Patsy's Italian Restaurant, Inc. v. Banas

08-4487-cv(L)
Patsy’s Italian Restaurant, Inc. v. Banas

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 August Term, 2009

4 (Argued: October 19, 2009 Decided: August 24, 2011)

5 Docket Nos. 08-4487-cv(L), 08-4774-cv(XAP)

6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
7 PATSY’S ITALIAN RESTAURANT, INC.,
8 Plaintiff-Counter-Defendant-Appellant-Cross-Appellee,
9
10 PATSY’S BRAND, INC.,
11 Plaintiff-Appellant-Cross-Appellee,
12
13 v.
14
15 ANTHONY BANAS, doing business as Patsy’s, doing business as
16 Patsy’s Pizzeria Trattoria Impazzire, doing business as Patsy’s
17 Bakery & Café, ALLAN ZYLLER, doing business as Patsy’s Pizzeria
18 Trattoria, doing business as Patsy’s, AL & ANTHONY’S PATSY’S,
19 INC., I.O.B. REALTY, INC.,
20 Defendants-Counter-Claimants-Appellees-Cross-
21 Appellants,
22
23 PATSY’S BAKERY & CAFÉ, PATSY’S PIZZERIA,
24 Defendants-Appellees,
25
26 ANTHONY & PATSY’S,
27 Defendant-Appellee-Cross-Appellant,
28
29 BSZ REALTY CORP.,
30 Defendant,
31
32 PATSY’S INC.,
33 Intervenor-Cross-Appellant.
34 - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
35 B e f o r e: WINTER, POOLER, Circuit Judges, and RAKOFF,
36 District Judge.*

*
The Hon. Jed S. Rakoff, of the United States District
Court for the Southern District of New York, sitting by
designation.

1
 1 Patsy’s Italian Restaurant appeals, and Patsy’s Pizzeria

2 cross-appeals, from a judgment of the United States District

3 Court for the Eastern District of New York (Ramon E. Reyes, Jr.,
4 Magistrate Judge) after a jury trial on claims brought pursuant
5 to trademark and unfair competition law. We uphold the district

6 court’s jury instructions. Additionally, we affirm the district

7 court’s refusal to grant a new trial on the issue of whether

8 Patsy’s Pizzeria made fraudulent statements to the Patent and

9 Trademark Office, as well as its refusal to vacate the jury’s

10 verdict that Patsy’s Italian Restaurant did not fraudulently

11 obtain its trademark registrations. We further affirm the

12 district court’s refusal to reinstate Patsy’s Pizzeria’s

13 trademark registration and its cancellation of Patsy’s Italian

14 Restaurant’s trademark registrations. Finally, we uphold the

15 district court’s denial of attorneys’ fees and injunctive relief.

16 We therefore affirm.

17 NORMAN H. ZIVIN, Cooper &
18 Dunham LLP, New York, New
19 York (Robert T. Maldonado,
20 Tonia A. Sayour, on the
21 brief), for Plaintiff-
22 Counter-Defendant-Appellant-
23 Cross-Appellee and
24 Plaintiff-Appellant-Cross-
25 Appellee.
26
27 PAUL GRANDINETTI, Levy &
28 Grandinetti, Washington,
29 D.C. (Rebecca J. Stempien,
30 Steven M. Levy, on the
31 brief), for Defendants-
32 Counter-Claimants-Appellees-
33 Cross-Appellants.

2
 1 TABLE OF CONTENTS
2
3 BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4
5 a) The Parties . . . . . . . . . . . . . . . . . . . . . . . . 5
6
7 b) The Prior Sauce Dispute . . . . . . . . . . . . . . . . 8
8
9 c) The Current Dispute . . . . . . . . . . . . . . . . . . . 10
10
11 DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . 14
12
13 a) Patsy’s Italian Restaurant’s Appeal: Merits . . . . . . . 14
14
15 1) Cancellation of Appellants’ Registrations . . . 14
16
17 A) Cancellation Not Barred by the
18 Prior Injunction . . . . . . . . . . . . 15
19
20 B) Patsy’s Pizzeria Only Partially
21 Abandoned Its Marks . . . . . . . . . . . 17
22
23 C) Jury Instructions Pursuant to
24 Grants of Judgment as a Matter of
25 Law . . . . . . . . . . . . . . . . . . . 24
26
27 2) Denial of Attorneys’ Fees . . . . . . . . . . . 28
28
29 b) Patsy’s Pizzeria’s Cross-Appeal: Merits . . . . . . . . 29
30
31 1) Limitation of Appellees’ Rights to
32 Pizzeria Services . . . . . . . . . . . . . . . . . 29
33
34 2) Fraud on the PTO . . . . . . . . . . . . . . . 33
35
36 3) Refusal to Reinstate Registration No. 2,213,574 36
37
38 c) Injunctive Relief . . . . . . . . . . . . . . . . . . . . 37
39
40 1) Refusal to Enjoin Appellees from Using
41 Patsy’s Outside of Manhattan. . . . . . . . . . . . 38
42
43 2) Prohibiting Appellants and Patsy’s Pizzeria
44 From Using Solely “PATSY’S” . . . . . . . . . . . . 41
45
46 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . 46
47

3
 1 WINTER, Circuit Judge:
2
3 This appeal is the latest, longest, and perhaps even the

4 last, chapter in a long legal struggle involving a host of

5 trademark and unfair competition claims over the name “Patsy’s.”

6 Patsy’s Italian Restaurant, Inc., and Patsy’s Brand, Inc.

7 (collectively “Patsy’s Italian Restaurant” or “appellants”)

8 appeal from a judgment entered after a jury trial before

9 Magistrate Judge Reyes. Anthony Banas, Anthony’s & Patsy’s Inc.,

10 Allan Zyller, Al & Anthony’s Patsy’s Inc., I.O.B. Realty, Inc.,

11 and Patsy’s Inc. (collectively “Patsy’s Pizzeria” or “appellees”)

12 cross-appeal.

13 Patsy’s Italian Restaurant’s appeal raises the following

14 issues: (i) whether the district court erroneously cancelled

15 their service mark registrations; (ii) whether the district

16 court’s decisions regarding injunctive relief constituted an

17 abuse of discretion; and (iii) whether the district court abused

18 its discretion when it denied their request for attorneys’ fees.

19 Patsy’s Pizzeria’s cross-appeal raises the following issues: (i)

20 whether their rights were erroneously limited to pizzeria

21 services; (ii) whether the jury verdict that they fraudulently

22 obtained their service mark registration can be upheld; (iii)

23 whether the jury verdict that appellants did not fraudulently

24 obtain their service mark registrations should have been vacated;

25 (iv) whether the district court erroneously refused to reinstate

26 their service mark registration; and (v) whether the district

4
 1 court’s decisions regarding injunctive relief constituted an

2 abuse of discretion.

3 We affirm. Relevant factual disputes were resolved by the

4 jury, and the district court’s equitable relief was appropriately

5 balanced and designed to limit ongoing consumer confusion.

6 BACKGROUND

7 To shorten this section and overall opinion, we provide only

8 an overview of the parties, their trademarks, their relationship

9 with one another, and the current dispute. Relevant descriptions

10 of the evidence at trial, the jury instructions, and various

11 aspects of the motion practice in the district court will be

12 given in the DISCUSSION section when relevant.
13 a) The Parties
14 Appellants are associated with Patsy’s Italian Restaurant on

15 West 56th Street in Midtown, New York City. It has been in

16 operation since 1944 and is well-known for Italian cuisine. The

17 entity Patsy’s Italian Restaurant, Inc. operates the restaurant.

18 Patsy’s Brand, Inc. was created in 1993 to sell packaged food

19 products in association with Patsy’s Italian Restaurant. At the

20 beginning of this action, Patsy’s Italian Restaurant, Inc. held
21 two federal service mark1 registrations issued November 1, 2005

1
A service mark is:
[A]ny word, name, symbol, or device, or any
combination thereof--
(1) used by a person, or
(2) which a person has a bona fide intention
to use in commerce and applies to register on

5
 1 -- Registration Nos. 3,009,836 (the “´836 Registration”) and

2 3,009,866 (the “´866 Registration”) -- which have since been

3 transferred to Patsy’s Brand. The ´836 Registration is for the

4 stylized mark PATSY’S PR for restaurant services. The ´866

5 Registration is for the mark PATSY’S for restaurant services not

6 including pizza. Patsy’s Brand also holds Registration No.

7 1,874,789 (the “´789 Registration”) for the trademark PATSY’S for

8 sauces.

9 Appellees are associated with Patsy’s Pizzeria. The

10 original Patsy’s Pizzeria opened in 1933 in East Harlem and

11 claims to have been the first pizzeria to sell pizza by the

the principal register established by this
chapter,
to identify and distinguish the services of one
person, including a unique service, from the
services of others and to indicate the source of
the services, even if that source is unknown.
. . .
15 U.S.C. § 1127. In contrast, a trademark is:
[A]ny word, name, symbol, or device, or any
combination thereof--
(1) used by a person, or
(2) which a person has a bona fide intention
to use in commerce and applies to register on
the principal register established by this
chapter,
to identify and distinguish his or her goods,
including a unique product, from those
manufactured or sold by others and to indicate the
source of the goods, even if that source is
unknown.
Id. Because trademarks and service marks are generally
protected by the same standards, see 15 U.S.C. § 1053; Lane
Capital Mgmt., Inc. v. Lane Capital Mgmt., Inc., 192 F.3d
337, 344 n.2 (2d Cir. 1999), we make no distinction in the
law governing these marks unless specifically noted.

6
 1 slice. I.O.B. Realty, Inc. purchased the original Patsy’s

2 Pizzeria in 1991 and entered into a licensing agreement with

3 Patsy’s Inc. in 1998. Under the current agreement, I.O.B. Realty

4 owns the real estate and trademarks, whereas Patsy’s Inc. is the

5 franchising arm of Patsy’s Pizzeria. There are currently six

6 Patsy’s Pizzeria locations in Manhattan in addition to the

7 original location, the Staten Island location, and the Syosset

8 location. When appropriate, we refer to I.O.B. Realty and

9 Patsy’s Inc. collectively as the “intervening appellees.” I.O.B.

10 Realty previously received two federal service mark registrations

11 -- Registration No. 1,975,110 (“the “´110 Registration”) and

12 Registration No. 2,213,574 (the “´574 Registration”). The ´110

13 Registration, issued May 21, 1996, was for the mark PATSY’S for

14 restaurant services. The ´574 Registration, issued December 29,

15 1998, was for the mark PATSY’S PIZZERIA for restaurant services.

16 Appellees Banas and Anthony & Patsy’s, Inc. are associated

17 with the Staten Island location of Patsy’s Pizzeria, and, when

18 appropriate, are referred to collectively as the “Staten Island

19 appellees.” The district court found that, as a matter of law,

20 the Staten Island location was opened after they obtained a

21 license to use I.O.B. Realty’s marks. Appellees Banas, Zyller,

22 and Al & Anthony’s Patsy’s, Inc. are associated with the Syosset

23 location of Patsy’s Pizzeria, and, when necessary, are referred

24 to as the “Syosset appellees.” The district court found that, as

25 a matter of law, the Syosset location also obtained a license to

7
 1 use I.O.B. Realty’s marks.

2 b) The Prior Sauce Dispute

3 The parties coexisted without litigation until each began to

4 sell packaged sauce under the name “Patsy’s,” thereby causing

5 considerable consumer confusion. On October 8, 1998, the

6 intervening appellees brought a cancellation proceeding before

7 the Patent and Trademark Office (the “PTO”) seeking the

8 cancellation of Patsy’s Brand’s ´789 Registration for PATSY’S for

9 sauces. Patsy’s Brand responded by filing a cancellation

10 proceeding before the PTO seeking the cancellation of I.O.B.

11 Realty’s Registration No. 1,975,110 for PATSY’S for restaurant

12 services and Registration No. 2,213,574 for PATSY’S PIZZERIA for

13 restaurant services. Patsy’s Brand also filed suit in the

14 Southern District against the intervening appellees. The action

15 (the “sauce litigation”) alleged trademark infringement and

16 unfair competition due to appellees’ sale of sauces using the

17 PATSY’S mark. The cancellation proceedings were consolidated and

18 suspended pending resolution of the sauce litigation.

19 In granting Patsy’s Brand’s a preliminary injunction in the

20 sauce litigation, the district court rejected the intervening

21 appellees’ argument that they were entitled to bridge the gap

22 into sauces as the senior user of the PATSY’S mark for restaurant

23 services. Patsy’s Brand Inc. v. I.O.B. Realty Inc.(“Patsy’s

24 Brand I”), 53 U.S.P.Q.2d 1861, 1862-63 (S.D.N.Y. 2000). The

25 court reasoned that the mark PATSY’S for restaurant services was

8
 1 weak, as both parties had the right to use the mark for

2 restaurant services. Id. at 1863. It also observed that it was

3 unclear when the intervening appellees entered the sauce market,

4 because evidence provided in support of the alleged date of entry

5 was clearly falsified, a fact that suggested that the intervening

6 appellees “did not choose [their] sauce label in good faith.”
7 Id. at 1862. In a later opinion granting Patsy’s Brand’s motion

8 for summary judgment in the sauce litigation, the district court

9 again reiterated its findings that the intervening appellees

10 presented falsified evidence and ordered them to show cause why

11 they should not be sanctioned for doing so. Patsy’s Brand Inc.

12 v. I.O.B. Realty Inc. (“Patsy’s Brand II”), 58 U.S.P.Q.2d 1048,

13 1050, 1059 (S.D.N.Y. 2001). The district court sanctioned the

14 intervening appellees and enjoined them from petitioning to

15 cancel Patsy’s Brand’s registrations for sauces, other packaged

16 food products, and restaurant services. In addition, it directed

17 the Commissioner of the PTO to cancel the intervening appellees’

18 ´110 Registration.

19 On October 18, 2001, Patsy’s Brand filed a motion with the

20 PTO requesting that the cancellation proceedings be reinstated.

21 This request led to the subsequent judgment cancelling the

22 intervening appellees’ ´110 Registration on September 4, 2002.

23 However, after Patsy’s Brand filed its request, the intervening

24 appellees filed a notice of appeal in the sauce litigation.

25 Notably, this appeal did not challenge the portion of the

9
 1 injunction that enjoined them from petitioning to cancel Patsy’s

2 Brand’s registrations for restaurant services. Patsy’s Brand,
3 Inc. v. I.O.B. Realty, Inc. (“Patsy’s Brand III”), 317 F.3d 209,
4 219-21 (2d Cir. 2003). On January 16, 2003, we affirmed the

5 sanctions against the intervening appellees, struck the provision

6 cancelling the intervening appellees’ ´110 Registration, and

7 stated “that the injunction should be confined to the marketing

8 of pasta sauce and food products and should not reach the

9 [intervening appellees’] restaurant business . . . .” Id. at

10 221-22.

11 On May 27, 2003, the Commissioner erroneously cancelled the

12 intervening appellees’ ´110 Registration and ´574 Registration.

13 On July 13, 2007, after realizing the previous order was

14 erroneous, the Commissioner issued an order cancelling the

15 registrations due to I.O.B. Realty’s failure to file declarations

16 of continuing use pursuant to 15 U.S.C. § 1058.

17 c) The Current Action

18 On February 17, 2006, appellants brought suit against the

19 Staten Island appellees for federal and common law trademark

20 infringement, injury to business reputation, and common law

21 unfair competition. The Staten Island location closed in

22 September 2006. During the course of settlement negotiations,

23 appellants discovered that the Syosset location was preparing to

24 open. On October 30, 2006, appellants brought suit against the

25 Syosset appellees for federal and common law trademark

10
 1 infringement, federal and common law unfair competition, false

2 designation of origin, and injury to business reputation. The

3 two actions were then consolidated, and I.O.B. Realty and Patsy’s

4 Inc. intervened, alleging that they had prior use rights to

5 PATSY’S for restaurant services. On November 26, 2006, the

6 Syosset appellees, I.O.B. Realty, and Patsy’s Inc. filed a

7 counterclaim seeking a declaration either that appellees did not

8 infringe appellants’ marks or that those marks were invalid.

9 After appellants sought a temporary restraining order, Judge

10 Irizarry issued an order allowing the Syosset appellees to open

11 the Syosset location as long as the words “Trattoria Impazzire”
12 were not used with any materials associated with the restaurant.2
13 In March 2007, appellees filed a motion for summary judgment

14 before the district judge seeking restoration of the ´574

15 Registration, cancellation of appellants’ ´836 Registration and

16 ´866 Registration, and the dismissal of appellants’ claims. The

17 district judge granted restoration of the ´574 Registration, but

18 denied summary judgment on appellants’ claims and the request for
19 the cancellations. See generally Patsy’s Italian Rest., Inc. v.

20 Banas (“Patsy’s Italian Rest. I”), 508 F. Supp. 2d 194 (E.D.N.Y.

21 2007). The district court also rejected appellants’ argument

2
The district court did this because “trattoria” means
“restaurant” in Italian, and allowing appellees to use the words
“Trattoria Impazzire” on the facade of the Syosset location would
add to the consumer confusion caused by the use of appellants’
mark and name in connection with restaurant services.

11
 1 that the injunction from the sauce litigation prohibited

2 appellees from seeking such relief on the ground that the

3 injunction applied only to registrations owned by Patsy’s Brand.
4 See id. at 214, 216. Patsy’s Italian Restaurant, Inc. owned the

5 registrations at issue. Id. at 214.

6 The parties proceeded to a jury trial before the magistrate

7 judge. The jury found that: (i) I.O.B. Realty was the senior

8 user of the marks PATSY’S and PATSY’S PIZZERIA, and continuously

9 used the marks for pizzeria services but not restaurant services;

10 (ii) there was a likelihood of confusion between appellees’ marks

11 and appellants’ ´836 and ´866 Registrations; (iii) the Staten

12 Island and Syosset appellees had exceeded the scope of their

13 license with I.O.B. Realty; (iv) I.O.B. Realty had abandoned its

14 marks through naked licensing -- i.e., a lack of adequate quality

15 control over goods and services sold under the mark by the

16 licensees; (v) the Staten Island appellees engaged in unfair

17 competition and infringed appellants’ federal and common law

18 marks, but the infringement was not willful; (vi) the Syosset

19 appellees engaged in unfair competition and willfully infringed

20 appellants’ federal and common law marks; (vii) both the Staten

21 Island appellees and the Syosset appellees were likely to injure

22 appellants’ business reputation; (viii) appellees fraudulently

23 obtained the ´574 Registration; and (ix) appellants did not

24 fraudulently obtain either the ´836 Registration or the ´866

25 Registration.

12
 1 After trial, appellants sought an injunction preventing the

2 Syosset appellees from using the mark PATSY’S. Although this

3 initial request was denied, on April 17, 2008, the district court

4 ordered the Syosset location to put up a 24” x 24” sign in its

5 front door that contained, in red capital letters, the statement:

6 “WE ARE NOT AFFILIATED WITH PATSY’S ITALIAN RESTAURANT LOCATED AT

7 236 WEST 56TH STREET, NEW YORK, NY.”

8 On September 9, 2008, the district court issued a decision
9 dealing with the post-trial issues. See generally Patsy’s
10 Italian Rest., Inc. v. Banas (“Patsy’s Italian Rest. IV”), 575 F.

11 Supp. 2d 427 (E.D.N.Y. 2008). It denied appellees’ motions for

12 judgment as a matter of law because appellees failed to make such

13 requests during trial. Id. at 445. The district court also

14 denied appellees’ various motions for a new trial. Id. at 446-

15 54. Nevertheless, while the district court denied appellees’

16 motion for a new trial with regard to the abandonment of their

17 marks, the district court granted their motion to interpret the
18 abandonment verdict narrowly. See id. at 450, 453. Concluding

19 that the jury’s verdict of abandonment was based on naked

20 licensing but that the jury had not addressed the geographic
21 scope of the naked licensing, id. at 450, 452, the district court
22 determined that appellees had abandoned their marks only in

23 Staten Island and Syosset. Id. at 452-53.

24 With regard to the parties’ service mark registrations, the

25 district court superseded the prior order reinstating appellees’

13
 1 ´574 Registration, thus refusing reinstatement of the

2 registration, reasoning that the jury’s verdicts precluded such
3 relief. Id. at 463, 468-69, 469 n.28. However, the district

4 court also determined that appellants’ ´836 and ´866

5 Registrations should be cancelled due to appellees’ limited

6 remaining rights in their marks. Id. at 463, 465.

7 Addressing injunctive relief, the district court permanently

8 enjoined the Syosset appellees from using the words “Trattoria

9 Impazzire” in connection with their establishment. Id. at 469.

10 Additionally, the district court required the Syosset appellees

11 to maintain the previously imposed disclaimer sign for not less

12 than three years from the entry of judgment. Id. The district

13 court denied appellants’ requests for further injunctive relief,

14 as well as appellees’ request for injunctive relief. Id. at 469-

15 70. However, the district court went on to enter an injunction

16 prohibiting both Patsy’s Italian Restaurant and Patsy’s Pizzeria

17 from using the term PATSY’S alone in connection with their
18 establishments. Id. at 470-71.
19 Finally, the district court denied appellants’ request for

20 attorneys’ fees. Id. at 471.

21 DISCUSSION

22 a) Patsy’s Italian Restaurant’s Appeal: Merits

23 1) Cancellation of Appellants’ Registrations

24 Patsy’s Italian Restaurant advances several arguments that

25 the district court erred in cancelling the ´836 and ´866

14
 1 Registrations. We address them seriatim.

2 A) Cancellation Not Barred by the Prior Injunction

3 Appellants argue that the injunction in the sauce litigation

4 prohibited appellees from seeking cancellation.

5 The injunction issued in the sauce litigation provided, in

6 relevant part:

7 That Defendants [I.O.B. Realty, Patsy’s Inc.,
8 Brija, Brecevich, and Nick Tsoulos], their
9 successors, assigns, officers, directors,
10 servants, employees, distributors, customers,
11 representatives, agents and attorneys, and
12 all persons in active concert and
13 participation with them, or any of them, be
14 and they are hereby permanently restrained
15 and enjoined:
16 . . .
17 e. from opposing any application for
18 registration or petitioning to cancel any
19 registration of Plaintiff [Patsy’s Brand] for
20 any trademark incorporating PATSY’S for
21 sauces or other packaged food products or
22 restaurant services . . . .
23
24 The district court held that the sauce litigation injunction

25 applied only to registrations owned by Patsy’s Brand and not to

26 those owned by Patsy’s Italian Restaurant, Inc.

27 We review a district court’s interpretation of another
28 court’s order de novo. See United States v. Spallone, 399 F.3d

29 415, 423 (2d Cir. 2005). In doing so, we apply traditional

30 principles of contract law and look to the intent of the issuing

31 court. See Mastrovincenzo v. City of New York, 435 F.3d 78, 103

32 (2d Cir. 2006); Spallone, 399 F.3d at 424. Under traditional

33 principles of contract law, “‘[a] contract should be construed so

15
 1 as to give full meaning and effect to all of its provisions.’”

2 PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1199 (2d Cir. 1996)
3 (quoting Am. Express Bank Ltd. v. Uniroyal, Inc., 562 N.Y.S.2d
4 613, 614 (1st Dep’t 1990)) (alteration in original).

5 Appellants essentially argue that we should read “Plaintiff”

6 to include not just Patsy’s Brand but also its associate, Patsy’s

7 Italian Restaurant, Inc. However, that would impermissibly

8 stretch the injunction’s language. Whereas “Defendants,” as used

9 in the order, specifically includes “their successors, assigns,

10 officers, directors, servants, employees, distributors,

11 customers, representatives, agents and attorneys, and all persons

12 in active concert and participation with them, or any of them,”

13 the word “Plaintiff” lacks any such expansion. Injunctions are

14 serious orders, enforceable in contempt proceedings, and such an

15 order must give notice of the specific conduct ordered or

16 prohibited. See Fed. R. Civ. P. 65(d) (requiring that “[e]very

17 order granting an injunction . . . must . . . state its terms

18 specifically . . . and . . . describe in reasonable detail . . .

19 the act or acts restrained or required.”) We therefore read

20 “Plaintiff” to refer only to the party bringing the action.

21 This interpretation is fully consistent with the context in

22 which the injunction was issued. Patsy’s Italian Restaurant and

23 Patsy’s Pizzeria had co-existed peacefully for quite some time.

24 See Patsy’s Brand III, 317 F.3d at 212-13, 216. This co-

25 existence ended only when both parties sought to enter the

16
1 packaged foods market. See id. at 212-15. In the sauce

2 litigation, appellees had sought to cancel only Patsy’s Brand’s

3 registrations and committed misconduct only with regard to the
4 date of first use of their sauces. See id. at 214-15. Thus, the

5 injunction does not bar appellees’ counterclaim.3

6 B) Patsy’s Pizzeria Only Partially Abandoned Its Marks

7 The district court’s decision to cancel appellants’ ´836 and

8 ´866 Registrations pursuant to section 37 of the Lanham Act,

3
Appellants also argue that the district court erred in
even considering the cancellation counterclaim because the
Syosset appellees sought cancellation only due to prior use, not
likelihood of confusion. However, the counterclaim states that
“[Patsy’s Italian Restaurant] has no intellectual property rights
to the word PATSY’S when used with the word PIZZERIA. Therefore,
there is no infringement of the Patsy’s Restaurant Marks or, if
the marks of these registrations are infringed by the Defendants’
use of the mark PATSY’S PIZZERIA with pizzeria services, the
registrations are invalid.” This language can reasonably be read
to include a counterclaim for cancellation due to a likelihood of
confusion.
Moreover, appellants filed the motion to dismiss the
counterclaim on this ground only months after the district court
denied appellees’ motion for summary judgment seeking
cancellation of appellants’ trademark registrations due to prior
use. As the district court then noted, the counterclaim seeking
cancellation due to prior use necessarily required the additional
showing of a likelihood of confusion. See Patsy’s Italian Rest.
I, 508 F. Supp. 2d at 215 (citing Sterling Drug, Inc. v. Bayer
AG, 14 F.3d 733, 743 (2d Cir. 1994)). Nevertheless, appellants
did not argue at the summary judgment stage that the Syosset
appellees’ counterclaim seeking cancellation of their marks was
not included within the pleadings. Nor do appellants point to
any other instance throughout the litigation where they raised
this issue in a motion, either to dismiss or otherwise, so that
the district court could properly address it. Having actually
litigated the issue during the trial, without raising any
objections, “appellants impliedly consented to trial on this
issue, within the meaning of Fed. R. Civ. P. 15(b).” Snell v.
Suffolk County, 782 F.2d 1094, 1102 (2d Cir. 1986).

17
 1 codified as amended at 15 U.S.C. § 1119, depended on its

2 conclusion that I.O.B. Realty had retained some rights even after
3 the jury’s abandonment finding. Patsy’s Italian Rest. IV, 575 F.
4 Supp. 2d at 465-68. The district court concluded that, because

5 the jury found that I.O.B. Realty continuously used the marks,

6 the finding of abandonment had to have been based on a finding of

7 naked licensing. Id. at 452. Appellants do not challenge this

8 reasoning, but argue, rather, that the jury’s verdict was one of

9 total abandonment.

10 A district court’s determination to grant relief pursuant to

11 15 U.S.C. § 1119 is reviewed for an abuse of discretion. See

12 Empresa Cubana del Tabaco v. Culbro Corp., 541 F.3d 476, 478 (2d

13 Cir. 2008) (“[S]ection 1119's use of the permissive ‘may’ in

14 authorizing courts to grant relief, [is] distinct from its use of

15 the mandatory ‘shall’ in requiring any orders or decrees that are

16 entered to be sent to and followed by the PTO.”). Appellants

17 argue that our review should be de novo because the district

18 court based its decision “on [its] disagreement with the jury’s

19 fact findings and [its] misreading of the Lanham Act.”

20 Appellant’s Br. at 47. However, while claims of factual error or

21 mistakes of law may inform the determination of abuse of

22 discretion, they do not alter the standard of review.

23 Appellants first argue that any finding of naked licensing

24 necessarily acted as a total abandonment of all rights. We

25 disagree. Although some forms of trademark abandonment may

18
 1 result in a loss of all rights in the mark, see e.g.,

2 Feathercombs, Inc. v. Solo Prods. Co., 306 F.2d 251, 256 (2d Cir.

3 1962), abandonment of a mark through naked licensing has

4 different effects on the validity of the mark in different
5 markets. See Dawn Donut Co. v. Hart’s Food Stores, Inc., 267
6 F.2d 358, 369 (2d Cir. 1959) (a finding of naked licensing in the

7 retail market would not result in the loss of trademark rights in

8 the wholesale market). For example, if a restaurant operates in

9 both New York and California, but engages in naked licensing only

10 in California, the restaurant’s registered mark may lose its

11 significance in California while retaining its significance in

12 New York. Thus, naked licensing will lead to an abandonment of a

13 mark only where the mark loses its significance. 15 U.S.C. §

14 1127.

15 As a result, we agree with the district court that a mark

16 owner can abandon a mark through naked licensing in a particular

17 geographic area without abandoning its rights throughout the
18 entire United States. See also Tumblebus Inc. v. Cranmer, 399

19 F.3d 754, 765-66 (6th Cir. 2005) (recognizing that “there is

20 considerable support for the concept that rights in a mark may be
21 abandoned in certain geographic areas but not others”); Sheila’s

22 Shine Prods., Inc. v. Sheila Shine, Inc., 486 F.2d 114, 125 (5th

23 Cir. 1973) (recognizing abandonment in some areas but not

24 others); E.F. Prichard Co. v. Consumers Brewing Co., 136 F.2d
25 512, 521-22 (6th Cir. 1943); Snuffer & Watkins Mgmt. Inc. v.

19
 1 Snuffy’s Inc., 17 U.S.P.Q.2d 1815, 1816 (T.T.A.B. 1990)

2 (“Accordingly, an allegation of abandonment in a specific

3 geographic location is an insufficient pleading in a cancellation
4 proceeding.”); 3 J. Thomas McCarthy, McCarthy on Trademarks and
5 Unfair Competition § 18:48 (4th ed. 2008).4

6 The district court limited the scope of I.O.B. Realty’s

7 abandonment pursuant to Fed. R. Civ. P. 49(a)(3) (“A party waives

8 the right to a jury trial on any issue of fact raised by the

9 pleadings or evidence but not submitted to the jury unless,

10 before the jury retires, the party demands its submission to the

11 jury. If the party does not demand submission, the court may

12 make a finding on the issue. . . .”).

13 In its answer to a special interrogatory, the jury concluded

14 that Patsy’s Pizzeria abandoned its marks. Patsy’s Italian

15 Restaurant argues that the verdict encompassed the Staten Island

16 location, the Syosset location, and all Manhattan locations other

17 than the East Harlem location. We disagree.5

4
Apart from arguing total abandonment, Patsy’s Italian
Restaurant does not contest the geographical divisions the
district court adopted in determining the scope of I.O.B.
Realty’s abandonment through naked licensing.
5
Appellants also argue that the district court’s decision
to cancel appellees’ ‘574 mark conflicts with the conclusion that
appellees retained some rights in the mark because the
cancellation was based, in part, on the jury finding of
abandonment. However, the court did not rely solely on the
finding of abandonment in cancelling the registration, but on a
combination of fraud and partial abandonment of the mark. See
Patsy’s Italian Restaurant IV, 575 F. Supp. 2d at 469 (“I.O.B.
Realty’s fraudulent statements to the PTO and TTAB, and its

20
 1 “[S]pecial interrogatories must be read in conjunction with

2 the district court’s charge.” Romano v. Howarth, 998 F.2d 101,

3 104 (2d Cir. 1993) (internal quotation marks omitted). The jury

4 was asked to determine whether there was abandonment but not the

5 geographic scope of any such abandonment. Appellants requested

6 no instruction on whether the naked licensing was limited to

7 certain entities or certain geographical areas. While the

8 abandonment instructions never identified as their subject the

9 specific licenses granted to the Staten Island location or the

10 Syosset location, those are the entities that were the subject of

11 the naked licensing claim at trial. Therefore, the district

12 court properly resolved the scope of abandonment issue pursuant

13 to Fed. R. Civ. P. 49(a)(3).

14 Finally, Patsy’s Italian Restaurant argues that Patsy’s

15 Pizzeria’s limited rights in the Manhattan area do not warrant

16 cancellation of their registration. They contend that they are

17 entitled to expand nationwide because Patsy’s Pizzeria’s rights

18 are limited. Moreover, they suggest that the expansion by

19 Patsy’s Pizzeria outside Manhattan that caused the likelihood of

20 confusion occurred after their applications for registration were

21 filed. They argue, therefore, that the cancellation was in

limited abandonment through naked licensing . . . warrants
cancelling the ‘574 Registration.” (emphasis added)). Therefore,
the decision to cancel appellees’ ‘574 Registration and the
conclusion that they still retained some limited rights in the
mark are not in conflict.

21
 1 violation of their rights and should not affect their

2 registrations. We disagree.

3 Local rights owned by another have been consistently viewed

4 as sufficient to prevent a party from obtaining registration of a

5 federal mark. See Giant Food, Inc. v. Nation’s Foodservice,

6 Inc., 710 F.2d 1565, 1571 (Fed. Cir. 1983) (refusing registration

7 due to likelihood of confusion, even where there was no evidence

8 of actual confusion “mainly [due] to the geographical separation
9 of the two parties’ operations”); Peopleware Sys., Inc. v.
10 Peopleware, Inc., 226 U.S.P.Q. 320, 321 (T.T.A.B. 1985) (noting

11 that “geographical separation of the parties’ principal places of

12 business cannot be considered to be of significance in

13 determining registrability of applicant’s mark since it seeks a

14 geographically unrestricted registration”); 3 J. Thomas McCarthy,

15 McCarthy on Trademarks and Unfair Competition § 20:15 (4th ed.

16 2008) (“Geographical separation of the parties is not relevant in

17 an opposition.”). Indeed, this is consistent with the principle

18 in trademark law “that the second comer has a duty to so name and
19 dress his product [or service] as to avoid all likelihood of

20 consumers confusing it with the product [or service] of the first

21 comer.” Harold F. Ritchie, Inc. v. Chesebrough-Pond’s, Inc., 281

22 F.2d 755, 758 (2d Cir. 1960).

23 Because registration of a federal mark confers upon the

24 owner of the mark a presumption that the owner has the exclusive

25 right to use the mark nationwide, 15 U.S.C. § 1115(a), it is

22
 1 proper to consider the rights of users nationwide when

2 determining whether a party is entitled to registration of their
3 mark. See 3 J. Thomas McCarthy, McCarthy on Trademarks and
4 Unfair Competition § 20:15 (4th ed. 2008). In fact, Section

5 1052(d) itself provides that a mark cannot be registered if it

6 “[c]onsists of or comprises a mark which so resembles a mark

7 registered in the Patent and Trademark Office, or a mark or trade

8 name previously used in the United States and not abandoned, as

9 to be likely . . . to cause confusion . . . .” 15 U.S.C. §

10 1052(d). Thus, the very language of the statute contemplates

11 that a mark used anywhere in the United States can be sufficient

12 to block federal registration. See id.

13 In these circumstances, the principles applicable to the

14 initial registrability of a mark should also be applied to a

15 claim seeking the cancellation of a registration that has not yet

16 become incontestable pursuant to Section 1065. Id. § 1065.

17 Young v. AGB Corp., 152 F.3d 1377, 1380 (Fed. Cir. 1998) (“The

18 linguistic and functional similarities between the opposition and

19 cancellation provisions of the Lanham Act mandate that we

20 construe the requirements of these provisions consistently.

21 There is no basis for interpreting them differently.”) (internal

22 citations omitted); 3 McCarthy on Trademarks and Unfair

23 Competition § 20:52 (“[F]or Principal Register marks not yet five

24 years on the register, cancellation may be based on any ground in

25 the Lanham Act that would have barred registration in the first

23
 1 instance.”). Cf. 15 U.S.C. § 1064 (limiting the grounds on which

2 cancellation can be sought after the mark has been registered for

3 five years).

4 In conclusion, the district court did not abuse its

5 discretion by cancelling appellants’ registrations.

6 Nevertheless, the lack of a federal registration does not prevent

7 Patsy’s Italian Restaurant or Patsy’s Pizzeria from expanding as

8 they so desire, so long as they respect each other’s existing

9 rights. Rather, the cancellation simply precludes appellants

10 from utilizing the statutory presumptions and other benefits
11 conferred to a mark owner through federal registration. See 15
12 U.S.C. § 1115 (setting forth the evidentiary presumptions a mark

13 owner is entitled to and limiting the defenses against an

14 incontestable registration); cf. id. § 1125(a) (providing a

15 federal cause of action for infringement of an unregistered

16 mark).

17 C) Jury Instructions Pursuant to Grants of Judgment as
18 a Matter of Law
19
20 Appellants argue that the district court erroneously

21 instructed the jury that there was privity as a matter of law

22 between the purported predecessors of I.O.B. Realty and I.O.B.

23 Realty as well as between I.O.B. Realty and the Syosset and

24 Staten Island appellees. The instruction being a question of

25 law, we review it de novo. See Wilkinson ex rel. Wilkinson v.
26 Russell, 182 F.3d 89, 96 (2d Cir. 1999). However, appellants

24
 1 waived any claim of error regarding the privity issue by failing

2 to raise them with the district court. See Gwozdzinsky ex rel.
3 Revco D.S., Inc. v. Magten Asset Mgmt. Corp., 106 F.3d 469, 472
4 (2d Cir. 1997). Appellants made no objection whatsoever to the

5 finding of privity between I.O.B. Realty’s predecessors and

6 I.O.B. Realty. As for the finding of privity between I.O.B.

7 Realty and the other defendants, counsel for appellants stated

8 only that: “we object to reference to the license agreement as

9 being a valid agreement . . . . Perhaps you could take out the

10 word ‘valid’; then there would be more consistency there.”

11 Later, appellants clarified their objection stating “[w]e don’t

12 believe that a naked license is a valid license.” Notably, the

13 issue of naked licensing went to the jury.

14 Appellants similarly challenge the district court’s

15 instruction to the jury that there was, as a matter of law, use

16 of the marks in interstate commerce. They argue in that regard

17 that appellees were required to demonstrate use in interstate
18 commerce as part of their prior use defense because a mark must
19 be used in interstate commerce in order to be eligible for

20 federal registration.

21 No provision of the Lanham Act supports that contention.

22 The Lanham Act merely provides that a mark is not registrable if

23 there is a likelihood of confusion between that mark and “a mark

24 or trade name previously used in the United States by another and

25 not abandoned . . . .” 15 U.S.C. § 1052(d). A party need not

25
 1 meet the statutory requirement of use in interstate commerce to

2 oppose, or seek cancellation of, a registration based on
3 confusion. See id.; First Niagara Ins. Brokers, Inc. v. First

4 Niagara Fin. Grp., Inc., 476 F.3d 867, 870-71 (Fed. Cir. 2007).

5 Likewise, prior use as a defense against a trademark infringement

6 suit does not require use in commerce. See 15 U.S.C. §

7 1115(b)(6). Indeed, as discussed above, even appellees’ local

8 rights would be sufficient to warrant cancellation of appellants’

9 marks due to a likelihood of confusion. See 3 McCarthy on

10 Trademarks and Unfair Competition § 20:15.

11 Nevertheless, even if use in commerce had to be shown, the

12 evidence showed such use as a matter of law. Due to the

13 different nature of the marks, “use in commerce” is defined

14 differently for trademarks and service marks. See 15 U.S.C. §

15 1127. A service mark is used in commerce when, among other

16 things, “it is used or displayed in the sale or advertising of

17 services and the services are rendered in commerce,” where

18 “commerce” includes “all commerce which may lawfully be regulated
19 by Congress.” Id. We have previously recognized that this broad

20 definition reflects “Congress’s intent to legislate to the limits
21 of its authority under the Commerce Clause.” Buti v. Perosa,

22 S.R.L., 139 F.3d 98, 102 (2d Cir. 1998) (internal quotation marks

23 omitted).

24 Appellants rely on the failure to show use of the mark in

25 advertising materials, but there is no requirement that a mark be

26
 1 so used. Rather, it is enough to show use or a display of the

2 mark in the sale of services rendered in commerce, 15 U.S.C. §

3 1127, as was the case here. Appellees’ mark was prominently

4 displayed on numerous versions of the Patsy’s Pizzeria menu

5 entered into evidence as well as displayed on the exterior of the

6 East Harlem building.

7 Additionally, these services were rendered in commerce. The

8 provision of services to interstate customers is sufficient to
9 show that the services were rendered in commerce. See Larry
10 Harmon Pictures Corp. v. Williams Rest. Corp., 929 F.2d 662, 666

11 (Fed. Cir. 1991); Application of Gastown, Inc., 326 F.2d 780,

12 782-83 (C.C.P.A. 1964). A map in evidence demonstrates that

13 Patsy’s Pizzeria is easily accessible from several nearby

14 interstate highways. Numerous articles about Patsy’s Pizzeria

15 were also in evidence, including one from the New York Times,

16 which undoubtedly extends to an interstate audience.

17 Furthermore, reviews for Patsy’s Pizzeria from guides such as the
18 2003 Not For Tourists Guide to New York City and the 2004 Zagat
19 Survey for New York City Restaurants were also entered into

20 evidence. Finally, there was testimony that cab drivers knew

21 where Patsy’s Pizzeria was, that people “[came] from all over” to

22 go there, and even that pizza was shipped to the west coast.

23 Thus, the district court properly instructed the jury to find

24 that appellees used their mark in interstate commerce as a matter

25 of law.

27
 1 2) Denial of Attorneys’ Fees

2 Patsy’s Italian Restaurant appeals the district court’s
3 denial of its request for attorneys’ fees. Patsy’s Italian Rest.
4 IV, 575 F. Supp. 2d at 471. Section 35(a) of the Lanham Act,

5 codified as amended at 15 U.S.C. § 1117(a), provides that “[t]he

6 court in exceptional cases may award reasonable attorney fees to

7 the prevailing party.” Thus, in order to be entitled to

8 attorneys’ fees, the party must be the “prevailing party” and the

9 case must be “exceptional,” or, in other words, involve fraud,

10 bad faith, or willful infringement. Patsy’s Brand III, 317 F.3d

11 at 221. Even then the statute provides only that the district

12 court “may” award attorneys’ fees. See 15 U.S.C. § 1117(a). As

13 a result, we review the district court’s decision for an abuse of

14 discretion. See Quaker State Oil Refining Corp. v. Kooltone,

15 Inc., 649 F.2d 94, 95-96 (2d Cir. 1981) (per curiam).

16 Appellants argue that the district court erred because it

17 held that they were not a prevailing party. We disagree with

18 that characterization of the district court’s holding. To be

19 sure, some of the district court’s statements, if read in

20 isolation, could be read to suggest that appellants were not a

21 prevailing party. However, the district court explicitly

22 exercised its discretion not to award. See Patsy’s Italian Rest.

23 IV, 575 F. Supp. 2d at 471 (“[T]he Court does not find this case

24 is so ‘exceptional’ as to justify an award of attorneys’ fees

25 . . . . The Court thus exercises its discretion and denies

28
1 Plaintiffs’ motion for attorneys’ fees.”). Given the facts of

2 this case and the mixed outcome of the litigation, the district
3 court clearly did not abuse its discretion in so ruling.6
4 b) Patsy’s Pizzeria’s Cross-Appeal: Merits

5 1) Limitation of Appellees’ Rights to Pizzeria Services

6 Patsy’s Pizzeria argues that the district court erred by

7 including the distinction between general restaurant services

8 and pizzeria services in the jury instructions and special

9 verdict sheet when no definition of pizzeria services was

6
Appellants also claim that the district court erred when
it refused to admit as evidence certified government records of a
fire into evidence. These records, they claim, show that Patsy’s
Pizzeria was operating solely as a pizzeria and not a restaurant
at the time of the fire. These records were not offered until
after the record was closed. “A motion to reopen the record for
the presentation of new evidence is addressed to the sound
discretion of the trial court” and is reviewed for an abuse of
discretion. DiBella v. Hopkins, 403 F.3d 102, 119 (2d Cir. 2005)
(internal quotation marks and alteration omitted). Appellants
offered no reason for not obtaining the certified records
earlier. Thus, the district court did not abuse its discretion
by declining to admit the records.
Additionally, appellants argue that appellees’ evidence of
prior use was misleading based on the discovery of photographs
said to contradict the testimony of appellees’ witnesses. They
contend that the district court erred by refusing to take into
account the misleading nature of the evidence when cancelling
appellants’ marks. Instead, the district court relied on the
jury’s verdict of prior use.
A district court has considerable discretion in determining
whether to grant equitable relief. See Bano v. Union Carbide
Corp., 361 F.3d 696, 716 (2d Cir. 2004). The district court did
not abuse its discretion by relying on a valid jury verdict when
fashioning equitable relief. Nor did the district court abuse
its discretion by failing to consider appellants’ photographs,
which were not admitted into evidence.

29
 1 offered.7 It asserts that the lack of a definition is

2 particularly important because it misled the jury into

3 believing this distinction is recognized at law, and the jury’s

4 special verdicts on many of the issues turned on the definition

5 of pizzeria services. We disagree. The court was not obliged

6 to define pizzeria services for the jury because the jury was

7 capable of determining the meaning of that term, which is
8 neither technical nor ambiguous. United States v. Morris, 928
9 F.2d 504, 511 (2d Cir. 1991) (“Since the word is of common

10 usage, without any technical or ambiguous meaning, the Court

11 was not obliged to instruct the jury on its meaning.”) (citing

12 United States v. Chenault, 844 F.2d 1124, 1131 (5th Cir. 1988).

13 Patsy’s Pizzeria also suggests that the distinction

14 between pizzeria services and restaurant services was

15 inappropriate because the classification system used by the PTO

16 does not distinguish between the two services, providing only

17 the category of “restaurant services.” This argument

18 misunderstands the purpose of the PTO’s classification system.
19 The PTO’s classifications exist solely for administrative

20 purposes, and does not affect the substantive rights of a

21 mark’s owner in any way. See 15 U.S.C. § 1112 (“The Director

22 may establish a classification of goods and services, for

7
Patsy’s Italian Restaurant claims that Patsy’s Pizzeria
waived any such objections to the jury instructions. The record
is unclear in this regard, and we therefore address the merits.

30
 1 convenience of Patent and Trademark Office administration, but

2 not to limit or extend the applicant’s or registrant’s

3 rights.”). Rather, Patsy’s Pizzeria’s substantive rights are

4 defined by the scope of the services used in connection with
5 the mark. See In re Trade-Mark Cases, 100 U.S. 82, 94 (1879);
6 ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 146 (2d Cir. 2007).

7 Patsy’s Pizzeria further argues that there was no evidence

8 to support the jury’s finding that they did not provide

9 restaurant services and use for pizzeria services. We

10 disagree. Patsy’s Pizzeria’s argument appears to rely heavily

11 on their claim that pizzeria services are limited to businesses

12 serving pizza only by the slice. However, as noted, Patsy’s

13 Pizzeria did not request that the district court provide this

14 definition in the jury instructions, and there is no manifest

15 injustice in the district court’s failure to do so. Without a

16 definition, it was up to the jury to determine the appropriate

17 distinction, and there was sufficient evidence to support its

18 determination.

19 For example, the jury had before it a variety of menus,

20 including the menus for various Patsy’s Pizzeria locations,

21 Patsy’s Italian Restaurant’s menu, and menus from Pizza Hut and

22 Dominos Pizza. They were able to compare those to determine

23 whether there was a distinction between the services provided

24 and, if so, what that distinction was. In addition, during the

25 trial, the deposition testimony of a Patsy’s Pizzeria

31
 1 franchisee was read into the record, in which the franchisee

2 stated that in “[p]izzerias you just serve pizza,” and a

3 witness for Patsy’s Italian Restaurant also gave a similar

4 definition. Thus, there was sufficient evidence to permit the

5 jury to draw the distinction in question.

6 There was also sufficient evidence to support the jury’s

7 verdict that Patsy’s Pizzeria’s rights were limited to pizzeria

8 services. Patsy’s Pizzeria argues that there was no evidence

9 that they served solely pizza, and, indeed, that they

10 demonstrated that they continuously sold a variety of foods.

11 Having conceded that they failed to file a motion for judgment

12 as a matter of law, appellants merely seek a new trial on this

13 ground. As we have previously explained, “‘[w]here a jury’s

14 verdict is wholly without legal support, we will order a new

15 trial in order to prevent a manifest injustice[,]’ despite an
16 appellant’s failure to move for a directed verdict.” Russo v.
17 New York, 672 F.2d 1014, 1022 (2d Cir. 1982) (quoting Sojak v.
18 Hudson Waterways Corp., 590 F.2d 53, 54-55 (2d Cir. 1978)).
19 There was no manifest injustice calling for a new trial.

20 With regard to the element of continuous provision of

21 restaurant services, the 1991 contract of sale transferring

22 ownership to I.O.B. Realty states that the East Harlem

23 location’s restaurant section was closed, and I.O.B. Realty

24 agreed only to provide pizzeria services during a specified

25 period of time. Evidence introduced by Patsy’s Pizzeria itself

32
 1 suggests a focus on only pizza. For example, franchisees were

2 trained regarding how to make pizza the Patsy’s way, and one

3 franchisee testified to the purchase of a $75,000 pizza oven

4 because their “focus was on the pizza.” Additionally, the jury

5 was shown a documentary that discussed how the original Patsy’s

6 Pizzeria was the first pizzeria to sell pizza by the slice.

7 Thus, Patsy’s Pizzeria is not entitled to a new trial on the

8 ground of manifest injustice.

9 2) Fraud on the PTO

10 Appellees challenge the jury’s verdict that they made

11 fraudulent statements to the PTO. Generally, a party alleging

12 that a registration was fraudulently obtained must prove the

13 following elements by clear and convincing evidence:

14 1. A false representation regarding a

15 material fact.

16 2. The person making the representation

17 knew or should have known that the

18 representation was false (“scienter”).

19 3. An intention to induce the listener

20 to act or refrain from acting in

21 reliance on the misrepresentation.

22 4. Reasonable reliance on the

23 misrepresentation.

24 5. Damage proximately resulting from

25 such reliance.

33
 1 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair

2 Competition § 31:61 (4th ed. 2008) (footnote omitted); see also
3 In re Bose, 580 F.3d 1240, 1243 (Fed. Cir. 2009); Quicksilver,
4 Inc. v. Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006); United

5 Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1226

6 (10th Cir. 2000).

7 Appellees argue that the jury’s verdict that they made

8 fraudulent statements to the PTO either relied on facts that,

9 even if proven, were insufficient as a matter of law, or was

10 supported by legally insufficient evidence.8 Again, because

11 appellees failed to move for a directed verdict, they are

12 limited to seeking a new trial, which we will grant only if

13 necessary to prevent manifest injustice when “a jury’s verdict

14 is wholly without legal support.” Russo, 672 F.2d at 1022.

15 Appellants claimed that I.O.B. Realty committed fraud in

16 its application for the ´574 Registration for PATSY’S PIZZERIA

17 for restaurant services by: (i) the statement that “the mark

18 was used continuously for restaurant services since 1933”; (ii)

19 the statement that they “believed I.O.B. Realty had the

8
Appellees also argue that the district court should have
vacated the jury’s verdicts that appellants did not commit fraud
on the PTO. We see no merit in this argument for the reasons
stated by the district court. Nevertheless, we also note that a
verdict finding fraud would result only in the cancellation of
appellants’ registrations. See Orient Express Trading Co. v.
Federated Dep’t Stores, Inc., 842 F.2d 650, 654 (2d Cir. 1988).
Thus, because we affirm the district court’s cancellation of
appellants’ registrations on other grounds, see supra, we need
not address this argument.

34
 1 exclusive right to use the name PATSY'S PIZZERIA or any mark

2 similar thereto for restaurant services and that no one else

3 had the right to use that name”; and (iii) their failure to

4 tell the PTO about Patsy’s Brand’s Registration No. 1,874,789

5 for PATSY’S for pasta sauces, even though they were petitioning

6 to cancel that mark on the ground that it was confusingly

7 similar to the mark PATSY’S PIZZERIA for restaurant services.

8 Appellees argue that there was insufficient evidence that

9 I.O.B. Realty knew that statement (i) was a misrepresentation

10 because the jury found I.O.B. Realty continuously used the

11 marks PATSY’S and PATSY’S PIZZERIA, and thus was the senior

12 user. Appellees additionally argue that statements (ii) and

13 (iii) were insufficient as a matter of law because they had no

14 obligation to inform the PTO of junior users. They add that,

15 even if they were legally sufficient, there was insufficient

16 evidence to support the jury’s verdict under either (ii) or

17 (iii) because the evidence showed that I.O.B. Realty believed

18 it was the senior user and thus was under no legal obligation

19 to disclose the information.

20 Appellees have failed to meet their burden of showing

21 manifest injustice because the jury’s verdict was not wholly

22 without support. There was evidence of fraud in I.O.B.

23 Realty’s statement that it had continuously used the mark for

24 restaurant services since 1933. It follows that I.O.B. Realty

25 specified the services in connection with which the mark was

35
 1 used more broadly than it was actually used, a fact they had to

2 have known.

3 “[S]ince a registration is prima facie evidence that the

4 registrant is using the registered mark on the goods or

5 services specified in the registration,” 3 J. Thomas McCarthy,
6 McCarthy on Trademarks and Unfair Competition § 19:48 (4th ed.
7 2008), I.O.B. Realty’s misrepresentation resulted in a

8 registered mark that was broader in scope than it should have

9 been. As a result, appellees have failed to show that the

10 jury’s verdict lacked any legal basis, and they are thus not

11 entitled to a new trial.

12 3) Refusal to Reinstate Registration No. 2,213,574

13 Appellees argue that the district court’s refusal to

14 reinstate the ´574 Registration for PATSY’S PIZZERIA for

15 restaurant services was erroneous because it was inconsistent

16 with the district court’s conclusion that they retained some

17 rights in the mark. As previously discussed, the district

18 court’s refusal to reinstate a registration pursuant to 15

19 U.S.C. § 1119 is reviewed for an abuse of discretion. See
20 Empresa, 541 F.3d at 478. Registration provides the mark owner

21 with certain presumptions and additional procedural rights,

22 see, e.g., 15 U.S.C. § 1115, but owners of unregistered marks

23 also retain some, albeit more limited, rights under the Lanham

24 Act. See, e.g., Orient Express Trading Co., 842 F.2d at 654.

25 Specifically, when a party’s registered mark is cancelled due

36
 1 to fraud before the PTO, the party can still bring an action as

2 an owner of an unregistered mark for relief pursuant to section
3 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). See Orient
4 Express, 842 F.2d at 653-54. Thus, the district court’s

5 determination that I.O.B. Realty’s mark should not be restored

6 but that appellants’ marks should be cancelled due to I.O.B.

7 Realty’s limited remaining rights is not inconsistent in this

8 respect. The jury’s fraud verdict fully justified the district

9 court’s decision not to restore I.O.B. Realty’s registration.

10 We, therefore, need not address appellees’ other arguments in

11 that regard.

12 c) Injunctive Relief

13 With regard to the injunction issued by the district

14 court, appellants claim that it erred when it did not enjoin

15 appellees from using the PATSY’S mark in connection with any

16 locations other than those currently located in Manhattan.

17 Appellants and Patsy’s Pizzeria both challenge the injunction

18 prohibiting them from using the term PATSY’S alone.

19 A permanent injunction is appropriate where the party

20 seeking the injunction has succeeded on the merits and “show[s]

21 the absence of an adequate remedy at law and irreparable harm

22 if the relief is not granted.” Roach v. Morse, 440 F.3d 53, 56

23 (2d Cir. 2006) (internal quotation marks omitted). However,

24 “[i]njunctive relief should be narrowly tailored to fit
25 specific legal violations.” Patsy's Brand III, 317 F.3d at 220

37
 1 (internal quotation marks omitted); see also Sterling Drug,

2 Inc. v. Bayer AG, 14 F.3d 733, 750 (2d Cir. 1994) (“The Lanham

3 Act does not require a total ban on the use of a mark by an

4 infringing junior user. To the contrary, the Lanham Act

5 demands that injunctive relief be no broader than necessary to

6 cure the effects of the harm caused.”) (internal quotation

7 marks omitted). Thus, “[i]n fashioning the injunction, the

8 Court should balanc[e] . . . the equities to reach an
9 appropriate result protective of the interests of both
10 parties.” Sterling Drug, 14 F.3d at 747 (internal quotation

11 marks omitted). We review a district court’s determinations

12 regarding the scope of injunctive relief for an abuse of

13 discretion. See id. at 744; Polymer Tech. Corp. v. Mimran, 975

14 F.2d 58, 61 (2d Cir. 1992). We review determinations regarding

15 the authority to enter an injunction de novo. Starter Corp. v.

16 Converse, Inc., 170 F.3d 286, 298 (2d Cir. 1999). In addition,

17 Rule 65(d)(1)(A) of the Federal Rules of Civil Procedure

18 requires that “[e]very order granting an injunction . . . must

19 . . . state the reasons why it issued.” Fed. R. Civ. P.

20 65(d)(1)(A). This requirement ensures that an appellate court
21 is able to understand the reasons for the injunction. See

22 Knox v. Salinas, 193 F.3d 123, 129 (2d Cir. 1999) (per curiam).

23 1) Refusal to Enjoin Appellees From Using PATSY’S Outside
24 of Manhattan
25
26 Appellants argue that the district court should have

38
 1 enjoined appellees from using the mark PATSY’S outside of the

2 current Manhattan locations. In so arguing, they rely on the

3 jury’s findings that: (i) the Staten Island and Syosset

4 appellees engaged in trademark infringement, unfair

5 competition, and injury to business reputation; (ii) the

6 Syosset appellees’ trademark infringement was willful; and

7 (iii) the Staten Island and Syosset appellees’ use of the

8 PATSY’S and/or PATSY’S PIZZERIA marks exceeded the scope of

9 their license with I.O.B. Realty.

10 However, there was no abuse of discretion by the district

11 court. Because the district court validly cancelled

12 appellants’ registrations, appellants are no longer entitled to

13 the presumptive right to use the marks nationwide that a
14 federal registration provides. See 15 U.S.C. § 1115(a). Nor

15 did this litigation address the parties’ rights beyond

16 Manhattan, Staten Island, and Syosset. Indeed, none of the

17 jury findings that appellants rely upon involves misconduct by

18 the intervening appellees, in contrast to the Staten Island and

19 Syosset appellees.

20 We, therefore, turn to the district court’s failure to

21 enjoin the Staten Island appellees and the Syosset appellees

22 from using the mark PATSY’S. After this action was brought,

23 the Staten Island location closed, and appellants do not claim

24 that it will be reopened. As a result, it was not an abuse of

25 discretion to refuse to enjoin the Staten Island appellees.

39
 1 As for the Syosset location, the district court did grant

2 some injunctive relief to appellants, although not as broad as

3 they would have liked. Rather than enjoining the Syosset

4 defendants from using the mark PATSY’S in any manner, the

5 district court entered an injunction that prohibits the Syosset

6 defendants from using the term “Trattoria Impazzire” and also

7 requires them to place a sign in their front window disclaiming
8 any association with Patsy’s Italian Restaurant for at least
9 three years from the date of judgment. Patsy’s Italian Rest.

10 IV, 575 F. Supp. 2d at 469. See supra note 2. Appellants

11 argue that these injunctions are insufficient because “the term

12 PATSY’S is more than three times the size of the word PIZZERIA”

13 in the signs of both the Syosset and Staten Island locations.

14 Appellants’ Br. at 40. Appellants also argue that the

15 disclaimer sign is insufficient because it is not visible to

16 the public, particularly to those driving by the Syosset

17 location and those visiting the Syosset location’s website.

18 Finally, appellants argue that the removal of the “Trattoria
19 Impazzire” sign is insufficient because it does not alter the

20 nature of the Syosset location’s menu.

21 “A district court has a ‘wide range of discretion in

22 framing an injunction in terms it deems reasonable to prevent

23 wrongful conduct.’” Soltex Polymer Corp. v. Fortex Indus.,

24 Inc., 832 F.2d 1325, 1329 (2d Cir. 1987) (quoting Spring Mills,

25 Inc. v. Ultracashmere House, Ltd., 724 F.2d 352, 355 (2d Cir.

40
 1 1983)). Given the district court’s great flexibility in

2 fashioning relief, see Soltex, 832 F.2d at 1329, we have

3 frequently recognized that the use of a disclaimer sign can, in
4 the right circumstances, be appropriate relief. See Jim Beam
5 Brands Co. v. Beamish & Crawford Ltd., 937 F.2d 729, 737 (2d

6 Cir. 1991); Soltex, 832 F.2d at 1329-30; Spring Mills, 724 F.2d

7 at 355. Whether such a disclaimer is appropriate depends on

8 “the circumstances of the relevant business and its consumers.”

9 Home Box Office, Inc. v. Showtime/The Movie Channel Inc., 832

10 F.2d 1311, 1315 (2d Cir. 1987). Here, the removal of the

11 “Trattoria Impazzire” sign, combined with the disclaimer, is a

12 permissible balancing of the equities. The fact that the term

13 PATSY’S may be larger than the term PIZZERIA in the sign does

14 not alter this conclusion. Nor are we persuaded by appellants’

15 argument that the menu remains the same. The district court

16 did not abuse its discretion by declining to delve into the

17 minute details of permissible menu items (unseen until passing

18 the disclaimer sign) for the Syosset restaurant.

19 As for appellants’ allegations regarding the disclaimer

20 sign, many of these allegations suggest that the Syosset

21 appellees are not complying with the injunction. This is a

22 matter properly brought up with the district court. Spring

23 Mills, 724 F.2d at 356. Nor do the remaining allegations

24 convince us that the injunction was not proper relief.
25 2) Prohibiting Appellants and Patsy’s Pizzeria From Using

41
 1 Solely “PATSY’S”
2
3 The district court entered an injunction prohibiting

4 appellants and Patsy’s Pizzeria from using solely the term

5 PATSY’S. No party requested such an injunction as relief.

6 Generally, where neither party has requested the injunctive

7 relief the district court intends to grant, the parties must
8 receive an opportunity to be heard. See Starter, 170 F.3d at
9 299.

10 In the present case, the district court instructed the

11 parties to address the propriety of such an injunction in their

12 post-trial papers. Neither party requested this particular

13 injunction only because it represented a compromise between

14 their respective positions, an anathema to both. It was not

15 the lack of notice, but rather the lack of interest in such

16 relief, that left the injunction with the appearance of sua

17 sponte relief. Also, the considerations pro and con are

18 rehashes of years of arguments that need to come to an end. We

19 are completely confident that a remand would be unilluminating,

20 delay the termination of this litigation needlessly, and merely

21 lead to more fruitless, overlitigated proceedings.

22 In all other respects, the injunction is entirely within

23 the district court’s discretion. Appellants argue that: (i)

24 the district court failed to make the findings required by Fed.

25 R. Civ. P. 65(d)(1)(A); (ii) the issuance of the injunction is

26 not narrowly tailored because it went beyond the scope of the

42
 1 party’s claims, which did not involve the right to use PATSY’S

2 in Manhattan; and (iii) the injunction is inconsistent with the

3 district court’s finding that appellants have the right to use

4 PATSY’S for restaurant services. None of these arguments has

5 any merit whatsoever.

6 With regard to (i), the district court’s injunction was

7 sufficiently tailored. While the prime focus of the litigation

8 may not have been on the right to use PATSY’S in Manhattan,

9 Patsy’s Pizzeria’s counter-claim seeking cancellation of

10 appellants’ registrations necessarily required the

11 consideration of a likelihood of confusion between the marks in

12 Manhattan. As a result, the injunction did not go beyond the

13 scope of the issues tried in the case.

14 As for (ii), the district court’s reasons for the

15 injunction are adequate to provide meaningful appellate review.

16 The jury found that there was a likelihood of confusion between

17 Patsy’s Pizzeria’s marks and Patsy’s Italian Restaurant’s ´836

18 Registration for the stylized mark PATSY’S PR for restaurant

19 services and the ´866 Registration for PATSY’S for restaurant

20 services not including pizza. And, as noted by the district

21 court, there was substantial evidence in the record indicating
22 “an exceeding degree of consumer confusion.” Patsy’s Italian
23 Rest. IV, 575 F. Supp. 2d at 470. In addition, the district

24 court weighed the parties’ rights with the harm to the public

25 due to a likelihood of confusion, and determined that the

43
 1 injunction met a sufficient balance.

2 With regard to (iii), while I.O.B. Realty can no longer

3 protect its rights to the name Patsy’s due to the long period
4 of use by Patsy’s Italian Restaurant, see Patsy’s Brand III,
5 317 F.3d at 216-17; Patsy’s Italian Rest. IV, 575 F. Supp. 2d

6 at 470, that fact does not alter the likelihood of confusion by

7 consumers. Having allowed the consumer confusion to develop,

8 no party can now complain about the district court’s attempt to

9 minimize the confusion. This is particularly true given our

10 earlier admonition to the parties that “both sides . . . would

11 be well advised to minimize the risk of confusion by

12 identifying their restaurants by the complete names: ‘Patsy’s

13 Italian Restaurant’ and ‘Patsy’s Pizzeria.’” Patsy’s Brand

14 III, 317 F.3d at 221.

15 Appellees argue that the injunction was an abuse of

16 discretion because it included the original location in East

17 Harlem as well as the licensees in Manhattan, which were not

18 parties to the litigation. They argue that there was no

19 finding of likelihood of confusion with regard to those

20 locations, claiming it is unusual to enjoin a senior user

21 without such a finding. We disagree.

22 Rule 65(d)(2) provides that an injunction binds both the

23 parties and anyone who is “in active concert or participation

24 with [the parties.]” Fed. R. Civ. P. 65(d)(2)(c). Both I.O.B.

25 Realty and Patsy’s Inc. were parties to the instant litigation.

44
 1 Because the Manhattan locations are authorized to use I.O.B.

2 Realty’s marks through the franchise agreements with Patsy’s

3 Inc., they are “in active concert or participation” with I.O.B.

4 Realty and Patsy’s Inc. insofar as the injunction involves the
5 use of the PATSY’S mark, see Fed. R. Civ. P. 65(d)(2)(C).
6 Furthermore, as the owner of the mark, I.O.B. Realty was

7 perfectly able to represent the other locations’ interests in

8 using the mark. As a result, it was not an abuse of discretion

9 to enter an injunction binding the Manhattan Patsy’s Pizzeria

10 locations.

11 Nor did the district court abuse its discretion by

12 enjoining the senior user. While doing so may be unusual, this

13 is not the typical case. As noted above, Patsy’s Pizzeria’s

14 counterclaim seeking cancellation of appellants’ registrations

15 necessarily required the consideration of a likelihood of

16 confusion between the marks in Manhattan. As a result, there

17 was substantial evidence in the record indicating “an exceeding
18 degree of consumer confusion,” Patsy’s Italian Rest. IV, 575 F.

19 Supp. 2d at 470, and the jury found that there was a likelihood

20 of confusion between Patsy’s Pizzeria’s marks and Patsy’s

21 Italian Restaurant’s ´836 and ´866 Registrations. Furthermore,

22 as noted, I.O.B. Realty can no longer protect its rights

23 against Patsy’s Italian Restaurant, see Patsy’s Brand III, 317

24 F.3d at 216-17; Patsy’s Italian Rest. IV, 575 F. Supp. 2d at

25 470, and thus I.O.B. Realty’s failure to enforce its rights

45
 1 contributed to the consumer confusion. Given these facts, we

2 do not believe that the district court erred by “evaluat[ing]

3 . . . the legitimate interests of the senior user, the junior
4 user, and the consuming public,” Am. Footwear Corp. v. Gen.
5 Footwear Co. Ltd., 609 F.2d 655, 664 (2d Cir. 1979) and

6 concluding that, in order to strike the proper balance of these

7 interests, the senior user must also be enjoined from using

8 solely the name PATSY’S.

9 CONCLUSION

10 For the foregoing reasons, we affirm.

11

12

13

46