Second Circuit rejects foreign famous marks doctrine federally, certifies state question

ITC Ltd. v. Punchgini, Inc., --- F.3d ----, 2007 WL 914742 (2nd Cir.)

The Second Circuit, after a long wait, has finally ruled on the validity of the famous marks exception to the territorial scope of trademark protection – and found no such exception in federal law. Thus, it affirmed the district court’s finding that the plaintiff had abandoned its mark BUKHARA for restaurants in the US, and could not maintain a federal unfair competition claim under §43(a). Significantly, however, it certified to the New York Court of Appeals the questions whether New York recognized the famous marks exception under state law, and if so what standard of fame was required (listing several possibilities, from mere secondary meaning to federal dilution fame). The case isn’t over, but we are well on our way to a clear answer about the validity of the rule in New York, whose decades-old trial court decisions provide the foundation for the claim that the US occasionally does protect famous foreign marks that aren’t in use within its borders.

Turning to less significant matters, the court affirmed the dismissal of plaintiff’s false advertising claim, since plaintiff lacked standing in the absence of evidence that defendant ever made statements comparing its Bukhara Grill to plaintiff’s Bukhara food products sold in the US. Defendant did compare the Bukhara Grill to plaintiff’s New Delhi Bukhara restaurant. Even though a significant percentage of defendant’s customers are of Indian descent, and even if such people are more likely to visit India, the court found any risk to plaintiff’s reputation too attenuated to support standing. Moreover, even if the court accepted plaintiff’s legal claim that well-developed plans to enter a market can support a finding of competitor standing, a question on which it reserved judgment, plaintiff had shown no such well-developed plans.