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Ritz Hotel, Ltd. v. Shen Manufacturing Co.

March 9, 2009

THE RITZ HOTEL, LTD.
v.
SHEN MANUFACTURING CO., INC.



The opinion of the court was delivered by: Norma L. Shapiro, S.J.

MEMORANDUM AND ORDER

Plaintiff The Ritz Hotel, Ltd. {"RHL"), filed for declaratory relief against Shen Manufacturing Co., Inc. ("Shen"). Shen filed counterclaims against RHL under §§ 14, 32, 35, and 38 of the Lanham Trade-Mark Act ("Lanham Act"), 15 U.S.C. §§ 1064, 1114, 1117, and 1120. Shen also filed supplemental state-law claims for fraud and trademark violations. The court will grant RHL's motion for partial summary judgment to dismiss count III of Shen's counterclaim, under § 38 of the Lanham Act, 15 U.S.C. § 1120, for damages resulting from RHL's alleged fraudulent registration of five trademarks with the United States Patent and Trademark Office ("PTO").

I. FACTUAL STATEMENT AND PROCEDURAL HISTORY

Plaintiff Ritz Hotel Limited, a United Kingdom corporation with its principal place of business in Paris, France, ("RHL") filed*fn1 for declaratory judgment that its marketing and sale of products under the name "RITZ" and its trademarks RITZ PARIS, RITZ PARIS and Design, RITZ HOTEL, RITZ ESCOFFIER, THE RITZ KIDS and other variations did not infringe upon or otherwise violate the trademarks of defendant Shen Manufacturing Co. ("Shen"). RHL contended that it was the owner of at least eighteen*fn2 valid trademark registrations for the sale of products ranging from personal care and gourmet food to home wares and decorative items. Pl.'s Complaint, ¶ 12.

Shen, a Pennsylvania corporation with its principal place of business in West Conshohocken, Pa., filed its original answer and counterclaim on September 16, 2005, and its amended answer and counterclaim on August 16, 2006. In its amended answer and counterclaim, Shen asserts that it is the holder of numerous registered and common law trademarks containing the word "RITZ", including RITZ, RITZ PRO SERIES, RITZ STERLING, RITZ SUPREME, RITZ ROYALE, and RITZ CLASSICS. Def.'s First Amended Counterclaim, ¶ 9. Shen contends that RHL has illegally sold millions of dollars worth of products under the name RITZ.

Count I of Shen's counterclaim, under § 14 of the Lanham Act, 15 U.S.C. § 1064, seeks cancellation of nineteen of RHL's registered trademarks as either abandoned or fraudulently acquired. Count II, under Pennsylvania common law, is for Shen's injury resulting from fraud allegedly committed by RHL in its acquisition and use of five trademarks. Count III, under § 38 of the Lanham Act, 15 U.S.C. § 1120, is for damages resulting from the use of the same five trademark registrations at issue in count II because of allegedly fraudulent or false declarations made by RHL to the United States Patent and Trademark Office ("PTO") during trademark applications. Count IV, under § 32 of the Lanham Act, 15 U.S.C. § 1114, is for alleged infringement of trademarks of Shen. Count V, under § 43 of the Lanham Act, 15 U.S.C. § 1125(a), is for infringement of common-law trademarks of Shen. Count VI alleges trademark infringement under Pennsylvania law.*fn3

Presently before the court is RHL's motion for partial summary judgment on amended counterclaim Count III. Three of RHL's trademark registrations are at issue in count III: 1,980,522--RITZ for cutlery ("the '522 mark"); 2,669,712--RITZ ESCOFFIER for food products ("the '712 mark"); and 2,788,043--RITZ PARIS for cosmetics ("the '043 mark").*fn4 The PTO issued the '522 mark on June 18, 1996 and RHL filed an affidavit of continued use in June, 2002. The PTO issued the '712 mark on December 31, 2002, and the '043 mark on December 3, 2003.

II. DISCUSSION

In count III, under § 38 of the Lanham Act, 15 U.S.C. § 1120, Shen seeks to recover damages resulting from alleged fraud or falsity in RHL's applications for the '522, '712, and '043 marks. Shen claims damages including but not limited to the lost profits resulting from its inability to partner with Calphalon to market its own Ritz-branded cookware. Shen also seeks to recover attorneys' fees and costs for contesting the alleged fraudulent registrations, as well as punitive damages.

RHL moves for partial summary judgment on counterclaim count III on three grounds: first, attorneys' fees and punitive damages are unavailable; second, the claims, sounding in fraud are not plead with sufficient specificity; third, the counterclaims were not filed within the applicable statute of limitations.

A motion for summary judgment is grantedif "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the burden of proving there is no genuine issue of material fact. Matsushita v. Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 10 (1986); Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 743 (3d Cir. 1996). Failure to file within the applicable statute of limitations is sufficient grounds for summary judgment absent a dispute of material fact about the date of injury. See Hanna v. U. S. Veterans' Administration Hospital, 514 F.2d 1092, 1094-95 (3rd Cir. 1975).

a. The Lanham Trademark Act

The Lanham Act, 15 U.S.C. §§ 1051 et seq., provides for both primary and secondary trademark registers, as well as procedures applicants must follow to have a trademark registered. Section 1 of the Lanham Act, 15 U.S.C. § 1051, provides the procedure for a domestic application to the primary trademark register. A § 1 applicant must have its mark already "in use in commerce," or state a "bona fide intention to use in commerce" followed by a demonstration of actual use in commerce within six months after the PTO registers the trademark. 15 U.S.C. § 1051(a)(3)(C), (b)(2), (d).

The Lanham Act also allows a foreign applicant with a recently-issued trademark in its home country to seek reciprocal trademark protection in the United States in anticipation of entering products into United States commerce. Section 44 of the Lanham Act grants a foreign applicant (such as RHL), "whose country of origin is a party to any convention or treaty relating to trademarks, trade or commercial names, or the repression of unfair competition, to which the United States is also a party, or extends reciprocal rights to nationals of the United States by law," an automatic registration of its trademark, provided the PTO receives the application within six months of the issuance of the foreign trademark registration. 15 U.S.C. ยง ...


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