Patsy's Italian Restaurant, Inc., et al. v. Banas, et al., No. 08-4487 (2d Cir. 2011)

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Justia Opinion Summary

This appeal stemmed from numerous trademark and unfair competition claims over the name "Patsy's." Patsy's Italian Restaurant appealed, and Patsy's Pizzeria cross-appealed, from a judgment of the district court after a jury trial on claims brought pursuant to trademark and unfair competition law. The court upheld the district court's jury instructions; affirmed the district court's refusal to grant a new trial on the issue of whether Patsy's Pizzeria made fraudulent statements to the Patent and Trademark Office, as well as its refusal to vacate the jury's verdict that Patsy's Italian Restaurant did not fraudulently obtain its trademark registrations; affirmed the district court's refusal to reinstate Patsy's Pizzeria's trademark registrations; and upheld the district court's denial of attorneys' fees and injunctive relief. Accordingly, the court affirmed the judgment of the district court.

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08-4487-cv(L) Patsy s Italian Restaurant, Inc. v. Banas 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2009 4 (Argued: October 19, 2009 Decided: August 24, 2011) 5 Docket Nos. 08-4487-cv(L), 08-4774-cv(XAP) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PATSY S ITALIAN RESTAURANT, INC., Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, PATSY S BRAND, INC., Plaintiff-Appellant-Cross-Appellee, v. ANTHONY BANAS, doing business as Patsy s, doing business as Patsy s Pizzeria Trattoria Impazzire, doing business as Patsy s Bakery & Café, ALLAN ZYLLER, doing business as Patsy s Pizzeria Trattoria, doing business as Patsy s, AL & ANTHONY S PATSY S, INC., I.O.B. REALTY, INC., Defendants-Counter-Claimants-Appellees-CrossAppellants, PATSY S BAKERY & CAFà , PATSY S PIZZERIA, Defendants-Appellees, ANTHONY & PATSY S, Defendant-Appellee-Cross-Appellant, BSZ REALTY CORP., Defendant, PATSY S INC., Intervenor-Cross-Appellant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - B e f o r e: WINTER, POOLER, Circuit Judges, and RAKOFF, District Judge.* * The Hon. Jed S. Rakoff, of the United States District Court for the Southern District of New York, sitting by designation. 1 1 Patsy s Italian Restaurant appeals, and Patsy s Pizzeria 2 cross-appeals, from a judgment of the United States District 3 Court for the Eastern District of New York (Ramon E. Reyes, Jr., 4 Magistrate Judge) after a jury trial on claims brought pursuant 5 to trademark and unfair competition law. 6 court s jury instructions. 7 court s refusal to grant a new trial on the issue of whether 8 Patsy s Pizzeria made fraudulent statements to the Patent and 9 Trademark Office, as well as its refusal to vacate the jury s 10 verdict that Patsy s Italian Restaurant did not fraudulently 11 obtain its trademark registrations. 12 district court s refusal to reinstate Patsy s Pizzeria s 13 trademark registration and its cancellation of Patsy s Italian 14 Restaurant s trademark registrations. 15 district court s denial of attorneys fees and injunctive relief. 16 We therefore affirm. 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 We uphold the district Additionally, we affirm the district We further affirm the Finally, we uphold the NORMAN H. ZIVIN, Cooper & Dunham LLP, New York, New York (Robert T. Maldonado, Tonia A. Sayour, on the brief), for PlaintiffCounter-Defendant-AppellantCross-Appellee and Plaintiff-Appellant-CrossAppellee. PAUL GRANDINETTI, Levy & Grandinetti, Washington, D.C. (Rebecca J. Stempien, Steven M. Levy, on the brief), for DefendantsCounter-Claimants-AppelleesCross-Appellants. 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 TABLE OF CONTENTS BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 5 a) The Parties . . . . . . . . . . . . . . . . . . . . . . . . 5 b) The Prior Sauce Dispute . . . . . . . . . . . . . . . . 8 . . . . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . . . . . . . . . . 14 c) The Current Dispute DISCUSSION a) Patsy s Italian Restaurant s Appeal: Merits . . . . . . . 1) Cancellation of Appellants Registrations 14 . . . 14 A) Cancellation Not Barred by the Prior Injunction . . . . . . . . . . . . 15 B) Patsy s Pizzeria Only Partially Abandoned Its Marks . . . . . . . . . . . 17 C) Jury Instructions Pursuant to Grants of Judgment as a Matter of Law . . . . . . . . . . . . . . . . . . . 24 2) Denial of Attorneys Fees . . . . . . . . . . . 28 . . . . . . . . 29 1) Limitation of Appellees Rights to Pizzeria Services . . . . . . . . . . . . . . . . . 29 2) Fraud on the PTO 33 b) Patsy s Pizzeria s Cross-Appeal: Merits . . . . . . . . . . . . . . . 3) Refusal to Reinstate Registration No. 2,213,574 c) Injunctive Relief 36 37 1) Refusal to Enjoin Appellees from Using Patsy s Outside of Manhattan. . . . . . . . . . . . 38 2) Prohibiting Appellants and Patsy s Pizzeria From Using Solely PATSY S . . . . . . . . . . . . CONCLUSION . . . . . . . . . . . . . . . . . . . . 41 . . . . . . . . . . . . . . . . . . . . . . . . . 46 3 1 2 3 WINTER, Circuit Judge: 4 last, chapter in a long legal struggle involving a host of 5 trademark and unfair competition claims over the name Patsy s. 6 Patsy s Italian Restaurant, Inc., and Patsy s Brand, Inc. 7 (collectively Patsy s Italian Restaurant or appellants ) 8 appeal from a judgment entered after a jury trial before 9 Magistrate Judge Reyes. This appeal is the latest, longest, and perhaps even the Anthony Banas, Anthony s & Patsy s Inc., 10 Allan Zyller, Al & Anthony s Patsy s Inc., I.O.B. Realty, Inc., 11 and Patsy s Inc. (collectively Patsy s Pizzeria or appellees ) 12 cross-appeal. 13 Patsy s Italian Restaurant s appeal raises the following 14 issues: (i) whether the district court erroneously cancelled 15 their service mark registrations; (ii) whether the district 16 court s decisions regarding injunctive relief constituted an 17 abuse of discretion; and (iii) whether the district court abused 18 its discretion when it denied their request for attorneys fees. 19 Patsy s Pizzeria s cross-appeal raises the following issues: 20 whether their rights were erroneously limited to pizzeria 21 services; (ii) whether the jury verdict that they fraudulently 22 obtained their service mark registration can be upheld; (iii) 23 whether the jury verdict that appellants did not fraudulently 24 obtain their service mark registrations should have been vacated; 25 (iv) whether the district court erroneously refused to reinstate 26 their service mark registration; and (v) whether the district 4 (i) 1 court s decisions regarding injunctive relief constituted an 2 abuse of discretion. 3 We affirm. Relevant factual disputes were resolved by the 4 jury, and the district court s equitable relief was appropriately 5 balanced and designed to limit ongoing consumer confusion. 6 7 BACKGROUND To shorten this section and overall opinion, we provide only 8 an overview of the parties, their trademarks, their relationship 9 with one another, and the current dispute. Relevant descriptions 10 of the evidence at trial, the jury instructions, and various 11 aspects of the motion practice in the district court will be 12 given in the DISCUSSION section when relevant. 13 a) The Parties 14 Appellants are associated with Patsy s Italian Restaurant on 15 West 56th Street in Midtown, New York City. 16 operation since 1944 and is well-known for Italian cuisine. 17 entity Patsy s Italian Restaurant, Inc. operates the restaurant. 18 Patsy s Brand, Inc. was created in 1993 to sell packaged food 19 products in association with Patsy s Italian Restaurant. 20 beginning of this action, Patsy s Italian Restaurant, Inc. held 21 two federal service mark1 registrations issued November 1, 2005 1 It has been in At the A service mark is: [A]ny word, name, symbol, or device, or any combination thereof-(1) used by a person, or (2) which a person has a bona fide intention to use in commerce and applies to register on 5 The 1 -- Registration Nos. 3,009,836 (the ´836 Registration ) and 2 3,009,866 (the ´866 Registration ) -- which have since been 3 transferred to Patsy s Brand. 4 stylized mark PATSY S PR for restaurant services. 5 Registration is for the mark PATSY S for restaurant services not 6 including pizza. 7 1,874,789 (the ´789 Registration ) for the trademark PATSY S for 8 sauces. 9 The ´836 Registration is for the The ´866 Patsy s Brand also holds Registration No. Appellees are associated with Patsy s Pizzeria. The 10 original Patsy s Pizzeria opened in 1933 in East Harlem and 11 claims to have been the first pizzeria to sell pizza by the the principal register established by this chapter, to identify and distinguish the services of one person, including a unique service, from the services of others and to indicate the source of the services, even if that source is unknown. . . . 15 U.S.C. § 1127. In contrast, a trademark is: [A]ny word, name, symbol, or device, or any combination thereof-(1) used by a person, or (2) which a person has a bona fide intention to use in commerce and applies to register on the principal register established by this chapter, to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown. Id. Because trademarks and service marks are generally protected by the same standards, see 15 U.S.C. § 1053; Lane Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d 337, 344 n.2 (2d Cir. 1999), we make no distinction in the law governing these marks unless specifically noted. 6 1 slice. I.O.B. Realty, Inc. purchased the original Patsy s 2 Pizzeria in 1991 and entered into a licensing agreement with 3 Patsy s Inc. in 1998. 4 owns the real estate and trademarks, whereas Patsy s Inc. is the 5 franchising arm of Patsy s Pizzeria. 6 Patsy s Pizzeria locations in Manhattan in addition to the 7 original location, the Staten Island location, and the Syosset 8 location. 9 Patsy s Inc. collectively as the intervening appellees. Under the current agreement, I.O.B. Realty There are currently six When appropriate, we refer to I.O.B. Realty and I.O.B. 10 Realty previously received two federal service mark registrations 11 -- Registration No. 1,975,110 ( the ´110 Registration ) and 12 Registration No. 2,213,574 (the ´574 Registration ). 13 Registration, issued May 21, 1996, was for the mark PATSY S for 14 restaurant services. 15 1998, was for the mark PATSY S PIZZERIA for restaurant services. 16 The ´110 The ´574 Registration, issued December 29, Appellees Banas and Anthony & Patsy s, Inc. are associated 17 with the Staten Island location of Patsy s Pizzeria, and, when 18 appropriate, are referred to collectively as the Staten Island 19 appellees. 20 the Staten Island location was opened after they obtained a 21 license to use I.O.B. Realty s marks. 22 and Al & Anthony s Patsy s, Inc. are associated with the Syosset 23 location of Patsy s Pizzeria, and, when necessary, are referred 24 to as the Syosset appellees. 25 a matter of law, the Syosset location also obtained a license to The district court found that, as a matter of law, Appellees Banas, Zyller, The district court found that, as 7 1 use I.O.B. Realty s marks. 2 b) The Prior Sauce Dispute 3 The parties coexisted without litigation until each began to 4 sell packaged sauce under the name Patsy s, thereby causing 5 considerable consumer confusion. 6 intervening appellees brought a cancellation proceeding before 7 the Patent and Trademark Office (the PTO ) seeking the 8 cancellation of Patsy s Brand s ´789 Registration for PATSY S for 9 sauces. On October 8, 1998, the Patsy s Brand responded by filing a cancellation 10 proceeding before the PTO seeking the cancellation of I.O.B. 11 Realty s Registration No. 1,975,110 for PATSY S for restaurant 12 services and Registration No. 2,213,574 for PATSY S PIZZERIA for 13 restaurant services. 14 Southern District against the intervening appellees. 15 (the sauce litigation ) alleged trademark infringement and 16 unfair competition due to appellees sale of sauces using the 17 PATSY S mark. 18 suspended pending resolution of the sauce litigation. 19 Patsy s Brand also filed suit in the The action The cancellation proceedings were consolidated and In granting Patsy s Brand s a preliminary injunction in the 20 sauce litigation, the district court rejected the intervening 21 appellees argument that they were entitled to bridge the gap 22 into sauces as the senior user of the PATSY S mark for restaurant 23 services. 24 Brand I ), 53 U.S.P.Q.2d 1861, 1862-63 (S.D.N.Y. 2000). 25 court reasoned that the mark PATSY S for restaurant services was Patsy s Brand Inc. v. I.O.B. Realty Inc.( Patsy s 8 The 1 weak, as both parties had the right to use the mark for 2 restaurant services. 3 unclear when the intervening appellees entered the sauce market, 4 because evidence provided in support of the alleged date of entry 5 was clearly falsified, a fact that suggested that the intervening 6 appellees did not choose [their] sauce label in good faith. 7 Id. at 1862. 8 for summary judgment in the sauce litigation, the district court 9 again reiterated its findings that the intervening appellees Id. at 1863. It also observed that it was In a later opinion granting Patsy s Brand s motion 10 presented falsified evidence and ordered them to show cause why 11 they should not be sanctioned for doing so. 12 v. I.O.B. Realty Inc. ( Patsy s Brand II ), 58 U.S.P.Q.2d 1048, 13 1050, 1059 (S.D.N.Y. 2001). 14 intervening appellees and enjoined them from petitioning to 15 cancel Patsy s Brand s registrations for sauces, other packaged 16 food products, and restaurant services. 17 the Commissioner of the PTO to cancel the intervening appellees 18 ´110 Registration. Patsy s Brand Inc. The district court sanctioned the In addition, it directed 19 On October 18, 2001, Patsy s Brand filed a motion with the 20 PTO requesting that the cancellation proceedings be reinstated. 21 This request led to the subsequent judgment cancelling the 22 intervening appellees ´110 Registration on September 4, 2002. 23 However, after Patsy s Brand filed its request, the intervening 24 appellees filed a notice of appeal in the sauce litigation. 25 Notably, this appeal did not challenge the portion of the 9 1 injunction that enjoined them from petitioning to cancel Patsy s 2 Brand s registrations for restaurant services. 3 Inc. v. I.O.B. Realty, Inc. ( Patsy s Brand III ), 317 F.3d 209, 4 219-21 (2d Cir. 2003). 5 sanctions against the intervening appellees, struck the provision 6 cancelling the intervening appellees ´110 Registration, and 7 stated that the injunction should be confined to the marketing 8 of pasta sauce and food products and should not reach the 9 [intervening appellees ] restaurant business . . . . 10 Patsy s Brand, On January 16, 2003, we affirmed the Id. at 221-22. 11 On May 27, 2003, the Commissioner erroneously cancelled the 12 intervening appellees ´110 Registration and ´574 Registration. 13 On July 13, 2007, after realizing the previous order was 14 erroneous, the Commissioner issued an order cancelling the 15 registrations due to I.O.B. Realty s failure to file declarations 16 of continuing use pursuant to 15 U.S.C. § 1058. 17 c) The Current Action 18 On February 17, 2006, appellants brought suit against the 19 Staten Island appellees for federal and common law trademark 20 infringement, injury to business reputation, and common law 21 unfair competition. 22 September 2006. 23 appellants discovered that the Syosset location was preparing to 24 open. 25 Syosset appellees for federal and common law trademark The Staten Island location closed in During the course of settlement negotiations, On October 30, 2006, appellants brought suit against the 10 1 infringement, federal and common law unfair competition, false 2 designation of origin, and injury to business reputation. 3 two actions were then consolidated, and I.O.B. Realty and Patsy s 4 Inc. intervened, alleging that they had prior use rights to 5 PATSY S for restaurant services. 6 Syosset appellees, I.O.B. Realty, and Patsy s Inc. filed a 7 counterclaim seeking a declaration either that appellees did not 8 infringe appellants marks or that those marks were invalid. 9 After appellants sought a temporary restraining order, Judge The On November 26, 2006, the 10 Irizarry issued an order allowing the Syosset appellees to open 11 the Syosset location as long as the words Trattoria Impazzire 12 were not used with any materials associated with the restaurant.2 13 In March 2007, appellees filed a motion for summary judgment 14 before the district judge seeking restoration of the ´574 15 Registration, cancellation of appellants ´836 Registration and 16 ´866 Registration, and the dismissal of appellants claims. 17 district judge granted restoration of the ´574 Registration, but 18 denied summary judgment on appellants claims and the request for 19 the cancellations. 20 Banas ( Patsy s Italian Rest. I ), 508 F. Supp. 2d 194 (E.D.N.Y. 21 2007). The See generally Patsy s Italian Rest., Inc. v. The district court also rejected appellants argument 2 The district court did this because trattoria means restaurant in Italian, and allowing appellees to use the words Trattoria Impazzire on the facade of the Syosset location would add to the consumer confusion caused by the use of appellants mark and name in connection with restaurant services. 11 1 that the injunction from the sauce litigation prohibited 2 appellees from seeking such relief on the ground that the 3 injunction applied only to registrations owned by Patsy s Brand. 4 See id. at 214, 216. 5 registrations at issue. 6 Patsy s Italian Restaurant, Inc. owned the Id. at 214. The parties proceeded to a jury trial before the magistrate 7 judge. The jury found that: (i) I.O.B. Realty was the senior 8 user of the marks PATSY S and PATSY S PIZZERIA, and continuously 9 used the marks for pizzeria services but not restaurant services; 10 (ii) there was a likelihood of confusion between appellees marks 11 and appellants ´836 and ´866 Registrations; (iii) the Staten 12 Island and Syosset appellees had exceeded the scope of their 13 license with I.O.B. Realty; (iv) I.O.B. Realty had abandoned its 14 marks through naked licensing -- i.e., a lack of adequate quality 15 control over goods and services sold under the mark by the 16 licensees; (v) the Staten Island appellees engaged in unfair 17 competition and infringed appellants federal and common law 18 marks, but the infringement was not willful; (vi) the Syosset 19 appellees engaged in unfair competition and willfully infringed 20 appellants federal and common law marks; (vii) both the Staten 21 Island appellees and the Syosset appellees were likely to injure 22 appellants business reputation; (viii) appellees fraudulently 23 obtained the ´574 Registration; and (ix) appellants did not 24 fraudulently obtain either the ´836 Registration or the ´866 25 Registration. 12 1 After trial, appellants sought an injunction preventing the 2 Syosset appellees from using the mark PATSY S. 3 initial request was denied, on April 17, 2008, the district court 4 ordered the Syosset location to put up a 24 x 24 sign in its 5 front door that contained, in red capital letters, the statement: 6 WE ARE NOT AFFILIATED WITH PATSY S ITALIAN RESTAURANT LOCATED AT 7 236 WEST 56TH STREET, NEW YORK, NY. 8 9 Although this On September 9, 2008, the district court issued a decision dealing with the post-trial issues. See generally Patsy s 10 Italian Rest., Inc. v. Banas ( Patsy s Italian Rest. IV ), 575 F. 11 Supp. 2d 427 (E.D.N.Y. 2008). 12 judgment as a matter of law because appellees failed to make such 13 requests during trial. 14 denied appellees various motions for a new trial. 15 54. 16 motion for a new trial with regard to the abandonment of their 17 marks, the district court granted their motion to interpret the 18 abandonment verdict narrowly. 19 that the jury s verdict of abandonment was based on naked 20 licensing but that the jury had not addressed the geographic 21 scope of the naked licensing, id. at 450, 452, the district court 22 determined that appellees had abandoned their marks only in 23 Staten Island and Syosset. It denied appellees motions for Id. at 445. The district court also Id. at 446- Nevertheless, while the district court denied appellees See id. at 450, 453. Concluding Id. at 452-53. 24 With regard to the parties service mark registrations, the 25 district court superseded the prior order reinstating appellees 13 1 ´574 Registration, thus refusing reinstatement of the 2 registration, reasoning that the jury s verdicts precluded such 3 relief. 4 court also determined that appellants ´836 and ´866 5 Registrations should be cancelled due to appellees limited 6 remaining rights in their marks. 7 Id. at 463, 468-69, 469 n.28. However, the district Id. at 463, 465. Addressing injunctive relief, the district court permanently 8 enjoined the Syosset appellees from using the words Trattoria 9 Impazzire in connection with their establishment. Id. at 469. 10 Additionally, the district court required the Syosset appellees 11 to maintain the previously imposed disclaimer sign for not less 12 than three years from the entry of judgment. 13 court denied appellants requests for further injunctive relief, 14 as well as appellees request for injunctive relief. 15 70. 16 prohibiting both Patsy s Italian Restaurant and Patsy s Pizzeria 17 from using the term PATSY S alone in connection with their 18 establishments. 19 20 21 22 Id. The district Id. at 469- However, the district court went on to enter an injunction Id. at 470-71. Finally, the district court denied appellants request for attorneys fees. Id. at 471. DISCUSSION a) Patsy s Italian Restaurant s Appeal: Merits 23 1) Cancellation of Appellants Registrations 24 Patsy s Italian Restaurant advances several arguments that 25 the district court erred in cancelling the ´836 and ´866 14 1 Registrations. We address them seriatim. 2 A) Cancellation Not Barred by the Prior Injunction 3 Appellants argue that the injunction in the sauce litigation 4 5 6 prohibited appellees from seeking cancellation. The injunction issued in the sauce litigation provided, in relevant part: 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 The district court held that the sauce litigation injunction 25 applied only to registrations owned by Patsy s Brand and not to 26 those owned by Patsy s Italian Restaurant, Inc. 27 That Defendants [I.O.B. Realty, Patsy s Inc., Brija, Brecevich, and Nick Tsoulos], their successors, assigns, officers, directors, servants, employees, distributors, customers, representatives, agents and attorneys, and all persons in active concert and participation with them, or any of them, be and they are hereby permanently restrained and enjoined: . . . e. from opposing any application for registration or petitioning to cancel any registration of Plaintiff [Patsy s Brand] for any trademark incorporating PATSY S for sauces or other packaged food products or restaurant services . . . . We review a district court s interpretation of another 28 court s order de novo. See United States v. Spallone, 399 F.3d 29 415, 423 (2d Cir. 2005). 30 principles of contract law and look to the intent of the issuing 31 court. 32 (2d Cir. 2006); Spallone, 399 F.3d at 424. 33 principles of contract law, [a] contract should be construed so In doing so, we apply traditional See Mastrovincenzo v. City of New York, 435 F.3d 78, 103 15 Under traditional 1 as to give full meaning and effect to all of its provisions. 2 PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996) 3 (quoting Am. Express Bank Ltd. v. Uniroyal, Inc., 562 N.Y.S.2d 4 613, 614 (1st Dep t 1990)) (alteration in original). 5 Appellants essentially argue that we should read Plaintiff 6 to include not just Patsy s Brand but also its associate, Patsy s 7 Italian Restaurant, Inc. 8 stretch the injunction s language. 9 in the order, specifically includes their successors, assigns, However, that would impermissibly Whereas Defendants, as used 10 officers, directors, servants, employees, distributors, 11 customers, representatives, agents and attorneys, and all persons 12 in active concert and participation with them, or any of them, 13 the word Plaintiff lacks any such expansion. 14 serious orders, enforceable in contempt proceedings, and such an 15 order must give notice of the specific conduct ordered or 16 prohibited. 17 order granting an injunction . . . must . . . state its terms 18 specifically . . . and . . . describe in reasonable detail . . . 19 the act or acts restrained or required. ) 20 Plaintiff to refer only to the party bringing the action. 21 Injunctions are See Fed. R. Civ. P. 65(d) (requiring that [e]very We therefore read This interpretation is fully consistent with the context in 22 which the injunction was issued. Patsy s Italian Restaurant and 23 Patsy s Pizzeria had co-existed peacefully for quite some time. 24 See Patsy s Brand III, 317 F.3d at 212-13, 216. 25 existence ended only when both parties sought to enter the 16 This co- 1 packaged foods market. 2 litigation, appellees had sought to cancel only Patsy s Brand s 3 registrations and committed misconduct only with regard to the 4 date of first use of their sauces. 5 injunction does not bar appellees counterclaim.3 6 7 8 See id. at 212-15. In the sauce See id. at 214-15. Thus, the B) Patsy s Pizzeria Only Partially Abandoned Its Marks The district court s decision to cancel appellants ´836 and ´866 Registrations pursuant to section 37 of the Lanham Act, 3 Appellants also argue that the district court erred in even considering the cancellation counterclaim because the Syosset appellees sought cancellation only due to prior use, not likelihood of confusion. However, the counterclaim states that [Patsy s Italian Restaurant] has no intellectual property rights to the word PATSY S when used with the word PIZZERIA. Therefore, there is no infringement of the Patsy s Restaurant Marks or, if the marks of these registrations are infringed by the Defendants use of the mark PATSY S PIZZERIA with pizzeria services, the registrations are invalid. This language can reasonably be read to include a counterclaim for cancellation due to a likelihood of confusion. Moreover, appellants filed the motion to dismiss the counterclaim on this ground only months after the district court denied appellees motion for summary judgment seeking cancellation of appellants trademark registrations due to prior use. As the district court then noted, the counterclaim seeking cancellation due to prior use necessarily required the additional showing of a likelihood of confusion. See Patsy s Italian Rest. I, 508 F. Supp. 2d at 215 (citing Sterling Drug, Inc. v. Bayer AG, 14 F.3d 733, 743 (2d Cir. 1994)). Nevertheless, appellants did not argue at the summary judgment stage that the Syosset appellees counterclaim seeking cancellation of their marks was not included within the pleadings. Nor do appellants point to any other instance throughout the litigation where they raised this issue in a motion, either to dismiss or otherwise, so that the district court could properly address it. Having actually litigated the issue during the trial, without raising any objections, appellants impliedly consented to trial on this issue, within the meaning of Fed. R. Civ. P. 15(b). Snell v. Suffolk County, 782 F.2d 1094, 1102 (2d Cir. 1986). 17 1 codified as amended at 15 U.S.C. § 1119, depended on its 2 conclusion that I.O.B. Realty had retained some rights even after 3 the jury s abandonment finding. 4 Supp. 2d at 465-68. 5 the jury found that I.O.B. Realty continuously used the marks, 6 the finding of abandonment had to have been based on a finding of 7 naked licensing. 8 reasoning, but argue, rather, that the jury s verdict was one of 9 total abandonment. 10 Patsy s Italian Rest. IV, 575 F. The district court concluded that, because Id. at 452. Appellants do not challenge this A district court s determination to grant relief pursuant to 11 15 U.S.C. § 1119 is reviewed for an abuse of discretion. 12 Empresa Cubana del Tabaco v. Culbro Corp., 541 F.3d 476, 478 (2d 13 Cir. 2008) ( [S]ection 1119's use of the permissive may in 14 authorizing courts to grant relief, [is] distinct from its use of 15 the mandatory shall in requiring any orders or decrees that are 16 entered to be sent to and followed by the PTO. ). 17 argue that our review should be de novo because the district 18 court based its decision on [its] disagreement with the jury s 19 fact findings and [its] misreading of the Lanham Act. 20 Appellant s Br. at 47. 21 mistakes of law may inform the determination of abuse of 22 discretion, they do not alter the standard of review. 23 See Appellants However, while claims of factual error or Appellants first argue that any finding of naked licensing 24 necessarily acted as a total abandonment of all rights. 25 disagree. We Although some forms of trademark abandonment may 18 1 result in a loss of all rights in the mark, see e.g., 2 Feathercombs, Inc. v. Solo Prods. Co., 306 F.2d 251, 256 (2d Cir. 3 1962), abandonment of a mark through naked licensing has 4 different effects on the validity of the mark in different 5 markets. 6 F.2d 358, 369 (2d Cir. 1959) (a finding of naked licensing in the 7 retail market would not result in the loss of trademark rights in 8 the wholesale market). 9 both New York and California, but engages in naked licensing only See Dawn Donut Co. v. Hart s Food Stores, Inc., 267 For example, if a restaurant operates in 10 in California, the restaurant s registered mark may lose its 11 significance in California while retaining its significance in 12 New York. 13 mark only where the mark loses its significance. 14 1127. 15 Thus, naked licensing will lead to an abandonment of a 15 U.S.C. § As a result, we agree with the district court that a mark 16 owner can abandon a mark through naked licensing in a particular 17 geographic area without abandoning its rights throughout the 18 entire United States. 19 F.3d 754, 765-66 (6th Cir. 2005) (recognizing that there is 20 considerable support for the concept that rights in a mark may be 21 abandoned in certain geographic areas but not others ); Sheila s 22 Shine Prods., Inc. v. Sheila Shine, Inc., 486 F.2d 114, 125 (5th 23 Cir. 1973) (recognizing abandonment in some areas but not 24 others); E.F. Prichard Co. v. Consumers Brewing Co., 136 F.2d 25 512, 521-22 (6th Cir. 1943); Snuffer & Watkins Mgmt. Inc. v. See also Tumblebus Inc. v. Cranmer, 399 19 1 Snuffy s Inc., 17 U.S.P.Q.2d 1815, 1816 (T.T.A.B. 1990) 2 ( Accordingly, an allegation of abandonment in a specific 3 geographic location is an insufficient pleading in a cancellation 4 proceeding. ); 3 J. Thomas McCarthy, McCarthy on Trademarks and 5 Unfair Competition § 18:48 (4th ed. 2008).4 6 The district court limited the scope of I.O.B. Realty s 7 abandonment pursuant to Fed. R. Civ. P. 49(a)(3) ( A party waives 8 the right to a jury trial on any issue of fact raised by the 9 pleadings or evidence but not submitted to the jury unless, 10 before the jury retires, the party demands its submission to the 11 jury. 12 make a finding on the issue. . . . ). 13 If the party does not demand submission, the court may In its answer to a special interrogatory, the jury concluded 14 that Patsy s Pizzeria abandoned its marks. Patsy s Italian 15 Restaurant argues that the verdict encompassed the Staten Island 16 location, the Syosset location, and all Manhattan locations other 17 than the East Harlem location. We disagree.5 4 Apart from arguing total abandonment, Patsy s Italian Restaurant does not contest the geographical divisions the district court adopted in determining the scope of I.O.B. Realty s abandonment through naked licensing. 5 Appellants also argue that the district court s decision to cancel appellees 574 mark conflicts with the conclusion that appellees retained some rights in the mark because the cancellation was based, in part, on the jury finding of abandonment. However, the court did not rely solely on the finding of abandonment in cancelling the registration, but on a combination of fraud and partial abandonment of the mark. See Patsy s Italian Restaurant IV, 575 F. Supp. 2d at 469 ( I.O.B. Realty s fraudulent statements to the PTO and TTAB, and its 20 1 [S]pecial interrogatories must be read in conjunction with 2 the district court s charge. Romano v. Howarth, 998 F.2d 101, 3 104 (2d Cir. 1993) (internal quotation marks omitted). 4 was asked to determine whether there was abandonment but not the 5 geographic scope of any such abandonment. 6 no instruction on whether the naked licensing was limited to 7 certain entities or certain geographical areas. 8 abandonment instructions never identified as their subject the 9 specific licenses granted to the Staten Island location or the The jury Appellants requested While the 10 Syosset location, those are the entities that were the subject of 11 the naked licensing claim at trial. 12 court properly resolved the scope of abandonment issue pursuant 13 to Fed. R. Civ. P. 49(a)(3). 14 Therefore, the district Finally, Patsy s Italian Restaurant argues that Patsy s 15 Pizzeria s limited rights in the Manhattan area do not warrant 16 cancellation of their registration. 17 entitled to expand nationwide because Patsy s Pizzeria s rights 18 are limited. 19 Patsy s Pizzeria outside Manhattan that caused the likelihood of 20 confusion occurred after their applications for registration were 21 filed. They contend that they are Moreover, they suggest that the expansion by They argue, therefore, that the cancellation was in limited abandonment through naked licensing . . . warrants cancelling the 574 Registration. (emphasis added)). Therefore, the decision to cancel appellees 574 Registration and the conclusion that they still retained some limited rights in the mark are not in conflict. 21 1 violation of their rights and should not affect their 2 registrations. 3 We disagree. Local rights owned by another have been consistently viewed 4 as sufficient to prevent a party from obtaining registration of a 5 federal mark. 6 Inc., 710 F.2d 1565, 1571 (Fed. Cir. 1983) (refusing registration 7 due to likelihood of confusion, even where there was no evidence 8 of actual confusion mainly [due] to the geographical separation 9 of the two parties operations ); Peopleware Sys., Inc. v. See Giant Food, Inc. v. Nation s Foodservice, 10 Peopleware, Inc., 226 U.S.P.Q. 320, 321 (T.T.A.B. 1985) (noting 11 that geographical separation of the parties principal places of 12 business cannot be considered to be of significance in 13 determining registrability of applicant s mark since it seeks a 14 geographically unrestricted registration ); 3 J. Thomas McCarthy, 15 McCarthy on Trademarks and Unfair Competition § 20:15 (4th ed. 16 2008) ( Geographical separation of the parties is not relevant in 17 an opposition. ). 18 in trademark law that the second comer has a duty to so name and 19 dress his product [or service] as to avoid all likelihood of 20 consumers confusing it with the product [or service] of the first 21 comer. 22 F.2d 755, 758 (2d Cir. 1960). Indeed, this is consistent with the principle Harold F. Ritchie, Inc. v. Chesebrough-Pond s, Inc., 281 23 Because registration of a federal mark confers upon the 24 owner of the mark a presumption that the owner has the exclusive 25 right to use the mark nationwide, 15 U.S.C. § 1115(a), it is 22 1 proper to consider the rights of users nationwide when 2 determining whether a party is entitled to registration of their 3 mark. 4 Unfair Competition § 20:15 (4th ed. 2008). 5 1052(d) itself provides that a mark cannot be registered if it 6 [c]onsists of or comprises a mark which so resembles a mark 7 registered in the Patent and Trademark Office, or a mark or trade 8 name previously used in the United States and not abandoned, as 9 to be likely . . . to cause confusion . . . . See 3 J. Thomas McCarthy, McCarthy on Trademarks and In fact, Section 15 U.S.C. § 10 1052(d). 11 that a mark used anywhere in the United States can be sufficient 12 to block federal registration. 13 Thus, the very language of the statute contemplates See id. In these circumstances, the principles applicable to the 14 initial registrability of a mark should also be applied to a 15 claim seeking the cancellation of a registration that has not yet 16 become incontestable pursuant to Section 1065. 17 Young v. AGB Corp., 152 F.3d 1377, 1380 (Fed. Cir. 1998) ( The 18 linguistic and functional similarities between the opposition and 19 cancellation provisions of the Lanham Act mandate that we 20 construe the requirements of these provisions consistently. 21 There is no basis for interpreting them differently. ) (internal 22 citations omitted); 3 McCarthy on Trademarks and Unfair 23 Competition § 20:52 ( [F]or Principal Register marks not yet five 24 years on the register, cancellation may be based on any ground in 25 the Lanham Act that would have barred registration in the first 23 Id. § 1065. 1 instance. ). 2 cancellation can be sought after the mark has been registered for 3 five years). 4 Cf. 15 U.S.C. § 1064 (limiting the grounds on which In conclusion, the district court did not abuse its 5 discretion by cancelling appellants registrations. 6 Nevertheless, the lack of a federal registration does not prevent 7 Patsy s Italian Restaurant or Patsy s Pizzeria from expanding as 8 they so desire, so long as they respect each other s existing 9 rights. Rather, the cancellation simply precludes appellants 10 from utilizing the statutory presumptions and other benefits 11 conferred to a mark owner through federal registration. 12 U.S.C. § 1115 (setting forth the evidentiary presumptions a mark 13 owner is entitled to and limiting the defenses against an 14 incontestable registration); cf. id. § 1125(a) (providing a 15 federal cause of action for infringement of an unregistered 16 mark). See 15 17 18 19 20 C) Jury Instructions Pursuant to Grants of Judgment as a Matter of Law Appellants argue that the district court erroneously 21 instructed the jury that there was privity as a matter of law 22 between the purported predecessors of I.O.B. Realty and I.O.B. 23 Realty as well as between I.O.B. Realty and the Syosset and 24 Staten Island appellees. 25 law, we review it de novo. 26 Russell, 182 F.3d 89, 96 (2d Cir. 1999). The instruction being a question of See Wilkinson ex rel. Wilkinson v. However, appellants 24 1 waived any claim of error regarding the privity issue by failing 2 to raise them with the district court. 3 Revco D.S., Inc. v. Magten Asset Mgmt. Corp., 106 F.3d 469, 472 4 (2d Cir. 1997). 5 finding of privity between I.O.B. Realty s predecessors and 6 I.O.B. Realty. 7 Realty and the other defendants, counsel for appellants stated 8 only that: 9 being a valid agreement . . . . See Gwozdzinsky ex rel. Appellants made no objection whatsoever to the As for the finding of privity between I.O.B. we object to reference to the license agreement as Perhaps you could take out the 10 word valid ; then there would be more consistency there. 11 Later, appellants clarified their objection stating [w]e don t 12 believe that a naked license is a valid license. 13 issue of naked licensing went to the jury. 14 Notably, the Appellants similarly challenge the district court s 15 instruction to the jury that there was, as a matter of law, use 16 of the marks in interstate commerce. 17 that appellees were required to demonstrate use in interstate 18 commerce as part of their prior use defense because a mark must 19 be used in interstate commerce in order to be eligible for 20 federal registration. 21 They argue in that regard No provision of the Lanham Act supports that contention. 22 The Lanham Act merely provides that a mark is not registrable if 23 there is a likelihood of confusion between that mark and a mark 24 or trade name previously used in the United States by another and 25 not abandoned . . . . 15 U.S.C. § 1052(d). 25 A party need not 1 meet the statutory requirement of use in interstate commerce to 2 oppose, or seek cancellation of, a registration based on 3 confusion. 4 Niagara Fin. Grp., Inc., 476 F.3d 867, 870-71 (Fed. Cir. 2007). 5 Likewise, prior use as a defense against a trademark infringement 6 suit does not require use in commerce. 7 1115(b)(6). 8 rights would be sufficient to warrant cancellation of appellants 9 marks due to a likelihood of confusion. 10 See id.; First Niagara Ins. Brokers, Inc. v. First See 15 U.S.C. § Indeed, as discussed above, even appellees local See 3 McCarthy on Trademarks and Unfair Competition § 20:15. 11 Nevertheless, even if use in commerce had to be shown, the 12 evidence showed such use as a matter of law. 13 different nature of the marks, use in commerce is defined 14 differently for trademarks and service marks. 15 1127. 16 things, it is used or displayed in the sale or advertising of 17 services and the services are rendered in commerce, where 18 commerce includes all commerce which may lawfully be regulated 19 by Congress. 20 definition reflects Congress s intent to legislate to the limits 21 of its authority under the Commerce Clause. 22 S.R.L., 139 F.3d 98, 102 (2d Cir. 1998) (internal quotation marks 23 omitted). 24 25 Due to the See 15 U.S.C. § A service mark is used in commerce when, among other Id. We have previously recognized that this broad Buti v. Perosa, Appellants rely on the failure to show use of the mark in advertising materials, but there is no requirement that a mark be 26 1 so used. 2 mark in the sale of services rendered in commerce, 15 U.S.C. § 3 1127, as was the case here. 4 displayed on numerous versions of the Patsy s Pizzeria menu 5 entered into evidence as well as displayed on the exterior of the 6 East Harlem building. 7 Rather, it is enough to show use or a display of the Appellees mark was prominently Additionally, these services were rendered in commerce. 8 provision of services to interstate customers is sufficient to 9 show that the services were rendered in commerce. The See Larry 10 Harmon Pictures Corp. v. Williams Rest. Corp., 929 F.2d 662, 666 11 (Fed. Cir. 1991); Application of Gastown, Inc., 326 F.2d 780, 12 782-83 (C.C.P.A. 1964). 13 Patsy s Pizzeria is easily accessible from several nearby 14 interstate highways. 15 were also in evidence, including one from the New York Times, 16 which undoubtedly extends to an interstate audience. 17 Furthermore, reviews for Patsy s Pizzeria from guides such as the 18 2003 Not For Tourists Guide to New York City and the 2004 Zagat 19 Survey for New York City Restaurants were also entered into 20 evidence. 21 where Patsy s Pizzeria was, that people [came] from all over to 22 go there, and even that pizza was shipped to the west coast. 23 Thus, the district court properly instructed the jury to find 24 that appellees used their mark in interstate commerce as a matter 25 of law. A map in evidence demonstrates that Numerous articles about Patsy s Pizzeria Finally, there was testimony that cab drivers knew 27 1 2) Denial of Attorneys Fees 2 Patsy s Italian Restaurant appeals the district court s 3 denial of its request for attorneys fees. 4 IV, 575 F. Supp. 2d at 471. 5 codified as amended at 15 U.S.C. § 1117(a), provides that [t]he 6 court in exceptional cases may award reasonable attorney fees to 7 the prevailing party. 8 attorneys fees, the party must be the prevailing party and the 9 case must be exceptional, or, in other words, involve fraud, Patsy s Italian Rest. Section 35(a) of the Lanham Act, Thus, in order to be entitled to 10 bad faith, or willful infringement. 11 at 221. 12 court may award attorneys fees. 13 a result, we review the district court s decision for an abuse of 14 discretion. 15 Inc., 649 F.2d 94, 95-96 (2d Cir. 1981) (per curiam). 16 Patsy s Brand III, 317 F.3d Even then the statute provides only that the district See 15 U.S.C. § 1117(a). As See Quaker State Oil Refining Corp. v. Kooltone, Appellants argue that the district court erred because it 17 held that they were not a prevailing party. We disagree with 18 that characterization of the district court s holding. 19 sure, some of the district court s statements, if read in 20 isolation, could be read to suggest that appellants were not a 21 prevailing party. 22 exercised its discretion not to award. 23 IV, 575 F. Supp. 2d at 471 ( [T]he Court does not find this case 24 is so exceptional as to justify an award of attorneys fees 25 . . . . To be However, the district court explicitly See Patsy s Italian Rest. The Court thus exercises its discretion and denies 28 1 Plaintiffs motion for attorneys fees. ). Given the facts of 2 this case and the mixed outcome of the litigation, the district 3 court clearly did not abuse its discretion in so ruling.6 4 b) Patsy s Pizzeria s Cross-Appeal: Merits 5 1) Limitation of Appellees Rights to Pizzeria Services 6 Patsy s Pizzeria argues that the district court erred by 7 including the distinction between general restaurant services 8 and pizzeria services in the jury instructions and special 9 verdict sheet when no definition of pizzeria services was 6 Appellants also claim that the district court erred when it refused to admit as evidence certified government records of a fire into evidence. These records, they claim, show that Patsy s Pizzeria was operating solely as a pizzeria and not a restaurant at the time of the fire. These records were not offered until after the record was closed. A motion to reopen the record for the presentation of new evidence is addressed to the sound discretion of the trial court and is reviewed for an abuse of discretion. DiBella v. Hopkins, 403 F.3d 102, 119 (2d Cir. 2005) (internal quotation marks and alteration omitted). Appellants offered no reason for not obtaining the certified records earlier. Thus, the district court did not abuse its discretion by declining to admit the records. Additionally, appellants argue that appellees evidence of prior use was misleading based on the discovery of photographs said to contradict the testimony of appellees witnesses. They contend that the district court erred by refusing to take into account the misleading nature of the evidence when cancelling appellants marks. Instead, the district court relied on the jury s verdict of prior use. A district court has considerable discretion in determining whether to grant equitable relief. See Bano v. Union Carbide Corp., 361 F.3d 696, 716 (2d Cir. 2004). The district court did not abuse its discretion by relying on a valid jury verdict when fashioning equitable relief. Nor did the district court abuse its discretion by failing to consider appellants photographs, which were not admitted into evidence. 29 1 offered.7 2 particularly important because it misled the jury into 3 believing this distinction is recognized at law, and the jury s 4 special verdicts on many of the issues turned on the definition 5 of pizzeria services. 6 to define pizzeria services for the jury because the jury was 7 capable of determining the meaning of that term, which is 8 neither technical nor ambiguous. 9 F.2d 504, 511 (2d Cir. 1991) ( Since the word is of common It asserts that the lack of a definition is We disagree. The court was not obliged United States v. Morris, 928 10 usage, without any technical or ambiguous meaning, the Court 11 was not obliged to instruct the jury on its meaning. ) (citing 12 United States v. Chenault, 844 F.2d 1124, 1131 (5th Cir. 1988). 13 Patsy s Pizzeria also suggests that the distinction 14 between pizzeria services and restaurant services was 15 inappropriate because the classification system used by the PTO 16 does not distinguish between the two services, providing only 17 the category of restaurant services. 18 misunderstands the purpose of the PTO s classification system. 19 The PTO s classifications exist solely for administrative 20 purposes, and does not affect the substantive rights of a 21 mark s owner in any way. 22 may establish a classification of goods and services, for This argument See 15 U.S.C. § 1112 ( The Director 7 Patsy s Italian Restaurant claims that Patsy s Pizzeria waived any such objections to the jury instructions. The record is unclear in this regard, and we therefore address the merits. 30 1 convenience of Patent and Trademark Office administration, but 2 not to limit or extend the applicant s or registrant s 3 rights. ). 4 defined by the scope of the services used in connection with 5 the mark. 6 ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 146 (2d Cir. 2007). 7 Rather, Patsy s Pizzeria s substantive rights are See In re Trade-Mark Cases, 100 U.S. 82, 94 (1879); Patsy s Pizzeria further argues that there was no evidence 8 to support the jury s finding that they did not provide 9 restaurant services and use for pizzeria services. We 10 disagree. 11 on their claim that pizzeria services are limited to businesses 12 serving pizza only by the slice. 13 Pizzeria did not request that the district court provide this 14 definition in the jury instructions, and there is no manifest 15 injustice in the district court s failure to do so. 16 definition, it was up to the jury to determine the appropriate 17 distinction, and there was sufficient evidence to support its 18 determination. 19 Patsy s Pizzeria s argument appears to rely heavily However, as noted, Patsy s Without a For example, the jury had before it a variety of menus, 20 including the menus for various Patsy s Pizzeria locations, 21 Patsy s Italian Restaurant s menu, and menus from Pizza Hut and 22 Dominos Pizza. 23 whether there was a distinction between the services provided 24 and, if so, what that distinction was. 25 trial, the deposition testimony of a Patsy s Pizzeria They were able to compare those to determine In addition, during the 31 1 franchisee was read into the record, in which the franchisee 2 stated that in [p]izzerias you just serve pizza, and a 3 witness for Patsy s Italian Restaurant also gave a similar 4 definition. 5 jury to draw the distinction in question. 6 Thus, there was sufficient evidence to permit the There was also sufficient evidence to support the jury s 7 verdict that Patsy s Pizzeria s rights were limited to pizzeria 8 services. 9 that they served solely pizza, and, indeed, that they Patsy s Pizzeria argues that there was no evidence 10 demonstrated that they continuously sold a variety of foods. 11 Having conceded that they failed to file a motion for judgment 12 as a matter of law, appellants merely seek a new trial on this 13 ground. 14 verdict is wholly without legal support, we will order a new 15 trial in order to prevent a manifest injustice[,] despite an 16 appellant s failure to move for a directed verdict. 17 New York, 672 F.2d 1014, 1022 (2d Cir. 1982) (quoting Sojak v. 18 Hudson Waterways Corp., 590 F.2d 53, 54-55 (2d Cir. 1978)). 19 As we have previously explained, [w]here a jury s Russo v. There was no manifest injustice calling for a new trial. 20 With regard to the element of continuous provision of 21 restaurant services, the 1991 contract of sale transferring 22 ownership to I.O.B. Realty states that the East Harlem 23 location s restaurant section was closed, and I.O.B. Realty 24 agreed only to provide pizzeria services during a specified 25 period of time. Evidence introduced by Patsy s Pizzeria itself 32 1 suggests a focus on only pizza. 2 trained regarding how to make pizza the Patsy s way, and one 3 franchisee testified to the purchase of a $75,000 pizza oven 4 because their focus was on the pizza. 5 was shown a documentary that discussed how the original Patsy s 6 Pizzeria was the first pizzeria to sell pizza by the slice. 7 Thus, Patsy s Pizzeria is not entitled to a new trial on the 8 ground of manifest injustice. 9 2) Fraud on the PTO 10 For example, franchisees were Additionally, the jury Appellees challenge the jury s verdict that they made 11 fraudulent statements to the PTO. Generally, a party alleging 12 that a registration was fraudulently obtained must prove the 13 following elements by clear and convincing evidence: 14 1. A false representation regarding a 15 material fact. 16 2. The person making the representation 17 knew or should have known that the 18 representation was false ( scienter ). 19 3. An intention to induce the listener 20 to act or refrain from acting in 21 reliance on the misrepresentation. 22 4. Reasonable reliance on the 23 misrepresentation. 24 5. Damage proximately resulting from 25 such reliance. 33 1 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair 2 Competition § 31:61 (4th ed. 2008) (footnote omitted); see also 3 In re Bose, 580 F.3d 1240, 1243 (Fed. Cir. 2009); Quicksilver, 4 Inc. v. Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006); United 5 Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1226 6 (10th Cir. 2000). 7 Appellees argue that the jury s verdict that they made 8 fraudulent statements to the PTO either relied on facts that, 9 even if proven, were insufficient as a matter of law, or was 10 supported by legally insufficient evidence.8 11 appellees failed to move for a directed verdict, they are 12 limited to seeking a new trial, which we will grant only if 13 necessary to prevent manifest injustice when a jury s verdict 14 is wholly without legal support. 15 Again, because Russo, 672 F.2d at 1022. Appellants claimed that I.O.B. Realty committed fraud in 16 its application for the ´574 Registration for PATSY S PIZZERIA 17 for restaurant services by: 18 was used continuously for restaurant services since 1933 ; (ii) 19 the statement that they believed I.O.B. Realty had the (i) the statement that the mark 8 Appellees also argue that the district court should have vacated the jury s verdicts that appellants did not commit fraud on the PTO. We see no merit in this argument for the reasons stated by the district court. Nevertheless, we also note that a verdict finding fraud would result only in the cancellation of appellants registrations. See Orient Express Trading Co. v. Federated Dep t Stores, Inc., 842 F.2d 650, 654 (2d Cir. 1988). Thus, because we affirm the district court s cancellation of appellants registrations on other grounds, see supra, we need not address this argument. 34 1 exclusive right to use the name PATSY'S PIZZERIA or any mark 2 similar thereto for restaurant services and that no one else 3 had the right to use that name ; and (iii) their failure to 4 tell the PTO about Patsy s Brand s Registration No. 1,874,789 5 for PATSY S for pasta sauces, even though they were petitioning 6 to cancel that mark on the ground that it was confusingly 7 similar to the mark PATSY S PIZZERIA for restaurant services. 8 9 Appellees argue that there was insufficient evidence that I.O.B. Realty knew that statement (i) was a misrepresentation 10 because the jury found I.O.B. Realty continuously used the 11 marks PATSY S and PATSY S PIZZERIA, and thus was the senior 12 user. 13 (iii) were insufficient as a matter of law because they had no 14 obligation to inform the PTO of junior users. 15 even if they were legally sufficient, there was insufficient 16 evidence to support the jury s verdict under either (ii) or 17 (iii) because the evidence showed that I.O.B. Realty believed 18 it was the senior user and thus was under no legal obligation 19 to disclose the information. 20 Appellees additionally argue that statements (ii) and They add that, Appellees have failed to meet their burden of showing 21 manifest injustice because the jury s verdict was not wholly 22 without support. 23 Realty s statement that it had continuously used the mark for 24 restaurant services since 1933. 25 specified the services in connection with which the mark was There was evidence of fraud in I.O.B. It follows that I.O.B. Realty 35 1 used more broadly than it was actually used, a fact they had to 2 have known. 3 [S]ince a registration is prima facie evidence that the 4 registrant is using the registered mark on the goods or 5 services specified in the registration, 3 J. Thomas McCarthy, 6 McCarthy on Trademarks and Unfair Competition § 19:48 (4th ed. 7 2008), I.O.B. Realty s misrepresentation resulted in a 8 registered mark that was broader in scope than it should have 9 been. As a result, appellees have failed to show that the 10 jury s verdict lacked any legal basis, and they are thus not 11 entitled to a new trial. 12 3) Refusal to Reinstate Registration No. 2,213,574 13 Appellees argue that the district court s refusal to 14 reinstate the ´574 Registration for PATSY S PIZZERIA for 15 restaurant services was erroneous because it was inconsistent 16 with the district court s conclusion that they retained some 17 rights in the mark. 18 court s refusal to reinstate a registration pursuant to 15 19 U.S.C. § 1119 is reviewed for an abuse of discretion. 20 Empresa, 541 F.3d at 478. 21 with certain presumptions and additional procedural rights, 22 see, e.g., 15 U.S.C. § 1115, but owners of unregistered marks 23 also retain some, albeit more limited, rights under the Lanham 24 Act. 25 Specifically, when a party s registered mark is cancelled due As previously discussed, the district See Registration provides the mark owner See, e.g., Orient Express Trading Co., 842 F.2d at 654. 36 1 to fraud before the PTO, the party can still bring an action as 2 an owner of an unregistered mark for relief pursuant to section 3 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). 4 Express, 842 F.2d at 653-54. 5 determination that I.O.B. Realty s mark should not be restored 6 but that appellants marks should be cancelled due to I.O.B. 7 Realty s limited remaining rights is not inconsistent in this 8 respect. 9 court s decision not to restore I.O.B. Realty s registration. 10 We, therefore, need not address appellees other arguments in 11 that regard. 12 c) 13 See Orient Thus, the district court s The jury s fraud verdict fully justified the district Injunctive Relief With regard to the injunction issued by the district 14 court, appellants claim that it erred when it did not enjoin 15 appellees from using the PATSY S mark in connection with any 16 locations other than those currently located in Manhattan. 17 Appellants and Patsy s Pizzeria both challenge the injunction 18 prohibiting them from using the term PATSY S alone. 19 A permanent injunction is appropriate where the party 20 seeking the injunction has succeeded on the merits and show[s] 21 the absence of an adequate remedy at law and irreparable harm 22 if the relief is not granted. 23 (2d Cir. 2006) (internal quotation marks omitted). 24 [i]njunctive relief should be narrowly tailored to fit 25 specific legal violations. Roach v. Morse, 440 F.3d 53, 56 However, Patsy's Brand III, 317 F.3d at 220 37 1 (internal quotation marks omitted); see also Sterling Drug, 2 Inc. v. Bayer AG, 14 F.3d 733, 750 (2d Cir. 1994) ( The Lanham 3 Act does not require a total ban on the use of a mark by an 4 infringing junior user. 5 demands that injunctive relief be no broader than necessary to 6 cure the effects of the harm caused. ) (internal quotation 7 marks omitted). 8 Court should balanc[e] . . . the equities to reach an 9 appropriate result protective of the interests of both To the contrary, the Lanham Act Thus, [i]n fashioning the injunction, the 10 parties. 11 marks omitted). 12 regarding the scope of injunctive relief for an abuse of 13 discretion. 14 F.2d 58, 61 (2d Cir. 1992). 15 the authority to enter an injunction de novo. 16 Converse, Inc., 170 F.3d 286, 298 (2d Cir. 1999). 17 Rule 65(d)(1)(A) of the Federal Rules of Civil Procedure 18 requires that [e]very order granting an injunction . . . must 19 . . . state the reasons why it issued. 20 65(d)(1)(A). 21 is able to understand the reasons for the injunction. 22 Knox v. Salinas, 193 F.3d 123, 129 (2d Cir. 1999) (per curiam). 23 24 25 26 Sterling Drug, 14 F.3d at 747 (internal quotation We review a district court s determinations See id. at 744; Polymer Tech. Corp. v. Mimran, 975 We review determinations regarding Starter Corp. v. In addition, Fed. R. Civ. P. This requirement ensures that an appellate court See 1) Refusal to Enjoin Appellees From Using PATSY S Outside of Manhattan Appellants argue that the district court should have 38 1 enjoined appellees from using the mark PATSY S outside of the 2 current Manhattan locations. 3 jury s findings that: 4 appellees engaged in trademark infringement, unfair 5 competition, and injury to business reputation; (ii) the 6 Syosset appellees trademark infringement was willful; and 7 (iii) the Staten Island and Syosset appellees use of the 8 PATSY S and/or PATSY S PIZZERIA marks exceeded the scope of 9 their license with I.O.B. Realty. 10 In so arguing, they rely on the (i) the Staten Island and Syosset However, there was no abuse of discretion by the district 11 court. 12 appellants registrations, appellants are no longer entitled to 13 the presumptive right to use the marks nationwide that a 14 federal registration provides. 15 did this litigation address the parties rights beyond 16 Manhattan, Staten Island, and Syosset. 17 jury findings that appellants rely upon involves misconduct by 18 the intervening appellees, in contrast to the Staten Island and 19 Syosset appellees. 20 Because the district court validly cancelled See 15 U.S.C. § 1115(a). Nor Indeed, none of the We, therefore, turn to the district court s failure to 21 enjoin the Staten Island appellees and the Syosset appellees 22 from using the mark PATSY S. 23 the Staten Island location closed, and appellants do not claim 24 that it will be reopened. 25 discretion to refuse to enjoin the Staten Island appellees. After this action was brought, As a result, it was not an abuse of 39 1 As for the Syosset location, the district court did grant 2 some injunctive relief to appellants, although not as broad as 3 they would have liked. 4 defendants from using the mark PATSY S in any manner, the 5 district court entered an injunction that prohibits the Syosset 6 defendants from using the term Trattoria Impazzire and also 7 requires them to place a sign in their front window disclaiming 8 any association with Patsy s Italian Restaurant for at least 9 three years from the date of judgment. Rather than enjoining the Syosset Patsy s Italian Rest. 10 IV, 575 F. Supp. 2d at 469. See supra note 2. Appellants 11 argue that these injunctions are insufficient because the term 12 PATSY S is more than three times the size of the word PIZZERIA 13 in the signs of both the Syosset and Staten Island locations. 14 Appellants Br. at 40. 15 disclaimer sign is insufficient because it is not visible to 16 the public, particularly to those driving by the Syosset 17 location and those visiting the Syosset location s website. 18 Finally, appellants argue that the removal of the Trattoria 19 Impazzire sign is insufficient because it does not alter the 20 nature of the Syosset location s menu. Appellants also argue that the 21 A district court has a wide range of discretion in 22 framing an injunction in terms it deems reasonable to prevent 23 wrongful conduct. 24 Inc., 832 F.2d 1325, 1329 (2d Cir. 1987) (quoting Spring Mills, 25 Inc. v. Ultracashmere House, Ltd., 724 F.2d 352, 355 (2d Cir. Soltex Polymer Corp. v. Fortex Indus., 40 1 1983)). Given the district court s great flexibility in 2 fashioning relief, see Soltex, 832 F.2d at 1329, we have 3 frequently recognized that the use of a disclaimer sign can, in 4 the right circumstances, be appropriate relief. 5 Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 737 (2d 6 Cir. 1991); Soltex, 832 F.2d at 1329-30; Spring Mills, 724 F.2d 7 at 355. 8 the circumstances of the relevant business and its consumers. 9 Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 See Jim Beam Whether such a disclaimer is appropriate depends on 10 F.2d 1311, 1315 (2d Cir. 1987). 11 Trattoria Impazzire sign, combined with the disclaimer, is a 12 permissible balancing of the equities. 13 PATSY S may be larger than the term PIZZERIA in the sign does 14 not alter this conclusion. 15 argument that the menu remains the same. 16 did not abuse its discretion by declining to delve into the 17 minute details of permissible menu items (unseen until passing 18 the disclaimer sign) for the Syosset restaurant. 19 Here, the removal of the The fact that the term Nor are we persuaded by appellants The district court As for appellants allegations regarding the disclaimer 20 sign, many of these allegations suggest that the Syosset 21 appellees are not complying with the injunction. 22 matter properly brought up with the district court. 23 Mills, 724 F.2d at 356. 24 convince us that the injunction was not proper relief. 25 2) This is a Spring Nor do the remaining allegations Prohibiting Appellants and Patsy s Pizzeria From Using 41 1 2 3 Solely PATSY S The district court entered an injunction prohibiting 4 appellants and Patsy s Pizzeria from using solely the term 5 PATSY S. 6 Generally, where neither party has requested the injunctive 7 relief the district court intends to grant, the parties must 8 receive an opportunity to be heard. 9 299. No party requested such an injunction as relief. See Starter, 170 F.3d at 10 In the present case, the district court instructed the 11 parties to address the propriety of such an injunction in their 12 post-trial papers. 13 injunction only because it represented a compromise between 14 their respective positions, an anathema to both. 15 the lack of notice, but rather the lack of interest in such 16 relief, that left the injunction with the appearance of sua 17 sponte relief. 18 rehashes of years of arguments that need to come to an end. 19 are completely confident that a remand would be unilluminating, 20 delay the termination of this litigation needlessly, and merely 21 lead to more fruitless, overlitigated proceedings. 22 Neither party requested this particular It was not Also, the considerations pro and con are We In all other respects, the injunction is entirely within 23 the district court s discretion. Appellants argue that: 24 the district court failed to make the findings required by Fed. 25 R. Civ. P. 65(d)(1)(A); (ii) the issuance of the injunction is 26 not narrowly tailored because it went beyond the scope of the 42 (i) 1 party s claims, which did not involve the right to use PATSY S 2 in Manhattan; and (iii) the injunction is inconsistent with the 3 district court s finding that appellants have the right to use 4 PATSY S for restaurant services. 5 any merit whatsoever. 6 None of these arguments has With regard to (i), the district court s injunction was 7 sufficiently tailored. While the prime focus of the litigation 8 may not have been on the right to use PATSY S in Manhattan, 9 Patsy s Pizzeria s counter-claim seeking cancellation of 10 appellants registrations necessarily required the 11 consideration of a likelihood of confusion between the marks in 12 Manhattan. 13 scope of the issues tried in the case. 14 As a result, the injunction did not go beyond the As for (ii), the district court s reasons for the 15 injunction are adequate to provide meaningful appellate review. 16 The jury found that there was a likelihood of confusion between 17 Patsy s Pizzeria s marks and Patsy s Italian Restaurant s ´836 18 Registration for the stylized mark PATSY S PR for restaurant 19 services and the ´866 20 services not including pizza. 21 court, there was substantial evidence in the record indicating 22 an exceeding degree of consumer confusion. 23 Rest. IV, 575 F. Supp. 2d at 470. 24 court weighed the parties rights with the harm to the public 25 due to a likelihood of confusion, and determined that the Registration for PATSY S for restaurant And, as noted by the district Patsy s Italian In addition, the district 43 1 2 injunction met a sufficient balance. With regard to (iii), while I.O.B. Realty can no longer 3 protect its rights to the name Patsy s due to the long period 4 of use by Patsy s Italian Restaurant, see Patsy s Brand III, 5 317 F.3d at 216-17; Patsy s Italian Rest. IV, 575 F. Supp. 2d 6 at 470, that fact does not alter the likelihood of confusion by 7 consumers. 8 no party can now complain about the district court s attempt to 9 minimize the confusion. Having allowed the consumer confusion to develop, This is particularly true given our 10 earlier admonition to the parties that both sides . . . would 11 be well advised to minimize the risk of confusion by 12 identifying their restaurants by the complete names: 13 Italian Restaurant and Patsy s Pizzeria. 14 III, 317 F.3d at 221. Patsy s Patsy s Brand 15 Appellees argue that the injunction was an abuse of 16 discretion because it included the original location in East 17 Harlem as well as the licensees in Manhattan, which were not 18 parties to the litigation. 19 finding of likelihood of confusion with regard to those 20 locations, claiming it is unusual to enjoin a senior user 21 without such a finding. They argue that there was no We disagree. 22 Rule 65(d)(2) provides that an injunction binds both the 23 parties and anyone who is in active concert or participation 24 with [the parties.] 25 Realty and Patsy s Inc. were parties to the instant litigation. Fed. R. Civ. P. 65(d)(2)(c). 44 Both I.O.B. 1 Because the Manhattan locations are authorized to use I.O.B. 2 Realty s marks through the franchise agreements with Patsy s 3 Inc., they are in active concert or participation with I.O.B. 4 Realty and Patsy s Inc. insofar as the injunction involves the 5 use of the PATSY S mark, see Fed. R. Civ. P. 65(d)(2)(C). 6 Furthermore, as the owner of the mark, I.O.B. Realty was 7 perfectly able to represent the other locations interests in 8 using the mark. 9 to enter an injunction binding the Manhattan Patsy s Pizzeria 10 11 As a result, it was not an abuse of discretion locations. Nor did the district court abuse its discretion by 12 enjoining the senior user. While doing so may be unusual, this 13 is not the typical case. 14 counterclaim seeking cancellation of appellants registrations 15 necessarily required the consideration of a likelihood of 16 confusion between the marks in Manhattan. 17 was substantial evidence in the record indicating an exceeding 18 degree of consumer confusion, Patsy s Italian Rest. IV, 575 F. 19 Supp. 2d at 470, and the jury found that there was a likelihood 20 of confusion between Patsy s Pizzeria s marks and Patsy s 21 Italian Restaurant s ´836 and ´866 Registrations. 22 as noted, I.O.B. Realty can no longer protect its rights 23 against Patsy s Italian Restaurant, see Patsy s Brand III, 317 24 F.3d at 216-17; Patsy s Italian Rest. IV, 575 F. Supp. 2d at 25 470, and thus I.O.B. Realty s failure to enforce its rights As noted above, Patsy s Pizzeria s 45 As a result, there Furthermore, 1 contributed to the consumer confusion. 2 do not believe that the district court erred by evaluat[ing] 3 . . . the legitimate interests of the senior user, the junior 4 user, and the consuming public, Am. Footwear Corp. v. Gen. 5 Footwear Co. Ltd., 609 F.2d 655, 664 (2d Cir. 1979) and 6 concluding that, in order to strike the proper balance of these 7 interests, the senior user must also be enjoined from using 8 solely the name PATSY S. 9 10 Given these facts, we CONCLUSION For the foregoing reasons, we affirm. 11 12 13 46