Trademark Disputes in the Hospitality Industry

The efforts of hotels, casinos and restaurants to globally protect their brands and, in some cases, to geographically expand are resulting in disputes with remote geographic users of the same or similar marks. Although there are many global, national and regional hotel, casinos and restaurant chains, many of these businesses—including some of the most famous in the world—have only single locations. According to Travel + Leisure and Restaurant magazines, respectively, most of the world’s top hotels and all 50 of the top restaurants are single-location venues. Although these businesses may cater to travelers, they provide their services in a single location. Perhaps in light of this, hospitality businesses historically have neglected to register their trademarks on a national or international basis or have failed to enforce their marks outside of their own geographic markets. Recently, the geographic expansion of businesses in the hospitality industry has resulted in trademark disputes. In the last few years alone, there were lawsuits between The Plaza Hotel in New York and the Union Plaza a.k.a. Plaza Hotel and Casino in Las Vegas, the Casino de Monte-Carlo in Monaco and the Monte Carlo in Las Vegas, the Bukhara restaurant in New Delhi and the Bukhara Grill in New York, and the Atlantis in the Bahamas and the Atlantis resort in Reno, Nevada.

Key Issues: Territoriality and Well-Known Marks

The international disputes in the hospitality industry evoke the tension between the territoriality principle (that trademark rights are determined on a country-by-country basis) and the well-known and famous marks doctrine (the exception to the territoriality principle). The territoriality principle is reflected in Article 6(3) of the Paris Convention, which provides that “[a] mark duly registered in a country of the [Paris] Union shall be regarded as independent of marks registered in other countries of the Union, including the country of origin.” The well-known marks doctrine is an exception to the territoriality principle. See Article 6bis of the Paris Convention. Article 16(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) of the General Agreement on Tariffs and Trade (GATT) extended the well-known marks doctrine to service marks, which include those applicable to hospitality industry services. The same article provides that knowledge of the trademark among the relevant segment of the population may be established based on promotion of the mark. Thus, actual use of the mark in a foreign country is not necessary to establish that a mark is well known in that country. The well-known marks doctrine is particularly important in countries that do not recognize common-law rights in unregistered marks.

One of the most notable cases involving an international dispute over hospitality marks occurred over 50 years ago in Canada. Hilton Hotels filed suit against a company using the HILTON mark in Canada. At the time, Hilton Hotels did not have a HILTON hotel in Canada and did not own any Canadian trademark registrations. Nevertheless, the Canadian court enjoined the defendant’s use of the HILTON mark for a hotel in Vancouver, British Columbia, based on the well-known marks doctrine. The court held that the HILTON mark was well known in Canada by Canadians who traveled in the United States. Hilton Hotels Corp. v. Belkin & Kalensky, 17 WWR 86, 24 CPR 100 (British Columbia Sp. Ct. 1955).

Although such international disputes are not new in the hospitality industry, they are becoming more frequent, and the results, as well as the applicable law, are still unpredictable. Indeed, the ability of famous hotels, casinos and restaurants to rely on the well-known and famous marks doctrine is uncertain, at least in the United States.

In ITC Ltd. v. Punchgini, Inc., 482 F.3d 135 (2d Cir. 2007), ITC, the owners of the Bukhara restaurant in India, sued Punchgini, the owners of the Bukhara Grill in New York, for trademark infringement and other claims. ITC operates the Bukhara restaurant in New Delhi, which has consistently been rated as one of the top restaurants in the world. ITC opened additional Bukhara restaurants in various countries around the world, including in New York and Chicago. However, the U.S. restaurants closed by 1997. In 1999 and again in 2001, Punchgini, an entity formed by former employees of ITC’s Bukhara restaurant in New York, opened restaurants using the BUKHARA GRILL mark in New York. The Bukhara Grill emulated ITC’s Bukhara restaurants, including the overall look and feel. The owners of the Bukhara Grill described it as “quite like Delhi’s Bukhara.” ITC filed suit against Punchgini for trademark infringement, among other claims. Punchgini filed a motion for summary judgment, which the district court granted. The court held that ITC had abandoned its U.S. trademark registration and any trademark rights acquired through use. Thus, ITC’s only basis for establishing rights in the BUKHARA mark in the United States was the well-known and famous marks doctrine. The district court held that U.S. law does not recognize the doctrine, despite the court’s acknowledgment that the United States was required to adopt a well-known marks doctrine under the Paris Convention and the TRIPS Agreement. The Second Circuit affirmed. The ruling is contrary to the Ninth Circuit’s recognition of the well-known marks doctrine, creating a split in authority in the United States. See Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088 (9th Cir. 2004).

A more recent global clash over trademark rights in the hospitality industry is a suit filed on March 28, 2008, by Société des Bains de Mer et du Cercle des Etrangers à Monaco (SBM) against the owner of the MONTE CARLO resort and casino in Las Vegas in the U.S. District Court for the Southern District of New York. See Societe Anonyme des Bains de Mer et du Cercle des Etrangers a Monaco v. MGM Mirage, Inc. et al., Case No. 08-cv-03157 (S.D.N.Y. 2008). SBM is a holding company that owns and operates the Casino de Monte-Carlo in Monaco. SBM does not own or operate any hotel or casino in the United States and does not own any U.S. trademark registrations for the MONTE CARLO mark. However, citing its victory in a Fourth Circuit case against a cybersquatter, SBM claimed that it owned rights in the MONTE CARLO mark in the United States based on use in commerce. In addition, SBM claimed that its mark was well known in the United States. The case was recently dismissed while the parties were attempting to settle the dispute.

Trademark disputes in the hospitality industry are also common in geographically remote markets within the same country. A recent infringement action in the United States was filed by a common-law user of a mark against the federal registrant when the federal registrant announced plans to enter the common-law user’s geographic market. In January 2008, Tamares Las Vegas Properties, LLC filed suit for trademark infringement against the El-Ad Group, Ltd. and related entities, involving the PLAZA mark for hotel services. El-Ad is the owner of The Plaza Hotel, which opened in New York City in 1906. El-Ad owns a U.S. federal trademark registration for THE PLAZA and design for hotel and restaurant services, which was registered in 1987. Tamares owns a hotel and casino in Las Vegas that has used PLAZA-formative marks since 1971, including the UNION PLAZA and, more recently, according to Tamares, PLAZA alone. The parties peacefully coexisted for decades until El-Ad announced plans in 2007 to build a hotel-casino under THE PLAZA mark less than three miles from Tamares’s property. Tamares sued El-Ad for trademark infringement, claiming that El-Ad’s use of THE PLAZA mark for a hotel-casino in Las Vegas would cause confusion among consumers with respect to Tamares’s PLAZA hotel-casino. El-Ad argued that the hotels and casinos catered to different segments of the market and that Tamares’s transition from use of UNION PLAZA to PLAZA postdated El-Ad’s federal trademark registration. The case went to trial, and the jury concluded that there was no likelihood of confusion. Tamares has appealed the decision, and the case is currently pending in the Nevada Supreme Court.

Practical Strategies

To maintain the ability to use their marks when they geographically expand, hospitality companies should develop a global trademark strategy. As with other global trademark protection programs, the first step is to identify countries in which the company may reasonably expect to expand and, for those countries, to attempt to obtain and maintain trademark registrations. In some countries, advertising of the hospitality services, or at least the marketing or sale of room reservations, etc., under the mark to residents proposing to travel to the hotel or facility concerned, may be sufficient to obtain and maintain registrations, even though the hospitality services are not actually provided in the country in question.

In the countries of interest where the hospitality company is forced to rely on the well-known and famous marks doctrine to enforce its rights, the company should maintain records that it may need to establish that its mark is well known or famous in the future. For example, the company may need to rely on advertisements and media references in the country or in publications or media that may reach consumers in the country; accounting records reflecting advertising and marketing expenses in the country; customer lists identifying guests from the country who have visited the hotel, casino or restaurant; and Web logs identifying visits to the company’s website from Internet users in the country. Proving that a particular mark is well known or famous and proving priority in a particular country may require evidence spanning several years or even, in some cases, decades. In the absence of a document retention program specifically designed for this purpose, many companies would fail to maintain documents necessary to prove that their mark is famous or well known in a particular country.

Finally, hospitality companies should maintain an enforcement program in countries or regions of interest to ensure that they can maximize the opportunity for future expansion into the countries of interest and avoid the application of laches or other defenses that may affect their right to enforce their marks in the future.

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