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Patsy's Italian Restaurant, Inc. v. Banas

September 9, 2008

PATSY'S ITALIAN RESTAURANT, INC., PATSY'S BRAND, INC., PLAINTIFFS,
v.
ANTHONY BANAS D/B/A PATSY'S, PATSY'S PIZZERIA, DEFENDANTS.
PATSY'S ITALIAN RESTAURANT, INC., PLAINTIFF AND COUNTERCLAIM DEFENDANT,
v.
ANTHONY BANAS D/B/A PATSY'S AND PATSY'S PIZZERIA TRATTORIA IMPAZZIRE, ALLAN ZYLLER D/B/A PATSY'S AND PATSY'S PIZZERIA TRATTORIA IMPAZZIRE, AL & ANTHONY'S PATSY'S, INC., I.O.B. REALTY, INC., AND PATSY'S, INC., DEFENDANTS AND COUNTERCLAIM PLAINTIFFS.



The opinion of the court was delivered by: Ramon E. Reyes, Jr., U.S.M.J.

OPINION & ORDER

More than five years ago, the Court of Appeals for the Second Circuit admonished the major parties in this litigation "that henceforth they would be well advised to minimize the risk of confusion by identifying their restaurants by the complete names: 'Patsy's Italian Restaurant' and 'Patsy's Pizzeria.'" Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d Cir. 2003). This lengthy Opinion and Order is written because the parties have largely ignored that admonition. During the intervening years, the parties have instead continued on an oftentimes labyrinthine course of litigation. As noted by the Court of Appeals, one source of this litigation's "unavoidable confusion" has been the fact that, for over sixty years, the major parties and their predecessors have shared the mark PATSY'S for nearly identical restaurant-related services, both within the same New York City market. See Patsy's Brand, Inc., 317 F.3d at 217. Additional confusion occurred during proceedings before the Patent and Trademark Office (the "PTO") and the Trademark Trial and Appeal Board (the "TTAB"). These proceedings have been alternately described as "protracted and convoluted," Patsy's Italian Rest., Inc. v. Banas, 508 F. Supp. 2d 194, 203 (E.D.N.Y. 2007), and "a procedural morass," "tortured" and "resulting in confusion and mistake." I.O.B. Realty, Inc. v. Patsy's Brand, Inc., TTAB Cancellation Nos. 92028142 & 92029614, at 10, 15 (June 28, 2007) (unpublished decision submitted as Defs.' Ex. III, herein "TTAB Decision"). Such was the muddled state of affairs that formed the starting point for this case.

As this case made its way toward a jury trial, its "convoluted" and "tortured" procedural history presented considerable practical challenges in resolving the thorny legal and factual issues raised by the parties' simultaneous and long-standing use of the mark PATSY'S. In coping with these challenges, the Court was reminded that trademark law's fundamental purpose is to not only "encourage investments in strong trademarks, but also 'to protect the ability of consumers to distinguish among competing producers.'" Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 539 (2d Cir. 2005) (quoting Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198 (1985)) (emphasis added). As described in greater detail below, the jury's findings in this case make clear that consumers are having grave difficulties distinguishing between the parties' marks. It is with this in mind, and for the foregoing reasons, that the Court makes the following rulings on the parties' post-verdict motions for injunctive relief: (1) the PTO is ordered to cancel Plaintiffs' registration number 3,009,836 for the stylized mark PATSY'S PR for restaurant services; (2) the PTO is ordered to cancel Plaintiffs' registration number 3,009,866 for the unstylized mark PATSY'S for restaurant services not including pizza; (3) the PTO is ordered not to restore I.O.B. Realty, Inc's registration number 2,213,574 for the mark PATSY'S PIZZERIA for restaurant services; (4) Plaintiffs are enjoined from using the mark PATSY'S alone in any advertising, signs, menus or anything similarly associated with their restaurant services; and (5) Defendants are enjoined from using the mark PATSY'S alone in any advertising, signs, menus or anything similarly associated with their pizzeria services. Additional injunctive relief is granted to Plaintiffs as described below. See infra Section III.D. The parties remaining motions are denied.

BACKGROUND

I assume familiarity with the facts of this case, including the procedural history and facts described in previous decisions in this case and in the "Sauce Litigation."*fn1 I do acknowledge that a full understanding of this Opinion and Order requires extensive prior knowledge of this case. It is simply an impossible and unwieldy task to include a complete set of facts and procedural history in a single document. The blame for this unfortunate situation lies with the convoluted and protracted manner in which the parties allowed this litigation to progress.

Instead, I will describe only so much of the background as is necessary to understand my rulings. Further, the reader is directed to the previous decisions in this case. Moving from oldest to most recent, a time line of the pertinent decisions in this action is as follows: Patsy's Italian Rest., Inc. v. Banas, 2006 WL 3478988 (E.D.N.Y. Nov. 30, 2006) (Docket Entry 32)*fn2 (Irizarry, J.) (affirming my order that this action be consolidated); Patsy's Italian Rest., Inc. v. Banas, 2007 WL 174131 (E.D.N.Y. Jan. 19, 2007) (Docket Entry 67) (Irizarry, J.) (granting in part plaintiffs' motion to quash subpoena of plaintiffs' counsel); Patsy's Italian Rest., Inc. v. Banas, 508 F. Supp. 2d 194 (E.D.N.Y. 2007) (Docket Entry 110) (Irizarry, J.) (granting in part defendants' motion to correct the PTO register and denying defendants' remaining motions for summary judgment); Patsy's Italian Rest., Inc. v. Banas, 2007 WL 3232232 (E.D.N.Y. Oct. 31, 2007) (Docket Entry 117) (Irizarry, J.) (denying plaintiffs' motion for reconsideration of the Court's order to correct the PTO register); Patsy's Italian Rest., Inc. v. Banas, 531 F. Supp. 2d 483 (E.D.N.Y. 2008) (Docket Entry 124) (Reyes, J.) (granting defendants' motion in limine to exclude expert's proffered testimony); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 495568 (E.D.N.Y. Feb. 20, 2008) (Docket Entry 130) (Reyes, J.) (denying plaintiffs' motion to amend action number 06-CV-5957 to add Patsy's Brand, Inc. as a plaintiff); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 795341 (E.D.N.Y. Mar. 24, 2008) (Docket Entry 175) (Reyes, J.) (rulings on the parties' motions in limine); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 850151 (E.D.N.Y. Mar. 26, 2008) (Docket Entry 177) (Reyes, J.) (reversing prior ruling and ordering that witness's videotaped deposition is admissible); Patsy's Italian Rest., Inc. v. Banas, 2008 WL 926401 (E.D.N.Y. Apr. 3, 2008) (Docket Entry 188) (Reyes, J.) (denying plaintiffs' motion to reconsider plaintiffs' motion to dismiss defendants' counterclaim).

I. The Parties

This case involves two long-standing and well-known eateries, each located in New York, New York, and each bearing the name "Patsy's."*fn3 Plaintiff Patsy's Italian Restaurant, Inc. ("Patsy's Italian Restaurant") is a famous establishment located at 236 West 56th Street in New York, New York. Patsy's Italian Restaurant was founded by Patsy Scognamillo, and after his death has been continuously owned and operated by Mr. Scognamillo's son, grandson and other family members. (See 3/31/08 Tr. at 41:18-43:22; 4/1/08 Tr. at 186:21-189:10.)*fn4 Patsy's Italian Restaurant is well-known for its "red-sauce" style Neopolitan, fine-dining cuisine.(See 3/31/08 Tr. at 42:15-43:5, 46:20-25; 4/1/08 Tr. at 190:21-191:3; Pls.' Exs. 19, 26-29.) As stipulated by the parties prior to trial, Patsy's Italian Restaurant has been in continuous operation since 1944. (See Docket Entry 132 at 13 ¶ 3.) Affiliated with Patsy's Italian Restaurant is plaintiff Patsy's Brand, Inc. (collectively, "Plaintiffs"), which was formed in 1993 to market and sell pasta sauces and other packaged food products bearing the PATSY'S mark. (See id. ¶ 4.)

Just across town, Defendant I.O.B. Realty, Inc. ("I.O.B. Realty") owns and operates an establishment called Patsy's Pizzeria at 118th Street and First Avenue in East Harlem, New York (the "East Harlem Location"). Patsy's Pizzeria was founded by Patsy Lancieri and his wife Carmela Lancieri, who owned and operated the establishment after Mr. Lancieri's death. (See 4/1 Tr. at 207:4-208:22, 217:11-23.) Defendants claim that the East Harlem Location was established in 1933, although Plaintiffs hotly contested this fact at trial. Patsy's Pizzeria is no longer in the hands of the Lancieri family. Instead, in 1991 a principal of I.O.B. Realty purchased Patsy's Pizzeria, including any goodwill in the mark PATSY'S PIZZERIA from Carmela Lancieri. (See Defs.' Exs. G, H.) Starting in the 1990s, I.O.B. Realty began entering into licensing agreements that allowed others to open establishments bearing the mark PATSY'S PIZZERIA. Two such licensed locations spurred the foregoing case.

In July 2005, defendants Anthony Banas ("Banas") and Anthony & Patsy's, Inc. (collectively, the "Staten Island Defendants") opened a restaurant at 1949 Richmond Avenue, Staten Island, New York (the "Staten Island Location"). (See Docket Entry 132 ¶ 6.) The Staten Island Location bore a sign that read "PATSY'S" in scripted font along with the words "Since 1933" in smaller type, below which were the words "PIZZERIA * RESTAURANT * BAKERY * CAFÉ." (See Pls.' Ex. 4.) The Staten Island Location closed in September 2006. (Docket Entry 132 ¶ 7.) Thereafter, in November 2006, defendants Banas, Allan Zyller ("Zyller") and Al & Anthony's Patsy's Inc. (collectively, the "Syosset Defendants") opened another restaurant at 407 Jericho Turnpike, Syosset, Long Island, New York (the "Syosset Location"). (Id. ¶ 8-9.) The Syosset Location bore signs that read "PATSY'S PIZZERIA," below which were the words "SINCE 1933" and "TRATTORIA IMPAZZIRE" and "COAL FIRED OVEN." (Pls' Ex. 3.) The Syosset Location is still in operation.

II. The Parties' Trademark Registrations

The parties' respective trademark*fn5 registrations for restaurant services are very much at the heart of this case. On November 1, 2005, the PTO issued to Patsy's Italian Restaurant registration number 3,009,836 for the stylized mark PATSY'S PR for restaurant services (the "'836 Registration"), and registration number 3,009,866 for the unstylized mark PATSY'S for restaurant services not including pizza (the "'866 Registration"). (See Pls.' Exs. 1 & 2.) Plaintiffs also own trademark registration number 2,845,063 for the mark PATSY'S for various food products including "pastries, namely, tiramisu." (the "'063 Registration"). (See Pls.' Ex. 105.) Not at issue in this case are Plaintiffs' trademark registrations for pasta sauces, which formed the basis of the Sauce Litigation.*fn6 (See Pls.' Exs. 103, 104.)

As for Defendants' marks, on December 29, 1998, the PTO issued to I.O.B. Realty registration number 2,213,574 for the mark PATSY'S PIZZERIA for restaurant services (the "'574 Registration"). (See Defs.' Ex. A.) The '574 Registration was cancelled by the TTAB on May 27, 2003, but was subsequently ordered to be restored by the Honorable Dora L. Irizarry. See Banas, 508 F. Supp. 2d at 205, 207-13. The parties report that the TTAB has not yet restored the '574 Registration pending final resolution of the foregoing case. At one time, I.O.B. Realty also owned registration number 1,975,110 for the mark PATSY'S for restaurant services (the "'110 Registration"). (See Pls.' Ex. B.) However, this registration was cancelled due to I.O.B. Realty's failure to submit an affidavit of continued use pursuant to Section 8 of the Lanham Act, 15 U.S.C. § 1058. See Banas, 508 F. Supp. 2d at 204-05. I.O.B. Realty has not sought restoration of the '110 Registration. See id. at 206 n.8.

A detailed and complete procedural history of "[t]he parties' protracted and convoluted dealings" with the PTO and TTAB can be found in Banas, 508 F. Supp. 2d at 203-06. (See also Pls.' Ex. 151 (time line of TTAB proceedings).)

III. The Parties' Claims and Counterclaims

In 2006, Plaintiffs filed two separate actions against the Staten Island Defendants and the Syosset Defendants, respectively. In case number 06-CV-729, Plaintiffs brought suit against the Staten Island Defendants alleging trademark infringement, unfair competition and injury to business reputation in relation to the Staten Island Location. (See Case No. 06-CV-729, Docket Entry 1.) In case number 06-CV-5857, plaintiff Patsy's Italian Restaurant brought suit against the Syosset Defendants alleging trademark infringement, unfair competition and injury to business reputation in relation to the Syosset Location. (See Docket Entry 1.) The Court subsequently granted a motion by Patsy's, Inc.*fn7 and I.O.B. Realty (collectively, "I.O.B. Realty") to intervene as defendants.*fn8 (Docket Entry 16.) Thereafter, I.O.B. Realty, the Staten Island Defendants and the Syosset Defendants (collectively, "Defendants") brought a counterclaim seeking cancellation of Plaintiffs' trademark registrations. (See Docket Entry 29 at 10-12.) On November 9, 2006, the Court granted Plaintiffs' motion for a preliminary injunction removing the words "Trattoria Impazzire" from "all advertising, signs, menus, or anything associated" with the Syosset Location. (See Docket Entry 23; see also Defs.' Ex. MM.)

On November 30, 2006, Judge Irizarry consolidated the two separate actions against the Staten Island and Syosset Defendants. (Docket Entry 32.) On January 11, 2007, this case was bifurcated, with liability to be addressed first and then, if necessary, damages. (See Minute Entry dated 1/1/2007.) On August 28, 2007, Judge Irizarry denied Defendants' motions for summary judgment on Plaintiffs' claims and also, as noted, ordered that Defendants' '574 Registration be restored. See Banas, 508 F. Supp. 2d at 207-13, 216-21. On December 6, 2007, the parties consented to my jurisdiction pursuant to 28 U.S.C. § 636. (Docket Entry 118.) Thereafter, a trial was set for March 10, 2008. (See Docket Entry dated 12/13/2007.)

IV. Pre-Trial Proceedings

Prior to trial,*fn9 and after reviewing the parties' pre-trial papers, it became clear to the Court that it would be difficult for a jury to simultaneously decide Plaintiffs' infringement claim and Defendants' counterclaim to cancel Plaintiffs' '836 and '866 Registrations. As the Court explained to the parties during a telephone conference held on March 5, 2008, the relief sought in Defendants' counterclaim -- namely, invalidating Plaintiffs' '836 and '866 Registrations -- was a threshold issue that must be decided before the jury could reach Plaintiffs' infringement claims under the Lanham Act. (See 3/5/08 Tr. at 2:10-4:3, 7:2-18.) Thus, the Court warned the parties that putting the entirety of the case to the jury simultaneously would be extremely confusing and would require a very long, detailed special verdict form to deal with all the permutations of validity of the '836 and '866 Registrations. (See id. at 3:19-4:3.) In particular, the Court was concerned that the jury would be asked, in light of the "Polaroid factors," see Polaroid Corp. v. Polarad Elects. Corp., 287 F.2d 492, 495 (2d Cir. 1961), to determine first the validity of the '836 and '866 Registrations, and then, if the jury found that the registrations are valid, to conduct a similar Polaroid analysis to determine infringement. In the Court's view, this invited confusion and mistake because each analysis was slightly, yet crucially, different.

The Court thus proposed three potential approaches: First, to nonetheless present the entirety of the case to the jury through the use of a very detailed special verdict form; Second, to hold a bench trial on the threshold issue of validity of Plaintiffs' registrations, followed by a jury trial on the issue of infringement; or Third, to hold a bench trial on the entirety of the case. (See 3/5/08 Tr. at 4:4-25.) The Court initially ruled that it would employ option number two and hold a bench trial on the legal issue of whether Plaintiffs' '836 and '866 Registrations are valid. (See 3/6/08 Tr. at 4:3-16; Minute Entry dated 3/6/2008.) Defendants indicated that they favored this bifurcated approach as well. (See 3/6/2008 Tr. at 4:1-2.)

Plaintiffs, however, pressed for a trial on all issues and filed a motion to reconsider, arguing that the issue of validity shares common issues of fact with Plaintiffs' infringement claims. (Docket Entry 165.) In pertinent part, Plaintiffs argued that holding a bench trial on the issue of validity of the '836 and '866 Registrations would impermissibly deny Plaintiffs their right to have a jury decide the overlapping issues of fact relating to their infringement claim. (See id. at 2-3 (citing Curtis v. Loether, 415 U.S. 189, 192 (1974); Dairy Queen, Inc. v. Wood, 369 U.S. 469, 479 (1962); Beacon Theaters, Inc. v. Westover, 359 U.S. 500, 506-07 (1959); LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 426 (2d Cir. 1995), cert. denied, 518 U.S. 1017 (1996); Sorlucco v. N.Y. City Police Dep't, 971 F.2d 864, 873-74 (2d Cir. 1992); Wade v. Orange County Sheriff's Office, 844 F.2d 951, 954 (2d Cir. 1998).) The Court was ultimately persuaded by Plaintiffs' argument and scheduled a jury trial on all issues for March 31, 2008. (See 3/7/08 Tr. at 5:12-8:14, 10:19-11:14; Minute Entry dated 3/7/08.) Again, however, the Court warned the parties that this would require a very detailed special verdict form to take the jury through all permutations of how this complicated case could be decided. (3/7/08 Tr. at 11:4-7.) Thereafter, the parties each submitted a set of proposed jury instructions and special verdict forms. (See Docket Entries 166-69, 171-73.) In the end, the special verdict form submitted to the jury spanned twenty-three pages and included forty-eight separate questions, many of which contained multiple subparts. (See Docket Entry 203.) The final jury instructions, which were similarly detailed, spanned fifty-four pages. (See Docket Entry 202.)

V. The Trial and the Jury's Findings

A trial was held beginning on March 31, 2008. By the Court's count, Plaintiffs called sixteen witnesses, a number of whom appeared by video conference. Defendants called six witnesses, including one by videotaped deposition. The parties collectively submitted several hundred exhibits into evidence. (See Docket Entry 201 (stipulated joint exhibit list).) Throughout the trial, the jury remained extremely attentive and engaged, with several of the jurors taking copious notes. The parties rested on April 4, 2008.

A charge conference was held outside of the jury's presence on the following Monday, April 7, 2008. Defendants made two motions for judgment as a matter of law ("JMOL"): that there was no evidence that the Staten Island Defendants sold packaged food products in violation of Plaintiffs' '063 Registration (see 4/7/08 Tr. at 757:11-759:9); and that BSZ Realty Corp., which is the leaseholder of the Syosset Location, should be dismissed as a defendant (id. at 763:11-24). Plaintiffs, in turn, made two motions for JMOL: that Defendants had failed to present sufficient evidence on their equitable defense of laches (id. at 765:19-767:3); and that Defendants had failed to present adequate evidence on their counterclaim of fraud on the TTAB (id. 767:18-769:24).

In response to the parties' motions, the Court made the following rulings: (1) Defendants' motion for JMOL on Plaintiffs' packaged food products claim was denied with leave to renew after the jury reached a verdict (id. at 762:23-24); (2) Defendants' motion for JMOL to dismiss all claims against BSZ Realty Corp. was granted (see id. at 763:11-765:15; see also Docket Entry 197); (3) Defendants' equitable defenses of laches, unclean hands and bad faith are issues of law and would thus be decided post-verdict by the Court; and (4) there was sufficient evidence to put Defendants' fraud counterclaim to the jury. (See 4/7/08 Tr. at 767:4-15, 771:20-25). Regarding Plaintiffs' motion for JMOL on Defendants' fraud counterclaim, the Court was concerned that presenting this matter to the jury would be overly confusing. In particular, each party had asserted that the other had obtained their trademark registrations through fraud. To resolve these claims would require the jury to assess the "procedural morass" at the TTAB. The Court thus proposed two practical alternatives: that both parties agree to voluntarily dismiss their fraud claims, or that the both parties allow the Court to decide these claims. Plaintiffs preferred the former option, while Defendants preferred the latter.*fn10 Thus, the Court put these claims to the jury, but instructed both parties that they were required to submit more definite statements of their fraud claims to be included in the instructions to the jury. (Id. at 777:6-12.)

Finally, the Court sua sponte issued JMOL on two issues. First, that privity between I.O.B. Realty and its predecessors, as well as between I.O.B. Realty and the Staten Island and Syosset Defendants, had been established as a matter of law. (Id. at 772:13-774:2.) Second, that the competitive proximity and bridging-the-gap factors under the Polaroid test had been established as a matter of law on Defendants' counterclaim. (Id. at 774:3-775:12.)

On April 8, 2008, the parties gave their closing statements and the Court instructed the jury on the law. With one juror having been dismissed due to illness (see 4/8/2008 Tr. at 835:23-836:2), the seven jurors then took copies of the charge, special verdict form and a complete set of exhibits into the jury room to deliberate.*fn11 After two and a half days of deliberation, on April 10, the jury rendered a verdict via the special verdict form. The jury's findings of fact were as follows.*fn12

First, the jury considered Defendants' counterclaim and made the following findings of fact relating to the scope of Defendants' rights in the marks.*fn13 I.O.B. Realty and its predecessors are the prior users of the mark PATSY'S, alone or with other words. (Docket Entry 203 at 1, Question 1.) Pursuant to my instruction, as a matter of law, I.O.B. Realty is in privity with the prior users of the marks PATSY'S and PATSY'S PIZZERIA. (Id. at 2, Questions 2 & 3.) I.O.B. Realty and its predecessors continuously used both the marks PATSY'S and PATSY'S PIZZERIA in connection with the establishment Patsy's Pizzeria. (Id., Questions 4.A & 5.A.) However, I.O.B. Realty and its predecessors' continuous use of the service marks PATSY'S and PATSY'S PIZZERIA was not for restaurant services. (Id. at 2-3, Questions 4.B & 5.B.) Pursuant to my instruction, as a matter of law, the Staten Island Defendants and the Syosset Defendants entered into a valid license agreement with I.O.B. Realty that allowed them to use the marks PATSY'S and PATSY'S PIZZERIA in connection with operating a pizzeria. (Id. at 3, Question 6.)

The jury then made the following factual determinations regarding Defendants' counterclaim. Plaintiffs did not fraudulently obtain either the '836 or '866 Registrations. (Id., Questions 7.A & 7.B.) However, Plaintiffs' '836 and '866 Registrations are likely to cause confusion with I.O.B. Realty's prior rights in the marks PATSY'S and PATSY'S PIZZERIA. (Id. at 7, Questions 8.I.i & 8.I.ii.)*fn14 The earliest date that Plaintiffs' '836 Registration was likely to cause confusion with I.O.B. Realty's rights in PATSY'S and PATSY'S PIZZERIA was September 30, 1999. (Id. at 8, Question 8.J.) The earliest date that Plaintiffs' '866 Registration was likely to cause confusion with I.O.B. Realty's rights in PATSY'S and PATSY'S PIZZERIA was April 13, 2001. (Id. at 8, Question 8.K.)

Having made these factual findings regarding Defendants' counterclaim, the jury then made the following findings regarding Plaintiffs' defenses to Defendants' counterclaim. By clear and convincing evidence, I.O.B. Realty fraudulently obtained the '574 Registration. (Id. at 9, Question 9.) By clear and convincing evidence, I.O.B. Realty abandoned its rights in the marks PATSY'S and PATSY'S PIZZERIA. (Id., Question 10.) The Staten Island Defendants and the Syosset Defendants used the marks PATSY'S and PATSY'S PIZZERIA beyond the scope of their license agreement with I.O.B. Realty. (Id., Questions 11 & 12.)

Having found that there was a basis to reach the question of infringement, the jury then made the following factual findings regarding Plaintiffs' infringement claims of the '836 and '866 Registrations under the Lanham Act. The marks used in relation to the Staten Island Location were likely to cause confusion with Plaintiffs' '836 and '866 Registrations. (Id. at 17 & 18, Questions 26 & 30.) The Staten Island Defendants' violation of the Lanham Act was not willful. (Id., Questions 27 & 31.) The marks used in relation to the Syosset Location were likely to cause confusion with Plaintiffs' '836 and '866 Registrations. (Id., Questions 28 & 32.) The Syosset Defendants' violation of the Lanham Act was willful. (Id., Questions 29 & 33.)*fn15

While the jury found that the Staten Island and Syosset Defendants had infringed upon the '836 and '866 Registrations, it also found that the Staten Island Location did not sell any packaged food products bearing the mark PATSY'S. (Id. at 19, Question 34.) Thus, the jury was instructed not to reach the question of infringement of the '063 Registration for packaged foods. The jury nonetheless found that the Staten Island Defendants were not likely to cause confusion with the '063 Registration; in other words, the Staten Island Defendants did not infringe the '063 Registration. (See id, Question 35.)

The jury next considered infringement of Plaintiffs' rights under the common law and made the following findings of fact. The marks used in relation to the Staten Island Location were likely to cause confusion with Plaintiffs' stylized mark PATSY'S PR and non-stylized mark PATSY'S for restaurant services. (Id. at 20 & 21, Questions 37 & 41.) The Staten Island Defendants' violation of the Plaintiffs' common law rights was not willful. (Id., Questions 38 & 42.) The marks used in relation to the Syosset Location were likely to cause confusion with Plaintiffs' stylized mark PATSY'S PR and non-stylized mark PATSY'S for restaurant services. (Id., Questions 39 & 43.) The Syosset Defendants' violation of the Plaintiffs' common law rights was willful. (Id., Questions 40 & 44.)*fn16

The jury then made the following factual findings on Plaintiffs' unfair competition claim and N.Y. GEN. BUS. LAW§ 360-l (McKinney 1997) ("GBL § 360-l") claim. Plaintiffs' marks PATSY'S or PATSY'S PR are inherently distinctive or have achieved a secondary meaning. (Id. at 22, Question 45.) The Staten Island Defendants violated New York's unfair competition law.*fn17

(Id., Question 46.) The Syosset Defendants violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and New York's unfair competition law. (Id., Question 47.) Finally, the Staten Island and Syosset Defendants violated GBL § 360-l. (Id. at 23, Questions 48.A & 48.B.)

VI. Post-Verdict Proceedings

After receiving the jury's verdict, the Court instructed the parties that it would wait to enter judgment pending resolution of the parties' post-verdict motions. (See 4/10/08 Tr. at 1048:3-5.) In the interim, and based on the jury's verdict, the Court enjoined Defendants by requiring them to place a sign in the Syosset Location's door stating, in red-and-white letters: "WE ARE NOT AFFILIATED WITH PATSY'S ITALIAN RESTAURANT LOCATED AT 236 WEST 56TH STREET, NEW YORK, NY." (See Minute Entry dated 4/17/2008; see also Docket Entry dated 5/2/2008 (slightly modifying order).) Defendants report that they have complied with the Court's Order. (See Docket Entry 210.) The Court also addressed the bifurcated issue of damages, and instructed the parties to engage in limited discovery to determine whether Plaintiffs would elect to seek monetary damages. (See Minute Entry dated 4/17/2008.) Having engaged in such limited discovery, Plaintiffs choose not to seek monetary damages, but instead continue to seek equitable relief and attorneys' fees. (See Docket Entry 220.)*fn18

ANALYSIS

Plaintiffs seek: (1) to have Defendants' '574 Registration cancelled; (2) to permanently enjoin the Syosset Location from using the mark PATSY'S; and (3) an award of attorneys' fees. (See Docket Entry 207.) Defendants oppose Plaintiffs' motions. (See Docket Entry 212.) In turn, Defendants seek: (1) to preclude Plaintiffs' claims under the equitable defenses of laches, unclean hands and bad faith; (2) to have Plaintiffs' '836 and '866 Registrations cancelled; (3) to construe certain of the jury's findings as favorable to Defendants and/or to grant a new trial; and (4) to enjoin Plaintiffs from engaging in various activities. (See Docket Entry 208; Docket Entry 209.) Plaintiffs oppose Defendants' motions. (See Docket Entry 214.)

For the foregoing reasons, the parties motions are granted in part and denied in part.

I. Defendants' Motion for a Final Order on the Issues

Presented to the Jury, or in the Alternative, a New Trial Is Granted in Part and Denied in Part Defendants move that the Court issue a final order, or in the alternative, grant a new trial pursuant to Rules 49(a)(3) and 59(a) of the Federal Rules of Civil Procedure. Defendants have asked the Court to harmonize certain factual findings by the jury in a manner that necessitates invalidating the '836 and '866 Registrations, and to narrowly interpret the Staten Island and Syosset Defendants' liability. (See Docket Entry 208 at 3.) For the following reasons, the Court grants in part Defendants motion to: (1) narrowly construe the jury's finding of abandonment; and (2) negate Plaintiffs' federal trademark infringement claim. Defendants' remaining motions are denied.

A. Standard for Harmonizing the Jury's Findings of Fact and Granting a New Trial

The rule for determining "Issues Not Submitted to the Jury" via a special verdict is set forth in Rule 49(a)(3) of the Federal Rules of Civil Procedure. Rule 49(a)(3) provides that:

A party waives the right to a jury trial on any issue of fact raised by the pleadings or evidence but not submitted to the jury unless, before the jury retires, the party demands its submission to the jury. If the party does not demand submission, the court may make a finding on the issue. If the court makes no finding, it is considered to have made a finding consistent with its judgment on the special verdict.

FED. R. CIV. P. 49(a)(3). Pursuant to its power to make findings of fact on matters not submitted to the jury, the Court "has a duty to reconcile the jury's answers on a special verdict form with any reasonable theory consistent with the evidence, and to attempt to harmonize the answers if possible under a fair reading of those answers." McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1311 (2d Cir. 1993) (citing Gallick v. Baltimore & Ohio R.R., 372 U.S. 108, 119 (1963); Pierce v. S. Pac. Transp. Co., 823 F.2d 1366, 1370 (9th Cir. 1987)). "In evaluating a claim that a jury's answers to special interrogatories are inconsistent, a reviewing court must 'adopt a view of the case, if there is one, that resolves any seeming inconsistency.'" Brooks v. Brattleboro Mem'l Hosp., 958 F.2d 525, 529 (2d Cir. 1992) (quoting Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 890 (2d Cir. 1988)). If "the jury's answers cannot be harmonized rationally, the judgment must be vacated and a new trial ordered." Crockett v. Long Island R.R., 65 F.3d 274, 278 (2d Cir. 1995) (quoting Brooks, 958 F.2d at 530-31).

The rule for granting a new trial on all or some issues after a jury trial is set forth in Rule 59(a)(1)(A) of the Federal Rules of Civil Procedure. The power to grant a new trial under Rule 59(a)(1)(A) is strongly circumscribed, and the Court should only grant "such a motion when the jury's verdict is 'egregious.'" DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 134 (2d Cir. 1998) (quoting Dunlap-McCuller v. Riese Org., 980 F.2d 153, 158 (2d Cir. 1992)). Thus, "[a] motion for a new trial ordinarily should not be granted unless the trial court is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." Atkins v. New York City, 143 F.3d 100, 102 (2d Cir. 1998) (quoting Lightfoot v. Union Carbide Corp., 110 F.3d 898, 911 (2d Cir. 1997)). "In deciding a motion for a new trial, the court may weigh the evidence and is not bound to view it in the light most favorable to the non-moving party." Meiselman v. Byrom, 207 F. Supp. 2d 40, 42 (E.D.N.Y. 2002) (citing DLC Mgmt., 163 F.3d at 133; United States v. Landau, 155 F.3d 93, 104 (2d Cir. 1998)). However, "[a] jury's credibility assessments are entitled to deference . . . and . . . 'where the resolution of the issues depended on assessment of the credibility of the witnesses, it is proper for the court to refrain from setting aside the verdict and granting a new trial.'" Landau, 155 F.3d at 104-05 (citing Tennant v. Peoria & Pakin Union Ry. Co., 321 U.S. 29, 35 (1944); quoting Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992)). Most importantly, "if the moving party's argument is simply a disagreement with the court's decisions or conclusions, that party is not entitled to relief under Rule 59." Meiselman, 207 F. Supp. 2d at 42 (citing Ullman v. Starbucks Corp., 152 F. Supp. 2d 322, 326 (S.D.N.Y. 2001)).

As Plaintiffs argue, Defendants failed to make a pre-verdict motion for JMOL on the issues that they now raise. (See Docket Entry 214 at 3-6; see also 4/7/08 Tr. at 757:11-759:9, 763:11-24.) As such, Defendants are foreclosed from now making a post-verdict motion for JMOL. See McCardle v. Haddad, 131 F.3d 43, 50-51 (2d Cir. 1997) ("There is no provision for a JMOL motion to be made for the first time after trial.") (citing Holmes v. United States, 85 F.3d 956, 962 (2d Cir. 1996)). Unlike a motion brought under either Rule 49(a)(3) or 59(a)(1)(A), a motion for JMOL permits the court to grant judgment "if it can conclude that, with credibility assessments made against the moving party and all inferences drawn against the moving party, a reasonable juror would have been compelled to accept the view of the moving party." Piesco v. Koch, 12 F.3d 332, 343 (2d Cir. 1993) (citing Fugazy, 983 F.2d at 361). To the extent that Defendants now request that the Court makes such an evaluation, this relief is denied.

B. Defendants' Motion to Narrowly Interpret the Jury's Findings as to the Scope of Defendants' Rights, or in the Alternative Grant a New Trial, Is Denied

Defendants argue that the jury's findings regarding the scope of their rights should be read narrowly or, in the alternative, a new trial should be granted. The jury found that: (1) I.O.B. Realty and its predecessors' continuous use of the service marks PATSY'S and PATSY'S PIZZERIA was not for restaurant services (Docket Entry 203 at 2-3, Questions 4.B & 5.B); and (2) the Staten Island and Syosset Defendants used the marks PATSY'S and PATSY'S PIZZERIA beyond the scope of their license agreement with I.O.B. Realty (Id. at 9, Questions 11 & 12). The purpose of these special verdict questions was to permit the jury to define the scope of Defendants' use of the marks PATSY'S and PATSY'S PIZZERIA so that it could then determine whether Defendants infringed upon Plaintiffs' rights by exceeding their proper scope of use. For the reasons given below, the Court is persuaded that the jury's verdicts on these issues were neither egregious nor a miscarriage of justice, and therefore Defendants' motions are accordingly denied.

1. I.O.B. Realty Has Not Continuously Used the Marks PATSY'S and PATSY'S PIZZERIA for Restaurant Services

Because the jury was not instructed how to define "restaurant services" as opposed to "operating a pizzeria," Defendants argue that "operating a pizzeria" should be defined narrowly as only "any place that serves pizza." (Docket Entry 208 at 5-7.) Defendants further argue that the jury's finding that the Staten Island and Syosset Defendants exceeded the scope of I.O.B.

Realty's rights should be limited to the fact that the Staten Island Defendants opened a bakery. (Id.) While these are creative arguments, they are wholly inconsistent with the jury's findings and are therefore rejected.

Defendants have not shown an adequate basis for the Court to harmonize the jury's factual findings or to order a new trial. Defendants first argue that such relief is warranted because the Court did not define restaurant services as opposed to pizzeria services. However, the fact that the Court did not define how these services differ is immaterial because trademark rights derive from use, not from any legal classification at the PTO or otherwise. See In re Trade-Mark Cases, 100 U.S. 82, 94 (1879) ("At common law the exclusive right to [trademark protection] grows out of its use, and not its mere adoption. . . . It is simply founded on priority of appropriation."); Punchgini, 482 F.3d at 146 ("[O]ne of the fundamental premises underlying the registration provisions in the Lanham Act is that trademark rights flow from priority and that priority is acquired through use.") (citing 15 U.S.C. § 1057(c)). At most, therefore, the classification of restaurant services as opposed to pizzeria services is an issue of mixed fact and law. Nonetheless, the jury was perfectly capable of making such a determination, and Defendants did not object to presenting this issue to the jury. Further, Defendants have not shown that the Court erred by instructing the jury that trademark rights derive from continuous use. (See Docket Entry 202 at 20-21 (instructing jurors that "a party only maintains rights in a mark through 'continuous use.' Continuous use is defined as deliberate and continuous, not sporadic, casual or transitory. The law also considers whether a party intends to continue exploiting a mark commercially.").) Given these instructions, the jury was perfectly capable of defining, as an issue of fact, the scope of Defendants' rights in the marks PATSY'S and PATSY'S PIZZERIA, and whether those rights included restaurant and/or pizzeria services.

It is also worth noting that Defendants bore the burden of proving that I.O.B. Realty and its predecessors continuously engaged in restaurant services as well as pizzeria services. The jury found that Defendants had only met their burden as to the latter. As instructed, the jury made this determination on the basis of Defendants' proof of continuous use. Reading the jury's verdict as a whole, it is clear that the jury concluded that I.O.B. Realty's continuous use of PATSY'S and PATSY'S PIZZERIA did not include restaurant services. Defendants introduced evidence that the East Harlem Location served traditional restaurant fare between the 1930s and 1950s. (See, e.g., 4/1/08 Tr. at 209:17-210:19; 4/3/08 Tr. at 641:19-642:16.) Defendants also introduced evidence that I.O.B. Realty has served such fare beginning in the 1990s. (See Defs.' Exs. W & X, DD, PPP.) However, the jury could have reasonably concluded that Defendants failed to meet their burden of showing continuous use of their marks from the 1940s to the 1990s. For instance, the jury could have relied upon I.O.B. Realty's contract with Carmela Lancieri, which provides that I.O.B. Realty "will continue to operate the pizzeria in the normal, usual and customary manner . . . ." (Defs. Ex. F.) Therefore, the jury's finding that I.O.B. Realty's rights are limited to pizzeria services does not require harmonization with the jury's other findings, and the result is neither egregious nor a miscarriage of justice.

At the same time, the jury's verdict begs the following question: if I.O.B. Realty is the senior user of the marks PATSY'S and PATSY'S PIZZERIA for pizzeria services, do Plaintiffs then have the right to use the mark PATSY'S or PATSY'S ITALIAN RESTAURANT for restaurant services? In answering this question, the Court relies ...


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