Opinion
01 Civ. 0849 (JGK)
July 12, 2002
OPINION AND ORDER
This case involves a trademark dispute between two competing businesses that are located next door to one another, provide similar restaurant, food and catering services and were once parts of a unified family business, owned by the Manganaro family. The businesses both incorporate the Manganaro family name into their trade names and service marks, and the businesses are now owned separately by two brothers descended from the Manganaro family, namely, James and Salvatore Dell'Orto. In this action, the plaintiff, Manganaro Foods, Inc. ("Foods"), alleges that the defendant, Manganaro's Hero Boy, Inc. ("Hero Boy"), has violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125 (a), by expanding its recent business to compete more directly with the plaintiff's while, at the same time, placing a new sign bearing the name "Manganaro's Hero Boy" prominently on its renovated storefront. The plaintiff contends that these actions constitute a false designation of origin for the defendant's products (Count Two). The plaintiff also seeks an order pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119, directing the United States Patent and Trademark Office (the "PTO") to register the "Manganaro" mark in the plaintiff's name for all purposes excluding six-foot hero sandwiches (Count Three). The plaintiff originally raised eight other claims, but the plaintiff withdrew them in its opposition papers to the defendant's currently pending motion for summary judgment, with the exception of a claim for attorney's fees, which is still being pursued. The plaintiff agreed at oral argument that these eight claims, other than any claim for attorney's fees, should be dismissed with prejudice.
James Dell'Orto currently shares ownership of the defendant with his son; Anthony Dell'Orto. Affidavit of James Dell'Orto, sworn to November 26, 2001, at ¶ 7.
There are currently several motions pending before this Court. The defendant moves pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment dismissing all ten of the plaintiff's claims. The defendant also moves for an award of attorney's fees pursuant to Section 35(a) of the Lanham Act, 15 U.S.C. § 1117 (a). The plaintiff cross-moves pursuant to Rule 56 for summary judgment on its Lanham Act claims for trademark infringement and for registration of the "Manganaro" mark, and cross-moves pursuant to Section 35(a) of the Lanham Act for an award of attorney's fees.
I.
The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see generally Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219 (2d Cir. 1994); Shaw v. Rizzoli Int'l Publ'ns, Inc., No. 96 Civ. 4259, 1999 WL 160084, at *1, (S.D.N.Y. Mar. 23, 1999). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224.
The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will determine those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether summary judgment is appropriate, the Court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, 369 U.S. 654, 655 (1962)); Gallo, 22 F.3d at 1223. If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). With respect to the issues on which summary judgment is sought, if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper. See Chambers v. TRM Copy Ctrs., 43 F.3d 29, 37 (2d Cir. 1994).
Where, as here, both parties seek summary judgment, the Court must "`evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'" Abrams v. United States, 797 F.2d 100, 103 (2d Cir. 1986) (quoting Schwabenbauer v. Bd. of Educ., 667 F.2d 304, 314 (2d Cir. 1981)).
II.
Unless otherwise indicated, the following facts are either undisputed, are matters of public record or are clearly established by the submissions on file.
A.
For several decades prior to 1956, Nina Dell'Orto, whose maiden name was Manganaro, and her brother, Louis Manganaro, owned and operated a family business that went by the name of "Manganaro Foods," or "Manganaro Grosseria," and which is the plaintiff in this case. (See Affidavit of James Dell'Orto, sworn to November 26, 2001 ("J. Dell'Orto Aff. I"), at ¶ 2; Pl.'s Rule 56.1 St., Additional Undisputed Facts ¶ 2.) By 1956, the plaintiff had already built a considerable reputation for itself as a purveyor of Italian food products. See Hero Boy, Inc. v. Dell'Orto, No. 30582/87 ("1989 State Court Decision"), slip op. at 8 (N.Y.Sup.Ct. Oct. 18, 1989) (attached as Def.'s Mem. Ex. 2). The business, which consists of a grocery store with a small restaurant in the rear, located at 488 Ninth Avenue in Manhattan between 37th and 38th streets, is currently incorporated under the name "Manganaro Foods, Inc." (Id. at 2; J. Dell'Orto Aff. I ¶ 2; Deposition of Salvatore Dell'Orto taken May 29 and May 30, 2001 ("S. Dell'Orto Dep."), at 19, 43; Pl.'s 56.1 St. ¶ 2.)
In 1956, the Manganaro family decided to expand the sandwich section of the rear of the grocery store to a space next door, at 492 Ninth Avenue. (J. Dell'Orto Aff. I ¶ 2; S. Dell'Orto Dep. at 26, 36.) The store was originally named "Hero Boy" and was run as a partnership between Mario Dell'Orto, one of Nina Dell'Orto's sons, and Salvatore Manganaro, one of Louis Manganaro's sons. In or about 1961, James Dell'Orto, another one of Nina Dell'Orto's sons, bought out Salvatore Manganaro's interest in the store and incorporated the enterprise with his brother Mario under the name "Hero Boy, Inc." (J. Dell'Orto Aff. I ¶ 3.) This business is the defendant in this case.
In 1962, Nina Dell'Orto and Louis Manganaro entered into an agreement (the "1962 Agreement" or the "Agreement"), under which Louis Manganaro sold all of his right, title and interest in Manganaro Foods to Nina Dell'Orto. See Agreement dated September 20, 1962, at ¶¶ 1-2 (attached as Def.'s Mem. Ex. 1). Nina Dell'Orto had four sons — Salvatore, Vincent, Mario and James — who also signed the Agreement, and the Agreement purported to settle a dispute among the four brothers concerning ownership of the defendant, Hero Boy, Inc., by granting full ownership to James and Mario. See id. at ¶ 4. At the same time, Nina Dell'Orto conveyed the plaintiff, Manganaro Foods, to her other two sons, Salvatore and Vincent. See id. at ¶ 5.
The Agreement stated that "HERO BOY INC. may use the name MANGANARO-HERO BOY on its menus and advertising," id. at ¶ 8, and that Salvatore and Vincent Dell'Orto "will hereafter be entitled to conduct the grocery business at #488 Ninth Avenue, New York, N.Y., under the firm name and style of MANGANARO FOODS." Id. at ¶ 6. The Agreement also placed a twelve-year limitation on certain kinds of competition between the two businesses. In particular, Salvatore and Vincent agreed that they would "not advertise nor physically expand that portion of MANGANARO FOODS which consists of the operation of the sandwich and restaurant business now conducted in the rear portion of the store premises and in the upstairs rear room during the next 12 years," and James and Mario agreed that they would "not enter into any business during the next 12 years which will compete in any additional way with the present business of MANGANARO FOODS." Id. at ¶ 8.
B.
Since the defendant began doing business in 1956, the defendant has continuously sold Italian and non-Italian type sandwiches, along with some other hot foods on plates. (Def.'s Rule 56.1 St. ¶¶ 4-5; Pl.'s Rule 56.1 St. ¶¶ 4-5.) In the years up to and following the 1962 Agreement, the defendant significantly built its business and developed a particular reputation for its six-foot long hero sandwich, which became a very important part of its business. See 1989 State Court Decision at 3. After the Agreement's twelve-year restrictions on competition came to an end in 1974, the defendant expanded its business in several other ways. In 1980, the defendant began catering Italian foods; by 1982, the defendant began selling certain hot foods on plates such as lasagna and baked ziti; and, after 1990, the defendant began selling additional hot foods and pastas such as calamari, rigatoni and veal parmesan. (Def.'s Rule 56.1 St. ¶¶ 6-7; Pl.'s Rule 56.1 St. ¶¶ 6-7; J. Dell'Orto Aff. I Exs. 19 23.) The parties dispute the degree to which the sale of anything other than Italian-style sandwiches aver formed a substantial portion of the defendant's business. However, the plaintiff concedes that it has been aware of the full range of the defendant's business activities and expansions all along. (Def.'s Rule 56.1 St. ¶¶ 4-8; Pl.'s Rule 56.1 St. ¶¶ 4-8.) This is understandable given the fact that the stores are literally right next door to one another.
From before 1966 through approximately 1983, the defendant, with some small variations, consistently used its then-current logo on its menus and in its advertisements. The logo contains a picture of a superhero stick figure holding up a six-foot long party sandwich, with the words "hero" and "boy" displayed prominently on either side of the superhero's waist and the name "Manganaro's" displayed in a smaller font. (See J. Dell'Orto Aff. I Exs. 1-13, 23; S. Dell'Orto Dep. 128.) From approximately 1984 until very recently, the defendant has consistently used as its logo a prominent block-letter design of the name "HERO BOY," skewered by a six-foot-long cartoon hero sandwich, with the name "Manganaro's" appearing in a smaller and thinner font above the sandwich. (See J. Dell'Orto Aff. I Exs. 15, 17-22, 23.) The defendant obtained federal registrations for the mark "Manganaro's Hero Boy" and for these two designs on January 21, 1969 and November 12, 1991, respectively, for the sale of "Italian-type sandwiches, including six-foot sandwiches." (Def.'s Rule 56.1 St. ¶ 14; Pl.'s Rule 56.1 St. ¶ 14.)
C.
The parties have a history of disputes culminating in litigation, which date back at least to 1980, when Foods placed a listing in the telephone phone book for "Manganaro's Hero Party Hotline" and began catering the six-foot party hero sandwiches that Hero Boy had popularized. See 1989 State Court Decision at 6. In 1987, Hero Boy filed a lawsuit against Foods in the New York State Supreme Court, New York County, alleging that Foods' use of the Manganaro name in connection with this new telephone hot line violated Section 43(a) of the Lanham Act and analogous state law provisions. The court found that both parties had the general right under the Agreement to their respective uses of the Manganaro family name in their trade names and service marks, and noted that some confusion between the businesses was inevitable given the similar names, histories, services and locations of the businesses. See id. at 12-13. However, the court also held that "the fact that there has been confusion in the past does not authorize a conspicuous increase in it, now and for the future." Id. at 13-14.
With regard to the trademark infringement claim raised in that case, the court found that Hero Boy had spent considerable resources popularizing the six-foot party hero sandwich and creating a "vital, natural connection between `Manganaro's' and `hero'", thereby giving the name secondary meaning in the market for those sandwiches. Id. at 10. The court found that Foods' grocery business had, by contrast, not helped create this reputation. Rather, due to increased competition from supermarkets and other nearby outlets, Foods, which had been running primarily a grocery store business before 1980, had opened up the new telephone hot line in bad faith, with the specific intent of capitalizing on some of the good will and reputation for heros that Hero Boy had developed. See id. at 6, 15. The court thus held that Foods' telephone listing and its use of the Manganaro name specifically to promote hero sandwiches increased the likelihood of confusion between the two businesses. The court concluded that Foods had engaged in unfair competition and enjoined Foods from listing its party hero hot line with the Manganaro name or using the Manganaro family name to engage in any other specific promotions of party heroes. See id. at 19. The court nevertheless allowed both businesses to continue using their names and allowed Foods to continue selling six-foot long sandwiches, as the plaintiff had done as a minor part of its business since before 1956, providing that it did not use the Manganaro name to sell such sandwiches separately from its grocery business or menus for on-site food sales. Id. at 5, 19.
Shortly after this injunction had issued, Foods began proceedings before the PTO seeking registration of the Manganaro name for all purposes except Italian-type sandwiches, including six-foot sandwiches. This application was ultimately rejected, in part on the basis of Hero Boy's registrations. The plaintiff has not obtained any registration that includes the Manganaro family name. (Def.'s Rule 56.1 St. ¶ 13; Pl.'s Rule 56.1 St. ¶ 13.)
In 1996, Hero Boy brought another action against Foods in the New York State Supreme Court, New York County, alleging that Foods was in contempt of the 1989 Court Order. Foods purported to raise a counterclaim in that action challenging some of the same business practices that it challenges in the present action. The court held, however, that Foods could not raise those issues as counterclaims in the contempt proceedings and would instead have to raise them in an independent action if it sought to raise those complaints. The plaintiff did not bring any such action at that time. (Def.'s Rule 56.1 St. ¶¶ 11; Pl.'s Rule 56.1 St. ¶¶ 11.)
D.
Recently, Hero Boy has undertaken a major expansion of its restaurant business, including an expansion and renovation of its premises. In 2000, as part of these renovations, the defendant placed a new sign on its storefront, which reads "Manganaro's Hero Boy — Originators of the 6-Foot Hero." This logo appears on a long and thin horizontal beam that runs across the entire length of the store, just above eye level, and gives the "Manganaro's" portion of the logo somewhat more prominence than the "Hero Boy" portion. (See Supplemental Affidavit of James Dell'Orto, sworn to January 8, 2001 ("J. Dell'Orto Aff. II") Ex. C.) The storefront sign does not display either of the defendant's registered "Manganaro's Hero Boy" designs, which were described above, and Hero Boy now sells a somewhat broader range of pastas and other hot foods, and has placed some increased emphasis on its on-site restaurant dining services. (See J. Dell'Orto Aff. II, at ¶ 7.)
The right end of the defendant's new storefront sign is next to the left end of the plaintiff's older storefront sign, which reads "Manganaro Grosseria Italiana" across a long and thin horizontal sign running across the entire length of the plaintiff's store, also just above eye level. The plaintiff's sign gives "Manganaro" and "Grosseria Italiana" roughly equal predominance. (See id. Ex. C.) The signs use significantly different fonts, are in different color schemes, and have significantly different overall appearances.
In 2001, the plaintiff brought this action.
III.
The plaintiff raises its first claim for relief under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125 (a), which states, in relevant part, that:
[a]ny person who, on or in connection with any goods or services, . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, . . . shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such an act.
Id. To succeed on a Section 43(a) claim for trademark infringement, the plaintiff must show both that it has a valid mark that is entitled to trademark protection and that the junior user's entry into the market and use of its mark will create a likelihood of confusion. Arrow Fastener Co. v. The Stanley Works, 59 F.3d 384, 390 (2d Cir. 1995); The Sports Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir. 1996); see also The Trs. of Columbia Univ. v. Columbia/HCA Healthcare Corp., 964 F. Supp. 733, 742-43 (S.D.N.Y. 1997). The prohibitions in this provision extend to any unauthorized use in commerce of an unregistered trademark in a way that is likely to cause confusion. Time, Inc. v. Petersen Publ'g Co., 173 F.3d 113, 117 (2d Cir. 1999) (quoting 15 U.S.C. § 1125 (a)(1)).
Count Two of the Plaintiff's Amended Complaint alleges a claim for "Federal Unfair Competition." The Count alleges that the defendant's conduct "constitutes a false designation of origin in violation of 15 U.S.C. § 1125 (a)." In connection with the present motions, both parties address the issues as though Count Two alleges that the defendant infringed an unregistered trademark that the plaintiff has in "Manganaro" as applied to food. For purposes of the present motions, however, there is no substantive distinction between a claim for false designation of origin and one for infringement of the plaintiff's alleged unregistered mark. As the Court of Appeals has explained, a claim for false designation of origin "is now frequently recognized with regard to unregistered marks as the equivalent of a claim for trademark infringement." Union Mfg. Co. v. Han Baek Trading Co., 763 F.2d 42, 47-48 (2d Cir. 1985); see also Soltex Polymer Corp. v. Fortex Indus., Inc., 832 F.2d 1325, 1328 (2d Cir. 1987) (considering trademark infringement and false designation of origin claims together for purposes of applying the Polaroid factors relating to likelihood of confusion).
The plaintiff alleges that the defendant is violating Section 43(a) by using the name "Manganaro's Hero Boy" on its storefront and in connection with its expanded restaurant and catering services. The defendant moves for summary judgment dismissing this claim, first, on the ground that all of the uses of the Manganaro family name that the plaintiff challenges were authorized by the 1962 Agreement and, second, under the doctrine of laches.
A.
The defendant argues that Section 43(a) of the Lanham Act does not prohibit the defendant from using the trade name "Manganaro's Hero-Boy" in its advertising and on its storefront. The defendant originally incorporated as Hero Boy, Inc., but, as discussed above, the 1962 Agreement explicitly stated that "[i]t is further agreed that HERO BOY INC. may use the name MANGANARO — HERO BOY on its menus and advertising." See Def.'s Ex. 1 at ¶ 8. The plaintiff thereby authorized the defendant to use the Manganaro family name in its advertising, which includes the sign on its storefront.
The plaintiff argues that this authorization did not include the right to use the possessive version of the mark, namely, "Manganaro's Hero Boy," because the Agreement identified the right in question with the name "MANGANARO — HERO BOY." However, there is nothing in the Agreement or in the record to suggest that the parties' use of the particular form of the name in the 1962 Agreement in granting this right was meant to place such a tight restriction on the defendant's use. Salvatore Dell'Orto does not clearly distinguish between these names in his deposition, and he agreed in his deposition that the Agreement gave the defendant, the right to use the name "Manganaro's Hero Boy." (See S. Dell'Orto Dep. 79.) Moreover, it would be unreasonable to believe that the existence of a cause of action under Section 43(a) could turn on the distinction between "Manganaro's" and "Manganaro" because any right under Section 43(a) would depend on a likelihood of confusion, and there is no basis to conclude that the use of the possessive form has any consequence for the consuming public.
Similarly, while the plaintiff complains particularly about the defendant's use of its current storefront sign, which reads "Manganaro's Hero Boy," the 1962 Agreement plainly gave the defendant the right to use "Manganaro-Hero Boy" on its advertising. The possessive is not a meaningful departure from the explicit right granted to the defendant in the 1962 Agreement for advertising, and the storefront sign is plainly advertising. Furthermore, as explained below, the defendant has been using various signs including the words "Manganaro's" together with "Hero" and "Boy" on its storefront for decades. Finally, Salvatore Dell'Orto himself testified that after he saw what the defendant's new storefront looked like, he made no objection. (S. Dell'Orto Dep. at 127.) Therefore, the new storefront sign was authorized by the 1962 Agreement, and the plaintiff has no claim based on the defendant's use of this sign.
It is possible to conceive of some acts of alleged trademark infringement or false designation of origin involving the defendant's use of the name "Manganaro-Hero Boy" or "Manganaro's Hero Boy" on its menus or advertising that, if proven and if satisfying the relevant elements for a violation of Section 43(a), would not be foreclosed by the 1962 Agreement. For example, the plaintiff's counsel warned the defendant against imitating the plaintiff's store design. See Letter from Kenneth M. Moltner to Irving Heisler dated dated January 6, 1998, attached to Def.'s Rep. Mem. At oral argument, the plaintiff's counsel also argued that it would violate Section 43(a) to use a sign reading "Manganaro's Hero Boy" that imitates the precise font and design of the current "Manganaro Grosseria" sign in order to deceive customers into dining at Hero Boy on the mistaken belief that they are eating at the restaurant portion of Foods. It is unnecessary to decide these hypotheticals, however, because the defendant's storefront sign does not imitate the plaintiff's storefront sign or design, the defendant uses only a term that the defendant was explicitly authorized to use, and Salvatore Dell'Orto testified that when he saw the new storefront, he no longer made any objection to the design.
Similarly, the plaintiff argues unpersuasively that this situation regarding the new storefront sign is closely analogous to the plaintiff's use of "Manganaro" in opening a party hero telephone hotline catering business, which Judge Baer held to violate Section 43(a) of the Lanham Act even though the plaintiff had the more general right under the 1962 Agreement to use "Manganaro Foods" in its business, including the sales of six-foot hero sandwiches. However, the situation that Judge Baer faced was very different because Foods had used the listing "Manganaro's Hero Party Hotline" for its new telephone business. This listing was much further removed from its own name, "Manganaro Foods," which the 1962 Agreement gave it the right to use in its business activities, was highly imitative of both Hero Boy's trademark name "Manganaro's Hero Boy" and its telephone listing based on this name, and, Judge Baer found, was chosen in bad faith in order to exploit the particularized good will and reputation that Hero Boy had been creating for itself in the party hero business.
In any event, the plaintiff's complaints about the defendant's use of the term "Manganaro's Hero Boy" are barred by the doctrine of laches. The doctrine of laches is available as a defense to federal trademark infringement actions, and it may be used in such actions to bar both injunctive relief and claims for damages. See Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1040-41 (2d Cir. 1980). In order to prevail on this defense, a defendant must ordinarily demonstrate that (1) the plaintiff had knowledge of the allegedly infringing activities; (2) the plaintiff inexcusably delayed in taking action; and (3) the defendant would be prejudiced if the plaintiff belatedly asserted its rights to the mark. The Trs. of Columbia Univ., 964 F. Supp. at 751. There is, however, a presumption of laches in trademark infringement actions if a plaintiff fails to raise a claim within the statute of limitations applicable to the most analogous state law claims, which in this case is New York's six-year statute of limitations for fraud claims. Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 193 (2d Cir. 1996).
In its submissions, the defendant has presented numerous uncontraverted advertisements dating from before 1966 through the present indicating that it has used the possessive form of the name "Manganaro's Hero-Boy" for most of its existence after the 1962 Agreement. (See, e.g., James Dell'Orto Aff. Exs. 2-13, 15, 17-23.) Both of the defendant's registered trademarks, which date from 1969 and 1991, respectively, also use the possessive form of "Manganaro's Hero Boy." (See Def.'s Ex. 2 at 3.) The plaintiff conceded at oral argument, and has taken the. position in prior litigations, that it has known of the defendants' activities, including its use of the name "Manganaro's Hero Boy" for this entire period. (See Def.'s Rule 56.1 St. ¶ 9; Pl.'s Rule 56.1 St. ¶ 9.) Indeed, the plaintiff could hardly do otherwise in view of the fact that the two stores are right next door to each other. The plaintiff did not dispute that from the time it learned of the defendant's activities that are challenged in this lawsuit until the time this lawsuit was filed, the plaintiff did not make any complaints to the defendant about the use of this name. (Def.'s Rule 56.1 St. ¶ 12; Pl.'s Rule 56.1 St. ¶ 9.) Thus, the plaintiff failed to bring any legal action against activities that existed for decades and of which it was aware, and there is no valid excuse for such inaction.
While the plaintiff does not raise this issue, a lawyer for the plaintiff did warn the defendant against any use of the term "Manganaro's-Hero Boy" in a letter dated January 6, 1998. See Letter from Kenneth M. Moltner to Irving Heisler, attached to Def.'s Rep. Mem. However, the plaintiff still did not bring any lawsuit until 2001, and there is no justification for having failed to complain about the use of the term for the prior decades.
At the same time, the record in these and prior proceedings clearly establishes that the defendant has spent considerable resources in advertising and building up its reputation and good will, using its current trade name. See 1989 State Court Decision at 3-5, 7; (Def.'s Rule 56.1 St. ¶ 16; Pl.'s Rule 56.1 St. ¶ 16). The defendant would therefore be severely prejudiced if it were unable to use this name in its current business enterprises. See Harley-Davison, Inc. v. Estate of Daniel K. O'Connell, 13 F. Supp.2d 271, 282-83 (N.D.N.Y. 1998) ("[P]rejudice may be found where defendants have built up a valuable association between the name and their business on which they will continue to rely to attract customers, at least where defendants' costs in building that association were significant."). The plaintiff's claim is therefore barred by the doctrine of laches.
The plaintiff argues that there is a per se exception to the doctrine of laches, which allows for the revival of trademark infringement claims upon a showing of inevitable confusion, or a particularly strong showing of likelihood of confusion. It is true that a number of other circuits have allowed for such an exception to the equitable defense of estoppel by laches or acquiescence. See, e.g., TMT, Inc. v. Magic Touch, GmbH, 124 F.3d 876, 886 (7th Cir. 1997); Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 462-63 (4th Cir. 1996); SunAmerica Corp. v. Sun Life Assurance Co., 77 F.3d 1325, 1334 (11th Cir. 1996). The rationale behind this exception is that there is not only a private but also a public interest in preventing the likelihood of confusion, which must also be considered when balancing the equities and determining whether these equitable defenses apply. See, e.g., id. at 1334. For a similar reason, the strength of the evidence of any likelihood of confusion can be relevant in determining whether the doctrine of laches bars a particular Lanham Act claim; this is because a trademark owner has no obligation to sue until the "likelihood of confusion looms large." See Sara Lee, 81 F.3d at 462 (internal quotation marks omitted). Application of the exception for "inevitable confusion" requires a particularly strong showing of likelihood of confusion. See generally Harley-Davison, 13 F. Supp.2d at 285.
The inevitable confusion exception does not bar the laches defense in this case. The difference between the disputed use of "Manganaro's Hero Boy" and the use of "Manganaro Hero Boy," which is authorized under the 1962 Agreement, is slight. Any difference between those terms would not heighten any likelihood of confusion between the defendant's store and the plaintiff's store, much less amount to a particularly strong showing of likelihood of confusion. Any confusion results from the parties' own decision to establish two stores side-by-side with the same family name and to attempt, by agreement, to sell two similar product lines. Hence, the plaintiff's challenge to the defendant's use of the name "Manganaro's Hero Boy," as opposed to "Manganaro Hero Boy" in its advertising, including its storefront sign, is further barred by the doctrine of laches.
B.
The plaintiff argues that even if the defendant has the right to use the name "Manganaro's Hero Boy" in its business and on its storefront, the defendant cannot use this name in connection with its expanded restaurant and catering services without violating Section 43(a) of the Lanham Act.
The parties' 1962 Agreement is decisive with respect to this claim as well. In the Agreement, the defendant agreed not to "enter into any business during the next 12 years which will compete in any additional way with the present business of Manganaro Foods." See. Agreement ¶ 8 (emphasis added). The Agreement thus gave the defendant the right to use the name "Manganaro Hero Boy" on its "menus and advertising," Agreement ¶ 8, and only restricted the defendant's ability to compete with the plaintiff in any additional way until 1974. The defendant's subsequent right to compete in any additional way beginning in 1974 clearly includes the right to engage in the catering of foods other than hero sandwiches, the right to serve, or increasingly serve, food on plates in its restaurant, and the right to sell, or increasingly sell, non-Italian-style sandwiches and hot foods such as pastas. These facts provide a sufficient ground on which to dismiss the plaintiff's complaints about the defendant's expansions of its business.
In any event, the plaintiff's challenges to these expansions are also barred by the doctrine of laches. The defendant has very publicly engaged in all of the general activities complained of since at least before 1982. (See. e.g., Def.'s Exs. 1-21, 23.) In addition to the many resources it has spent creating a reputation and good will for its business, the defendant has recently spent considerable resources on its recent renovations and expansions. The defendant would be unduly prejudiced if it were unable to continue to use its name in connection with its current services, and the defendant is therefore entitled to a laches defense. See Harley-Davison, 13 F. Supp.2d at 283.
The plaintiff argues that its challenge to the defendant's business expansions should not be dismissed under the doctrine of laches because there has been a progressive encroachment on the plaintiff's business activities, which excuses any delays on the plaintiff's part in bringing this action. See, e.g., Olay Co. v. Cococare Prods., Inc., 218 U.S.P.Q. 1028, 1044-45 n. 5 (S.D.N.Y. 1983) (no unreasonable delay for failing to challenge a limited encroachment). However, while there is evidence in the record suggesting that the defendant has been expanding its restaurant and catering business to some degree, and that its most recent menus offer more non-hero foods than its earlier ones, there is nothing in the record to suggest that the defendant's activities have changed so substantially or qualitatively that the plaintiff could have been excused for waiting until this action to raise its present challenges. (Compare, e.g., Def.'s Exs. 1-21, with, Def.'s Ex. 22.)
C.
The plaintiff cross-moves for summary judgment on its trademark infringement claim. However, for the reasons explained above, it is the defendant that is entitled to summary judgment on this claim. The plaintiff's motion for summary judgment is therefore denied.
IV.
In Count Three, the plaintiff seeks an order pursuant to Section 37 of the Lanham Act directing the U.S. Patent and Trademark Office to register the name "Manganaro" in the plaintiff's name for all purposes excluding six-foot hero sandwiches. (See Pl.'s Opp. at 8.) This provision states, in relevant part, that "[i]n any action involving a registered mark the court may determine the right to registration, order the cancellation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action." 15 U.S.C. § 1119.
The defendant argues that it is entitled to summary judgment dismissing this request because the PTO has primary jurisdiction over questions of trademark registrability. The doctrine of primary jurisdiction "allows a federal court to refer a matter extending beyond the `conventional experiences of judges' or `falling within the realm of administrative discretion' to an administrative agency with more specialized experience, expertise, and insight." Nat'l Communications Ass'n, Inc. v. Am. Tel. Tel. Co., 46 F.3d 220, 222-23 (2d Cir. 1995) (quoting Far East Conference v. United States, 342 U.S. 570, 574 (1952); see also United States v. Western Pac. R.R. Co., 352 U.S. 59, 63-64 (1956). The doctrine of primary jurisdiction does not automatically apply in the present circumstances, however, because courts routinely decide issues concerning registrability when determining the likelihood of confusion in properly-instituted actions for trademark infringement or unfair competition, and, hence, the issue of trademark registrability is not uniquely within the PTO's expertise. See Goya Foods, Inc. v. Tropicana Prods., Inc., 846 F.2d 848, 850 (2d Cir. 1988); The Forschner Group, Inc. v. B-Line A.G., 943 F. Supp. 287, 290-91 (S.D.N.Y. 1996). Section 37 of the Lanham Act grants federal courts concurrent jurisdiction over issues of registrability, when that provision applies. See, e.g., Aini v. Sun Taiyang Co., Ltd., 964 F. Supp. 762, 780 (S.D.N.Y. 1997).
The Court of Appeals left open the possibility that the doctrine of primary jurisdiction might be applied in certain circumstances to obtain the views of the PTO: "If a district court action involves only the issue of whether a mark is entitled to registration and if subject matter jurisdiction is available, the doctrine of primary jurisdiction might well be applicable, despite the differences between the trademark registration scheme and other regulatory patterns. In such a case, the benefits of awaiting the decision of the PTO would rarely, if ever, be outweighed by the litigants' need for a prompt adjudication." Goya Foods, 846 F.2d at 853.
There are nevertheless limits to the authority granted by Section 37. Section 37 authorizes the Court to provide certain remedies relating to registration but does not itself create a private cause of action. Section 37 does not provide a basis for relief, and a federal court's authority to determine registrability and order rectification of the registry under this provision depends on a properly-instituted and otherwise jurisdictionally-supported action involving a registered trademark. Moog Controls, Inc. v. Moog, Inc., 923 F. Supp. 427, 431 (W.D.N.Y. 1996); Universal Sewing Mach. Co. v. Standard Equipment Corp., 185 F. Supp. 257 (S.D.N.Y. 1960). When a court renders a judgment in such an action, and the judgement involves or would affect an issue of trademark registrability, Section 37 authorizes the Court to rectify the register to conform with its judgment. However, Section 37 does not empower a Court to order registration of a trademark when there are no other claims in the case that involve, or would have any effect upon, the relevant issue of registrability. See generally In re Falchi, No. 97 B 43080, 1998 WL 274679, at *7 (Bankr. S.D.N.Y. May 27, 1998) ("[T]o obtain an order cancelling a trademark registration under § 37 . . . plaintiff must allege a controversy as to the validity of or interference with a registered trademark."); Gear, Inc. v. L.A. Gear California, Inc., 670 F. Supp. 508, 512 (S.D.N.Y. 1987) ("Section 37 of the Lanham Act empowers the court to order the cancellation of registrations in any civil action in which the validity of the mark is placed in issue.").
In this case, there is no basis to direct registration of the plaintiff's alleged mark. Although the plaintiff has raised a claim for trademark infringement and false designation of origin pursuant to Section 43(a) of the Lanham Act, in deciding this claim it was unnecessary to determine whether the plaintiff's mark was registrable. Indeed, the registrability of the plaintiff's mark was not even relevant to the plaintiff's standing to raise its Section 43(a) claim because this provision allows for actions asserting the infringement of both registered and unregistered marks. Moreover, this claim has now been dismissed. This is also not a case in which the plaintiff could attempt to leverage a challenge to the defendant's registered marks into a basis for obtaining registration of its proposed mark, if such a claim were possible, because the plaintiff has not effectively challenged the defendant's registrations. Hence, there is nothing in the register that needs to be rectified to conform to the rulings made in this case. In these circumstances, Section 37 does not authorize the Court to direct the registration that the plaintiff seeks.
In addition, as the defendant correctly argues, the plaintiff's argument for registrability has no merit. In order to obtain a trademark registration, a petitioner must be able to establish that it has the exclusive right to use the mark in question in connection with the goods or services identified. The plaintiff, however, asks the Court to require the registration of the name "Manganaro" for all uses except six-foot hero sandwiches. For the reasons discussed above, the plaintiff lacks the exclusive right to use the Manganaro family name in connection with this broad range of services because the plaintiff shares this right with the defendant. Hence, even if the Court had the power to order registration of the "Manganaro" family name in the plaintiff's name, for these purposes and in this action, the plaintiff has failed to establish that it would be entitled to an exercise of this power.
V.
The defendant argues that the eight claims that the plaintiff has withdrawn should be dismissed with prejudice. At oral argument, the plaintiff agreed to such dismissal with prejudice, and Count One and Counts Four through Ten are therefore dismissed with prejudice.
VI.
Both parties cross-move for attorney's fees pursuant to 15 U.S.C. § 1117 (a), which allows courts to grant reasonable attorney's fees in a trademark infringement action in "exceptional cases." Id. Under the clear law in this Circuit, "exceptional circumstances" requires a showing of bad faith. See, e.g., See Henegan Constr. Co. v. Heneghan Contracting Corp., No. 00 Civ. 9077, 2002 WL 1300252, at *15-16 (S.D.N.Y. June 12, 2002); Cache, Inc. v. M.Z. Berger Co., No. 99 Civ. 12320, 2001 WL 38283, at *16 (S.D.N.Y. Jan. 16, 2001). In this case, it cannot be said that either party acted in bad faith. The defendant prevailed, and did not act in bad faith in the litigation. While the plaintiff did not succeed, it cannot be said that its claims were so plainly without merit, or that they were pursued in such an unfair way that a finding of bad faith would be warranted. The cross-motions are therefore denied.
CONCLUSION
For the foregoing reasons:
1. The plaintiff's first and fourth through tenth causes of action are dismissed with prejudice.
2. The defendant's motion for summary judgment dismissing the second and third causes of action is granted.
3. The plaintiff's motion for summary judgment on its trademark infringement claim and its registration claim is denied.
4. Both parties' motions for attorney's fees are denied.
SO ORDERED.