[author: Rachel B. Rudensky]

Performing a heroic act of CPR on the common law trademark rights held by New York's famous Second Avenue Deli, U.S. District Judge Engelmeyer ruled last week that the restaurant could continue to sell its INSTANT HEART ATTACK SANDWICH and its TRIPLE BYPASS SANDWICH to its local customers. Judge Engelmeyer's ruling underscores the importance of conducting a thorough trademark search before adopting and attempting to enforce trademarks. A poorly researched and misjudged cease and desist letter proved disastrous to the owner of federally registered trademarks.

Plaintiff, Second Avenue Deli, brought a declaratory judgment action against the Las Vegas-based Heart Attack Grill after receiving an aggressive cease-and-desist letter concerning Second Avenue Deli's use of the trademark HEART ATTACK SANDWICH and its planned launch of TRIPLE BYPASS SANDWICH for certain menu items. As Heart Attack Grill came to discover, Second Avenue Deli first featured the HEART ATTACK SANDWICH item on its menu as early as 2004, though it did not apply for federal registration of the marks until 2010.

Heart Attack Grill was founded in 2005 as a “medically-themed” restaurant. Its waitresses (called “nurses”) take orders (called “prescriptions”) from customers (called “patients”). The menu tracks the theme of the restaurant, offering patrons a SINGLE BYPASS BURGER, a DOUBLE BYPASS BURGER, a TRIPLE BYPASS BURGER and a QUADRUPLE BYPASS BURGER. Heart Attack Grill promptly filed trademark applications for its marks in 2005, and the applications registered in 2006.

Under Section 7(c) of the Trademark Act, the date of filing an application establishes a registrant's constructive date of first use, establishing nationwide priority except with respect to a party who began using the mark before that date. A prior user can defeat the registrant of a federal trademark for any territory in which the prior user can show that it (1) used the mark before the registrant's date of filing; and (2) acquired common law rights as a result of its use in that territory. That is precisely what Second Avenue Deli did in this case. Careful research on Heart Attack Grill’s part would have revealed Second Avenue Deli’s status as a prior user, and spared Heart Attack Grill the pain and suffering of this declaratory judgment action.

The court considered the likelihood that consumers could be confused by concurrent use of Second Avenue Deli's INSTANT HEART ATTACK and TRIPLE BYPASS SANDWICH on the one hand, and Heart Attack Grill's SINGLE BYPASS BURGER, DOUBLE BYPASS BURGER, TRIPLE BYPASS BURGER and QUADRUPLE BYPASS BURGER. Though the court held that the marks were visually and aurally similar, conveying a similar overall commercial impression, other factors weighed against a finding of likelihood of confusion. First, the court found that the goods were dissimilar, inasmuch as Heart Attack Grill serves cheeseburgers fried in lard, while Second Avenue Deli is a kosher restaurant that abjures cheeseburgers and lard. Warming to this analysis, the court also found that the parties' customers differed because Heart Attack Grill attracted customers who were looking for unhealthful food, while Second Avenue Deli's customers were kosher-observant patrons.

However, the meat of the decision rested on the court's view of Second Avenue Deli's prior rights, and the territory to which it extended. Despite the presumptions afforded by Heart Attack Grill's federal trademark registrations, the court focused its analysis heavily on the fact that Heart Attack Grill has one location only, in Las Vegas, while Second Avenue Deli is located only in Manhattan. Because restaurants require a customer's physical presence, the court found that customer bases in remote geographic locations are necessarily different. Additionally, the court found no evidence that Heart Attack Grill had any plans to expand to New York.

Accordingly, the main question concerning the court was how large a territory to afford Second Avenue Deli based on its prior rights in its INSTANT HEART ATTACK SANDWICH. While Second Avenue Deli sought exclusive rights in the common tri-state area of New York, New Jersey and Connecticut, the court held that its rights extended only as far as the island of Manhattan. Otherwise, the court's order largely preserves an arrangement the parties devised, in which Second Avenue Deli will use its trademarks on its menus, and in some advertising.

This case demonstrates that, while filing for trademark protection provides many significant benefits, registration by itself does not conclusively establish the owner’s exclusive right to use the mark, given the protections afforded common law trademark rights in the United States. One of the biggest mistakes a business can make is spending years building a brand, only to realize that it cannot expand to an important market because of a prior user. Furthermore, overly-aggressive enforcement measures can backfire without thorough research and confirmation of priority. This decision proves that a comprehensive assessment of third-party trademark rights can be just as crucial to enforcement efforts as to trademark adoption and use consideration. Taking the time to conduct a thorough trademark search before sending out that letter will prevent a party's goose from being cooked.