Mealey's (June 30, 2016, 2:30 PM EDT) -- NEW YORK — A Second Circuit U.S. Court of Appeals panel on June 27 affirmed the cancellation of a federal trademark for pizza restaurants on the grounds that a family member fraudulently obtained federal registration for the mark long used by his family’s chain of pizzerias (MPC Franchise LLC, et al. v. Brent Tarntino, No. 15-717-cv, 2nd Cir.; 2016 U.S. App. LEXIS 11698).
(Opinion available. Document #98-160712-037Z.)
The case involves a dispute over the trademark for a chain of pizza restaurants named “Pudgie’s” that started out as a small family business and waxed and waned over the decades as the original founders passed their interests on to subsequent generations and once-convivial family relationships soured.
Brent Tarntino appealed U.S. Judge Charles J. Siragusa of the Western District of New York’s ruling granting summary judgment to MPC Franchise LLC and MP Cleary Inc., companies principally owned by Tarntino’s cousins David and Robert Cleary, on their claims that Tarntino fraudulently obtained his federal trademark registration for the Pudgie’s mark in connection with restaurants that serve pizza, pasta and submarine sandwiches.
Dispute Origins
The dispute over the Pudgie’s mark goes back more than 50 years to the town of Elmira, N.Y., just north of the Pennsylvania border. In 1963, three brothers — Francis, Michael Sr. and Charles “Pudgie” Cleary — opened a pizza parlor on the north side of Elmira and named it Pudgie’s after Charles. The next year, the three brothers opened a second Pudgie’s on the south side of Elmira. The two locations, known a “Pudgie’s Northside” and “Pudgie’s Southside,” were successful, leading the three brothers to form Pudgie’s Pizza Franchising Corp. (PPFC) in 1972 to offer and sell franchises for additional Pudgie’s locations.
PPFC then registered the Pudgie’s mark with the U.S. Patent and Trademark Office (PTO). Bernadette Tarntino, the three brothers’ sister, bought a franchise from PPFC and opened a Pudgie’s in Horseheads, N.Y., several miles north of Elmira, known as “Pudgie’s Horseheads.” To manage the location, Bernadette Tarntino formed a corporation named Pudgie’s Pizza Corp. – Horseheads (PPCH).
In 1985, the PTO canceled PPFC’s federal trademark registration of the Pudgie’s mark after PPFC failed to file a required declaration. For several years, however, PPFC continued to operate its franchises as before. In 1990, Michael Cleary Sr. died owning 50 percent of the stock in PPFC and all of MP Cleary, which owned Pudgie’s Southside and another Pudgie’s in Pennsylvania. These interests passed on to his sons, David and Robert, and his wife, Rosa.
PPFC began to deteriorate in the early 1990s. On Sept. 29, 1993, PPFC officially dissolved, and another franchisor did not immediately take its place. As a result, the restaurants that were operating as PPFC franchisees became independently run operations.
Other Pudgie’s
The Elmira Pudgie’s chain of pizza restaurants was not the only chain of restaurants in the nation to use the name “Pudgie’s” in connection with restaurants and food services. In the New York City metropolitan area, there was a chain of restaurants principally serving fried chicken named “Pudgie’s Famous Chicken.” In 2002, Arthur Treacher’s Inc., which operated the restaurants at the time, obtained a federal trademark registration for the Pudgie’s mark. It later assigned its interest in the mark to PAT Franchise Systems Inc.
MP Cleary and PAT reached an agreement regarding the mark in which PAT grant MP Cleary a “non-exclusive, perpetual and transferrable license to use and display the PUDGIE’S mark . . . in connection with MP Cleary’s existing and future restaurants,” while PAT retained the right to use the mark solely in connection with its “Pudgie’s Famous Chicken” business. In 2009, David and Robert Cleary formed MPC Franchise to begin franchising Pudgie’s pizza restaurants.
Bernadette Tarntino died in 2007, leaving a one-third stake in PPCH to each of her three children, one of whom is Brent Tarntino. On July 12, 2010, Brent Tarntino file an application with the PTO seeking federal trademark registration for a mark “consist[ing] of the word ‘Pudgie’s’ displayed in a custom font,” for use in connection with “[p]izza parlors” and “[r]estaurant services featuring pizza, pasta, and subs.”
Tarntino certified in his application that to the best of his knowledge no other person, firm corporation or association has the right to use the Pudgie’s mark either in identical form or in a way to cause confusion or mistake or to deceive. Tarntino submitted with his application a photograph of a Pudgie’s pizza box that he obtained from Pudgie’ Horseheads, where he worked at the time. Under the Pudgie’s mark on the box were the words “® Pudgie’s Pizza Franchising Corporation 1972.” The PTO issued Tarntino a federal trademark registration for the Pudgie’s mark on Feb. 22, 2011.
‘Nationwide Priority’
In letters dated March 30, 2011, Tarntino told all owners of Pudgie’s pizza establishments, including MPC, that he was the registered owner of the Pudgie’s mark and that it entitled him to “nationwide priority” with respect to use of the Pudgie’s logo in the operation of pizza parlors and restaurants and that Pudgie’s pizza establishments could not use the mark beyond the geographic regions they currently served without his written permission. Tarntino allegedly called at least one Pudgie’s pizzeria to reiterate his rights to the Pudgie’s mark and also touted his sole ownership of the mark on Facebook.
MPC and MP Cleary sued Tarntino in the Western District of New York, alleging various violations of the Lanham Act and seeking cancellation of Tarntino’s mark pursuant to 15 U.S. Code Section 1064(3) on the grounds that Tarntino fraudulently obtained the mark.
On May 13, 2014, Judge Siragusa granted the plaintiffs’ motion for partial summary judgment insofar as it relied on fraud as a basis for cancellation of Tarntino’s mark, finding that the record clearly demonstrated that Tarntino “knew that Plaintiffs were already franchising pizzerias, using the very same mark that he was attempting to register for that same purpose.” The judge canceled Tarntino’s registration, dismissed Tarntino and PPCH’s counterclaim for federal trademark infringement, granted Tarntino and PPCH’s motion for summary judgment on the plaintiffs’ federal unfair competition claim and denied Tarntino and PPCH’s motion for summary judgment on several other counterclaims.
On appeal, Tarntino principally contested the judge’s grant of summary judgment on the plaintiffs’ claim seeking cancellation of his Pudgie’s mark on the grounds that Tarntino procured the mark by fraud.
Appeals Court
“The district court correctly concluded that no material issue of fact existed as to whether Tarntino knowingly made false, material representations in his application,” the appeals panel said in an opinion written by Circuit Judge Debra Ann Livingston that affirmed cancellation of Tarntino’s mark. “indeed, the specimen that he included with his application exhibited that the PUDGIE’S mark originally came from PPFC, as it was an image of a pizza box displaying the words ‘® Pudgie’s Pizza Franchising Corporation 1972’ beneath the PUDGIE’S mark.
“And when asked in a deposition whether these words ‘signif[ied] to [Tarntino] that someone other than [him] owned [the PUDGIE’S mark],’ Tarntino conceded that the words indicated to him that someone else ‘ha[d] the rights to’ the mark ‘[a]long with [him].’ Given these facts, it cannot be gainsaid that Tarntino knew fully well that other Pudgie’s locations used the PUDGIE’S mark even before Pudgie’s Horseheads existed, in the same general area as Pudgie’s Horseheads and for use in connection with pizza restaurants.”
Circuit Judges Chester J. Straub and Denny Chin concurred.
MPC is represented by Jeffrey Zucker of Fischer Zucker in Philadelphia. Tarntino was represented by Michael H. Zhu of Michael H. Zhu PC in New York.
(Additional documents available. District Court decision. Document #98-160712-038Z. Appellant brief. Document #98-160712-039B. Appellee brief. Document #98-160712-040B.)...