and their families moved to Edison, New Jersey, where Vasudevan
continued his practice of selling Bargavi's homemade pickles to local
stores. (Tr. 397-402). In approximately 1987, Bargavi stopped making
pickles. (Tr. 338-39, 401-02).
III. The contract Between VRS and Ushodaya
Vasudevan testified that he hoped to continue selling pickles after his
daughter stopped preparing them, and to that end he incorporated VRS in
New Jersey in February 1988. (Tr. 403). Vasudevan met with Ushodaya in
India in March of 1988. (Tr. 415-16). In approximately September 1988,
Ushodaya entered into an agreement with VRS. (Tr. 72-77; Pl.Ex. 2). The
agreement provided that "[Ushodaya] agrees to appoint VRS as their
exclusive dealer/distributor for U.S.A. market only to market PRIYA
pickles and chutneys. Further, [Ushodaya] will give first priority to VRS
for selling their other products in U.S.A." The agreement also provided
that "VRS will keep [Ushodaya] informed of product sales, feedback on
competition, market opportunities etc. on quarterly basis," and that
Ushodaya "will inform VRS on a continuous basis [of] any changes in the
products, packing, etc."
Vasudevan testified that in his meetings prior to signing the
agreement, he provided Ushodaya with his family's specifications for the
pickles. He suggests that the parties agreed that Ushodaya would change
the recipe for its "Priya" pickles to conform to Vasudevan's
specifications. (Tr. 416-35). I find that Vasudevan was not credible on
this issue. I do credit the testimony of Ananta Mangalampalli, who has
worked for Ushodaya since 1988 and is currently the manager of export
operations of the export division. (Tr. 69). Mangalampalli testified that
at the 1988 meetings he attended with Vasudevan, there was no discussion
of a recipe, and that the recipe for the pickles exported to the United
States through VRS was the same recipe that Ushodaya had been using
previously. (Tr. 79).
Vasudevan advertised and sold Ushodaya's "Priya" pickles in Texas,
California, Illinois and New York. (Tr. 448-49).
IV. Trademark Applications
In August 1991, Vasudevan met with Ushodaya officials to discuss the
possibility of VRS registering the "Priya" mark in the United States.
(Tr. 97-98). In accordance with the discussion at this meeting,
Ushodaya's managing director signed a consent letter, dated August 19,
1991 and addressed to VRS. (Tr. 98-101). The parties produce two
different forms of the letter which are substantially the same.
Ushodaya's version reads: "We hereby authorize you to register our PRIYA
BRAND PICKLES under the Trade Name Registration as Manufacturers and your
Name as Trade Mark Holders." (Pl. Ex.9). The version produced by
defendants is the same, except that the word "our" is crossed out.
First Trademark Application. In September 1991, VRS filed a trademark
application signed by Vasudevan for the mark "Priya" for the following
goods: "pickles, spices, rice, idly, . . . ." (Pl.Ex. 10; Tr. at 463). In
that application, and in accordance with the registration requirements of
15 U.S.C. § 1051(a)(1), Vasudevan stated that he "believes [VRS] to
be the owner of the mark sought to be registered", and that "to the best
of his knowledge and belief no other person, firm, corporation or
association has the right to use said mark in commerce." The application
stated that first use of the mark and first use in commerce were March
In an "Office action" dated January 9, 1992 and mailed to VRS's
attorney, a PTO examining attorney noted deficiencies in VRS's
application, and stated that if the application were not "amended"
accordingly the application would be deemed abandoned. Among other
things, the examining attorney stated that the description of goods was
"indefinite." He also stated that "The record indicates that the goods
are manufactured in India. The applicant is located in New Jersey."
(Pl.Ex.35). He wrote:
"If the referenced manufacturer is only a manufacturer
and does not use the mark anywhere as owner, the
applicant should state so for the record. That
response, by itself, will satisfy this inquiry.
However, if the foreign manufacturer uses the mark
outside the United States as owner, the applicant must
do one of the following to establish ownership and the
right to apply in the United States. (1) The applicant
must provide a copy of an assignment from the foreign
owner to the applicant of all rights in the mark in
the United States. . . . (2) The applicant must
provide written consent from the foreign owner to the
applicant's registration of the mark in the United
However, in the July 9, 1992 submission, VRS's attorney inadvertently
failed to amend the description of goods in accordance with the Office
action. Therefore, in a letter dated October 18, 1993, the PTO deemed the
application abandoned. (Pl. Ex.36). VRS immediately objected, and
successfully revived the application.
In the meantime, Ushodaya's U.S. attorneys had sent a letter to the
Commissioner of Patents and Trademarks dated June 16, 1992, protesting
the trademark application filed by VRS. (Pl.Ex.56). Ultimately, the PTO
granted VRS's application and registered the "Priya" ...