By Peter Reap, J.D., LL.M.
Tavern on the Green International (TOGI)—a company that markets restaurant franchises and cooking products under the "Tavern on the Green" name—infringed the federally registered trademark "Tavern on the Green" for restaurant services, the federal district court in New York City has decided. In addition, TOGI committed false designation of origin and trademark dilution in connection with its use of the mark. However, the City offered no evidence to establish what, if any damages it suffered as a result of TOGI’s actions. Thus, the City was entitled to summary judgment only as to liability on its Lanham Act claims, and the court would address the issue of damages at a later proceeding. Further, the City was granted summary judgment in part on its breach of contract claim and on TOGI’s breach of contract counterclaim (City of New York v. Tavern on the Green International LLC, September 28, 2018, Sullivan, R.).
The City owns the Tavern on the Green restaurant, which is located in Central Park and has been operated by concessionaires since 1934. The City also owns the registered mark "Tavern on the Green" for restaurant services (the restaurant mark) and an identical mark for cooking oils (the cooking oil mark).
In 2011, the City and TOGI’s predecessor entered into a contract ("the Use Agreement"). Under the Use Agreement, TOGI’s predecessor purchased the right to use both of the marks at issue, subject to certain conditions. After relations between the parties soured in 2017, the City filed suit. Both parties moved for summary judgment.
The City’s breach of contract claim. The City alleged that TOGI breached Section 3.04(a) of the Use Agreement by not using required disclaimers in its promotional materials. However, as to its claim that TOGI submitted product specimens to the USPTO that did not contain proper disclosures, the City submitted no evidence in support other than the unsworn hearsay statement of its counsel. Thus, the City was denied summary judgment on the portion of its breach of contract claim based on submissions to the USPTO.
However, TOGI could have breached Section 3.04(a) of the Use Agreement by selling "Tavern on the Green Central Park Signature Dipping Oil" without the requisite disclaimers, the court held. There was a disputed issue of material fact over whether the complained-of conduct by TOGI was in compliance with the Use Agreement’s provision entitling it to sell off its remaining inventory of cooking oil. Thus, summary judgment was clearly improper as to this alleged breach, according to the court.
TOGI did breach the Use Agreement by referring to the fame and success of the Tavern on the Green restaurant in its promotional materials, the court ruled. Section 2.04(c) of the Use Agreement barred TOGI from mentioning Central Park or using any pictures of Central Park without the City’s consent. The City established that TOGI breached the agreement in connection with its 2016 marketing materials and the City complied with the Use Agreement’s notice and cure provisions in connection with these breaches. As to TOGI’s improper use of the City’s mark through a retained franchising agent, the City’s failure to comply with the Use Agreement’s notice and cure provisions was excused. Although the City was entitled to summary judgment as to liability on its breach of contract claim, an inquest regarding damages was required. Additionally, the City was entitled to injunctive relief in connection with this claim, but the court would determine the scope of that relief in a later proceeding.
TOGI’s breach of contract claim. TOGI’s claim that the City breached the implied covenant of good faith and fair dealing in the Use Agreement by stating, thorough counsel, that it intended to prevent TOGI from enjoying the rights it purchased under the Use Agreement, was required to be dismissed, the court held. Under New York law, the implied covenant is breached only when a party takes actions to impair the other party’s rights under the contract. It is not breached by a party’s statements regarding the scope of an agreement, the court said. Further, the City was also entitled to summary judgment on TOGI’s claim that it breached the Use Agreement by opposing TOGI’s attempts to register a trademark in the phrase "Tavern on the Green."
Trademark infringement. The City satisfied both elements of its claim for trademark infringement by showing that the restaurant mark, "Tavern on the Green," was federally registered and that TOGI’s use of the mark was likely to cause confusion. Because the City offered no evidence as to what damages, if any, it was entitled, the court would address damages at a further proceeding.
False designation of origin. The City’s claim for false designation of origin under Section 1125(a) overlapped entirely with its claim for infringement under Section 1114, the court observed. The City was entitled to summary judgment as to liability on this claim as well, but not as to damages.
Dilution. Given the parties’ stipulation in the Use Agreement that a likelihood of consumer confusion shall be presumed to exist in the event of a breach, there was little question that the parties’ use of the exact same name to refer to different sources of products (that is, restaurant services) would amount to dilution by blurring, the court opined. Thus, the City was entitled to summary judgment as to liability on this claim as well, but not as to damages.
State law claims. The City was entitled to summary judgment on its common law unfair competition claim, the court held. In light of TOGI’s continued use of the "Tavern on the Green" phrase in ways not authorized by the Use Agreement, there was no doubt that TOGI acted in bad faith.
However, summary judgment was denied to the City on its claim that TOGI violated New York general Business Law sections 349 and 350. The City failed to establish a specific and substantial injury to the public interest, proving fatal to this claim.
This case is No. 1:17-cv-01376-RJS.
Attorneys: Gerald E. Singleton, NYC Law Department, for City of New York. Gerard Francis Dunne (Law Office of Gerard F. Dunne, PC) for Tavern on the Green International LLC.
Companies: City of New York; Tavern on the Green International LLC
MainStory: TopStory Trademark NewYorkNews
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