News: The Bukhara Case
History of ITC's Bukhara:
ITC Limited opened its first ‘Bukhara’ restaurant in 1977 in New Delhi, India, in the luxurious Maurya Sheraton Hotel. It has won numerous awards and is consistently rated as one of the top 50 restaurants in the world and as the top Asian restaurant in the world. ‘Bukhara’ is a regular stop for international travellers and has been praised by numerous visitors, including a variety of international celebrities, diplomats and dignitaries such as former U.S. President Clinton. ITC opened Bukhara restaurants in New York and Chicago. Both these restaurants recreated the ambiance of the first Bukhara in New Delhi. However, Indian regulations on overseas investment are particularly strict, and neither restaurant was able to provide adequate returns to satisfy Indian regulatory requirements. Thus, both the restaurants were closed in 1997. Since 1997 ITC has not operated a Bukhara restaurant in the United States.
Defendants' Bukhara Grill
IIn 1999, three former employees of ITC's Bukhara restaurants, together with several other people opened a restaurant in New York called the ‘Bukhara Grill’. A second Bukhara restaurant named ‘Bukhara II’ was also opened with a common ownership in 2001. Numerous reviews and media articles identified Bukhara Grill as associated with ITC's Bukhara. Bukhara Grill's owners discussed their relationship with ITC's Bukhara in several interviews and news articles. Bukhara Grill's own publicity billed the Bukhara Grill as a re-creation of the New Delhi ‘Bukhara’.
The Bukhara Grill restaurants not only copied the name but also the waiter uniforms, tableware, menus on wood slabs, red-chequered bibs used in lieu of napkins, an open or see-through kitchen, heavy, wooden furniture and other rustic, decorative elements that contribute to an overall look and feel that one of the owners of the ‘Bukhara Grill’ has described as "quite like Delhi's Bukhara."
The Litigation
In February 2003, ITC filed an action against ‘Bukhara Grill’ claiming that Defendants' actions were Acts of Infringement and also acts of unfair competition prohibited by the Lanham Act and under the New York State Common Law. ITC based its claims for unfair competition, in part, on the well-known marks or famous marks doctrine, through which "a trademark or service mark is protected within a nation if it is well known in that nation even though the mark is not actually used or registered in that nation" (J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition , 29:61 (4th ed 2002)).
The District Court granted summary judgment to the defendants and that decision was affirmed by the Second Circuit, which held that ITC had abandoned its federal trademark registration and any trademark rights acquired through use, so the only possible basis for ITC to assert rights in the BUKHARA mark was through the well-known marks doctrine. The Court held, U.S. federal law does not recognize the famous marks doctrine, despite the court's acknowledgement that the United States was required to adopt a well-known marks doctrine under the Paris Convention and the TRIPs Agreement.
Other Circuit Decisions
Besides the Second Circuit, the only other U.S. Circuit Court of appeals to have weighed in on the famous marks doctrine was the Ninth Circuit in Grupo Gigante SA de CV v Dallo & Co Inc. (391 F3d 1088 (9th Cir 2004)). While not fully articulated in its opinion, the Ninth Circuit recognized that the famous marks doctrine required by the Paris Convention and the TRIPs Agreement is found in the Federal Trademark Act (known as the Lanham Act), noting that the Plaintiff's claim under an international treaty recognizing the famous marks doctrine "is duplicative of its claim that, because [its] mark is well-known, that mark is entitled to protection under the Lanham Act."
It makes sense that the Ninth Circuit would conclude that the plaintiff's famous marks claim is found in the Lanham Act, as the Lanham Act was enacted, in part, to codify the then existing federal common law of trademarks. The Senate Report accompanying passage of the Lanham Act states that "[t]he purpose of this bill is to place all matters relating to trademarks in one statute and to eliminate judicial obscurity This Bill effects the necessary codification and coordination" (see S Rep No 79-1333 (1946) reprinted in 1946 USCCAN 1274, 1274). Presumably, this would include the common law recognizing rights through reputation rather than use.
Finally, the Ninth Circuit also explained how the famous marks doctrine is consistent with policy considerations, because "[a]n absolute territoriality rule without a famous-mark exception would promote consumer confusion and fraud" (* Id* at 1094). Describing the United States as a "nation of immigrants" in which commerce and people regularly cross borders, the court described that "[t]rademark [law] is, at its core, about protecting against consumer confusion and palming off." Thus, the Court concluded, "[t]here can be no justification for using trademark law to fool immigrants into thinking that they are buying from the store they liked back home."
International Obligations
The Second Circuit's opinion effectively renounces U.S. international obligations to protect foreign marks that are well-known in the United States unless the mark owner also has independent domestic rights through U.S. use or registration. The United States is obliged to protect famous marks under both the Paris Convention and the TRIPs Agreement. Likewise, Article 16(2) of the TRIPs Agreement extends the well-known marks doctrine to apply to service marks and explains the basis upon which a mark becomes well-known, namely, "knowledge of the trademark in the relevant sector of the public, including knowledge in the member concerned which has been obtained as a result of the promotion of the trademark."
These sections have been enacted or recognized as binding by Congress in various ways, including through Section 44 of the Lanham Act, which expressly provides foreigners the right to assert unfair competition claims under the Lanham Act. Section 44, when read together with the unfair competition provisions of the Lanham Act (Section 43(a)), effectively incorporates provisions of treaties of which the United States is a member - including, presumably, the provisions of the Paris Convention and the TRIPs Agreement that confer protection of famous marks.
ITC sought review of the Second Circuit's decision by the United States Supreme Court, which petition was recently denied. The Supreme Court's determination not to resolve the split between the Second and Ninth Circuits over the status of the well-known marks doctrine in the United States leaves U.S. law on the issue inconsistent.
What can MOHAN ASSOCIATES, India do to help?
We at Mohan Associates are aggrieved hugely by the stand adopted by the American Courts on protecting Non-American famous trademarks, in the absence of U.S. use and/or registration. We keenly advise our clients to obtain requisite registration in America, with periodic renewals and a minimum threshold of use. This is particularly relevant to the Indian companies who are constantly aiming to achieve dramatic growth and market presence in America.
We would be delighted to co-ordinate with our associates in America, in ensuring that your precious trade marks/service marks are not affected by such stance adopted by the American Courts. Please do not hesitate to call us for any queries on this matter. We would further, be delighted to visit your office to discuss this issue in person.