By Scott Hervey

The battle over the right to the trademark “Tavern on the Green” is over. In Manhattan earlier this month U.S. District Judge Miriam Cedarbaum ruled in favor of New York City, casting aside the prior concessionaire’s claim that it owned and controlled the famed “Tavern on the Green” trademark. The risk to New York losing were extremely high. Tavern on the Green, LP and LeRoy Adventures Inc. claimed ownership of the iconic brand that had recently been valued at $19 million and were seeking an injunction to prevent the new operator and the city from using the mark. Although the restaurant was the second-highest-grossing independent restaurant in the U.S. in 2008, with sales of $34.2 million. It’s almost certain that the new operator would renegotiate its winning bid if it was not able to use the Tavern on the Green mark, which would mean the city could lose millions of dollars in license fees.

LeRoy Adventures operated Tavern on the Green since 1976. However, LeRoy and Tavern on the Green, LP lost a bid to renew the restaurant lease when the City awarded the operation to a higher bidder. LeRoy and Tavern on the Green, LP filed for bankruptcy protection on September 10, 2009, and ceased operations on December 31, 2009. A fight over trademark rights quickly erupted and New York City filed suit in District Court seeking a declaration of its prior right under New York law to use the “Tavern on the Green” mark for its restaurant facility in Central Park, and to cancel LeRoy’s Federal trademark registration for fraud on the USPTO.

In 1973 the New York City and LeRoy entered into a license agreement for the operation of the “Tavern on the Green” as a “restaurant and cabaret.” The license agreement provided that New York City had various rights over the operation of the facility, including approval of the manager, approval of employee uniforms, approval of use of signs or any other means of soliciting business, and the right to regulate the times and manner of operation. The City maintained the right of inspection at all times, and the City retained the right to terminate the license under numerous conditions, including unsatisfactory operations.

In August of 1978 LeRoy applied, on behalf of Tavern on the Green, LP, to register the mark “Tavern on the Green” with the United States Patent and Trademark Office for restaurant services. The application claimed an August 31, 1976 date of first use and that the joint venture was the owner of the mark and that “no other person, firm, corporation or association has the right to use said mark in commerce, either in the identical form or in such near resemblance thereto as to be likely…to cause confusion, to cause mistake, or to deceive[.]"   In 1986 Tavern on the Green, LP filed an affidavit with the USPTO swearing that the Tavern or the Green mark had been in continuous use for more than five consecutive years from issuance. The PTO accepted the affidavit, and the mark services became "incontestable" pursuant to 15 U.S.C. §1065.

Section 1065 provides as follows:

"Except on a ground for which application to cancel may be filed at any time under paragraphs (3) and (5) of section 1064 of this title, and except to the extent, if any, to which the use of a mark registered on the principal register infringes a valid right acquired under the law of any State or Territory by use of a mark or trade name continuing from a date prior to the date of registration under this chapter of such registered mark, the right of the registrant to use such registered mark in commerce for the goods or services on or in connection with which such registered mark has been in continuous use for five consecutive years subsequent to the date of such registration and is still in use in commerce, shall be incontestable…."

In the trademark fight with New York City, LeRoy argued that the "incontestable" status of the mark entitled Tavern on the Green, LP to a declaration of exclusive right to use the mark for restaurant services and an injunction against the New York City’s use of the trademark "Tavern on the Green."

The City argued that a number of exceptions to statutory incontestability applied. First, the City argued that under New York State law it had a prior right to the "Tavern on the Green" mark. The Court found sufficient evidence had been provided to show that the City had established the restaurant and utilized the “Tavern on the Green” mark in connection with such restaurant more than thirty five years prior the LeRoy’s use and registration. The Court found compelling the fact that the City initially chose the name, chose each concessionaire and made significant investments to ensure the success of the restaurant. The Court concluded that because the facts did show that the City established and continuously maintained a restaurant called “Tavern on the Green” at the same location in New York’s Central Park since 1934, the City has a protectable interest in the mark and that LeRoy’s registration is not incontestable as against the City’s prior right.

Having established its own independent right to use the Tavern on the Green mark the City now needed to terminate any independent right LeRoy may have to the mark. This is the reason behind the City’s second challenge to LeRoy’s incontestability claiming that LeRoy’s Federal registration was obtained fraudulently and should be cancelled.

In order to cancel a trademark registration on the grounds of fraud, the petitioner must establish misstatements that show a deliberate attempt to mislead the USPTO with regard to a material fact. The court found LeRoy’s application to register the mark contained numerous misstatements and omissions of material facts, including the claim that 1973 was the date of first use when the City had used the mark for over three decades prior. The court also found LeRoy’s declaration that, to the best of his knowledge, no other party has the right to use the “Tavern on the Green” mark in commerce to be a material misstatement.   The court stated that the LeRoy and Tavern on the Green, LP “have adduced no facts which would permit a reasonable fact finder to conclude that LeRoy’s conduct was anything but a deliberate attempt to mislead the PTO.” The court held that the registration must be canceled.

Had the City lost it certainly would have faced some challenges. It appears that the City had a contingency plan; it applied to register the trademark “Tavern in the Park” in November. Doesn’t quite have the ring as “Tavern on the Green” and certainly can’t be worth $19 million..