Norden Restaurant Corp. v. Sons of the Revolution

OPINION OF THE COURT

Ross, J.

The corporate defendant, formed in 1883, is a patriotic organization dedicated to keeping alive the best traditions of the "Spirit of '76”. This not-for-profit corporation is the owner of historic Fraunces Tavern, a five-building, interconnected complex located in lower Manhattan. In 1904, defendant acquired this property through a bequest from a descendant of an officer on General George Washington’s staff, who was present at the Commander-in-Chiefs farewell ceremony conducted at Fraunces Tavern. Through the society’s efforts, this building has been successfully restored to its original "revolutionary” character. The defendant now maintains its offices there and is curator of an on-premises museum.

Plaintiff leases the main building and portions of adjoining buildings of this complex and operates a restaurant therein. The Norden family has operated this food emporium for over 40 years. The plaintiff has at various times, through various media and accuterments of plaintiff’s trade, advertised the name of this restaurant as Fraunces Tavern. The existing lease signed in mid-December, 1977, effective, January 1, 1977, provides in pertinent parts:

§ 3.04 "The business conducted by Tenant in the premises is only to be conducted under the name 'Fraunces Tavern Restaurant’ or such other name as Landlord shall from time to time approve in writing”.

§ 40.01 "Tenant covenants and agrees that in any and all advertising of the business of Tenant * * * Tenant will in no way state or imply that the Buildings are in any way the property of Tenant or of the restaurant operated by it in the premises * * * The right to use the name 'Fraunces Tavern Restaurant’ in connection with Tenant’s business shall be limited to the restaurant business conducted in the premises and to no other business or location”.

Plaintiff, as lessee, instituted this action for, inter alia, water damages and to enjoin defendant from interfering with proposed interior remodeling. Defendant, alleging breach of lease in a third counterclaim, sought to enjoin plaintiff from using the name Fraunces Tavern, and from prosecuting its Federal trade-mark application. Special Term denied defendant-appellant’s motion for partial summary judgment on the third counterclaim and granted plaintiff’s cross motion to the extent of dismissing this counterclaim.

The question then presented by this appeal is whether Special Term erred in denying defendant landlord’s motion for partial summary judgment enjoining plaintiff lessee’s use of the service mark Fraunces Tavern. On the facts presented herein, injunctive relief cannot be granted summarily.

The terms "service mark” and "tráde-mark” are related concepts and both are governed by identical standards (Boston Professional Hockey Assn. v Dallas Cap & Emblem Mfg., 510 F2d 1004; West & Co. v Arica Inst., 557 F2d 338). "Service mark” has been defined as a mark used in the sale or advertising of services to identify the services of one .person and distinguishes them from services of others. "Trade-mark”, although similarly defined, identifies a manufacturer’s or merchant’s goods or products. (Lanham Trade-Mark Act [60 US Stat 427]; US Code, tit 15, § 1127; see, also, General Business Law, § 360, subds [a], [a-i].) The twofold congressional intent for protecting trade-mark is: " 'to protect the public so it may be confident that, in purchasing a product bearing a particular trade-mark which it favorably knows, it will get the product which it asks for and wants to get. Secondly, where the owner of a trade-mark has spent energy, time, and money in presenting to the public the product, he is protected in his "investment” from its misappropriation by pirates and cheats’ ” (7 NYL For 91, 92).

In this court defendant argues that through its efforts the mark "Fraunces Tavern” has become synonymous with its organization and with the maintenance and preservation of a landmark steeped in historical significance. Additionally, the restrictive terms and conditions in the current lease between defendant and plaintiff prohibit the latter’s use of this mark. Therefore, the mark has derived its sole uniqueness from these labors and the society is entitled to the protection and goodwill flowing therefrom. Plaintiff similarly argues that the consuming public identifies the mark in dispute as connoting a distinguished restaurant. The record on appeal divulges conflicting substantial claims by both parties. It is axiomatic that both cannot claim the benefits of this individual mark.

Each controversy in this area of the law must be decided on its own merits since the circumstances surrounding each are not readily duplicated. "Although this type of litigation has been said to present mixed questions of law and fact * * * the emphasis, and rightly so, we believe, seems to have been placed upon the fact pattern of each situation [citations omitted]. Each case * * * must be decided on its facts” (Dell Pub. Co. v Stanley Pub., 9 NY2d 126, 133).

Courts have long recognized that noncommercial organizations are entitled, under proper circumstances, to enjoin the pirating of a mark by a junior user even though not in direct competition. "Equity may also shield the thrust by business into the kind of legal rights acquired in areas entirely removed from commercial activities” (Cornell Univ. v Messing Bakeries, 285 App Div 490, 492, affd 309 NY 722).

Under any circumstances, whatever the mark, the more viable it is in the current market, the greater is its need for protection from unwarranted incursions. "The real injury * * * 'is the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use on noncompeting goods. The more distinctive or unique the mark the deeper is its impress upon the public consciousness and the greater its need for protection against vitiation or dissociation from the particular product in connection with which it has been used’ [citation omitted]” (Tiffany & Co. v Tiffany Prods., 147 Misc 679, 681-682, affd 237 App Div 801, affd 262 NY 482). Without question the mark Fraunces Tavern is recognized by the consuming public in the local market place, if not the national. Whether the common man recognizes this mark as synonymous with an historic setting, or as a restaurant, cannot be decided in the absence of a complete trial. For this reason our dissenting colleagues’ reliance on Stogop Realty Co. v Marie Antoinette Hotel Co. (217 App Div 555) is misplaced. There, a full hearing was concluded before a determination was rendered, and, moreover, the subject premises were specifically constructed for the use to which they were put. In Stogop Realty Co. v Marie Antoinette Hotel Co. (supra) the court found that the name "Hotel Marie Antoinette” had become inseparably connected with the building, and had become synonymous with the hotel business through the efforts of plaintiff’s predecessor. Here, Fraunces Tavern was built for the use the name implies and has been so utilized in that manner since 1763. On the record before us it cannot summarily be said that the name Fraunces Tavern has become "appurtenant to and inseparably connected” with the defendant society. These incompatible assertions must be resolved at trial.

The defendant, as landlord and owner of a building in which plaintiff undertook a commercial venture, possesses a valued interest in its building’s name, which is entitled to protection. However, as a result of steady and gradual usage and development, such a name may acquire a secondary meaning as indicating the particular business housed in the building. (60 NY Jur, Trademarks, § 100.) Where such mark has acquired this distinctive meaning, the user thereof is entitled to the same protection as would be accorded a "technical” trade-mark. "Secondary meaning can be established by showing that notwithstanding the absence of an arbitrary, fanciful or coined expression, a trade-mark or trade name has, through exclusive use and advertising by one entity, become so associated in the mind of the public with that entity or its product that it identifies the goods sold by that entity and distinguishes them from goods sold by others.” (Allied Maintenance Corp. v Allied Mechanical Trades, 42 NY2d 538, 542, n 2.)

The ability of a mark to acquire a secondary meaning will rarely be established overnight. Such is uniquely attainable through a gradual evolution. Acceptance thereof will be acknowledged when a substantial section of the buying public can equate that mark with a particular business and no other (3 Callmann, Unfair Competition, Trademarks and Monopolies [3d ed], § 77.4).

The issue then is whether either party through its individual efforts can be credited with ascribing a secondary meaning to the mark Fraunces Tavern. After a trial if it can be determined that this mark exclusively identifies a particular business, and the buying public would thereby be confused, then that business is entitled to the service mark protection (Matter of Playland Corp. v Playland Center, 1 NY2d 300).

In trade-mark law, as in other matters of equity, good faith is an indispensable component. No right of ownership can be acquired in a service mark which is not registered or adopted in good faith (US Code, tit 15, § 1064; 60 NY Jur, Trademarks, § 17). Defendant argues that this element is lacking. The existing lease was negotiated throughout 1977, and it is alleged that a major portion of these discussions centered on utilization of the mark Fraunces Tavern. However, prior to signing of this document, plaintiff on October 28, 1977, caused to be served an application with the United States Patent and Trademark Office seeking to register the service mark Fraunces Tavern.^* The society maintains this procedure was commenced at a time when plaintiff was aware that its use of the service mark was in dispute, and moreover violated the restrictive conditions of the lease.

The question of good faith, or the lack thereof, is an issue, under these circumstances, which cannot be disposed of summarily. The familiar refrain that the key to summary judgment is "issue finding rather than issue determination” (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395) is persuasively presented in the record before us.

This court enunciated the rule with clarity, when it said "summary judgment is a drastic remedy which should be withheld whenever there is any doubt as to the existence of a triable or arguable issue of fact (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395)”. (Pollard v Meyer, 61 AD2d 766, 767.) Here we have substantial questions of fact that cannot be disposed of in advance of trial.

Accordingly, the order of Supreme Court, New York County (Hughes, J.), entered on July 24, 1979, which, inter alia, denied defendant-appellant’s motions to dismiss the second and fourth causes of action contained in the complaint and denied defendant’s motion for partial summary judgment on the third counterclaim in appellant’s answer, seeking to enjoin plaintiff's use of the service mark Fraunces Tavern, and granting plaintiff’s cross motion to the extent of dismissing the third counterclaim should be, insofar as appealed from, affirmed, without costs and without disbursements.

* This mark was subsequently registered on September 11,1979.