Second Circuit Clarifies Knowledge Requirement for Proving Trademark Fraud | Practical Law

Second Circuit Clarifies Knowledge Requirement for Proving Trademark Fraud | Practical Law

In MPC Franchise, LLC v. Tarntino, the US Court of Appeals for the Second Circuit affirmed the district court's grant of summary judgment and cancellation of defendant Tarntino's trademark registration after finding he fraudulently registered the mark.

Second Circuit Clarifies Knowledge Requirement for Proving Trademark Fraud

Practical Law Legal Update w-002-7231 (Approx. 4 pages)

Second Circuit Clarifies Knowledge Requirement for Proving Trademark Fraud

by Practical Law Intellectual Property & Technology
Published on 28 Jun 2016 • USA (National/Federal)
In MPC Franchise, LLC v. Tarntino, the US Court of Appeals for the Second Circuit affirmed the district court's grant of summary judgment and cancellation of defendant Tarntino's trademark registration after finding he fraudulently registered the mark.
On June 27, 2016, the US Court of Appeals for the Second Circuit, in MPC Franchise, LLC v. Tarntino, affirmed the US District Court for the Western District of New York's grant of summary judgment to MPC Franchise, LLC, and cancellation of Brent Tarntino's federal registration for the PUDGIE'S trademark after determining Tarntino obtained the mark by fraud ( (2d Cir. June 27, 2016)).
This matter arose out of a family-owned chain of pizzeria restaurants based in Elmira, NY. Though the parties share a complicated background, the following facts were relevant to the court's decision:
  • Pudgie's Pizza Franchising Corporation (PPFC) formed in 1972 and registered the PUDGIE'S mark in 1978. The US Patent and Trademark Office (USPTO) cancelled the mark in 1985, after PPFC failed to file a required declaration.
  • In 1973, Bernadette Tarntino purchased a franchise from PPFC and opened a Pudgie's pizzeria. When she died in 2007, defendant Brent Tarntino inherited a one-third stake in her Pudgie's holdings.
  • In 2010, Tarntino filed an application with the USPTO for the mark PUDGIE'S in connection with restaurant services. In his application, Tarntino certified that there was no other person, firm, corporation, or association that had the right to use the PUDGIE'S mark in a manner that would be likely to cause consumer confusion. He also submitted a specimen photo of a Pudgie's pizza box that displayed the mark along with the words "® Pudgie's Pizza Franchising Corporation 1972".
  • The USPTO granted Tarntino's application for the PUDGIE'S mark in 2011.
  • Plaintiffs MPC Franchise and MP Cleary, Inc. are the ultimate successors to PPFC.
After Tarntino began claiming sole ownership of the PUDGIE'S mark and threatening MPC Franchise and others with trademark infringement suits, the plaintiffs sued him seeking, among other things, cancellation of his trademark registration on the ground that it was fraudulently obtained under the Lanham Act (15 U.S.C. § 1064(3)).
Finding that the record clearly demonstrated that Tarntino knew that MPC Franchise was already franchising pizzerias using the mark he was attempting to register, the district court:
  • Granted MPC Franchise's motion for summary judgment.
  • Cancelled Tarntino's registration for the PUDGIE'S mark.
  • Dismissed Tarntino's counterclaim for federal trademark infringement.
On appeal, Tarntino argued that the district court misapplied the US Court of Appeals for the Federal Circuit's standard for determining whether a trademark registration is fraudulently obtained as stated in In re Bose Corp. (580 F.3d 1240 (Fed. Cir. 2009)). Specifically, Tarntino argued that Bose required a plaintiff to prove an applicant actually knew – rather than merely should have known – that material statements made on a trademark application were false.
Although the Second Circuit agreed with Tarntino's assessment of the degree of scienter needed to prove fraudulent trademark procurement, the court ultimately found there was no genuine issue of material fact that Tarantino fraudulently obtained the mark. Specifically, the court noted:
  • Second Circuit jurisprudence is consistent with Bose. Although the court in Patsy's Italian Restaurant, Inc. v. Banas had stated that one of the requirements of a fraudulent trademark procurement claim was that the defendant knew or should have known about the false representation, any suggestion that the requirement could be satisfied by showing that an applicant merely should have known is mere dicta (658 F.3d 254 (2d Cir. 2011)).
  • The district court applied the correct standard in finding fraud.
  • Tarntino had actual knowledge that others had rights to use the applied-for mark, as shown through his:
    • knowledge of multiple Pudgie's locations that were using the mark for the same goods and services he applied for;
    • familiarity with the origins of Pudgie's restaurants;
    • admission that he knew his mother opened her Pudgie's location as a franchisee; and
    • submission of the pizza box displaying the words "® Pudgie's Pizza Franchising Corporation 1972" as an application specimen.
Accordingly, the Second Circuit affirmed the district court's grant of summary judgment to MPC Franchise and the cancellation of Tarntino's trademark registration.