08-4487-cv(L)

08-4487-cv(L)
Patsy’s Italian Restaurant, Inc. v. Banas
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
August Term, 2009 3
(Argued: October 19, 2009 Decided: August 24, 2011) 4
Docket Nos. 08-4487-cv(L), 08-4774-cv(XAP) 5
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6 PATSY’S ITALIAN RESTAURANT, INC., 7 Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, 8
9 PATSY’S BRAND, INC., 10 Plaintiff-Appellant-Cross-Appellee, 11
12 v. 13
14 ANTHONY BANAS, doing business as Patsy’s, doing business as 15 Patsy’s Pizzeria Trattoria Impazzire, doing business as Patsy’s 16 Bakery & Café, ALLAN ZYLLER, doing business as Patsy’s Pizzeria 17 Trattoria, doing business as Patsy’s, AL & ANTHONY’S PATSY’S, 18 INC., I.O.B. REALTY, INC., 19 Defendants-Counter-Claimants-Appellees-Cross- 20 Appellants, 21
22 PATSY’S BAKERY & CAFÉ, PATSY’S PIZZERIA, 23 Defendants-Appellees, 24
25 ANTHONY & PATSY’S, 26 Defendant-Appellee-Cross-Appellant, 27
28 BSZ REALTY CORP., 29 Defendant, 30
31 PATSY’S INC., 32 Intervenor-Cross-Appellant. 33 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 34 B e f o r e: WINTER, POOLER, Circuit Judges, and RAKOFF, 35 District Judge.*
36
* The Hon. Jed S. Rakoff, of the United States District
Court for the Southern District of New York, sitting by
designation.
1

-- 1 of 46 --

Patsy’s Italian Restaurant appeals, and Patsy’s Pizzeria 1
cross-appeals, from a judgment of the United States District 2
Court for the Eastern District of New York (Ramon E. Reyes, Jr., 3
Magistrate Judge) after a jury trial on claims brought pursuant 4
to trademark and unfair competition law. We uphold the district 5
court’s jury instructions. Additionally, we affirm the district 6
court’s refusal to grant a new trial on the issue of whether 7
Patsy’s Pizzeria made fraudulent statements to the Patent and 8
Trademark Office, as well as its refusal to vacate the jury’s 9
verdict that Patsy’s Italian Restaurant did not fraudulently 10
obtain its trademark registrations. We further affirm the 11
district court’s refusal to reinstate Patsy’s Pizzeria’s 12
trademark registration and its cancellation of Patsy’s Italian 13
Restaurant’s trademark registrations. Finally, we uphold the 14
district court’s denial of attorneys’ fees and injunctive relief. 15
We therefore affirm. 16
NORMAN H. ZIVIN, Cooper & 17 Dunham LLP, New York, New 18 York (Robert T. Maldonado, 19 Tonia A. Sayour, on the 20 brief), for Plaintiff- 21 Counter-Defendant-Appellant- 22 Cross-Appellee and 23 Plaintiff-Appellant-Cross- 24 Appellee. 25
26 PAUL GRANDINETTI, Levy & 27 Grandinetti, Washington, 28 D.C. (Rebecca J. Stempien, 29 Steven M. Levy, on the 30 brief), for Defendants- 31 Counter-Claimants-Appellees- 32 Cross-Appellants. 33
2

-- 2 of 46 --

TABLE OF CONTENTS 1
2 BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3
4 a) The Parties . . . . . . . . . . . . . . . . . . . . . . . . 5 5
6 b) The Prior Sauce Dispute . . . . . . . . . . . . . . . . 8 7
8 c) The Current Dispute . . . . . . . . . . . . . . . . . . . 10 9
10 DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . 14 11
12 a) Patsy’s Italian Restaurant’s Appeal: Merits . . . . . . . 14 13
14 1) Cancellation of Appellants’ Registrations . . . 14 15
16 A) Cancellation Not Barred by the 17 Prior Injunction . . . . . . . . . . . . 15 18
19 B) Patsy’s Pizzeria Only Partially 20 Abandoned Its Marks . . . . . . . . . . . 17 21
22 C) Jury Instructions Pursuant to 23 Grants of Judgment as a Matter of 24 Law . . . . . . . . . . . . . . . . . . . 24 25
26 2) Denial of Attorneys’ Fees . . . . . . . . . . . 28 27
28 b) Patsy’s Pizzeria’s Cross-Appeal: Merits . . . . . . . . 29 29
30 1) Limitation of Appellees’ Rights to 31 Pizzeria Services . . . . . . . . . . . . . . . . . 29 32
33 2) Fraud on the PTO . . . . . . . . . . . . . . . 33 34
35 3) Refusal to Reinstate Registration No. 2,213,574 36 36
37 c) Injunctive Relief . . . . . . . . . . . . . . . . . . . . 37 38
39 1) Refusal to Enjoin Appellees from Using 40 Patsy’s Outside of Manhattan. . . . . . . . . . . . 38 41
42 2) Prohibiting Appellants and Patsy’s Pizzeria 43 From Using Solely “PATSY’S” . . . . . . . . . . . . 41 44
45 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . 46 46
47
3

-- 3 of 46 --

WINTER, Circuit Judge: 1
2 This appeal is the latest, longest, and perhaps even the 3
last, chapter in a long legal struggle involving a host of 4
trademark and unfair competition claims over the name “Patsy’s.” 5
Patsy’s Italian Restaurant, Inc., and Patsy’s Brand, Inc. 6
(collectively “Patsy’s Italian Restaurant” or “appellants”) 7
appeal from a judgment entered after a jury trial before 8
Magistrate Judge Reyes. Anthony Banas, Anthony’s & Patsy’s Inc., 9
Allan Zyller, Al & Anthony’s Patsy’s Inc., I.O.B. Realty, Inc., 10
and Patsy’s Inc. (collectively “Patsy’s Pizzeria” or “appellees”) 11
cross-appeal. 12
Patsy’s Italian Restaurant’s appeal raises the following 13
issues: (i) whether the district court erroneously cancelled 14
their service mark registrations; (ii) whether the district 15
court’s decisions regarding injunctive relief constituted an 16
abuse of discretion; and (iii) whether the district court abused 17
its discretion when it denied their request for attorneys’ fees. 18
Patsy’s Pizzeria’s cross-appeal raises the following issues: (i) 19
whether their rights were erroneously limited to pizzeria 20
services; (ii) whether the jury verdict that they fraudulently 21
obtained their service mark registration can be upheld; (iii) 22
whether the jury verdict that appellants did not fraudulently 23
obtain their service mark registrations should have been vacated; 24
(iv) whether the district court erroneously refused to reinstate 25
their service mark registration; and (v) whether the district 26
4

-- 4 of 46 --

court’s decisions regarding injunctive relief constituted an 1
abuse of discretion. 2
We affirm. Relevant factual disputes were resolved by the 3
jury, and the district court’s equitable relief was appropriately 4
balanced and designed to limit ongoing consumer confusion. 5
BACKGROUND 6
To shorten this section and overall opinion, we provide only 7
an overview of the parties, their trademarks, their relationship 8
with one another, and the current dispute. Relevant descriptions 9
of the evidence at trial, the jury instructions, and various 10
aspects of the motion practice in the district court will be 11
given in the DISCUSSION section when relevant. 12
a) The Parties 13
Appellants are associated with Patsy’s Italian Restaurant on 14
West 56th Street in Midtown, New York City. It has been in 15
operation since 1944 and is well-known for Italian cuisine. The 16
entity Patsy’s Italian Restaurant, Inc. operates the restaurant. 17
Patsy’s Brand, Inc. was created in 1993 to sell packaged food 18
products in association with Patsy’s Italian Restaurant. At the 19
beginning of this action, Patsy’s Italian Restaurant, Inc. held 20
two federal service mark 1 registrations issued November 1, 2005 21
1 A service mark is:
[A]ny word, name, symbol, or device, or any
combination thereof--
(1) used by a person, or
(2) which a person has a bona fide intention
to use in commerce and applies to register on
5

-- 5 of 46 --

-- Registration Nos. 3,009,836 (the “´836 Registration”) and 1
3,009,866 (the “´866 Registration”) -- which have since been 2
transferred to Patsy’s Brand. The ´836 Registration is for the 3
stylized mark PATSY’S PR for restaurant services. The ´866 4
Registration is for the mark PATSY’S for restaurant services not 5
including pizza. Patsy’s Brand also holds Registration No. 6
1,874,789 (the “´789 Registration”) for the trademark PATSY’S for 7
sauces. 8
Appellees are associated with Patsy’s Pizzeria. The 9
original Patsy’s Pizzeria opened in 1933 in East Harlem and 10
claims to have been the first pizzeria to sell pizza by the 11
the principal register established by this
chapter,
to identify and distinguish the services of one
person, including a unique service, from the
services of others and to indicate the source of
the services, even if that source is unknown.
. . .
15 U.S.C. § 1127. In contrast, a trademark is:
[A]ny word, name, symbol, or device, or any
combination thereof--
(1) used by a person, or
(2) which a person has a bona fide intention
to use in commerce and applies to register on
the principal register established by this
chapter,
to identify and distinguish his or her goods,
including a unique product, from those
manufactured or sold by others and to indicate the
source of the goods, even if that source is
unknown.
Id. Because trademarks and service marks are generally
protected by the same standards, see 15 U.S.C. § 1053; Lane
Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d
337, 344 n.2 (2d Cir. 1999), we make no distinction in the
law governing these marks unless specifically noted.
6

-- 6 of 46 --

slice. I.O.B. Realty, Inc. purchased the original Patsy’s 1
Pizzeria in 1991 and entered into a licensing agreement with 2
Patsy’s Inc. in 1998. Under the current agreement, I.O.B. Realty 3
owns the real estate and trademarks, whereas Patsy’s Inc. is the 4
franchising arm of Patsy’s Pizzeria. There are currently six 5
Patsy’s Pizzeria locations in Manhattan in addition to the 6
original location, the Staten Island location, and the Syosset 7
location. When appropriate, we refer to I.O.B. Realty and 8
Patsy’s Inc. collectively as the “intervening appellees.” I.O.B. 9
Realty previously received two federal service mark registrations 10
-- Registration No. 1,975,110 (“the “´110 Registration”) and 11
Registration No. 2,213,574 (the “´574 Registration”). The ´110 12
Registration, issued May 21, 1996, was for the mark PATSY’S for 13
restaurant services. The ´574 Registration, issued December 29, 14
1998, was for the mark PATSY’S PIZZERIA for restaurant services. 15
Appellees Banas and Anthony & Patsy’s, Inc. are associated 16
with the Staten Island location of Patsy’s Pizzeria, and, when 17
appropriate, are referred to collectively as the “Staten Island 18
appellees.” The district court found that, as a matter of law, 19
the Staten Island location was opened after they obtained a 20
license to use I.O.B. Realty’s marks. Appellees Banas, Zyller, 21
and Al & Anthony’s Patsy’s, Inc. are associated with the Syosset 22
location of Patsy’s Pizzeria, and, when necessary, are referred 23
to as the “Syosset appellees.” The district court found that, as 24
a matter of law, the Syosset location also obtained a license to 25
7

-- 7 of 46 --

use I.O.B. Realty’s marks. 1
b) The Prior Sauce Dispute 2
The parties coexisted without litigation until each began to 3
sell packaged sauce under the name “Patsy’s,” thereby causing 4
considerable consumer confusion. On October 8, 1998, the 5
intervening appellees brought a cancellation proceeding before 6
the Patent and Trademark Office (the “PTO”) seeking the 7
cancellation of Patsy’s Brand’s ´789 Registration for PATSY’S for 8
sauces. Patsy’s Brand responded by filing a cancellation 9
proceeding before the PTO seeking the cancellation of I.O.B. 10
Realty’s Registration No. 1,975,110 for PATSY’S for restaurant 11
services and Registration No. 2,213,574 for PATSY’S PIZZERIA for 12
restaurant services. Patsy’s Brand also filed suit in the 13
Southern District against the intervening appellees. The action 14
(the “sauce litigation”) alleged trademark infringement and 15
unfair competition due to appellees’ sale of sauces using the 16
PATSY’S mark. The cancellation proceedings were consolidated and 17
suspended pending resolution of the sauce litigation. 18
In granting Patsy’s Brand’s a preliminary injunction in the 19
sauce litigation, the district court rejected the intervening 20
appellees’ argument that they were entitled to bridge the gap 21
into sauces as the senior user of the PATSY’S mark for restaurant 22
services. Patsy’s Brand Inc. v. I.O.B. Realty Inc.(“Patsy’s 23
Brand I”), 53 U.S.P.Q.2d 1861, 1862-63 (S.D.N.Y. 2000). The 24
court reasoned that the mark PATSY’S for restaurant services was 25
8

-- 8 of 46 --

weak, as both parties had the right to use the mark for 1
restaurant services. Id. at 1863. It also observed that it was 2
unclear when the intervening appellees entered the sauce market, 3
because evidence provided in support of the alleged date of entry 4
was clearly falsified, a fact that suggested that the intervening 5
appellees “did not choose [their] sauce label in good faith.” 6
Id. at 1862. In a later opinion granting Patsy’s Brand’s motion 7
for summary judgment in the sauce litigation, the district court 8
again reiterated its findings that the intervening appellees 9
presented falsified evidence and ordered them to show cause why 10
they should not be sanctioned for doing so. Patsy’s Brand Inc. 11
v. I.O.B. Realty Inc. (“Patsy’s Brand II”), 58 U.S.P.Q.2d 1048, 12
1050, 1059 (S.D.N.Y. 2001). The district court sanctioned the 13
intervening appellees and enjoined them from petitioning to 14
cancel Patsy’s Brand’s registrations for sauces, other packaged 15
food products, and restaurant services. In addition, it directed 16
the Commissioner of the PTO to cancel the intervening appellees’ 17
´110 Registration. 18
On October 18, 2001, Patsy’s Brand filed a motion with the 19
PTO requesting that the cancellation proceedings be reinstated. 20
This request led to the subsequent judgment cancelling the 21
intervening appellees’ ´110 Registration on September 4, 2002. 22
However, after Patsy’s Brand filed its request, the intervening 23
appellees filed a notice of appeal in the sauce litigation. 24
Notably, this appeal did not challenge the portion of the 25
9

-- 9 of 46 --

injunction that enjoined them from petitioning to cancel Patsy’s 1
Brand’s registrations for restaurant services. Patsy’s Brand, 2
Inc. v. I.O.B. Realty, Inc. (“Patsy’s Brand III”), 317 F.3d 209, 3
219-21 (2d Cir. 2003). On January 16, 2003, we affirmed the 4
sanctions against the intervening appellees, struck the provision 5
cancelling the intervening appellees’ ´110 Registration, and 6
stated “that the injunction should be confined to the marketing 7
of pasta sauce and food products and should not reach the 8
[intervening appellees’] restaurant business . . . .” Id. at 9
221-22. 10
On May 27, 2003, the Commissioner erroneously cancelled the 11
intervening appellees’ ´110 Registration and ´574 Registration. 12
On July 13, 2007, after realizing the previous order was 13
erroneous, the Commissioner issued an order cancelling the 14
registrations due to I.O.B. Realty’s failure to file declarations 15
of continuing use pursuant to 15 U.S.C. § 1058. 16
c) The Current Action 17
On February 17, 2006, appellants brought suit against the 18
Staten Island appellees for federal and common law trademark 19
infringement, injury to business reputation, and common law 20
unfair competition. The Staten Island location closed in 21
September 2006. During the course of settlement negotiations, 22
appellants discovered that the Syosset location was preparing to 23
open. On October 30, 2006, appellants brought suit against the 24
Syosset appellees for federal and common law trademark 25
10

-- 10 of 46 --

infringement, federal and common law unfair competition, false 1
designation of origin, and injury to business reputation. The 2
two actions were then consolidated, and I.O.B. Realty and Patsy’s 3
Inc. intervened, alleging that they had prior use rights to 4
PATSY’S for restaurant services. On November 26, 2006, the 5
Syosset appellees, I.O.B. Realty, and Patsy’s Inc. filed a 6
counterclaim seeking a declaration either that appellees did not 7
infringe appellants’ marks or that those marks were invalid. 8
After appellants sought a temporary restraining order, Judge 9
Irizarry issued an order allowing the Syosset appellees to open 10
the Syosset location as long as the words “Trattoria Impazzire” 11
were not used with any materials associated with the restaurant. 2
12
In March 2007, appellees filed a motion for summary judgment 13
before the district judge seeking restoration of the ´574 14
Registration, cancellation of appellants’ ´836 Registration and 15
´866 Registration, and the dismissal of appellants’ claims. The 16
district judge granted restoration of the ´574 Registration, but 17
denied summary judgment on appellants’ claims and the request for 18
the cancellations. See generally Patsy’s Italian Rest., Inc. v. 19
Banas (“Patsy’s Italian Rest. I”), 508 F. Supp. 2d 194 (E.D.N.Y. 20
2007). The district court also rejected appellants’ argument 21
2 The district court did this because “trattoria” means
“restaurant” in Italian, and allowing appellees to use the words
“Trattoria Impazzire” on the facade of the Syosset location would
add to the consumer confusion caused by the use of appellants’
mark and name in connection with restaurant services.
11

-- 11 of 46 --

that the injunction from the sauce litigation prohibited 1
appellees from seeking such relief on the ground that the 2
injunction applied only to registrations owned by Patsy’s Brand. 3
See id. at 214, 216. Patsy’s Italian Restaurant, Inc. owned the 4
registrations at issue. Id. at 214. 5
The parties proceeded to a jury trial before the magistrate 6
judge. The jury found that: (i) I.O.B. Realty was the senior 7
user of the marks PATSY’S and PATSY’S PIZZERIA, and continuously 8
used the marks for pizzeria services but not restaurant services; 9
(ii) there was a likelihood of confusion between appellees’ marks 10
and appellants’ ´836 and ´866 Registrations; (iii) the Staten 11
Island and Syosset appellees had exceeded the scope of their 12
license with I.O.B. Realty; (iv) I.O.B. Realty had abandoned its 13
marks through naked licensing -- i.e., a lack of adequate quality 14
control over goods and services sold under the mark by the 15
licensees; (v) the Staten Island appellees engaged in unfair 16
competition and infringed appellants’ federal and common law 17
marks, but the infringement was not willful; (vi) the Syosset 18
appellees engaged in unfair competition and willfully infringed 19
appellants’ federal and common law marks; (vii) both the Staten 20
Island appellees and the Syosset appellees were likely to injure 21
appellants’ business reputation; (viii) appellees fraudulently 22
obtained the ´574 Registration; and (ix) appellants did not 23
fraudulently obtain either the ´836 Registration or the ´866 24
Registration. 25
12

-- 12 of 46 --

After trial, appellants sought an injunction preventing the 1
Syosset appellees from using the mark PATSY’S. Although this 2
initial request was denied, on April 17, 2008, the district court 3
ordered the Syosset location to put up a 24” x 24” sign in its 4
front door that contained, in red capital letters, the statement: 5
“WE ARE NOT AFFILIATED WITH PATSY’S ITALIAN RESTAURANT LOCATED AT 6
236 WEST 56TH STREET, NEW YORK, NY.” 7
On September 9, 2008, the district court issued a decision 8
dealing with the post-trial issues. See generally Patsy’s 9
Italian Rest., Inc. v. Banas (“Patsy’s Italian Rest. IV”), 575 F. 10
Supp. 2d 427 (E.D.N.Y. 2008). It denied appellees’ motions for 11
judgment as a matter of law because appellees failed to make such 12
requests during trial. Id. at 445. The district court also 13
denied appellees’ various motions for a new trial. Id. at 446- 14
54. Nevertheless, while the district court denied appellees’ 15
motion for a new trial with regard to the abandonment of their 16
marks, the district court granted their motion to interpret the 17
abandonment verdict narrowly. See id. at 450, 453. Concluding 18
that the jury’s verdict of abandonment was based on naked 19
licensing but that the jury had not addressed the geographic 20
scope of the naked licensing, id. at 450, 452, the district court 21
determined that appellees had abandoned their marks only in 22
Staten Island and Syosset. Id. at 452-53. 23
With regard to the parties’ service mark registrations, the 24
district court superseded the prior order reinstating appellees’ 25
13

-- 13 of 46 --

´574 Registration, thus refusing reinstatement of the 1
registration, reasoning that the jury’s verdicts precluded such 2
relief. Id. at 463, 468-69, 469 n.28. However, the district 3
court also determined that appellants’ ´836 and ´866 4
Registrations should be cancelled due to appellees’ limited 5
remaining rights in their marks. Id. at 463, 465. 6
Addressing injunctive relief, the district court permanently 7
enjoined the Syosset appellees from using the words “Trattoria 8
Impazzire” in connection with their establishment. Id. at 469. 9
Additionally, the district court required the Syosset appellees 10
to maintain the previously imposed disclaimer sign for not less 11
than three years from the entry of judgment. Id. The district 12
court denied appellants’ requests for further injunctive relief, 13
as well as appellees’ request for injunctive relief. Id. at 469- 14
70. However, the district court went on to enter an injunction 15
prohibiting both Patsy’s Italian Restaurant and Patsy’s Pizzeria 16
from using the term PATSY’S alone in connection with their 17
establishments. Id. at 470-71. 18
Finally, the district court denied appellants’ request for 19
attorneys’ fees. Id. at 471. 20
DISCUSSION 21
a) Patsy’s Italian Restaurant’s Appeal: Merits 22
1) Cancellation of Appellants’ Registrations 23
Patsy’s Italian Restaurant advances several arguments that 24
the district court erred in cancelling the ´836 and ´866 25
14

-- 14 of 46 --

Registrations. We address them seriatim. 1
A) Cancellation Not Barred by the Prior Injunction 2
Appellants argue that the injunction in the sauce litigation 3
prohibited appellees from seeking cancellation. 4
The injunction issued in the sauce litigation provided, in 5
relevant part: 6
That Defendants [I.O.B. Realty, Patsy’s Inc., 7 Brija, Brecevich, and Nick Tsoulos], their 8 successors, assigns, officers, directors, 9 servants, employees, distributors, customers, 10 representatives, agents and attorneys, and 11 all persons in active concert and 12 participation with them, or any of them, be 13 and they are hereby permanently restrained 14 and enjoined: 15 . . . 16 e. from opposing any application for 17 registration or petitioning to cancel any 18 registration of Plaintiff [Patsy’s Brand] for 19 any trademark incorporating PATSY’S for 20 sauces or other packaged food products or 21 restaurant services . . . . 22
23 The district court held that the sauce litigation injunction 24
applied only to registrations owned by Patsy’s Brand and not to 25
those owned by Patsy’s Italian Restaurant, Inc. 26
We review a district court’s interpretation of another 27
court’s order de novo. See United States v. Spallone, 399 F.3d 28
415, 423 (2d Cir. 2005). In doing so, we apply traditional 29
principles of contract law and look to the intent of the issuing 30
court. See Mastrovincenzo v. City of New York, 435 F.3d 78, 103 31
(2d Cir. 2006); Spallone, 399 F.3d at 424. Under traditional 32
principles of contract law, “‘[a] contract should be construed so 33
15

-- 15 of 46 --

as to give full meaning and effect to all of its provisions.’” 1
PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996) 2
(quoting Am. Express Bank Ltd. v. Uniroyal, Inc., 562 N.Y.S.2d 3
613, 614 (1st Dep’t 1990)) (alteration in original). 4
Appellants essentially argue that we should read “Plaintiff” 5
to include not just Patsy’s Brand but also its associate, Patsy’s 6
Italian Restaurant, Inc. However, that would impermissibly 7
stretch the injunction’s language. Whereas “Defendants,” as used 8
in the order, specifically includes “their successors, assigns, 9
officers, directors, servants, employees, distributors, 10
customers, representatives, agents and attorneys, and all persons 11
in active concert and participation with them, or any of them,” 12
the word “Plaintiff” lacks any such expansion. Injunctions are 13
serious orders, enforceable in contempt proceedings, and such an 14
order must give notice of the specific conduct ordered or 15
prohibited. See Fed. R. Civ. P. 65(d) (requiring that “[e]very 16
order granting an injunction . . . must . . . state its terms 17
specifically . . . and . . . describe in reasonable detail . . . 18
the act or acts restrained or required.”) We therefore read 19
“Plaintiff” to refer only to the party bringing the action. 20
This interpretation is fully consistent with the context in 21
which the injunction was issued. Patsy’s Italian Restaurant and 22
Patsy’s Pizzeria had co-existed peacefully for quite some time. 23
See Patsy’s Brand III, 317 F.3d at 212-13, 216. This co- 24
existence ended only when both parties sought to enter the 25
16

-- 16 of 46 --

packaged foods market. See id. at 212-15. In the sauce 1
litigation, appellees had sought to cancel only Patsy’s Brand’s 2
registrations and committed misconduct only with regard to the 3
date of first use of their sauces. See id. at 214-15. Thus, the 4
injunction does not bar appellees’ counterclaim. 3
5
B) Patsy’s Pizzeria Only Partially Abandoned Its Marks 6
The district court’s decision to cancel appellants’ ´836 and 7
´866 Registrations pursuant to section 37 of the Lanham Act, 8
3 Appellants also argue that the district court erred in
even considering the cancellation counterclaim because the
Syosset appellees sought cancellation only due to prior use, not
likelihood of confusion. However, the counterclaim states that
“[Patsy’s Italian Restaurant] has no intellectual property rights
to the word PATSY’S when used with the word PIZZERIA. Therefore,
there is no infringement of the Patsy’s Restaurant Marks or, if
the marks of these registrations are infringed by the Defendants’
use of the mark PATSY’S PIZZERIA with pizzeria services, the
registrations are invalid.” This language can reasonably be read
to include a counterclaim for cancellation due to a likelihood of
confusion.
Moreover, appellants filed the motion to dismiss the
counterclaim on this ground only months after the district court
denied appellees’ motion for summary judgment seeking
cancellation of appellants’ trademark registrations due to prior
use. As the district court then noted, the counterclaim seeking
cancellation due to prior use necessarily required the additional
showing of a likelihood of confusion. See Patsy’s Italian Rest.
I, 508 F. Supp. 2d at 215 (citing Sterling Drug, Inc. v. Bayer
AG, 14 F.3d 733, 743 (2d Cir. 1994)). Nevertheless, appellants
did not argue at the summary judgment stage that the Syosset
appellees’ counterclaim seeking cancellation of their marks was
not included within the pleadings. Nor do appellants point to
any other instance throughout the litigation where they raised
this issue in a motion, either to dismiss or otherwise, so that
the district court could properly address it. Having actually
litigated the issue during the trial, without raising any
objections, “appellants impliedly consented to trial on this
issue, within the meaning of Fed. R. Civ. P. 15(b).” Snell v.
Suffolk County, 782 F.2d 1094, 1102 (2d Cir. 1986).
17

-- 17 of 46 --

codified as amended at 15 U.S.C. § 1119, depended on its 1
conclusion that I.O.B. Realty had retained some rights even after 2
the jury’s abandonment finding. Patsy’s Italian Rest. IV, 575 F. 3
Supp. 2d at 465-68. The district court concluded that, because 4
the jury found that I.O.B. Realty continuously used the marks, 5
the finding of abandonment had to have been based on a finding of 6
naked licensing. Id. at 452. Appellants do not challenge this 7
reasoning, but argue, rather, that the jury’s verdict was one of 8
total abandonment. 9
A district court’s determination to grant relief pursuant to 10
15 U.S.C. § 1119 is reviewed for an abuse of discretion. See 11
Empresa Cubana del Tabaco v. Culbro Corp., 541 F.3d 476, 478 (2d 12
Cir. 2008) (“[S]ection 1119's use of the permissive ‘may’ in 13
authorizing courts to grant relief, [is] distinct from its use of 14
the mandatory ‘shall’ in requiring any orders or decrees that are 15
entered to be sent to and followed by the PTO.”). Appellants 16
argue that our review should be de novo because the district 17
court based its decision “on [its] disagreement with the jury’s 18
fact findings and [its] misreading of the Lanham Act.” 19
Appellant’s Br. at 47. However, while claims of factual error or 20
mistakes of law may inform the determination of abuse of 21
discretion, they do not alter the standard of review. 22
Appellants first argue that any finding of naked licensing 23
necessarily acted as a total abandonment of all rights. We 24
disagree. Although some forms of trademark abandonment may 25
18

-- 18 of 46 --

result in a loss of all rights in the mark, see e.g., 1
Feathercombs, Inc. v. Solo Prods. Co., 306 F.2d 251, 256 (2d Cir. 2
1962), abandonment of a mark through naked licensing has 3
different effects on the validity of the mark in different 4
markets. See Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 5
F.2d 358, 369 (2d Cir. 1959) (a finding of naked licensing in the 6
retail market would not result in the loss of trademark rights in 7
the wholesale market). For example, if a restaurant operates in 8
both New York and California, but engages in naked licensing only 9
in California, the restaurant’s registered mark may lose its 10
significance in California while retaining its significance in 11
New York. Thus, naked licensing will lead to an abandonment of a 12
mark only where the mark loses its significance. 15 U.S.C. § 13
1127. 14
As a result, we agree with the district court that a mark 15
owner can abandon a mark through naked licensing in a particular 16
geographic area without abandoning its rights throughout the 17
entire United States. See also Tumblebus Inc. v. Cranmer, 399 18
F.3d 754, 765-66 (6th Cir. 2005) (recognizing that “there is 19
considerable support for the concept that rights in a mark may be 20
abandoned in certain geographic areas but not others”); Sheila’s 21
Shine Prods., Inc. v. Sheila Shine, Inc., 486 F.2d 114, 125 (5th 22
Cir. 1973) (recognizing abandonment in some areas but not 23
others); E.F. Prichard Co. v. Consumers Brewing Co., 136 F.2d 24
512, 521-22 (6th Cir. 1943); Snuffer & Watkins Mgmt. Inc. v. 25
19

-- 19 of 46 --

Snuffy’s Inc., 17 U.S.P.Q.2d 1815, 1816 (T.T.A.B. 1990) 1
(“Accordingly, an allegation of abandonment in a specific 2
geographic location is an insufficient pleading in a cancellation 3
proceeding.”); 3 J. Thomas McCarthy, McCarthy on Trademarks and 4
Unfair Competition § 18:48 (4th ed. 2008). 4
5
The district court limited the scope of I.O.B. Realty’s 6
abandonment pursuant to Fed. R. Civ. P. 49(a)(3) (“A party waives 7
the right to a jury trial on any issue of fact raised by the 8
pleadings or evidence but not submitted to the jury unless, 9
before the jury retires, the party demands its submission to the 10
jury. If the party does not demand submission, the court may 11
make a finding on the issue. . . .”). 12
In its answer to a special interrogatory, the jury concluded 13
that Patsy’s Pizzeria abandoned its marks. Patsy’s Italian 14
Restaurant argues that the verdict encompassed the Staten Island 15
location, the Syosset location, and all Manhattan locations other 16
than the East Harlem location. We disagree. 5
17
4 Apart from arguing total abandonment, Patsy’s Italian
Restaurant does not contest the geographical divisions the
district court adopted in determining the scope of I.O.B.
Realty’s abandonment through naked licensing.
5 Appellants also argue that the district court’s decision
to cancel appellees’ ‘574 mark conflicts with the conclusion that
appellees retained some rights in the mark because the
cancellation was based, in part, on the jury finding of
abandonment. However, the court did not rely solely on the
finding of abandonment in cancelling the registration, but on a
combination of fraud and partial abandonment of the mark. See
Patsy’s Italian Restaurant IV, 575 F. Supp. 2d at 469 (“I.O.B.
Realty’s fraudulent statements to the PTO and TTAB, and its
20

-- 20 of 46 --

“[S]pecial interrogatories must be read in conjunction with 1
the district court’s charge.” Romano v. Howarth, 998 F.2d 101, 2
104 (2d Cir. 1993) (internal quotation marks omitted). The jury 3
was asked to determine whether there was abandonment but not the 4
geographic scope of any such abandonment. Appellants requested 5
no instruction on whether the naked licensing was limited to 6
certain entities or certain geographical areas. While the 7
abandonment instructions never identified as their subject the 8
specific licenses granted to the Staten Island location or the 9
Syosset location, those are the entities that were the subject of 10
the naked licensing claim at trial. Therefore, the district 11
court properly resolved the scope of abandonment issue pursuant 12
to Fed. R. Civ. P. 49(a)(3). 13
Finally, Patsy’s Italian Restaurant argues that Patsy’s 14
Pizzeria’s limited rights in the Manhattan area do not warrant 15
cancellation of their registration. They contend that they are 16
entitled to expand nationwide because Patsy’s Pizzeria’s rights 17
are limited. Moreover, they suggest that the expansion by 18
Patsy’s Pizzeria outside Manhattan that caused the likelihood of 19
confusion occurred after their applications for registration were 20
filed. They argue, therefore, that the cancellation was in 21
limited abandonment through naked licensing . . . warrants
cancelling the ‘574 Registration.” (emphasis added)). Therefore,
the decision to cancel appellees’ ‘574 Registration and the
conclusion that they still retained some limited rights in the
mark are not in conflict.
21

-- 21 of 46 --

violation of their rights and should not affect their 1
registrations. We disagree. 2
Local rights owned by another have been consistently viewed 3
as sufficient to prevent a party from obtaining registration of a 4
federal mark. See Giant Food, Inc. v. Nation’s Foodservice, 5
Inc., 710 F.2d 1565, 1571 (Fed. Cir. 1983) (refusing registration 6
due to likelihood of confusion, even where there was no evidence 7
of actual confusion “mainly [due] to the geographical separation 8
of the two parties’ operations”); Peopleware Sys., Inc. v. 9
Peopleware, Inc., 226 U.S.P.Q. 320, 321 (T.T.A.B. 1985) (noting 10
that “geographical separation of the parties’ principal places of 11
business cannot be considered to be of significance in 12
determining registrability of applicant’s mark since it seeks a 13
geographically unrestricted registration”); 3 J. Thomas McCarthy, 14
McCarthy on Trademarks and Unfair Competition § 20:15 (4th ed. 15
2008) (“Geographical separation of the parties is not relevant in 16
an opposition.”). Indeed, this is consistent with the principle 17
in trademark law “that the second comer has a duty to so name and 18
dress his product [or service] as to avoid all likelihood of 19
consumers confusing it with the product [or service] of the first 20
comer.” Harold F. Ritchie, Inc. v. Chesebrough-Pond’s, Inc., 281 21
F.2d 755, 758 (2d Cir. 1960). 22
Because registration of a federal mark confers upon the 23
owner of the mark a presumption that the owner has the exclusive 24
right to use the mark nationwide, 15 U.S.C. § 1115(a), it is 25
22

-- 22 of 46 --

proper to consider the rights of users nationwide when 1
determining whether a party is entitled to registration of their 2
mark. See 3 J. Thomas McCarthy, McCarthy on Trademarks and 3
Unfair Competition § 20:15 (4th ed. 2008). In fact, Section 4
1052(d) itself provides that a mark cannot be registered if it 5
“[c]onsists of or comprises a mark which so resembles a mark 6
registered in the Patent and Trademark Office, or a mark or trade 7
name previously used in the United States and not abandoned, as 8
to be likely . . . to cause confusion . . . .” 15 U.S.C. § 9
1052(d). Thus, the very language of the statute contemplates 10
that a mark used anywhere in the United States can be sufficient 11
to block federal registration. See id. 12
In these circumstances, the principles applicable to the 13
initial registrability of a mark should also be applied to a 14
claim seeking the cancellation of a registration that has not yet 15
become incontestable pursuant to Section 1065. Id. § 1065. 16
Young v. AGB Corp., 152 F.3d 1377, 1380 (Fed. Cir. 1998) (“The 17
linguistic and functional similarities between the opposition and 18
cancellation provisions of the Lanham Act mandate that we 19
construe the requirements of these provisions consistently. 20
There is no basis for interpreting them differently.”) (internal 21
citations omitted); 3 McCarthy on Trademarks and Unfair 22
Competition § 20:52 (“[F]or Principal Register marks not yet five 23
years on the register, cancellation may be based on any ground in 24
the Lanham Act that would have barred registration in the first 25
23

-- 23 of 46 --

instance.”). Cf. 15 U.S.C. § 1064 (limiting the grounds on which 1
cancellation can be sought after the mark has been registered for 2
five years). 3
In conclusion, the district court did not abuse its 4
discretion by cancelling appellants’ registrations. 5
Nevertheless, the lack of a federal registration does not prevent 6
Patsy’s Italian Restaurant or Patsy’s Pizzeria from expanding as 7
they so desire, so long as they respect each other’s existing 8
rights. Rather, the cancellation simply precludes appellants 9
from utilizing the statutory presumptions and other benefits 10
conferred to a mark owner through federal registration. See 15 11
U.S.C. § 1115 (setting forth the evidentiary presumptions a mark 12
owner is entitled to and limiting the defenses against an 13
incontestable registration); cf. id. § 1125(a) (providing a 14
federal cause of action for infringement of an unregistered 15
mark). 16
C) Jury Instructions Pursuant to Grants of Judgment as 17 a Matter of Law 18
19 Appellants argue that the district court erroneously 20
instructed the jury that there was privity as a matter of law 21
between the purported predecessors of I.O.B. Realty and I.O.B. 22
Realty as well as between I.O.B. Realty and the Syosset and 23
Staten Island appellees. The instruction being a question of 24
law, we review it de novo. See Wilkinson ex rel. Wilkinson v. 25
Russell, 182 F.3d 89, 96 (2d Cir. 1999). However, appellants 26
24

-- 24 of 46 --

waived any claim of error regarding the privity issue by failing 1
to raise them with the district court. See Gwozdzinsky ex rel. 2
Revco D.S., Inc. v. Magten Asset Mgmt. Corp., 106 F.3d 469, 472 3
(2d Cir. 1997). Appellants made no objection whatsoever to the 4
finding of privity between I.O.B. Realty’s predecessors and 5
I.O.B. Realty. As for the finding of privity between I.O.B. 6
Realty and the other defendants, counsel for appellants stated 7
only that: “we object to reference to the license agreement as 8
being a valid agreement . . . . Perhaps you could take out the 9
word ‘valid’; then there would be more consistency there.” 10
Later, appellants clarified their objection stating “[w]e don’t 11
believe that a naked license is a valid license.” Notably, the 12
issue of naked licensing went to the jury. 13
Appellants similarly challenge the district court’s 14
instruction to the jury that there was, as a matter of law, use 15
of the marks in interstate commerce. They argue in that regard 16
that appellees were required to demonstrate use in interstate 17
commerce as part of their prior use defense because a mark must 18
be used in interstate commerce in order to be eligible for 19
federal registration. 20
No provision of the Lanham Act supports that contention. 21
The Lanham Act merely provides that a mark is not registrable if 22
there is a likelihood of confusion between that mark and “a mark 23
or trade name previously used in the United States by another and 24
not abandoned . . . .” 15 U.S.C. § 1052(d). A party need not 25
25

-- 25 of 46 --

meet the statutory requirement of use in interstate commerce to 1
oppose, or seek cancellation of, a registration based on 2
confusion. See id.; First Niagara Ins. Brokers, Inc. v. First 3
Niagara Fin. Grp., Inc., 476 F.3d 867, 870-71 (Fed. Cir. 2007). 4
Likewise, prior use as a defense against a trademark infringement 5
suit does not require use in commerce. See 15 U.S.C. § 6
1115(b)(6). Indeed, as discussed above, even appellees’ local 7
rights would be sufficient to warrant cancellation of appellants’ 8
marks due to a likelihood of confusion. See 3 McCarthy on 9
Trademarks and Unfair Competition § 20:15. 10
Nevertheless, even if use in commerce had to be shown, the 11
evidence showed such use as a matter of law. Due to the 12
different nature of the marks, “use in commerce” is defined 13
differently for trademarks and service marks. See 15 U.S.C. § 14
1127. A service mark is used in commerce when, among other 15
things, “it is used or displayed in the sale or advertising of 16
services and the services are rendered in commerce,” where 17
“commerce” includes “all commerce which may lawfully be regulated 18
by Congress.” Id. We have previously recognized that this broad 19
definition reflects “Congress’s intent to legislate to the limits 20
of its authority under the Commerce Clause.” Buti v. Perosa, 21
S.R.L., 139 F.3d 98, 102 (2d Cir. 1998) (internal quotation marks 22
omitted). 23
Appellants rely on the failure to show use of the mark in 24
advertising materials, but there is no requirement that a mark be 25
26

-- 26 of 46 --

so used. Rather, it is enough to show use or a display of the 1
mark in the sale of services rendered in commerce, 15 U.S.C. § 2
1127, as was the case here. Appellees’ mark was prominently 3
displayed on numerous versions of the Patsy’s Pizzeria menu 4
entered into evidence as well as displayed on the exterior of the 5
East Harlem building. 6
Additionally, these services were rendered in commerce. The 7
provision of services to interstate customers is sufficient to 8
show that the services were rendered in commerce. See Larry 9
Harmon Pictures Corp. v. Williams Rest. Corp., 929 F.2d 662, 666 10
(Fed. Cir. 1991); Application of Gastown, Inc., 326 F.2d 780, 11
782-83 (C.C.P.A. 1964). A map in evidence demonstrates that 12
Patsy’s Pizzeria is easily accessible from several nearby 13
interstate highways. Numerous articles about Patsy’s Pizzeria 14
were also in evidence, including one from the New York Times, 15
which undoubtedly extends to an interstate audience. 16
Furthermore, reviews for Patsy’s Pizzeria from guides such as the 17
2003 Not For Tourists Guide to New York City and the 2004 Zagat 18
Survey for New York City Restaurants were also entered into 19
evidence. Finally, there was testimony that cab drivers knew 20
where Patsy’s Pizzeria was, that people “[came] from all over” to 21
go there, and even that pizza was shipped to the west coast. 22
Thus, the district court properly instructed the jury to find 23
that appellees used their mark in interstate commerce as a matter 24
of law. 25
27

-- 27 of 46 --

2) Denial of Attorneys’ Fees 1
Patsy’s Italian Restaurant appeals the district court’s 2
denial of its request for attorneys’ fees. Patsy’s Italian Rest. 3
IV, 575 F. Supp. 2d at 471. Section 35(a) of the Lanham Act, 4
codified as amended at 15 U.S.C. § 1117(a), provides that “[t]he 5
court in exceptional cases may award reasonable attorney fees to 6
the prevailing party.” Thus, in order to be entitled to 7
attorneys’ fees, the party must be the “prevailing party” and the 8
case must be “exceptional,” or, in other words, involve fraud, 9
bad faith, or willful infringement. Patsy’s Brand III, 317 F.3d 10
at 221. Even then the statute provides only that the district 11
court “may” award attorneys’ fees. See 15 U.S.C. § 1117(a). As 12
a result, we review the district court’s decision for an abuse of 13
discretion. See Quaker State Oil Refining Corp. v. Kooltone, 14
Inc., 649 F.2d 94, 95-96 (2d Cir. 1981) (per curiam). 15
Appellants argue that the district court erred because it 16
held that they were not a prevailing party. We disagree with 17
that characterization of the district court’s holding. To be 18
sure, some of the district court’s statements, if read in 19
isolation, could be read to suggest that appellants were not a 20
prevailing party. However, the district court explicitly 21
exercised its discretion not to award. See Patsy’s Italian Rest. 22
IV, 575 F. Supp. 2d at 471 (“[T]he Court does not find this case 23
is so ‘exceptional’ as to justify an award of attorneys’ fees 24
. . . . The Court thus exercises its discretion and denies 25
28

-- 28 of 46 --

Plaintiffs’ motion for attorneys’ fees.”). Given the facts of 1
this case and the mixed outcome of the litigation, the district 2
court clearly did not abuse its discretion in so ruling. 6
3
b) Patsy’s Pizzeria’s Cross-Appeal: Merits 4
1) Limitation of Appellees’ Rights to Pizzeria Services 5
Patsy’s Pizzeria argues that the district court erred by 6
including the distinction between general restaurant services 7
and pizzeria services in the jury instructions and special 8
verdict sheet when no definition of pizzeria services was 9
6 Appellants also claim that the district court erred when
it refused to admit as evidence certified government records of a
fire into evidence. These records, they claim, show that Patsy’s
Pizzeria was operating solely as a pizzeria and not a restaurant
at the time of the fire. These records were not offered until
after the record was closed. “A motion to reopen the record for
the presentation of new evidence is addressed to the sound
discretion of the trial court” and is reviewed for an abuse of
discretion. DiBella v. Hopkins, 403 F.3d 102, 119 (2d Cir. 2005)
(internal quotation marks and alteration omitted). Appellants
offered no reason for not obtaining the certified records
earlier. Thus, the district court did not abuse its discretion
by declining to admit the records.
Additionally, appellants argue that appellees’ evidence of
prior use was misleading based on the discovery of photographs
said to contradict the testimony of appellees’ witnesses. They
contend that the district court erred by refusing to take into
account the misleading nature of the evidence when cancelling
appellants’ marks. Instead, the district court relied on the
jury’s verdict of prior use.
A district court has considerable discretion in determining
whether to grant equitable relief. See Bano v. Union Carbide
Corp., 361 F.3d 696, 716 (2d Cir. 2004). The district court did
not abuse its discretion by relying on a valid jury verdict when
fashioning equitable relief. Nor did the district court abuse
its discretion by failing to consider appellants’ photographs,
which were not admitted into evidence.
29

-- 29 of 46 --

offered. 7 It asserts that the lack of a definition is 1
particularly important because it misled the jury into 2
believing this distinction is recognized at law, and the jury’s 3
special verdicts on many of the issues turned on the definition 4
of pizzeria services. We disagree. The court was not obliged 5
to define pizzeria services for the jury because the jury was 6
capable of determining the meaning of that term, which is 7
neither technical nor ambiguous. United States v. Morris, 928 8
F.2d 504, 511 (2d Cir. 1991) (“Since the word is of common 9
usage, without any technical or ambiguous meaning, the Court 10
was not obliged to instruct the jury on its meaning.”) (citing 11
United States v. Chenault, 844 F.2d 1124, 1131 (5th Cir. 1988). 12
Patsy’s Pizzeria also suggests that the distinction 13
between pizzeria services and restaurant services was 14
inappropriate because the classification system used by the PTO 15
does not distinguish between the two services, providing only 16
the category of “restaurant services.” This argument 17
misunderstands the purpose of the PTO’s classification system. 18
The PTO’s classifications exist solely for administrative 19
purposes, and does not affect the substantive rights of a 20
mark’s owner in any way. See 15 U.S.C. § 1112 (“The Director 21
may establish a classification of goods and services, for 22
7 Patsy’s Italian Restaurant claims that Patsy’s Pizzeria
waived any such objections to the jury instructions. The record
is unclear in this regard, and we therefore address the merits.
30

-- 30 of 46 --

convenience of Patent and Trademark Office administration, but 1
not to limit or extend the applicant’s or registrant’s 2
rights.”). Rather, Patsy’s Pizzeria’s substantive rights are 3
defined by the scope of the services used in connection with 4
the mark. See In re Trade-Mark Cases, 100 U.S. 82, 94 (1879); 5
ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 146 (2d Cir. 2007). 6
Patsy’s Pizzeria further argues that there was no evidence 7
to support the jury’s finding that they did not provide 8
restaurant services and use for pizzeria services. We 9
disagree. Patsy’s Pizzeria’s argument appears to rely heavily 10
on their claim that pizzeria services are limited to businesses 11
serving pizza only by the slice. However, as noted, Patsy’s 12
Pizzeria did not request that the district court provide this 13
definition in the jury instructions, and there is no manifest 14
injustice in the district court’s failure to do so. Without a 15
definition, it was up to the jury to determine the appropriate 16
distinction, and there was sufficient evidence to support its 17
determination. 18
For example, the jury had before it a variety of menus, 19
including the menus for various Patsy’s Pizzeria locations, 20
Patsy’s Italian Restaurant’s menu, and menus from Pizza Hut and 21
Dominos Pizza. They were able to compare those to determine 22
whether there was a distinction between the services provided 23
and, if so, what that distinction was. In addition, during the 24
trial, the deposition testimony of a Patsy’s Pizzeria 25
31

-- 31 of 46 --

franchisee was read into the record, in which the franchisee 1
stated that in “[p]izzerias you just serve pizza,” and a 2
witness for Patsy’s Italian Restaurant also gave a similar 3
definition. Thus, there was sufficient evidence to permit the 4
jury to draw the distinction in question. 5
There was also sufficient evidence to support the jury’s 6
verdict that Patsy’s Pizzeria’s rights were limited to pizzeria 7
services. Patsy’s Pizzeria argues that there was no evidence 8
that they served solely pizza, and, indeed, that they 9
demonstrated that they continuously sold a variety of foods. 10
Having conceded that they failed to file a motion for judgment 11
as a matter of law, appellants merely seek a new trial on this 12
ground. As we have previously explained, “‘[w]here a jury’s 13
verdict is wholly without legal support, we will order a new 14
trial in order to prevent a manifest injustice[,]’ despite an 15
appellant’s failure to move for a directed verdict.” Russo v. 16
New York, 672 F.2d 1014, 1022 (2d Cir. 1982) (quoting Sojak v. 17
Hudson Waterways Corp., 590 F.2d 53, 54-55 (2d Cir. 1978)). 18
There was no manifest injustice calling for a new trial. 19
With regard to the element of continuous provision of 20
restaurant services, the 1991 contract of sale transferring 21
ownership to I.O.B. Realty states that the East Harlem 22
location’s restaurant section was closed, and I.O.B. Realty 23
agreed only to provide pizzeria services during a specified 24
period of time. Evidence introduced by Patsy’s Pizzeria itself 25
32

-- 32 of 46 --

suggests a focus on only pizza. For example, franchisees were 1
trained regarding how to make pizza the Patsy’s way, and one 2
franchisee testified to the purchase of a $75,000 pizza oven 3
because their “focus was on the pizza.” Additionally, the jury 4
was shown a documentary that discussed how the original Patsy’s 5
Pizzeria was the first pizzeria to sell pizza by the slice. 6
Thus, Patsy’s Pizzeria is not entitled to a new trial on the 7
ground of manifest injustice. 8
2) Fraud on the PTO 9
Appellees challenge the jury’s verdict that they made 10
fraudulent statements to the PTO. Generally, a party alleging 11
that a registration was fraudulently obtained must prove the 12
following elements by clear and convincing evidence: 13
1. A false representation regarding a 14
material fact. 15
2. The person making the representation 16
knew or should have known that the 17
representation was false (“scienter”). 18
3. An intention to induce the listener 19
to act or refrain from acting in 20
reliance on the misrepresentation. 21
4. Reasonable reliance on the 22
misrepresentation. 23
5. Damage proximately resulting from 24
such reliance. 25
33

-- 33 of 46 --

6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair 1
Competition § 31:61 (4th ed. 2008) (footnote omitted); see also 2
In re Bose, 580 F.3d 1240, 1243 (Fed. Cir. 2009); Quicksilver, 3
Inc. v. Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006); United 4
Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1226 5
(10th Cir. 2000). 6
Appellees argue that the jury’s verdict that they made 7
fraudulent statements to the PTO either relied on facts that, 8
even if proven, were insufficient as a matter of law, or was 9
supported by legally insufficient evidence. 8 Again, because 10
appellees failed to move for a directed verdict, they are 11
limited to seeking a new trial, which we will grant only if 12
necessary to prevent manifest injustice when “a jury’s verdict 13
is wholly without legal support.” Russo, 672 F.2d at 1022. 14
Appellants claimed that I.O.B. Realty committed fraud in 15
its application for the ´574 Registration for PATSY’S PIZZERIA 16
for restaurant services by: (i) the statement that “the mark 17
was used continuously for restaurant services since 1933”; (ii) 18
the statement that they “believed I.O.B. Realty had the 19
8 Appellees also argue that the district court should have
vacated the jury’s verdicts that appellants did not commit fraud
on the PTO. We see no merit in this argument for the reasons
stated by the district court. Nevertheless, we also note that a
verdict finding fraud would result only in the cancellation of
appellants’ registrations. See Orient Express Trading Co. v.
Federated Dep’t Stores, Inc., 842 F.2d 650, 654 (2d Cir. 1988).
Thus, because we affirm the district court’s cancellation of
appellants’ registrations on other grounds, see supra, we need
not address this argument.
34

-- 34 of 46 --

exclusive right to use the name PATSY'S PIZZERIA or any mark 1
similar thereto for restaurant services and that no one else 2
had the right to use that name”; and (iii) their failure to 3
tell the PTO about Patsy’s Brand’s Registration No. 1,874,789 4
for PATSY’S for pasta sauces, even though they were petitioning 5
to cancel that mark on the ground that it was confusingly 6
similar to the mark PATSY’S PIZZERIA for restaurant services. 7
Appellees argue that there was insufficient evidence that 8
I.O.B. Realty knew that statement (i) was a misrepresentation 9
because the jury found I.O.B. Realty continuously used the 10
marks PATSY’S and PATSY’S PIZZERIA, and thus was the senior 11
user. Appellees additionally argue that statements (ii) and 12
(iii) were insufficient as a matter of law because they had no 13
obligation to inform the PTO of junior users. They add that, 14
even if they were legally sufficient, there was insufficient 15
evidence to support the jury’s verdict under either (ii) or 16
(iii) because the evidence showed that I.O.B. Realty believed 17
it was the senior user and thus was under no legal obligation 18
to disclose the information. 19
Appellees have failed to meet their burden of showing 20
manifest injustice because the jury’s verdict was not wholly 21
without support. There was evidence of fraud in I.O.B. 22
Realty’s statement that it had continuously used the mark for 23
restaurant services since 1933. It follows that I.O.B. Realty 24
specified the services in connection with which the mark was 25
35

-- 35 of 46 --

used more broadly than it was actually used, a fact they had to 1
have known. 2
“[S]ince a registration is prima facie evidence that the 3
registrant is using the registered mark on the goods or 4
services specified in the registration,” 3 J. Thomas McCarthy, 5
McCarthy on Trademarks and Unfair Competition § 19:48 (4th ed. 6
2008), I.O.B. Realty’s misrepresentation resulted in a 7
registered mark that was broader in scope than it should have 8
been. As a result, appellees have failed to show that the 9
jury’s verdict lacked any legal basis, and they are thus not 10
entitled to a new trial. 11
3) Refusal to Reinstate Registration No. 2,213,574 12
Appellees argue that the district court’s refusal to 13
reinstate the ´574 Registration for PATSY’S PIZZERIA for 14
restaurant services was erroneous because it was inconsistent 15
with the district court’s conclusion that they retained some 16
rights in the mark. As previously discussed, the district 17
court’s refusal to reinstate a registration pursuant to 15 18
U.S.C. § 1119 is reviewed for an abuse of discretion. See 19
Empresa, 541 F.3d at 478. Registration provides the mark owner 20
with certain presumptions and additional procedural rights, 21
see, e.g., 15 U.S.C. § 1115, but owners of unregistered marks 22
also retain some, albeit more limited, rights under the Lanham 23
Act. See, e.g., Orient Express Trading Co., 842 F.2d at 654. 24
Specifically, when a party’s registered mark is cancelled due 25
36

-- 36 of 46 --

to fraud before the PTO, the party can still bring an action as 1
an owner of an unregistered mark for relief pursuant to section 2
43(a) of the Lanham Act, 15 U.S.C. § 1125(a). See Orient 3
Express, 842 F.2d at 653-54. Thus, the district court’s 4
determination that I.O.B. Realty’s mark should not be restored 5
but that appellants’ marks should be cancelled due to I.O.B. 6
Realty’s limited remaining rights is not inconsistent in this 7
respect. The jury’s fraud verdict fully justified the district 8
court’s decision not to restore I.O.B. Realty’s registration. 9
We, therefore, need not address appellees’ other arguments in 10
that regard. 11
c) Injunctive Relief 12
With regard to the injunction issued by the district 13
court, appellants claim that it erred when it did not enjoin 14
appellees from using the PATSY’S mark in connection with any 15
locations other than those currently located in Manhattan. 16
Appellants and Patsy’s Pizzeria both challenge the injunction 17
prohibiting them from using the term PATSY’S alone. 18
A permanent injunction is appropriate where the party 19
seeking the injunction has succeeded on the merits and “show[s] 20
the absence of an adequate remedy at law and irreparable harm 21
if the relief is not granted.” Roach v. Morse, 440 F.3d 53, 56 22
(2d Cir. 2006) (internal quotation marks omitted). However, 23
“[i]njunctive relief should be narrowly tailored to fit 24
specific legal violations.” Patsy's Brand III, 317 F.3d at 220 25
37

-- 37 of 46 --

(internal quotation marks omitted); see also Sterling Drug, 1
Inc. v. Bayer AG, 14 F.3d 733, 750 (2d Cir. 1994) (“The Lanham 2
Act does not require a total ban on the use of a mark by an 3
infringing junior user. To the contrary, the Lanham Act 4
demands that injunctive relief be no broader than necessary to 5
cure the effects of the harm caused.”) (internal quotation 6
marks omitted). Thus, “[i]n fashioning the injunction, the 7
Court should balanc[e] . . . the equities to reach an 8
appropriate result protective of the interests of both 9
parties.” Sterling Drug, 14 F.3d at 747 (internal quotation 10
marks omitted). We review a district court’s determinations 11
regarding the scope of injunctive relief for an abuse of 12
discretion. See id. at 744; Polymer Tech. Corp. v. Mimran, 975 13
F.2d 58, 61 (2d Cir. 1992). We review determinations regarding 14
the authority to enter an injunction de novo. Starter Corp. v. 15
Converse, Inc., 170 F.3d 286, 298 (2d Cir. 1999). In addition, 16
Rule 65(d)(1)(A) of the Federal Rules of Civil Procedure 17
requires that “[e]very order granting an injunction . . . must 18
. . . state the reasons why it issued.” Fed. R. Civ. P. 19
65(d)(1)(A). This requirement ensures that an appellate court 20
is able to understand the reasons for the injunction. See 21
Knox v. Salinas, 193 F.3d 123, 129 (2d Cir. 1999) (per curiam). 22
1) Refusal to Enjoin Appellees From Using PATSY’S Outside 23 of Manhattan 24
25 Appellants argue that the district court should have 26
38

-- 38 of 46 --

enjoined appellees from using the mark PATSY’S outside of the 1
current Manhattan locations. In so arguing, they rely on the 2
jury’s findings that: (i) the Staten Island and Syosset 3
appellees engaged in trademark infringement, unfair 4
competition, and injury to business reputation; (ii) the 5
Syosset appellees’ trademark infringement was willful; and 6
(iii) the Staten Island and Syosset appellees’ use of the 7
PATSY’S and/or PATSY’S PIZZERIA marks exceeded the scope of 8
their license with I.O.B. Realty. 9
However, there was no abuse of discretion by the district 10
court. Because the district court validly cancelled 11
appellants’ registrations, appellants are no longer entitled to 12
the presumptive right to use the marks nationwide that a 13
federal registration provides. See 15 U.S.C. § 1115(a). Nor 14
did this litigation address the parties’ rights beyond 15
Manhattan, Staten Island, and Syosset. Indeed, none of the 16
jury findings that appellants rely upon involves misconduct by 17
the intervening appellees, in contrast to the Staten Island and 18
Syosset appellees. 19
We, therefore, turn to the district court’s failure to 20
enjoin the Staten Island appellees and the Syosset appellees 21
from using the mark PATSY’S. After this action was brought, 22
the Staten Island location closed, and appellants do not claim 23
that it will be reopened. As a result, it was not an abuse of 24
discretion to refuse to enjoin the Staten Island appellees. 25
39

-- 39 of 46 --

As for the Syosset location, the district court did grant 1
some injunctive relief to appellants, although not as broad as 2
they would have liked. Rather than enjoining the Syosset 3
defendants from using the mark PATSY’S in any manner, the 4
district court entered an injunction that prohibits the Syosset 5
defendants from using the term “Trattoria Impazzire” and also 6
requires them to place a sign in their front window disclaiming 7
any association with Patsy’s Italian Restaurant for at least 8
three years from the date of judgment. Patsy’s Italian Rest. 9
IV, 575 F. Supp. 2d at 469. See supra note 2. Appellants 10
argue that these injunctions are insufficient because “the term 11
PATSY’S is more than three times the size of the word PIZZERIA” 12
in the signs of both the Syosset and Staten Island locations. 13
Appellants’ Br. at 40. Appellants also argue that the 14
disclaimer sign is insufficient because it is not visible to 15
the public, particularly to those driving by the Syosset 16
location and those visiting the Syosset location’s website. 17
Finally, appellants argue that the removal of the “Trattoria 18
Impazzire” sign is insufficient because it does not alter the 19
nature of the Syosset location’s menu. 20
“A district court has a ‘wide range of discretion in 21
framing an injunction in terms it deems reasonable to prevent 22
wrongful conduct.’” Soltex Polymer Corp. v. Fortex Indus., 23
Inc., 832 F.2d 1325, 1329 (2d Cir. 1987) (quoting Spring Mills, 24
Inc. v. Ultracashmere House, Ltd., 724 F.2d 352, 355 (2d Cir. 25
40

-- 40 of 46 --

1983)). Given the district court’s great flexibility in 1
fashioning relief, see Soltex, 832 F.2d at 1329, we have 2
frequently recognized that the use of a disclaimer sign can, in 3
the right circumstances, be appropriate relief. See Jim Beam 4
Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 737 (2d 5
Cir. 1991); Soltex, 832 F.2d at 1329-30; Spring Mills, 724 F.2d 6
at 355. Whether such a disclaimer is appropriate depends on 7
“the circumstances of the relevant business and its consumers.” 8
Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832 9
F.2d 1311, 1315 (2d Cir. 1987). Here, the removal of the 10
“Trattoria Impazzire” sign, combined with the disclaimer, is a 11
permissible balancing of the equities. The fact that the term 12
PATSY’S may be larger than the term PIZZERIA in the sign does 13
not alter this conclusion. Nor are we persuaded by appellants’ 14
argument that the menu remains the same. The district court 15
did not abuse its discretion by declining to delve into the 16
minute details of permissible menu items (unseen until passing 17
the disclaimer sign) for the Syosset restaurant. 18
As for appellants’ allegations regarding the disclaimer 19
sign, many of these allegations suggest that the Syosset 20
appellees are not complying with the injunction. This is a 21
matter properly brought up with the district court. Spring 22
Mills, 724 F.2d at 356. Nor do the remaining allegations 23
convince us that the injunction was not proper relief. 24
2) Prohibiting Appellants and Patsy’s Pizzeria From Using 25
41

-- 41 of 46 --

Solely “PATSY’S” 1
2 The district court entered an injunction prohibiting 3
appellants and Patsy’s Pizzeria from using solely the term 4
PATSY’S. No party requested such an injunction as relief. 5
Generally, where neither party has requested the injunctive 6
relief the district court intends to grant, the parties must 7
receive an opportunity to be heard. See Starter, 170 F.3d at 8
299. 9
In the present case, the district court instructed the 10
parties to address the propriety of such an injunction in their 11
post-trial papers. Neither party requested this particular 12
injunction only because it represented a compromise between 13
their respective positions, an anathema to both. It was not 14
the lack of notice, but rather the lack of interest in such 15
relief, that left the injunction with the appearance of sua 16
sponte relief. Also, the considerations pro and con are 17
rehashes of years of arguments that need to come to an end. We 18
are completely confident that a remand would be unilluminating, 19
delay the termination of this litigation needlessly, and merely 20
lead to more fruitless, overlitigated proceedings. 21
In all other respects, the injunction is entirely within 22
the district court’s discretion. Appellants argue that: (i) 23
the district court failed to make the findings required by Fed. 24
R. Civ. P. 65(d)(1)(A); (ii) the issuance of the injunction is 25
not narrowly tailored because it went beyond the scope of the 26
42

-- 42 of 46 --

party’s claims, which did not involve the right to use PATSY’S 1
in Manhattan; and (iii) the injunction is inconsistent with the 2
district court’s finding that appellants have the right to use 3
PATSY’S for restaurant services. None of these arguments has 4
any merit whatsoever. 5
With regard to (i), the district court’s injunction was 6
sufficiently tailored. While the prime focus of the litigation 7
may not have been on the right to use PATSY’S in Manhattan, 8
Patsy’s Pizzeria’s counter-claim seeking cancellation of 9
appellants’ registrations necessarily required the 10
consideration of a likelihood of confusion between the marks in 11
Manhattan. As a result, the injunction did not go beyond the 12
scope of the issues tried in the case. 13
As for (ii), the district court’s reasons for the 14
injunction are adequate to provide meaningful appellate review. 15
The jury found that there was a likelihood of confusion between 16
Patsy’s Pizzeria’s marks and Patsy’s Italian Restaurant’s ´836 17
Registration for the stylized mark PATSY’S PR for restaurant 18
services and the ´866 Registration for PATSY’S for restaurant 19
services not including pizza. And, as noted by the district 20
court, there was substantial evidence in the record indicating 21
“an exceeding degree of consumer confusion.” Patsy’s Italian 22
Rest. IV, 575 F. Supp. 2d at 470. In addition, the district 23
court weighed the parties’ rights with the harm to the public 24
due to a likelihood of confusion, and determined that the 25
43

-- 43 of 46 --

injunction met a sufficient balance. 1
With regard to (iii), while I.O.B. Realty can no longer 2
protect its rights to the name Patsy’s due to the long period 3
of use by Patsy’s Italian Restaurant, see Patsy’s Brand III, 4
317 F.3d at 216-17; Patsy’s Italian Rest. IV, 575 F. Supp. 2d 5
at 470, that fact does not alter the likelihood of confusion by 6
consumers. Having allowed the consumer confusion to develop, 7
no party can now complain about the district court’s attempt to 8
minimize the confusion. This is particularly true given our 9
earlier admonition to the parties that “both sides . . . would 10
be well advised to minimize the risk of confusion by 11
identifying their restaurants by the complete names: ‘Patsy’s 12
Italian Restaurant’ and ‘Patsy’s Pizzeria.’” Patsy’s Brand 13
III, 317 F.3d at 221. 14
Appellees argue that the injunction was an abuse of 15
discretion because it included the original location in East 16
Harlem as well as the licensees in Manhattan, which were not 17
parties to the litigation. They argue that there was no 18
finding of likelihood of confusion with regard to those 19
locations, claiming it is unusual to enjoin a senior user 20
without such a finding. We disagree. 21
Rule 65(d)(2) provides that an injunction binds both the 22
parties and anyone who is “in active concert or participation 23
with [the parties.]” Fed. R. Civ. P. 65(d)(2)(c). Both I.O.B. 24
Realty and Patsy’s Inc. were parties to the instant litigation. 25
44

-- 44 of 46 --

Because the Manhattan locations are authorized to use I.O.B. 1
Realty’s marks through the franchise agreements with Patsy’s 2
Inc., they are “in active concert or participation” with I.O.B. 3
Realty and Patsy’s Inc. insofar as the injunction involves the 4
use of the PATSY’S mark, see Fed. R. Civ. P. 65(d)(2)(C). 5
Furthermore, as the owner of the mark, I.O.B. Realty was 6
perfectly able to represent the other locations’ interests in 7
using the mark. As a result, it was not an abuse of discretion 8
to enter an injunction binding the Manhattan Patsy’s Pizzeria 9
locations. 10
Nor did the district court abuse its discretion by 11
enjoining the senior user. While doing so may be unusual, this 12
is not the typical case. As noted above, Patsy’s Pizzeria’s 13
counterclaim seeking cancellation of appellants’ registrations 14
necessarily required the consideration of a likelihood of 15
confusion between the marks in Manhattan. As a result, there 16
was substantial evidence in the record indicating “an exceeding 17
degree of consumer confusion,” Patsy’s Italian Rest. IV, 575 F. 18
Supp. 2d at 470, and the jury found that there was a likelihood 19
of confusion between Patsy’s Pizzeria’s marks and Patsy’s 20
Italian Restaurant’s ´836 and ´866 Registrations. Furthermore, 21
as noted, I.O.B. Realty can no longer protect its rights 22
against Patsy’s Italian Restaurant, see Patsy’s Brand III, 317 23
F.3d at 216-17; Patsy’s Italian Rest. IV, 575 F. Supp. 2d at 24
470, and thus I.O.B. Realty’s failure to enforce its rights 25
45

-- 45 of 46 --

contributed to the consumer confusion. Given these facts, we 1
do not believe that the district court erred by “evaluat[ing] 2
. . . the legitimate interests of the senior user, the junior 3
user, and the consuming public,” Am. Footwear Corp. v. Gen. 4
Footwear Co. Ltd., 609 F.2d 655, 664 (2d Cir. 1979) and 5
concluding that, in order to strike the proper balance of these 6
interests, the senior user must also be enjoined from using 7
solely the name PATSY’S. 8
CONCLUSION 9
For the foregoing reasons, we affirm. 10
11
12
13
46

-- 46 of 46 --