Opinion ID: 612451
Heading Depth: 1
Heading Rank: 3

Heading: The Prior Sauce Dispute

Text: The parties coexisted without litigation until each began to sell packaged sauce under the name Patsy's, thereby causing considerable consumer confusion. On October 8, 1998, the intervening appellees brought a cancellation proceeding before the Patent and Trademark Office (the PTO) seeking the cancellation of Patsy's Brand's '789 Registration for PATSY'S for sauces. Patsy's Brand responded by filing a cancellation proceeding before the PTO seeking the cancellation of I.O.B. Realty's Registration No. 1,975,110 for PATSY'S for restaurant services and Registration No. 2,213,574 for PATSY'S PIZZERIA for restaurant services. Patsy's Brand also filed suit in the Southern District against the intervening appellees. The action (the sauce litigation) alleged trademark infringement and unfair competition due to appellees' sale of sauces using the PATSY'S mark. The cancellation proceedings were consolidated and suspended pending resolution of the sauce litigation. In granting Patsy's Brand's a preliminary injunction in the sauce litigation, the district court rejected the intervening appellees' argument that they were entitled to bridge the gap into sauces as the senior user of the PATSY'S mark for restaurant services. Patsy's Brand Inc. v. I.O.B. Realty Inc. (Patsy's Brand I), 53 U.S.P.Q.2d 1861, 1862-63 (S.D.N.Y.2000). The court reasoned that the mark PATSY'S for restaurant services was weak, as both parties had the right to use the mark for restaurant services. Id. at 1863. It also observed that it was unclear when the intervening appellees entered the sauce market, because evidence provided in support of the alleged date of entry was clearly falsified, a fact that suggested that the intervening appellees did not choose [their] sauce label in good faith. Id. at 1862. In a later opinion granting Patsy's Brand's motion for summary judgment in the sauce litigation, the district court again reiterated its findings that the intervening appellees presented falsified evidence and ordered them to show cause why they should not be sanctioned for doing so. Patsy's Brand Inc. v. I.O.B. Realty Inc. (Patsy's Brand II), 58 U.S.P.Q.2d 1048, 1050, 1059 (S.D.N.Y.2001). The district court sanctioned the intervening appellees and enjoined them from petitioning to cancel Patsy's Brand's registrations for sauces, other packaged food products, and restaurant services. In addition, it directed the Commissioner of the PTO to cancel the intervening appellees' '110 Registration. On October 18, 2001, Patsy's Brand filed a motion with the PTO requesting that the cancellation proceedings be reinstated. This request led to the subsequent judgment cancelling the intervening appellees' '110 Registration on September 4, 2002. However, after Patsy's Brand filed its request, the intervening appellees filed a notice of appeal in the sauce litigation. Notably, this appeal did not challenge the portion of the injunction that enjoined them from petitioning to cancel Patsy's Brand's registrations for restaurant services. Patsy's Brand, Inc. v. I.O.B. Realty, Inc. (Patsy's Brand III), 317 F.3d 209, 219-21 (2d Cir.2003). On January 16, 2003, we affirmed the sanctions against the intervening appellees, struck the provision cancelling the intervening appellees' '110 Registration, and stated that the injunction should be confined to the marketing of pasta sauce and food products and should not reach the [intervening appellees'] restaurant business.... Id. at 221-22. On May 27, 2003, the Commissioner erroneously cancelled the intervening appellees' '110 Registration and '574 Registration. On July 13, 2007, after realizing the previous order was erroneous, the Commissioner issued an order cancelling the registrations due to I.O.B. Realty's failure to file declarations of continuing use pursuant to 15 U.S.C. § 1058.