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I.O.B. Realty, Inc. v. Patsy's Brand, Inc.

United States District Court, S.D. New York

May 15, 2017

I.O.B. REALTY, INC., Plaintiff,
v.
PATSY'S BRAND, INC. and JOHN DOES 1-10, Defendants.

          OPINION & ORDER

          LOUIS L. STANTON U.S.D.J.

         Defendant Patsy's Brand, Inc. ("Patsy's Brand") moves, pursuant to Fed.R.Civ.P. 12(b)(6), to dismiss I.O.B. Realty, Inc.'s ("IOB Realty") complaint alleging trademark infringement for failure to state a claim upon which relief can be granted.

         For the reasons that follow, the motion is denied.

         BACKGROUND [1]

         The complaint (Dkt. No. 1) alleges the following:

         IOB Realty is a New York corporation based in New York City. Id. ¶ 2. IOB Realty and its predecessors have continuously used the mark PATSY'S PIZZERIA for restaurant services since 1933. Id. ¶ 13. IOB Realty licenses the mark PATSY'S PIZZERIA to its Patsy's Pizzeria franchisees for use in restaurant services in the New York metropolitan area. Id. ¶¶ 2, 12-13. IOB Realty obtained U.S. Trademark Registration Number 2, 213, 574 for the mark PATSY'S PIZZERIA, but as a result of what IOB Realty alleges was "shenanigans" engaged in by Patsy's Brand's counsel, that registration was canceled. Id. ¶ 14.

         Patsy's Brand is a New York corporation based in New York City. Id. ¶ 3. Patsy's Brand uses and licenses the marks PATSY'S OF NEW YORK and PATSY'S OF NEW YORK ITALIAN RESTAURANT for restaurant services in New York. Id. ¶ 4. Patsy's Brand obtained U.S. Trademark Registration Number 3, 090, 551 for the mark PATSY'S OF NEW YORK. Id. ¶ 11. Use of IOB Realty's mark PATSY'S PIZZERIA predates use of Patsy's Brand's mark PATSY'S OF NEW YORK. Id. ¶ 21.

         The Trademark Office has denied two IOB Realty applications to register the mark PATSY'S PIZZERIA for restaurant services and franchising services because of Patsy's Brand's registration for the mark PATSY'S OF NEW YORK. Id. ¶ 17.

         In a consolidated action brought in United States District Court for the Eastern District of New York by Patsy's Brand and non-party Patsy's Italian Restaurant, Inc. ("Patsy's Italian Restaurant"), in which IOB Realty was a defendant, Judge Irizarry ordered the restoration of "I.O.B. Realty, Inc.'s U.S. Trademark Registration No. 2, 213, 574 for non-stylized rendition of PATSY'S PIZZERIA for restaurant services." See Patsy's Italian Rest., Inc. v. Banas, 508 F.Supp.2d 194, 221 (E.D.N.Y. 2007). The U.S. Patent and Trademark Office did not restore the registration at that time, choosing to await final disposition of the case. Compl. ¶ 14.[2]

         In ruling on a post-trial motion in that action, Magistrate Judge Reyes declined IOB Realty's invitation to order the cancelation of Patsy's Brand's registration for the mark PATSY'S OF NEW YORK. Id. ¶ 15.

         Following an appeal, Judge Reyes ordered that Patsy's Brand and Patsy's Italian Restaurant "are required to refer to their restaurant services using the mark PATSY'S ITALIAN RESTAURANT" and IOB Realty and its Patsy's Pizzeria franchisees "are required to refer to their pizzeria services using the mark PATSY'S PIZZERIA." IcL ¶ 16; see Exhibit H to Defendant's Brief (Dkt. No. 12-8) at 4, quoting Patsy's Italian Rest., Inc. v. Banas, 575 F.Supp.2d 427, 470-71 (E.D.N.Y. 2008), aff'd, 658 F.3d 254 (2d Cir. 2011).

         IOB Realty sought an order from Judge Reyes holding Patsy's Brand in contempt for continuing to use the mark PATSY'S OF NEW YORK despite being ordered to use the mark PATSY'S ITALIAN RESTAURANT. Compl. ¶ 18. In a hearing on that application held on January 6, 2015, Judge Reyes reemphasized his prior order that Patsy's Brand was to use the mark PATSY'S ITALIAN RESTAURANT and Patsy's Pizzeria was to use the mark PATSY'S PIZZERIA. Id.; see Exhibit 4 to the Complaint (Dkt. No. 1-4). Patsy's Brand argued that disputes over the mark PATSY'S OF NEW YORK were beyond the scope of that case. Judge Reyes referred the matter to a special master who recommended against holding Patsy's Brand in contempt, noting, among other things, that "Plaintiffs [Patsy's Brand and Patsy's Italian Restaurant] apparently are not using the mark PATSY'S OF NEW YORK." Compl. ¶ 18; see Exhibit H to Defendant's Brief at 13-14. Accepting the special master's recommendation, Judge Reyes did not issue the requested contempt order. Compl. ¶ 18.

         The registration for the mark PATSY'S OF NEW YORK was set to expire on May 19, 2016, and IOB Realty expected that the expiration would enable it to register its mark PATSY'S PIZZERIA. Id. ¶ 19. However, on August 5, 2016, after Patsy's Brand asserted that it was still using the mark PATSY'S OF NEW YORK in interstate commerce, the Trademark Office renewed the registration for that mark; with limited exception, renewing a trademark registration requires proof that the mark is in use in interstate commerce. Id. ¶¶ 19-20.

         On September 30, 2016, IOB Realty commenced this action asserting that the continued use and the registration of the mark PATSY'S OF NEW YORK by Patsy's Brand promotes consumer confusion and infringes on its more senior mark PATSY'S PIZZERIA in violation of section 43 of the Lanham Act, 15 U.S.C. § 1125(a), and New York common law. Id. ΒΆΒΆ 21-30. IOB Realty seeks, among other things, compensatory and punitive damages to be determined at trial, an order enjoining Patsy's Brand from using the mark PATSY'S OF NEW ...


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