Tuesday, April 01, 2008

ITC, Punchgini and Bukhara: ITC prevails as Second Circuit Court applies Unfair Competition [United States]

In ITC Limited and ITC Hotels Limited v. Punchgini Inc. USCOA 2 No. 165 (N.Y. December 13, 2007), the Second Circuit court refused to apply the doctrine of famous marks to stop the infringement of an Indian trademark ‘Bukhara’. Nevertheless, the New York Court of Appeals applied the law of Unfair Competition to protect the trademark not specifically being used in the US at that point of time. The plaintiff was running a five star restaurant in New Delhi by the name ‘Bukhara’. It had acquired “some measure of reknown among those with an avid interest in fine cuisine.” Later, they decided to open nine restaurants in different parts of the world including US. However, the two Bukhara restaurants opened in US were closed down within a short span. Few former employees of Bukhara of New Delhi opened a Bukhara Grill and Bukhara II restaurants in Manhattan. They used the same logos, style, design, recipes and even the dresses of the waiters of the original Bukhara.

The Second Circuit refused to acknowledge trademark infringement because the plaintiff had abandoned the use of the trademark in the US, though they continued to operate in India.
The New York Court of Appeals later concluded that New York law "recognizes common law unfair competition claims, but not the ‘famous’ or ‘well-known’ marks doctrine."

Unfair Competition law prohibits use of another’s trademark or indication which is identical or similar to other persons goods that are widely recognized among users and thereby causing one's goods or business to be confounded with another person's business. Accordingly, “when a business, through reknown in New York, possesses goodwill constituting property or commercial advantage in this state, that goodwill is protected from misappropriation under New York unfair competition law. This is so whether the business is domestic or foreign.” Further, it was stated that the consumers of services provided by the defendants “must primarily associate the mark with the foreign plaintiff.” The court refused to exhaustively state the factors to determine this, stating that they would “vary with the facts of each case”. However, there has to be “evidence that the defendant intentionally associated its goods with those of the foreign plaintiff in the minds of the public, such as public statements or advertising stating or implying a connection with the foreign plaintiff; direct evidence, such as consumer surveys, indicating that consumers of defendant's goods or services believe them to be associated with the plaintiff; and evidence of actual overlap between customers of the New York defendant and the foreign plaintiff.”

The case is foundational in that it represents a paradigm shift in protection of foreign trademarks in the US. They now qualify for protection even though they may not be registered in the US, the underlying principle being that commercial unfairness should be restrained whenever there is misappropriation, for the benefit of the person who holds a legitimate property right.

No comments: