United States: Trademark Owner’s Failure to Police Strikes Again

In Pro-Fitness Physical Therapy, (IP Update, Vol. 5, No. 12, December 2002), a trademark owner’s failure to police its mark prevented the owner from challenging a similar mark. A new case demonstrates how failure to police can also result in a trademark owner’s loss of right to expand its mark into a related product market. Patsy’s Brand, Inc. v. I.O.B. Realty, Inc., 2003 U.S. App. LEXIS 614 (2nd Cir. Jan. 16, 2003).

The plaintiff and the defendant both use the mark PATSY’S for restaurant services. The parties have co-existed in New York City for more than half a century. The plaintiff opened its restaurant in 1944; the defendant in 1933. In 1993, the plaintiff began to sell pasta sauce at retail under its PATSY’S mark. In 1999, the defendant commenced the sale of pasta sauce at retail under the name PATSY’S. The plaintiff sued for trademark infringement and sought an injunction prohibiting the defendant’s use of PATSY’S for pasta sauce. The district court awarded judgment to the plaintiff.

The U.S. Court of Appeals for the Second Circuit affirmed and, therefore, rejected the defendant’s primary defense that the plaintiff’s claim was barred because the plaintiff’s use of PATSY’S for pasta sauce infringed the defendant’s PATSY’S mark for restaurant services. As the court explained, "Where a senior user delays in enforcing its rights, a junior user may acquire a valid trademark in a related field enforceable against even the senior user." The defendant had allowed the plaintiff to use PATSY’S for more than 50 years without objection. The court found it was now too late for the defendant to object, even if the plaintiff’s continued use of PATSY’S caused confusion. As the court put it, "the failure of [the defendant] to police its restaurant mark against [the plaintiff] has perhaps created a certain degree of now unavoidable confusion in the New York City market for restaurant services. As a result, it is now possible that [the plaintiff] will precipitate some confusion among customers of [the defendant’s] who will think that the sauce comes from [the defendant]. But that risk is far preferable to denying the first to market sauce the opportunity to capitalize on [its] goodwill." The court thus affirmed an injunction that prohibited the defendant from selling PATSY’S pasta sauces at retail.

Practice Note: Patsy’s and Pro-Fitness demonstrate how trademark rights are easily lost by an owner’s failure to timely object to a misuse of its mark. Trademark rights impart a duty on the trademark owner to stop others from using a confusingly similar mark. If the owner fails in that duty, loss of valuable trademark rights may result.