2009 WL 674360 (N.D. Ill. Mar. 13, 2009)

ABSTRACT

In a case analyzing the critical distinction between constructive use and constructive notice as applied to intent-to-use applications, the Northern District of Illinois found that a senior user’s rights in a mark for a critically acclaimed restaurant in Chicago could not be said, as a matter of law, to have extended to New York based solely on publicity, so that when defendant later filed an intent-to-use application for the mark, but did not actually begin to use the mark in New York until after plaintiff opened its own restaurant in New York, there were genuine issues of material fact as to priority.

CASE SUMMARY

FACTS

Plaintiff Geisha LLC (“Geisha”) operates a restaurant called JAPONAIS in Chicago and uses a design with the mark in all capital letters, with inverted V’s substituted for the A’s. The restaurant opened to critical acclaim in 2003 and received extensive press coverage including articles in Bon Appetit, Conde Nast Traveler, and Time magazines. Geisha did not seek federal registration for either the word mark or the design.

Defendant Tuccillo owns a frozen seafood supply house in New York. Nine months after plaintiff’s restaurant opened, and less than two weeks after the Time magazine article, defendant filed an intent-to-use application for the mark JAPONAIS in a stylization virtually identical to that used by Geisha. Geisha did not learn of Tuccillo’s application until a Notice of Allowance issued, precluding Geisha from opposing registration of the mark. Geisha immediately sent Tuccillo a demand letter containing more than fifty pages of evidence documenting Geisha’s prior use. Tuccillo responded that he intended to pursue his plan to use the JAPONAIS name and mark for a restaurant in New York and claimed he had used the mark in the same stylization in the window of a retail store in connection with the sale of seafood since 2000.

Geisha filed a ten-count complaint against Tuccillo, alleging, among other things, false designation of origin under Section 43(a) of the Lanham Act. Geisha then opened two new JAPONAIS restaurants, one in New York City and the other in Las Vegas. Tuccillo, in turn, opened his own restaurant in New York and filed a Statement of Use to perfect his registration. Geisha moved for summary judgment on the false designation of origin claim. At the time of the decision, defendant’s registration had not yet issued.

ANALYSIS

The court acknowledged that Geisha’s right to use the JAPONAIS mark for restaurant services in Chicago based on its 2003 use was not in dispute, as that use predated defendant’s intent-to-use application. The question the court faced, then, was whether Geisha’s rights extended to markets that it had not entered as of the June 25, 2004, filing date of defendant’s intent-to-use application. The general rule is that a junior user who is unaware of the senior user’s use may adopt a mark in a geographically distinct area, provided that the mark has not been registered. But an important exception to this rule recognizes that the senior user may possess rights in a mark by virtue of a reputation that extends beyond the immediate geographic area where the mark is employed. The court thus considered whether the publicity surrounding Geisha’s JAPONAIS restaurant in Chicago was sufficient to bestow common law rights in New York. Finding that most of the publicity had been in the Chicago media and trade publications, and that the distance between Chicago and New York was substantial, the court ultimately determined that it could not conclude, as a matter of law, that the JAPONAIS mark had obtained such widespread notoriety by 2004 that Geisha possessed common law rights in the mark in New York.

The court next determined that Geisha’s expansion to New York did not create enforceable trademark rights in New York that Tuccillo violated by opening his restaurant. Noting that in the absence of Tuccillo’s intent-to-use application, Geisha would have been able to claim enforceable rights against defendant as the senior user, the court concluded that the critical distinction in the case is between constructive use and constructive notice. Constructive notice, the court explained, is obtained when a mark is actually registered. Constructive use, by contrast, prevents a third party from acquiring any rights in a mark as of the date the intent-to-use application is filed. Under this doctrine, defendant’s constructive use date was June 25, 2004, but was subject to two important limitations: (1) constructive use is contingent upon actual registration; and (2) constructive use does not bar use of the mark by senior users. Although defendant’s registration had not yet issued at the time of the decision, the court found this of no consequence as defendant could not have violated plaintiff’s rights in the mark in New York unless plaintiff possessed common law rights in New York prior to defendant’s June 25, 2004, constructive use date, a finding that the court had already held was an issue of material fact precluding summary judgment.

The court further acknowledged that the constructive use doctrine ordinarily does not preclude use of the mark by a senior user, but that this exception did not require judgment in favor of Geisha. While the territory in which a senior user is entitled to use the mark is ordinarily frozen as of the date of registration by the junior user, rather than the filing date of the junior user’s ITU application, because Geisha had actual notice of the pending application prior to its expansion, it could be barred from expanding its use to New York.

Ultimately, the court concluded that there was a genuine issue of material fact as to whether Geisha had penetrated the New York market prior to defendant’s constructive use date, and on the motion for summary judgment, the court drew the reasonable inference that Geisha had not done so. Thus, given Geisha’s actual notice of defendant’s application, the court concluded that Geisha’s rights would not be enforceable in New York against defendant once defendant’s mark registered. The court denied Geisha’s motion for summary judgment, concluding that it could not hold, as a matter of law, that defendant had no rights in the mark and infringed plaintiff’s rights when he opened his restaurant in New York pursuant to his intent-to-use application.

CONCLUSION

This decision provides a thoughtful explanation of the important and often misunderstood distinction between constructive use and constructive notice as applied to rights originating from intent-to-use applications, and serves as a cautionary tale for local businesses that do not take the necessary steps to protect their marks early on in order to ensure their ability to later expand nationwide.