World Trade Centers Association, Inc. v. The Port Authority of New York and New Jersey
Filing
222
MEMORANDUM OPINION AND ORDER: re: 162 CROSS MOTION for Summary Judgment and Opposition to Motion for Partial Summary Judgment filed by The Port Authority of New York and New Jersey, 146 MOTION for Partial Summary Judgment filed by World Trade Ce nters Association, Inc. For the foregoing reasons, the Court partially grants Defendant's motion for summary judgment. Plaintiff's complaint is dismissed in its entirety. Defendant is granted summary judgment on its counterclaims for non-in fringement (1st Counterclaim) and non-breach of the licensing agreements (2nd Counterclaim), and is granted summary judgment on its 3rd Counterclaim with respect to its right to use the WORLD TRADE CENTER or WTC trademarks affixed to goods in connect ion with the NYWTC without interference by Plaintiff. The Court denies Defendant's motion for summary judgment with respect to its counterclaims for cancelation of Plaintiff's federal service mark registration (4th Counterclaim); injunction against Plaintiff's pending intent to use trademark registration application (5th Counterclaim); and breachof the 1986 Assignment and the 2001 Letter by Plaintiff (6th Counterclaim), Defendant's motion is also denied as to the balance of i ts 3rd Counterclaim for a declaration of ownership of the WTC and WORLD TRADE CENTER trademark and its ownership of and right to use the service marks at the NYWTC without interference from WTCA. Plaintiff's motion for summary judgment is grante d in part. The portion of Defendant's 3rd Counterclaim that seeks a declaration that Defendant owns the WTC service marks and is free to use them without WTCA's interference dismissed. The portion of Defendant's 4th Counterclaim that s eeks the cancelation of Plaintiff's federal service mark on the basis that it provided a false date of first use to the PTO is also dismissed. Defendant's defense of sovereign immunity (9th Affirmative Defense) is stricken with respect to i ts federal law claims (Claims for Relief 1 and 2) and the 9th Affirmative Defense is also stricken insofar as it relates to Plaintiff's claim for a declaration (Claim for Relief 7) that the 1986 License and 2006 Agreement bind the Port Authority to refrain from using the relevant trademarks on goods without WTCA's permission. Defendant's 5th Affirmative Defense with is stricken insofar as it asserts that Plaintiff's state registrations are invalid and that its federal registr ations are invalid because they were procured by fraud regarding the date of their first use. Plaintiff's motion for summary judgment is denied insofar as it seeks judgment in Plaintiff's favor on its 6th Claim for Relief for breach of cont ract and dismissal of Defendant's counterclaims for non-breach of the license agreements (2nd Counterclaim), and an injunction against Plaintiff's pending trademark application (5th Counterclaim). Plaintiff's motion for summary judgmen t is also denied insofar as it seeks dismissal of the balance of Defendant's 3rd Counterclaim with respect to Defendant's ownership of the WTC trademarks and Defendant's right to use the WORLD TRADE CENTER or WTC trademarks in connecti on with the NYWTC without interference by Plaintiff, and insofar as it seeks dismissal of the aspect of Defendant's 4th Counterclaim that is based on Defendant's contention that Plaintiff fraudulently represented to the PTO that no party ha d a superior right to use the federal service mark. Plaintiff's motion for summary judgment is denied to the extent it seeks to strike Defendant's prior use defense (7th Affirmative Defense), its sovereign immunity defense with respect to s tate law claims for injunctive relief (9th Affirmative Defense), and its 5th Affirmative Defense insofar as that defense rests on the assertion that Plaintiff fraudulently represented to the PTO that no other party had a superior right to use the mar k. By separate order, Defendant will be directed to show cause as to why its 6th Counterclaim should not be dismissed and why the 3rd Counterclaim, to the extent that it seeks a declaration that the Port Authority owns the WORLD TRADE CENTER and WTC marks used on goods in connection with the NYWTC, should not be dismissed for lack of subject matter jurisdiction. The claims remaining for trial are: (1) Defendant's counterclaim for cancelation of Plaintiff's federal service mark registra tion as procured by fraud, to the extent that counterclaim rests on Defendant's contention that Plaintiff falsely affirmed that it was aware of no other entity with a superior right to use the mark (4th Counterclaim); and (2) Defendant's co unterclaim seeking an injunction against the prosecution of Plaintiff's federal trademark applications (5th Counterclaim). This case remains referred to Magistrate Judge Lehrburger for general pre-trial management. The parties are directed to m eet with Judge Lehrburger promptly to discuss settlement. The final pre-trial conference is scheduled for February 8, 2019 at 10:30 a.m. (Docket Entry No. 221.) The parties are directed to confer and make submissions in advance of the conference in accordance with the pre-trial scheduling order. (Docket Entry No. 43.) This Memorandum Opinion and Order resolves Docket Entry Nos. 146 and 162. SO ORDERED. (Signed by Judge Laura Taylor Swain on 12/18/2018) (ama)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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WORLD TRADE CENTERS
ASSOCIATION, INC.,
Plaintiff,
-v-
No. 15 CV 7411-LTS-RWL
THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY,
Defendant.
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MEMORANDUM OPINION AND ORDER
In this action concerning the rights to use WORLD TRADE CENTER and related
trade and service marks in connection with real estate, trade promotion, merchandising, and other
activities, World Trade Centers Association, Inc. (“Plaintiff” or “WTCA”) asserts claims against
the Port Authority of New York and New Jersey (“Defendant” or the “Port Authority”) for
trademark infringement (1st Claim for Relief) and unfair competition and false designation of
origin (2nd Claim for Relief) under the Lanham Act, New York common law trademark
infringement (3rd Claim for Relief), New York common law unfair competition (4th Claim for
Relief), and breach of contract (5th and 6th Claims for Relief), and seeks a declaration confirming
that Defendant is bound by two licensing agreements that restrict it from affixing the relevant
trademarks to goods without WTCA’s consent (7th Claim for Relief). (Am. Compl., Docket
Entry No. 134.) Defendant asserts counterclaims for a declaration that it has not infringed upon
the subject marks (1st Counterclaim), a declaration that it has not breached the relevant licensing
agreements (2nd Counterclaim), a declaration that it is the owner of the relevant service and
trademarks and has the right to use them without Plaintiff’s interference (3rd Counterclaim), the
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cancelation of Plaintiff’s federal service mark registration (4th Counterclaim), an order enjoining
Plaintiff from prosecuting several pending federal trademark registration applications (5th
Counterclaim), and breach of contract (6th Counterclaim). (Am. Counterclaims, Docket Entry
No. 133.)
Cross-motions for summary judgment are now before the Court. Defendant Port
Authority moves for summary judgment dismissing all of Plaintiff’s claims and granting
judgment in its favor on all counterclaims. (Docket Entry No. 162.) Plaintiff WTCA moves for
partial summary judgment, specifically: for judgment in Plaintiff’s favor on its breach of
contract claim concerning a 2006 licensing agreement (6th Claim for Relief); to dismiss, in part,
Defendant’s counterclaims seeking a declaration that Defendant has not breached licensing
agreements entered into in 1986 and 2006 (2nd Counterclaim), a declaration of ownership of
certain marks and the right to use them free of Plaintiff’s interference (3rd Counterclaim), and the
cancelation of WTCA’s federal service mark registrations (4th Counterclaim), and to dismiss, in
its entirety, Defendant’s counterclaim that seeks to enjoin WTCA’s currently pending federal
trademark applications (5th Counterclaim). Plaintiff also moves to strike three of Defendant’s
affirmative defenses – those asserting sovereign immunity (9th Affirmative Defense), the
invalidity of Plaintiff’s state and federal registrations as void ab initio or as fraudulently procured
(5th Affirmative Defense), and the propriety of the Port Authority’s concurrent use of the marks
based on its continuing use of such marks, which commenced prior to any WTCA use of the
marks (7th Affirmative Defense). (Docket Entry No. 146.)
The Court has jurisdiction of this action pursuant to 28 U.S.C. sections 1331,
1338, 1367 and 15 U.S.C. sections 1119 and 1121.
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The Court has considered the submissions of both parties carefully and, for the
following reasons, grants the motions for summary judgment of both parties in part and denies
them in part.
I. BACKGROUND1
The Port Authority is an agency administered jointly by the states of New York
and New Jersey charged with operating “aviation, rail, surface, transportation and seaport
facilities.” (Def. 56.1 ¶ 1.) The Port Authority also owns the World Trade Center (“WTC”) site
in Manhattan (“NYWTC”) and is supervising the site’s reconstruction following the previous
complex’s destruction as a result of the terrorist attacks of September 11, 2001. (Id. ¶¶ 1, 53.)
In 1961, the Port Authority’s predecessor published a report proposing the
development of a World Trade Center. (Id. ¶ 5.) The states of New York and New Jersey
enacted legislation in 1962 authorizing the construction of the NYWTC. (Id.¶ 7.) Plans for the
complex, including its iconic “twin towers,” were announced in January of 1964, and
construction commenced in 1966 and was completed in 1973. (Id. ¶¶ 10, 12-13.) The complex
contained 10 million square feet of office space and hosted 40,000 workers and 150,000 business
guests and tourists each day. (Id. ¶¶ 15, 17.)
NYWTC featured the “Top of the World” observation deck, which included two
gift shops. (Id. ¶ 27.) From 1995 until the complex’s destruction, the observation deck and gift
1
The facts recited herein are undisputed unless otherwise indicated. Facts recited
as undisputed are identified as such in the parties’ statements pursuant to
S.D.N.Y. Local Civil Rule 56.1 or drawn from evidence as to which there is no nonconclusory contrary factual proffer. Citations to the parties’ respective Local
Civil Rule 56.1 Statements (“Pl. 56.1 St.,” “Def. 56.1 St.,” “Pl. 56.1 Resp.,” “Def. 56.1
Resp.,” and “Def. 56.1 Reply”) incorporate by reference the parties’ citations to
underlying evidentiary submissions.
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shops were operated by Ogden Entertainment (“Ogden”) under a lease from the Port Authority.
(Id. ¶¶ 25, 27.) Pursuant to its lease, Ogden was only authorized to sell merchandise bearing the
WORLD TRADE CENTER or WTC legend or that of any other Port Authority property with the
Port Authority’s prior consent. (Def. 56.1 St. ¶ 31; see Pl. 56.1 Resp. ¶ 31.)
From at least 1975 through the destruction of the original complex, the gift shops
operated by the Port Authority and, later, Ogden, sold souvenirs bearing the WORLD TRADE
CENTER or WTC mark. (Hoffman Tr., Medzhibovsky Decl., Docket Entry No. 166, Ex. 9, at
26:15-24, 43:1-22, 44:19-46:11.) A teddy bear branded with the WTC name was recovered from
the wreckage of the NYWTC site following the September 1, 2001 attacks. (Drakakis Aff.,
Docket Entry No. 188, ¶¶ 5-7; Drakakis Aff., Ex. C, Docket Entry No. 188-3, at ECF pg. 5-6.)
According to the database of the 9/11 Memorial Museum, it had come from the observation deck
of the South Tower where Ogden operated a gift shop. (Drakakis Aff. ¶¶ 2-3, 5-7; Drakakis Aff.,
Ex. C, at ECF pg. 5-6.)
Beginning in 1968, Guy Tozzoli, then the director of the Port Authority’s World
Trade Department, received requests from other entities, also styled as World Trade Centers, that
were interested in creating a network consisting of like entities. (Def. 56.1 St. ¶¶ 11, 97-98.) To
help administer this network, the Port Authority incorporated WTCA on August 22, 1969, as a
Delaware non-profit corporation. (Id. ¶ 104; Pl. 56.1 St. ¶ 12.) Initially, WTCA operated out of
the Port Authority’s offices and used Port Authority staff, primarily Tozzoli and Thomas
Kearney, to carry out its operations. (Def. 56.1 St. ¶¶ 105-108.) Although WTCA received
some funding from the dues of its members, much of its expenses were borne by the Port
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Authority. (Id. ¶¶ 107-109; Pl. 56.1 Resp. ¶ 109.) In 1985, WTCA entered into a lease with the
Port Authority for office space in the WTC complex. (Def. 56.1 St. ¶ 111.)
By November 14, 1985, the Port Authority had obtained six New York State
service mark registrations for the term WORLD TRADE CENTER, covering: (1) “advising
businessman [sic] as to prospective customers and suppliers for products and services”; (2)
“[o]perating facilities for commodities trading; promotion of financial commerce exchange”; (3)
“[e]recting international trade facilities”; (4) telecommunications services; (5) “[c]ommuter rail
services”; and (6) “[r]estaurant services, conducting exhibitions, seminars and business
conferences; instructional services in international trade.” (Def. 56.1 St. ¶ 129.) The service
mark registrations for advising businessmen as to prospective customers and erecting
international trade facilities list their dates of first use as March 1961. (Docket Entry No. 149-4,
at ECF p. 2, 4.)
On February 18, 1986, after discussions concerning the transfer of marks to
WTCA for management and enforcement purposes, the Port Authority executed a Confirmatory
Assignment of its service marks in favor of WTCA (the “1986 Assignment”). (1986
Assignment, Docket Entry No. 149-15.) The Assignment recites that the Port Authority “has
adopted and used the service mark WORLD TRADE CENTER, for which it has obtained
Argentine Service Mark Registrations 927594 and 937721” and the six New York service mark
registrations, listed by registration number and the class of each activity covered. (Id. at 1.) The
Assignment then provides that:
PORT AUTHORITY has sold and does hereby sell, transfer and convey to
WTCA, its successors, assigns and legal representatives, the entire right, title and
interest in and to said service mark WORLD TRADE CENTER, said service
mark registrations and the good will of PORT AUTHORITY’s business in the
services in respect of which the mark is used, together with all rights to apply for,
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obtain and hold registrations of the same and renewals and extensions thereof, and
together with all right to bring suit for any past and future infringement of said
mark. PORT AUTHORITY reserves to itself the right and license to use said
service mark for the existing and future services.
(Id. at 2.)
Thereafter, on March 6, 1986, the Port Authority and WTCA executed a license
agreement (the “1986 License”), in which WTCA agreed to license its “Licensed Marks” to Port
Authority. (1986 License, Docket Entry No. 149-17, at 1-2.) The term “Licensed Marks” was
defined to cover the eight New York and Argentine service marks enumerated in the 1986
Assignment, as well as a “Map Design Logo” and associated “U.S. Service Mark Registration
No. 1,011,720, granted on May 27, 1985.”2 (Id. at 1) The 1986 License recites that WTCA,
referred to as the Licensor, is the owner of the WORLD TRADE CENTER service marks,
registrations and goodwill, as well as of the Map Design Logo and associated service mark
registration and goodwill. It defines the listed “service marks and registration[s]” as “the
‘Licensed Marks.’” The operative provision of the 1986 License grants the Port Authority a nonexclusive license to use the Licensed Marks for “the service of fostering world trade and for such
additional trade services as Licensor may from time to time approve in writing.” (Id. at 1, ¶ 1,
Ex. A ¶ 1.) The 1986 License also includes quality control and inspection provisions for use of
2
According to the United States Patent and Trademark Office’s Trademark Electronic
Search System (“TESS”), the “Map Design Logo” was actually registered on May 27,
1975 for “services-namely, fostering and promoting world trade and international
business relationships.” TESS, U.S. Service Mark Registration 1,011,720 (December 17,
2018, 10:25 a.m.),
http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4802:9nr4pz.4.1; see Food Mktg.
Merch., Inc. v. California Milk Processor Bd., No. 15 CV 1758 LAK, 2015 WL 3893508,
at *1 n.2 (S.D.N.Y. May 7, 2015) (taking judicial notice of the existence of multiple
trademarks based on the TESS database).
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the Licensed Marks, Licensor specifications for use of the marks, a covenant that the Licensed
Marks are WTCA’s property, and an integration clause stating that the License “embodies the
entire agreement and understanding” between the parties “with respect to the Licensed Marks.”
(Id. ¶ 9.) Defendant asserts that the 1986 License is a standard form membership-type agreement
that all WTCA members execute. (Def. 56.1 St. ¶ 153; see also Pl. 56.1 Resp. ¶ 153 (disputing
whether a standard agreement existed at the time the 1986 License was executed because the
Port Authority and the Washington, D.C., WTCA member were the first to execute such an
agreement).) Both the Port Authority and WTCA relied on Lee Robinson of Curtis, Morris &
Safford, P.C. (“Licensing Counsel”) for drafting and advice in connection with these agreements.
(Def. 56.1 St. ¶ 118.)
On September 24, 1986, WTCA filed an application with the United States Patent
and Trademark Office (“PTO”) for the registration of a “WORLD TRADE CENTER” service
mark for “association services,” “namely, fostering and promoting world trade and international
business relationships.” (Federal Service Mark Application, Docket Entry No. 149-22, at 1-2.)
The application claims a March 1961 date of first use of the mark. (Id. at 1.) The application
further states that the Port of New York Authority (now the Port Authority), which the
application characterizes as WTCA’s predecessor, made first use of the mark in interstate
commerce for the sale or advertising of services and that WTCA continues to use the mark for
services. (Id. at 2-3.) That application, which was signed by Tozzoli as WCTA’s president, also
represented that “to the best of [Tozzoli’s] knowledge and belief 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 may be likely, when applied to the services of such other
person, to cause confusion, or cause mistake, or to deceive; [and] that said mark has been used
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substantially exclusively and continuously by applicant for said services in interstate commerce
for at least the five years next proceeding [sic] the date of this application and has become
distinctive of applicant’s services in such commerce.” (Id. at 3-4.) The registration was granted
on February 12, 1996 as trademark number 1,469,489. (Federal Service Mark Registration,
Docket Entry No. 149-23.) At the time of the application, WTCA was aware of several WTCA
members that had used the World Trade Center name prior to WTCA’s incorporation, some as
early as 1963, including New Orleans, San Francisco, Boston, San Diego, and Houston. (Def.
56.1 St. ¶¶ 126, 164; Pl. 56.1 Resp. ¶ 164; see WTCA Board Minutes for January 26, 1970
Meeting, Ewing Reply Decl. in Supp. of Pl.’s Mot. for Partial Summ. J., Ex. 136, at
PANYNJ00333215-6 (demonstrating the WCTA membership of the aforementioned WTCs as of
the date of the meeting).) During the preparation of the application, Kearney noted that he felt
“uncomfortable” about applying for a federal service mark. (Def. 56.1 St. ¶ 124; see Pl. 56.1
Resp. ¶ 124.)
In 1987, Tozzoli retired from the Port Authority and became the first full-time
president of WTCA, an office in which he served until February 2012. (Pl. 56.1 St. ¶ 52.) Port
Authority employees continued to serve on WTCA’s board until 1996. (Id. ¶ 53; see Def. 56.1
Resp. ¶ 53.)
On July 24, 2001, the Port Authority executed a set of “net lease” transactions
whereby it leased 1, 2, 3, 4, and 5 World Trade Center to corresponding single-purpose entities
controlled by the Silverstein Group (“Silverstein”) and leased the complex’s mall to a singlepurpose entity controlled by Westfield America, Inc. (Def. 56.1 St. ¶¶ 47-50, 52.) Each singlepurpose entity, except the entity leasing 3 World Trade Center, signed a separate trademark
license with Plaintiff WTCA on July 24, 2001 (collectively, the “2001 Licenses”). (Pl. 56.1 St. ¶
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93.) Concurrently with this transaction WTCA sub-leased office space from the Port Authority
and both parties executed a letter (the “2001 Letter”) which confirmed the Port Authority’s rights
under the 1986 Assignment to use the WORLD TRADE CENTER or WTC service marks
royalty free and sublicense them as contemplated by the assignment. (Def. 56.1 St. ¶¶ 197-198.)
Both parties agree that this letter constituted a binding agreement. (Id.)
Following the catastrophic attacks of September 11, 2001, the entire NYWTC
complex was destroyed. (Def. 56.1 St. ¶ 53.) As part of the redevelopment effort for the site, the
Port Authority determined that Silverstein would reconstruct and retain the net leases on future
Towers 2, 3, and 4 through its existing single-purpose entities. (Id. ¶ 59.) The Port Authority,
however, acquired One World Trade Center LLC (“1 WTC LLC”), the single-purpose entity
holding the net lease for the future One World Trade Center tower, from Silverstein. (Id.) Upon
its acquisition of 1 WTC LLC, the Port Authority became the sole managing member of that
entity.
On November 16, 2006, WTCA, as “Licensor,” entered into an Amended and
Restated Trademark License Agreement (the “2006 Agreement,” Docket Entry No. 149-56) with
1 WTC LLC, “a limited liability company having an office and place of business c/o the Port
Authority,” as “Licensee.” The Agreement recited the 2001 original leasing arrangement
between the Port Authority and 1 WTC LLC, the entities’ entry in to an amended and restated
lease following the destruction of the original towers, and that “Licensee desires to license from
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Licensor and Licensor desires to license to Licensee the right to use certain Marks (as herein
defined) owned by Licensor in connection with the operation of the Premises, on certain terms
and conditions more specifically set forth herein.” The 2006 Agreement defined “Marks” as the
“terms and/or designations (including word marks, logo marks, and names, as appropriate)
‘WORLD TRADE CENTER’, ‘WTC’, and the Map Design Logo,” and granted a non-exclusive
license to 1 WTC LLC for use of the Marks, subject to several restrictions, including a
requirement for Licensor approval of any changes in the form of use of the marks, and
prohibitions on combining the licensed marks with other terms (co-branding) or affixing the
marks to goods without Plaintiff’s permission. (Id. §§ (I)(A)(11), (II)(B), (II)(B)(2); (II)(B)(5).)
The agreement contained the following signature block for 1 WTC LLC, which was signed by
Michael B. Francois:
Licensee:
1 WORLD TRADE CENTER LLC
By:
The Port Authority of New York and New Jersey
By:
[Original Signed by Michael B. Francois]
Name: Michael B. Francois
Its:
Director of Development
(Id. at WTCA_0001125.) The 2006 Agreement contained no space for the Port Authority to sign
in its own name. The 2006 Agreement contains separate definitions for the terms “Licensee,”
which refers to 1 WTC LLC, and “Port Authority.” (Id. §§ (I)(A)(9), (17).)
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The Port Authority, along with its outside counsel, DLA Piper, LLP, negotiated
the 2006 Agreement on 1 WTC LLC’s behalf. (Pl. 56.1 St. ¶ 105; see Def. 56.1 Resp. ¶ 105
(disputing the extent of Defendant’s involvement in negotiations).)
In 2011 and 2012, WTCA filed several intent to use trademark applications with
the PTO, seeking trademark registration of both WORLD TRADE CENTER and WTC for use in
connection with the sale of a wide variety of goods including, but not limited to, clothing, books,
postcards, bags, purses, and architectural models. (Def. 56.1 St. ¶¶ 304-307, 311.)
In May 2011, 1 WTC LLC assigned its net lease and its intellectual property
rights under the 2006 Agreement to WTC Tower 1 LLC, in anticipation of the formation of a
joint venture by the Port Authority and the Durst Organization (“Durst”), which would own and
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manage that new single-purpose entity.3 (Def. 56.1 St. ¶ 72; Def. 56.1 Resp. ¶ 117; see Pl. 56.1
Resp. ¶ 72.)
In 2013, WTC Tower 1 LLC contracted with Legends Hospitality LLC
(“Legends”) to lease and operate the observation deck at the rebuilt One World Trade Center.
(Def. 56.1 St. ¶ 87; see Def. 56.1 St. ¶ 87.)
3
4
Membership and control of WTC Tower 1 LLC was transferred from Port Authority to
the joint venture in June 2011. (Def. 56.1 ¶¶ 73-75.) Durst manages the day to day
affairs of the Joint Venture, but “Major Decisions” under the Joint Venture agreement
require unanimous approval by the Port Authority entity Joint Venture member and the
Durst entity Joint Venture member. (Def. 56.1 ¶ 75.)
It appears, based on the parties’ evidentiary proffers, that WTC Tower 1 LLC had already
assumed the 2006 Agreement from 1 WTC LLC at this point. (See Pl.’s 56.1 St. ¶ 117.)
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In October 2014, Legends announced its observation deck logo, which included a
combination of the terms “One World Observatory” and “One World Trade Center.” (Def. 56.1
St. ¶¶ 88-89.) The observation deck, where visitors can purchase souvenirs bearing the term
“One World Trade Center” and the name of the observatory, opened in May 2015. (Id. ¶ 90; see
Pl. 56.1 Resp. ¶ 90.) It is undisputed that WTCA did not grant permission for these activities as
purportedly required under the 1986 License and 2006 Agreement. (Pl. 56.1 St. ¶ 149.)
In the context of discovery for this action, the Port Authority produced documents
in its possession from 1 WTC LLC and WTC Tower 1 LLC and produced a Port Authority
employee to appear as a Federal Rule of Civil Procedure 30(b)(6) (“Rule 30(b)(6)”) witness
“regarding 1 [WTC] LLC and WTC Tower 1 LLC.” (Pl. 56.1 St. ¶¶ 159-160; but see Def. 56.1
Resp. ¶¶ 159-160 (noting that Rule 30(b)(6) notice was only served on the Port Authority, not on
either single-purpose entity, and admitting that that it produced documents related to the singlepurpose entities in its possession); Ewing Decl. Docket Entry No. 149, ¶ 78.)
II. DISCUSSION
A. Sovereign Immunity (9th Affirmative Defense)
While each party makes extensive arguments as to why it is entitled to summary
judgment on the merits of the various claims, the Court must first consider the Port Authority’s
contention that the Court lacks jurisdiction, due to sovereign immunity, to consider WTCA’s
claims for injunctive relief and specific performance. In the Amended Complaint, WTCA pleads
its entitlement to injunctive relief barring, inter alia, the Port Authority’s use of the disputed
marks in connection with the sale of goods, the use of such marks for any goods or services
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outside the scope of the relevant license agreements, and barring the Port Authority and all acting
in concert with it from taking or continuing “actions inconsistent with WCTA’s sole and
exclusive ownership of the WORLD TRADE CENTER, WTC, WORLD TRADE CENTERS
ASSOCIATION and WTCA marks.” (Am. Compl. at 14-15.) WTCA further seeks injunctive
relief barring the Port Authority, its affiliates, and those acting in concert with it “from breaching
the 1986 or 2006 Licensing Agreements and directing them to specifically perform their
obligations under such contracts,” in addition to a declaration that the Port Authority is bound by
the restrictions contained in those agreements that prohibit the use of the WORLD TRADE
CENTER and WTC trademarks on goods without WTCA’s consent. (Id. at 14-15, ¶ 54.)
Defendant Port Authority contends that Plaintiff’s injunctive relief and specific
performance claims against it are barred by the doctrine of sovereign immunity. A court lacks
subject matter jurisdiction to hear an action against a sovereign or its instrumentalities unless the
sovereign has waived its immunity with respect to the claim at issue. C.H. Sanders Co. v. BHAP
Housing Dev. Fund Co., 903 F.2d 114, 117 (2d Cir. 1990). “[A] waiver of the Government’s
sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign.”
Lane v. Pena, 518 U.S. 187, 192 (1996).
Defendant argues that the laws of New York, which in conjunction with a
complementary New Jersey statute, govern suits against the Port Authority, do not provide a
waiver of sovereign immunity for actions seeking injunctive relief and specific performance.5
N.Y. Unconsol. Law §§ 7101 et seq. (McKinney); see also N.J. Stat. Ann. §§ 32:1-157 et seq.
Under these statutes, New York and New Jersey have consented to permit all “suits, actions or
5
Plaintiff does not seek damages, which would be barred unless Plaintiff timely filed a
notice of claim with the Port Authority. N.Y. Unconsol. Law § 7107 (McKinney).
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proceedings of any form or nature at law, in equity, or otherwise” against the Port Authority,
except as specifically prohibited by the statute. N.Y. Unconsol. Law §§ 7101 (McKinney)
(“Section 7101”); see also N.J. Stat. Ann. §§ 32:1-157. Excepted from this waiver of sovereign
immunity are “suits, actions or proceedings for judgments, orders or decrees restraining,
enjoining or preventing the Port Authority from committing or continuing any acts” unless such
measures are commenced by the attorney general of New York or New Jersey. N.Y. Unconsol.
Law § 7105 (McKinney) (“Section 7105”); see also Caceres v. Port Auth., 631 F.3d 620, 624 (2d
Cir. 2011) (finding that the aforementioned state statutes constitute waivers of sovereign
immunity and are, therefore, jurisdictional.).
Pursuant to the Eleventh Amendment to the Constitution of the United States,
states and their agencies are generally shielded from suits that have been brought in federal court
without their consent. See Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30, 39 (1994).
However, in Hess v. Port Authority Trans-Hudson Corp., the Supreme Court held that the Port
Authority, a financially self-sustaining entity created by the United States, New York, and New
Jersey pursuant to the Compacts Clause of the Constitution, was not protected by Eleventh
Amendment immunity against a Federal Employers’ Liability Act claim for damages brought
outside the one-year period provided for in the relevant state statutes, because a judgment on that
claim would not contravene the purposes of the Eleventh Amendment by drawing on the treasury
or offending the sovereign dignity of either state. Id., 513 U.S at 47-53. Hess is binding on this
Court, and thus requires rejection of the 9th Affirmative Defense to the extent Plaintiff’s claims
arise under the federal Lanham Act. WTCA’s Lanham Act Claims against the Port Authority are
not barred by the Eleventh Amendment.
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As to WTCA’s state law claims, however, “Federal courts apply the general rule
that state [sovereign immunity] statutes apply to state law claims.” Kyne v. Carl Beiber Bus.
Servs., 147 F. Supp. 2d 215, 217 (S.D.N.Y. 2001); see also Caceres, 631 F.3d at 625 (Although
the Supreme Court’s Hess decision precludes the Port Authority’s sovereign immunity defense
against federal claims, its “holding does not bear upon the validity of conditions for waiving
sovereign immunity over claims arising under state law.”). Because Section 7105 explicitly
prohibits, except in narrow circumstances not pertinent here, suits seeking to enjoin the Port
Authority, Plaintiff’s state law claims (3rd through 6th Claims for Relief) are barred to the extent
they seek such relief. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (“A
plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the
evidence that it exists.”).
Plaintiff contends that Section 7105’s exception to the waiver of sovereign
immunity, prohibiting suit against the Port Authority for injunctive relief, does not extend to
specific performance of a contract or agreement, a remedy that Plaintiff argues is subject to
different standards than a permanent or preliminary injunction. Courts, however, have classified
specific performance as an injunctive remedy, and this Court is bound to strictly construe any
waiver of sovereign immunity in favor of the Port Authority.6 See Petrello v. White, 533 F.3d
110, 114-15 (2d Cir. 2008) (“[W]e have little doubt that if a given specific-performance order is
injunctive in character, it would be” appealable to the same extent as an injunction.); see also
Lane, 518 U.S. at 192 (“[A] waiver of the Government’s sovereign immunity will be strictly
6
Plaintiff also argues that the Port Authority consented to suit through its execution of the
2006 License but, as explained below, Defendant was not party to that agreement and it
therefore cannot provide the basis for a finding of a contractual waiver of sovereign
immunity.
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construed, in terms of its scope, in favor of the sovereign.”). The Court therefore construes
Section 7105 as barring private entity actions for specific performance. Furthermore, the plain
language of Section 7105 prohibits courts from entering orders that “prevent[] the port authority
from committing or continuing any acts.” This restriction would preclude an order of specific
performance to remedy breach of a contract.
Plaintiff contends that its 7th Claim for Relief, which seeks a declaration that the
Port Authority is bound by the 1986 License and 2006 Agreement and that it is consequently
barred from selling goods bearing the WTC or WORLD TRADE CENTER MARK without
WTCA’s permission, is not precluded by sovereign immunity.7 Although waivers of sovereign
immunity must be construed narrowly, Section 7101 provides an unambiguously broad waiver of
sovereign immunity for all claims against the Port Authority except for those specifically
reserved by statute. Because no party has identified, and the Court’s own research has not
disclosed, any statutory provision that can be construed to prohibit a suit for declaratory relief
against the Port Authority, the Court has jurisdiction of Plaintiff’s state law claim (7th Claim for
Relief) seeking declaratory relief.8
Accordingly, the Court dismisses all of Plaintiff’s claims brought under state law
(3rd through 6th Claims for Relief) except the declaratory judgment claim (7th Claim for Relief),
denies Plaintiff’s motion for summary judgment on Plaintiff’s 6th Claim for Relief for breach of
contract and Plaintiff’s motion to strike Defendant’s 9th Affirmative Defense as to claims brought
7
8
This Claim for Relief appears to be grounded in state contract law.
Plaintiff contends that because it may seek declaratory relief on its state law claims, it
may also seek injunctive relief to enforce any such declarations. Section 7105 would,
however, prohibit any such injunction. Thus the Court has no subject matter jurisdiction
to entertain any injunctive aspect of Plaintiff’s 7th Claim for Relief.
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under state law, grants Plaintiff’s motion for summary judgment striking the Port Authority’s 9th
Affirmative Defense with respect to Plaintiff’s federal law claims (1st and 2nd Claims for Relief)
and, denies Defendant’s jurisdictional motion for summary judgment dismissing Plaintiff’s cause
of action for a declaration that the Port Authority is bound be the restrictions contained in the
1986 License and 2006 Agreement (7th Claim for Relief).
B. Merits
1. Summary Judgment Standard
The pending motions are brought pursuant to Rule 56(a) of the Federal Rules of
Civil Procedure. Under Rule 56(a), summary judgment is appropriate when the “movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” The moving party bears the burden of demonstrating the absence of material
issues of fact, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986), and the court
must be able to find that, “after drawing all reasonable inferences in favor of a non-movant, no
reasonable trier of fact could find in favor of that party.” Marvel Entertainment, Inc. v. Kellytoy
(USA), Inc., 769 F. Supp. 2d 520, 523 (S.D.N.Y.2011) (quoting Heublein v. United States, 996
F.2d 1455, 1461 (2d Cir. 1993) (internal quotation marks omitted). A fact is considered material
“if it might affect the outcome of the suit under the governing law,” and an issue of fact is
“genuine” where “the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Holtz v. Rockefeller & Co. Inc., 258 F.3d 62, 69 (2d Cir. 2001) (internal
quotation marks and citations omitted). “[M]ere conclusory allegations or denials . . . cannot by
themselves create a genuine issue of material fact where none would otherwise exist.” Hicks v.
Baines, 593 F.3d 159, 166 (2d Cir. 2010) (quoting Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d
Cir. 1995)) (internal quotation marks and citations omitted). When considering cross-motions
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for summary judgment, “the court must evaluate each party's motion on its own merits, taking
care in each instance to draw all reasonable inferences against the party whose motion is under
consideration.” Schwabenbauer v. Board of Educ. of City School Dist. of City of Olean, 667
F.2d 305, 314 (2d Cir. 1981).
2. Trademark Infringement and Breach of the Governing Contracts (1st, 2nd, and 7th Claims
for Relief and 1st and 2nd Counterclaims)
Plaintiff WCTA asserts in its 1st and 2nd Claims for Relief that the Port
Authority’s use of the WORLD TRADE CENTER and WTC marks infringes upon WTCA’s
ownership rights in those marks, and represents a breach of the contracts purportedly governing
use of those marks. The Port Authority’s 1st Counterclaim seeks a declaration that WTCA lacks
sufficient rights in the WORLD TRADE CENTER and WTC marks to “permit [WTCA] to
interfere with the Port Authority’s use of the Marks in connection with goods or services offered
at or in connection with the World Trade Center site,” contending that the WTCA has abandoned
the rights it claims, that the Port Authority’s use is consistent with its reserved rights, and,
alternatively, that Port Authority’s use is “fair use” under the Lanham Act. In its 2nd
Counterclaim, the Port Authority asserts that it has reserved the relevant rights and complied
with any applicable licenses or agreements, and that WTCA’s licenses are invalid and/or
unenforceable against the Port Authority. On the instant motion practice, the Port Authority
seeks summary judgment dismissing Plaintiff’s 1st, 2nd, and 7th Claims for Relief, as well as
summary judgment in its own favor on the 1st and 2nd Counterclaims. The WCTA seeks
dismissal of the Port Authority’s 2nd Counterclaim.
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To succeed on a claim of trademark infringement or unfair competition9 and false
designation of origin under the Lanham Act, a plaintiff must establish that it possesses “a valid
mark that is entitled to protection and that the defendant’s actions are likely to cause confusion
with the plaintiff’s mark.” Gameologist Group, LLC v. Sci. Games Int’l, Inc., 838 F. Supp. 2d
141, 152 (S.D.N.Y. 2011), aff’d, 508 F. App’x 31 (2d Cir. 2013).
Plaintiff contends that it acquired all relevant WTC and WORLD TRADE
CENTER-related service and trademarks through the 1986 Assignment and that the Port
Authority has breached the 1986 License and 2006 Agreement, which purportedly govern the
Port Authority’s use of the marks, and thus has infringed WCTA’s intellectual property rights by
combining, or authorizing Legends to combine, the term “World Trade Center” with “One World
Observatory” in a logo and by sublicensing the WTC marks for use on merchandise without
Plaintiff’s consent. (Am. Compl. ¶ 27; Pl.’s Mem of Law in Supp. of Mot. for Partial Summ. J.,
Docket Entry No. 147, at 24-25.) Defendant principally contends that it assigned only the
specified service marks, rather than rights in trademarks for use in connection with sales of
goods, under the 1986 Assignment, and thus is not restricted by the 1986 License in its
trademark use of the terms WORLD TRADE CENTER and WTC. The Port Authority further
asserts that it is not party to the 2006 Agreement, which by its terms prohibits WTCA’s
counterparties from authorizing the use of the WORLD TRADE CENTER or WTC marks on
goods or the combination of the marks with other marks to designate goods or services.
9
An unfair competition claim under New York law includes the additional element of bad
faith. See Rockland Exposition, Inc. v. Alliance of Auto. Serv. Providers, 894 F. Supp.
2d 288, 325-26 (S.D.N.Y. 2012).
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As noted above, Plaintiff claims that it acquired ownership of all WORLD
TRADE CENTER and WTC marks for trademark purposes under the 1986 Assignment, which is
also the only evidence in the record of a purported transfer of rights (as opposed to grants of
licenses) in either mark.10
a. 1986 Assignment
There is no dispute that the 1986 Assignment conveyed rights from the Port
Authority to WCTA. The first issue for examination on this motion practice is the nature and
scope of the rights that were conveyed. When “contractual language is ambiguous and subject to
varying reasonable interpretations, intent becomes an issue of fact and summary judgment is
inappropriate.” Thompson v. Gjivoje, 896 F.2d 716, 721 (2d Cir. 1990) (citation omitted).
Where, however, the language is unambiguous, the district court may construe it as a matter of
law and grant summary judgment accordingly. Id.; Krumme v. WestPoint Stevens Inc., 238 F.3d
133, 138 (2d Cir. 2000) (“[T]he threshold question in a dispute over the meaning of a contract is
whether the contract terms are ambiguous.”). “[I]f an agreement is ‘complete, clear and
unambiguous on its face [, it] must be enforced according to the plain meaning of its terms.’”
Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177-78 (2d
Cir. 2004) (citation omitted) (second alteration in original).
As a threshold matter, Defendant has produced uncontroverted evidence that it
has used or licensed (to Ogden and, after the post-9/11 reconstruction, Legends) WORLD
TRADE CENTER and WTC as a trademark for goods sold at the NYWTC gift shop since at
10
No document in the record explicitly purports to transfer any rights in the mark “WTC”
and there is no proffer of testimony concerning an explicit oral transfer of such rights,
although Plaintiff argues that ownership of the WORLD TRADE CENTER mark carries
with it ownership of the short form composed of the initials of the component words.
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least 1975. As Plaintiff has produced no evidence that it, rather than the Port Authority, used the
trademark in commerce first, any rights in the trademark originate with Defendant, at least with
respect to such use for goods sold at or in connection with the NYWTC. See Blue Planet
Software, Inc. v. Games Int’l, LLC, 334 F. Supp. 2d 425, 436-37 (S.D.N.Y. 2004) (stating that
common law trademark rights attach based on a mark’s first use in commerce) and cases cited
therein.
Here, the assignment purports to transfer title “in and to said service mark
WORLD TRADE CENTER, said service mark registrations, and the good will of PORT
AUTHORITY’s business in the services in respect of which the mark is used.” (1986
Assignment (emphasis added).) An introductory recital states that Defendant “has adopted and
used the service mark WORLD TRADE CENTER, for which it has obtained” two Argentine and
six New York service mark registrations for various services. (Id.) Although it was entered into
at a time when Defendant was already selling or licensing sales of trademarked merchandise, the
agreement unambiguously provides for the transfer of Defendant’s intellectual property in
connection with services only. The assignment repeatedly employs the term “service mark” and
specifically purports to transfer Defendant’s goodwill only with respect to the services in
connection with which the mark is used. Furthermore, the assigning clause uses the phrase “said
service mark,” the antecedent of which is clearly the previously referenced “service mark
WORLD TRADE CENTER, for which [the Port Authority] ha[d] obtained” the Argentine and
New York State service mark registrations enumerated in the recitals that open the agreement.
The assignment contains no language from which the Court could rationally infer that the parties
intended to transfer any other rights, including those in trademarks affixed to goods.
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Plaintiff nonetheless contends that the 1986 Assignment divested the Port
Authority of any trademark rights in the WORLD TRADE CENTER mark, arguing that the
terms service mark and trademark are synonymous and congruent under the Lanham Act. See
e.g. Dranoff-Perlstein Assocs. v. Sklar, 967 F.2d 852, 855 (3d Cir. 1992); see also 15 U.S.C. §
1053 (“service marks shall be registrable, in the same manner and with the same effect as are
trademarks”). Whatever the legal similarities between the two species of marks, the use of the
term “service mark,” particularly when used in reference to the provision of specific services, is
not broad enough to suggest that the parties intended to refer to trademarks affixed to goods. See
1 Gilson on Trademarks § 1.02[2] (quoting 15 U.S.C. § 1127) (stating that, although “service
marks are frequently referred to as trademarks,” a mark used as both a trademark and service
mark should be referred to simply as a “mark,” which term by statute includes any “trademark,
service mark, collective mark, or certification mark.”) (internal quotation marks omitted).
Plaintiff further argues that an “assignment” must by definition convey all
conceivable rights and title in a mark, making the service mark/trademark distinction irrelevant.
In support of this proposition, Plaintiff cites Fed. Treasury Enter. Sojuzplodoimport v. SPI
Spirits Ltd., 726 F. 3d 62, 75 (2d Cir. 2013) (“[A]n assignment is an outright sale of all rights in
that mark.”) (alterations, quotation marks, and citations omitted). That case did not, however,
concern the question of whether the assignment of rights in a service mark necessarily carries
with it the assignment of parallel trademark rights. Rather, the court in SPI Spirits was
concerned with the construction of the term “assign” as used in a provision of the Lanham Act
that authorizes a trademark registrant or assign to bring an action to enforce the trademark.
Finding that the putative grantor in that case had retained title, the right to rescind the trademark,
and the right to license it and to exclude others from the mark, the court found that “too many
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rights remain[ed] with the [grantor] for it to be deemed to have ‘assigned’ the Marks to” the
plaintiff within the meaning of the statutory standing provision. Id. at 76-77. Plaintiff has not
identified any authority that precludes a party from assigning ownership only of particular
elements of its intellectual property.
Plaintiff argues that the execution of the 1986 License supports a conclusion that
the parties entered into a larger transaction in which the Port Authority granted WTCA broad
ownership of all aspects of the WORLD TRADE CENTER and WTC marks, through the 1986
Assignment, and WTCA then licensed back certain rights. To the extent Plaintiff requests that
the Court interpret the 1986 Assignment in tandem with the 1986 License based on the
proposition that an assignment and contemporaneous license constitute a single transaction, the
Court declines to do so. Under New York law, documents “executed at the same time, by the
same parties, for the same purpose, and in the course of the same transaction” should be read
together. Carvel Corp. v. Diversified Management Group, Inc., 930 F.2d 228, 233 (2d Cir.
1991); see also Visa U.S.A., Inc. v. Birmingham Trust Nat’l Bank, 696 F.2d 1371, 1376-77 (Fed.
Cir. 1982) (finding that an assignment and simultaneous license-back arrangement constituted a
unitary transaction). The 1986 Agreement and the 1986 License do not meet these criteria. The
fact that these documents were executed about two weeks apart, rather than at the same time, the
inclusion of an integration clause in the 1986 License, and the lack of any cross-references
between the two documents foreclose any reasonable inference that the parties intended the
license and assignment to be read in conjunction with one another as the documentation of a
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unitary transaction.11 12 See In re Gulf Oil/Cities Service Tender Offer Lit., 725 F. Supp. 712,
731 (S.D.N.Y. 1989) (finding that a set of contracts was composed of distinct agreements based
on, inter alia, the inclusion of an integration clause in each document); cf. Liberty USA Corp. v.
Buyer's Choice Ins. Agency LLC., 386 F. Supp. 2d 421, 426 (S.D.N.Y. 2005) (finding that the
parties intended that an asset purchase agreement and promissory note were to be read as a single
agreement where both documents were executed on the same day, one agreement incorporated
the other by reference, and failure to make payments under the note constituted a breach of the
purchase agreement.); see also Maximilian Coreth, Olivia Bam v. Barclays Capital Inc.(In re
Barclays Capital Inc.), 479 B.R. 268, 279 (S.D.N.Y. 2012), aff’d, 513 F. App’x 75 (2d Cir. 2013)
(finding no ambiguity as to whether the parties intended that two documents be read separately
when they were executed on different dates, did not refer to one another, and addressed
employment terms in two different time periods, despite no one factor being dispositive).
Therefore, as a matter of law, the 1986 Assignment did not function to assign
Defendant’s rights in the WORLD TRADE CENTER or WTC trademarks as they pertain to
11
12
Even if the Court were to consider the 1986 License to inform its interpretation of the
1986 Assignment, no ambiguity would be introduced. The license agreement grants
rights to use the “Licensed Marks,” a term explicitly defined as the six New York and
two Argentine service marks and the one federal service mark and logo, and thus cannot
reasonably be interpreted to encompass trademarks. (1986 License Agreement at pg. 1.)
Plaintiff also argues that, as a party to the 1986 License, Defendant is barred from
challenging the ownership and validity of the marks it licensed from Plaintiff under the
doctrine of licensee estoppel. See The Martha Graham Sch. & Dance Found, Inc. v.
Martha Graham Center of Contemporary Dance, Inc., 153 F. Supp. 2d 512, 520
(S.D.N.Y. 2001), aff’d, 43 F. App’x 408 (2d Cir. 2002). Because the 1986 License
unambiguously pertains only to the enumerated service marks as defined in that
document, the doctrine of licensee estoppel does not equitably bar Defendant from
challenging Plaintiff’s rights in marks that are not within the scope of the license.
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goods to WTCA and, thus, no further licensing agreement could empower WTCA to restrict the
Port Authority’s use on goods of a trademark that WTCA did not own.
b. 1986 License
WTCA asserts that the Port Authority breached the 1986 License when, without
WTCA’s consent, it began using the WORLD TRADE CENTER or WTC marks on merchandise
for purposes other than “fostering world trade and . . . such additional trade services” and by
using such trademarks on a “global basis outside the U.S. in connection with merchandise,”
outside the geographical scope contemplated by the 1986 License. (1986 License ¶ 1, Ex. A ¶ 1;
Am. Compl. ¶¶ 28-29.) The Port Authority does not dispute that it is bound by the 1986
License. However, the agreement only addresses licensing to the Port Authority of “Licensed
Marks,” which are specifically defined as the six New York- and two Argentina-registered
service marks in addition to the federal Map Design Logo and service mark. Because the 1986
License is not susceptible to any reasonable interpretation that would encompass any trademarks
and, as previously explained, the 1986 Assignment did not convey any trademark ownership
rights, the Port Authority’s use of the WORLD TRADE CENTER or WTC legend on
merchandise as a trademark could not constitute a breach of the 1986 License. Furthermore,
Plaintiff has advanced no argument as to how the use of the trademarks on merchandise is
inconsistent with “fostering world trade” nor identified any provision of the license that imposes
a geographical scope on the Port Authority’s exploitation of even the Licensed Marks. (1986
License Ex. A ¶ 1.)
Accordingly, the Court grants summary judgment in Defendant’s favor on its 2nd
Counterclaim to the extent the Port Authority seeks a declaration that it is not in breach of the
1986 License, and dismisses WTCA’s 7th Claim for Relief to the extent it seeks a declaration that
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the Port Authority is bound by the 1986 License to refrain from affixing the relevant trademarks
to goods without WTCA’s approval.
c. 2006 Agreement
Plaintiff asserts that the 2006 Agreement prohibits Defendant from affixing the
WTC or WORLD TRADE CENTER marks to goods for sale, sublicensing these marks, or
combining them with other terms without WTCA’s consent. WTCA contends that the Port
Authority breached these provisions of the 2006 Agreement by authorizing Legends to co-brand
the WORLD TRADE CENTER and WTC service marks with other logos without Plaintiff’s
consent and authorizing Legends to affix the marks to merchandise offered for sale. Defendant
denies that it is bound by the 2006 Agreement, and reiterates its argument that, to the extent the
2006 Agreement purports to govern the use of trademarks on goods, the Port Authority never
transferred any ownership rights of such trademarks to WTCA and thus WTCA has no legal
right to restrict the use of such marks.
As previously explained, neither the 1986 Assignment nor any other instrument
that has been identified in this action effected the transfer to WTCA of the Port Authority’s
rights to affix any trademarks to goods. Thus, even if the Port Authority were bound by the 2006
Agreement, the Agreement would be inoperative to restrict the Port Authority’s use of
trademarks that the Port Authority, rather than WTCA, owned. The Court still must, however,
examine whether the 2006 Agreement restricted the Port Authority’s ability to sublicense the
WORLD TRADE CENTER and WTC service marks to Legends and authorize Legends to
combine them with other marks.
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Defendant asserts that only its subsidiary single-purpose entity, 1 WTC LLC, and
later 1 WTC LLC’s assignee and successor WTC Tower 1 LLC, are bound by the 2006
Agreement, pointing out that 1 WTC LLC and WTCA are the only named parties to the 2006
Agreement and that the Port Authority, which was the managing member of the special purpose
entities, only signed the agreement in its capacity as representative of 1 WTC LLC. Plaintiff
nonetheless argues that the Port Authority is bound by the agreement, citing New York law for
the proposition that a parent corporation may be bound to a subsidiary’s agreement if the parent
demonstrated an intent to be bound by the agreement or if the subsidiary is a dummy corporation
or alter ego of the parent. See MBIA Ins. Corp. v. Royal Bank of Canada, 706 F. Supp. 2d 380,
396-98 (S.D.N.Y. 2009). Plaintiff contends that Defendant evidenced its intent to be bound by
the 2006 Agreement through: (1) its actual execution of the agreement; (2) its allegedly extensive
involvement in the negotiation of the agreement; (3) its assumption of the contract through its
subsequent conduct; and, alternatively, (4) because 1 WTC LLC and WTC Tower 1 LLC were
dummy corporations or alter egos of the Port Authority.
The signature pages of the 2006 Agreement provide no support for the proposition
that the Port Authority intended to be bound to that contract. The identification on the signature
page of 1 WTC LLC as licensor, followed by the phrase “by [the Port Authority],”and then “by”
Francois, the Port Authority’s Director of Development and accompanied by his signature,
clearly evidences that the Port Authority executed the document in its representative capacity as
1 WTC LLC’s sole member and managing member. See eBC, Inc. v. Map Techs., LLC, No. 09
CV 10357 CS, 2011 WL 12847702, at *4-5 (S.D.N.Y. May 17, 2011). Furthermore, the 2006
Agreement explicitly defines the licensee as 1 WTC LLC and includes a separate definition for
Defendant as “[t]he Port Authority of New York and New Jersey.” (2006 Agreement §§
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(I)(A)(9), (17).) Accordingly, the Court finds that Defendant has demonstrated that no
reasonable jury could conclude that Defendant executed the 2006 Agreement on its own behalf.13
Plaintiff next points to evidence that Defendant’s agents, including its outside
counsel, negotiated the 2006 Agreement, which Plaintiff contends constitutes evidence that
Defendant intended to be bound by the agreement. Although the parties disagree on the extent of
Defendant’s involvement in negotiations, the Port Authority’s actions in connection with such
negotiations, through its employees and agents, is insufficient, without more, to enable a
reasonable jury to infer that the Port Authority intended to be bound by the agreement to the
same extent as the single-purpose subsidiary for which the Port Authority acted.
acts, it must by necessity
do so through the manager entity, which as a non-corporeal entity must itself act through its
human agents. N.Y. Limited Liability Company Law §§ 102(p), (q), (w) (stating that a person,
which by definition includes various corporate entities, may be a member or manager of an
LLC); cf. Capricorn Inv’rs III, L.P. v. Coolbrands Int’l, Inc., 897 N.Y.S.2d 668, 24 Misc. 3d
1224(A), at *6, (Sup. Ct.), aff’d, 886 N.Y.S.2d 158 (App. Div. 2009) (stating that, in conducting
an alter ego analysis, an LLC’s limitation of liability should not be pierced for the lack of its own
officers or staff or the failure to abide corporate formalities not required by the operating
agreement); see also Kirschner v. KPMG LLP, 15 N.Y.3d 446, 465 (2010) (Because corporate
principals “are not natural persons[,] . . . they must act solely through the instrumentality of their
13
Plaintiff attempts to distinguish eBC from the present case based on the fact that the
representative signatory that the plaintiff sought to hold liable in that case was a natural
person rather than another corporate entity. 2011 WL 12847702, at *2. The Court finds
no reason why an entity signing in a representative capacity should be treated any
differently.
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officers or other duly authorized agents.”) (alterations, citations, and internal quotation marks
omitted). To allow a parent entity to become bound to a subsidiary LLC’s contract simply
because it negotiated the contract through its agents, in its status as manager, would essentially
eviscerate the principle of limited liability established by New York law, exposing all LLC
managers, whether they are other business entities or natural persons, to personal liability for
actions undertaken on behalf of the company. See N.Y. Limited Liability Company Law §
609(a) (“Neither a member . . . [nor] manager of a limited liability company . . . is liable for any
debts, obligations or liabilities of the . . . company . . . solely by reason of being such member,
manager or agent or acting (or omitting to act) in such capacities or participating . . . in the
conduct of the business of the limited liability company.”) Here, Plaintiff has proffered no
evidence beyond Port Authority’s alleged participation in the negotiations, attributable to its role
as 1 WTC LLC’s manager, that would permit a jury to infer its intent to be bound by the contract
at the time of its execution; any such inference would be rank speculation and is insufficient to
frame a disputed issue of material fact.
Plaintiff next asserts that Defendant’s conduct subsequent to the execution of the
2006 Agreement indicates that it intended to assume its subsidiaries’ obligation under that
contract. See Silverberg v. SML Acquisition LLC, No. 15-CV-7129 (CS), 2017 WL 758520, at
*6 (S.D.N.Y. Feb. 27, 2017) (finding that a managing member of a subsidiary LLC demonstrated
its intent to be bound to the subsidiary’s contract when it began making payments required under
that contract).
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Cf. Malmsteeen v. Universal Music Group, Inc., 940 F. Supp. 2d.
123, 136 (S.D.N.Y. 2013) (finding that the fact that employees of a subsidiary referred to their
employer by the parent entity’s name was insufficient to create a genuine issue of material fact as
to whether the parent controlled the subsidiary for its own purposes in the context of an alter ego
analysis).
Thus Plaintiff has not met its burden
of raising a genuine issue of fact as to whether Defendant intended to assume 1 WTC LLC’s, and
later WTC Tower 1 LLC’s, obligations under the 2006 Agreement.14
Finally, Plaintiff asserts that Defendant can properly be treated as a party to the
2006 Agreement because 1 WTC LLC and WTC Tower 1 LLC are Defendant’s alter egos or
mere dummy entities, and the Court would thus be justified in lifting their veil to impute the
contractual liability of these special purpose entities to the Port Authority. See Horsehead
14
Plaintiff also cites a report by a consultant retained by the Port Authority that recites that
the Port Authority has a merchandise licensing agreement with Plaintiff. (Ewing Dec. in
Supp. of Pl.’s Mot. for Partial Summ. J., Ex. 58, at PANYNJ0089411). The report is
hearsay and is thus inadmissible for the truth of the matter asserted. Because no
documents or testimony in the record evidence the existence of such an agreement, the
hearsay reference in the report raises no genuine fact issue as to Defendant’s contractual
obligations. Fed. R. Evid. 801(c), 802.
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Indus., Inc. v. Metallgesellschaft AG, 239 A.D.2d 171, 172 (App. Div. 1997). To warrant the
disregard of the corporate form and a finding that a corporate parent is bound to a subsidiary
entity’s contract, Plaintiff bears a heavy burden of demonstrating that the Defendant dominated
the signatory subsidiary and that such domination “led to inequity, fraud or malfeasance.”15 TNS
Holdings Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 339-40 (1998); see also Print By Premier LLC
v. Emigrant Bancorp, Inc., 212 N.Y. Slip Op 31795(U), at *4-5 (Sup. Ct. July 10, 2012). To
determine whether a parent has exerted sufficient control to dominate its subsidiary, courts will
examine a variety of factors, including: “(1) the absence of the formalities and paraphernalia that
are part and parcel of the corporate existence, i.e., issuance of stock, election of directors,
keeping of corporate records and the like, (2) inadequate capitalization, (3) whether funds are put
in and taken out of the corporation for personal rather than corporate purposes, (4) overlap in
ownership, officers, directors, and personnel, (5) common office space, address and telephone
numbers of corporate entities, (6) the amount of business discretion displayed by the allegedly
dominated corporation, (7) whether the related corporations deal with the dominated corporation
15
Plaintiff relies in this regard on a statement by the Appellate Division in Horsehead
Industries., a brief memorandum opinion addressing the validity of a cause of action for
breach of contract, that a non-party may be bound if the subsidiary “is a dummy for the
parent, or if the subsidiary is controlled by the parent for the parent’s own purposes.”
239 A.D.2d at 172. The Court finds unpersuasive Plaintiff’s suggestion that Horsehead
Industries supports the proposition that a mere characterization of an entity as a
“dummy,” without scrutiny of the traditional criteria for piercing the corporate veil, can
properly suffice to support an inference of parent liability. Indeed in Horsehead
Industries, the court assumed the truth of the allegations in the underlying complaint that
the subsidiary performed no functions other than to hold shares upon which the plaintiff
would have had a right of first refusal had they been held directly by the defendant
corporation. The parent had also negotiated the sale agreement that was allegedly
evasive of the right of first refusal condition. Id. at 171. The Horsehead Industries
court’s attention to the purpose served by the subsidiary and the parent’s relationship to
the challenged transaction and its consequences is entirely consistent with traditional alter
ego analysis, which the Court now applies in determining whether Plaintiff has raised a
genuine issue of fact as to alter ego lability in this case.
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at arms[-]length, (8) whether the corporations are treated as independent profit centers, (9) the
payment or guarantee of debts of the dominated corporation by other corporations in the group,
and (10) whether the corporation in question had property that was used by other of the
corporations as if it were its own.” Wm. Passalacqua Builders v. Resnick Developers S., 933
F.2d 131, 139 (2d Cir. 1991).
Here, Plaintiff points to the fact that neither 1 WTC LLC nor WTC Tower 1 LLC
have employees or directors of their own, and that Port Authority employees transact business
and maintain files on their behalf, as evidence of domination and control. Plaintiff also argues
that, in the instant action, the Port Authority’s claim of privilege over the documents of its
subsidiaries, Defendant’s production of documents belonging to 1 WTC LLC and WTC Tower 1
LLC bearing the same sequence of Bates numbers as its own evidence, and the use of a Port
Authority employee as the Rule 30(b)(6) witness for both single-purpose entities demonstrate
that Defendant does not distinguish between itself and its subsidiaries.
All of the cited facts are consistent with Defendant’s status as the managing
member of the special purpose entities, and thus are not indicative of abuse of the LLC form or
of fraud that would warrant treatment of either special purpose entity as an alter ego of the Port
Authority. Although Defendant had complete control over 1 WTC LLC as its sole member and
manager, such an arrangement for the governance of a closely-held corporate entity is not
uncommon and thus represents a neutral factor in the alter ego analysis.16 See In re Stamou, No.
8-09-78895 REG, 2013 WL 209473, at *11 (Bankr. E.D.N.Y. Jan. 17, 2013) (finding that the
16
Because that the fact Defendant exercised complete control over 1 WTC LLC does not
support piercing the corporate veil, the Court need not specifically address Defendant’s
arguments regarding the lessened control it exerted over WTC Tower 1 LLC owing to its
joint venture arrangement with Durst.
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fact that an individual was the “sole member, manager, and employee” of a closely-held entity
did not weigh in favor of piercing the corporate veil.) Furthermore, as previously discussed,
where the parent entity of the LLC is also appointed as the manager, the use of employees or
other agents of the parent entity may be necessary to permit the parent to conduct business on its
behalf. Similarly, 1 WTC LLC and WTC Tower 1 LLC’s lack of directors and failure to observe
other corporate-type formalities are not significant, where, as here, the entity’s governance
structure does not require such formalities. See Capricorn, 24 Misc. 3d 1224(A), at *6.
Producing a Port Authority employee as the Rule 30(b)(6) witness is also
necessary where the subsidiary employs no agents in its own name and is owned and managed
by the Port Authority, which like any other corporate entity is unable to testify except through a
human agent. The production of documents related to the special purpose entities by Port
Authority’s counsel in discovery and
are also insufficient to demonstrate that they constitute Defendant’s alter egos. See Robilotto v.
Abyssinian Dev. Corp., 2016 N.Y. Slip Op. 30057(U), at *11 (Sup. Ct. Jan. 11, 2016) (finding
that allegations of shared phone numbers, email accounts, and offices were insufficient to state a
claim that the subsidiary was the parent’s alter ego); see also Malmsteeen, 940 F. Supp. 2d. at
136 (finding that the fact that employees of subsidiary referred to their employer by the parent
entity’s name, was insufficient to create a genuine issue of material fact as to whether the parent
controlled the subsidiary for its own purposes). Nor has Plaintiff produced any evidence that
demonstrates that 1 WTC LLC or WTC Tower 1 LLC were undercapitalized or that the Port
Authority used their property as its own. Moreover, Plaintiff has not articulated any theory as to
how this corporate arrangement furthered any fraud, inequity, or malfeasance. See TNS, 92
N.Y.2d 335 at 339-40.
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Plaintiff is thus unable to carry its burden of establishing that Defendant is bound
by the 2006 Agreement,17 which restricts co-branding of the WORLD TRADE CENTER or
WTC service mark and use of the trademarks on goods without WTCA’s permission. Even if
Plaintiff could demonstrate that Defendant was party to the 2006 Agreement, Plaintiff has failed
to demonstrate that the Port Authority assigned to Plaintiff the Port Authority’s rights to any
trademark affixed to goods through the execution of 1986 Assignment and, thus, that WTCA
could control the use of the relevant trademarks affixed to goods.
The Court grants summary judgment dismissing Plaintiff’s infringement and
unfair competition claims (1st and 2nd Claims for Relief) based on the rights and duties Plaintiff
asserts were established by the relevant documents. Correspondingly, the Court grants summary
judgment in favor of Defendant on the Port Authority’s counterclaims for a declaration that it
neither infringed upon the WTC marks nor breached the 1986 License or the 2006 Agreement
(1st and 2nd Counterclaims) and denies Plaintiff’s motion for summary judgment dismissing
Defendant’s 2nd Counterclaim. The Court also grants summary judgment dismissing Plaintiff’s
7th Claim for Relief, which seeks a declaration that the Port Authority is bound by the 1986
License and 2006 Agreement to refrain from affixing the relevant marks to goods without
WTCA’s approval.18
17
18
Because the Port Authority is not bound by the 2006 Agreement, Defendant is entitled to
summary judgment dismissing WTCA’s 7th Claim for relief to the extent is seeks a
declaration that the Port Authority is required, pursuant to that agreement, to seek
WTCA’s permission before affixing the WORLD TRADE CENTER or WTCA mark to
goods.
Because the Court dismisses all claims against Defendant, the Court need not address its
defense of laches.
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3. Port Authority’s Ownership Counterclaim (3rd Counterclaim)
Defendant seeks summary judgment in its favor on its counterclaim for a
declaration that it owns or has the “right to use and exploit the WORLD TRADE CENTER and
WTC Marks at or in connection with all activities at the World Trade Center site in New York
without interference from WTCA, and [that it] is the proper owner of certain of the New York
State Service Marks for which the goodwill was never transferred to WTCA” because the Port
Authority reserved its ownership rights with respect to the NYWTC complex in New York.
(Am. Counterclaims ¶ 128.) The Court will examine, separately, the ownership status of and
rights to use the service marks that are subject to the 1986 License and the ownership status of
and rights to use any trademarks affixed to goods.
As already explained, the 1986 Assignment did not divest Defendant of its rights
in the WTC trademarks, but assigned “the entire” right in the WORLD TRADE CENTER
service mark and certain New York and Argentine registrations of that mark to Plaintiff, subject
to a reservation of rights by the Port Authority. Defendant contends that its reservation of “the
right and license to use said service mark for the existing and future services” constituted a
reservation of some aspects of ownership of the New York service marks, rather than mere
continued permission to make use of them. Specifically, Defendant argues that, because the term
“license” grants a privilege to use, the term “right” must be given a broader definition to
differentiate it from “license” and avoid rendering the term “right” as surplusage. Defendant
points to several definitions of “right” from Black’s Law Dictionary, including: (1) “A power,
privilege, or immunity secured to a person by law;” (2) “[a] legally enforceable claim that
another will do or will not do a given act; a recognized and protected interest the violation of
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which is a wrong;” and (3) “[t]he interest claim or ownership that one has in tangible or
intangible property.” Black’s Law Dictionary (10th ed. 2014), right.
Here, reading the Defendant’s reservation of rights in the context of the whole
document, the Court finds that Defendant unambiguously retained the privilege to continue to
use the service mark, but did not retain any ownership rights. Through the assignment,
Defendant covenanted to “sell, transfer and convey to WTCA” “the entire right, title and interest
in and to said service mark WORLD TRADE CENTER, said service mark registrations and . . .
the good will of its business in the services in respect of which the mark is used.” (1986
Agreement at 1-2.) Defendant’s grant to Plaintiff clearly evinces an intent to transfer ownership,
to include title, of the service mark and registrations. Defendant reserved only “the right and
license to use” the service marks. (1986 Assignment (emphasis added).) The phase “to use”
must modify both the terms “license” and “right,” otherwise Defendant would have reserved an
undefined “right.” Because the reservation clause references Defendant’s continued right “to
use” the service marks and did not include the same broad affirmative language of ownership
that appears in the assignment clause, the Court construes the 1986 Assignment as
unambiguously granting all ownership rights in WORLD TRADE CENTER as a service mark,
and the corresponding New York- and Argentina-registered service marks, to Plaintiff and
granting only a privilege to Defendant to continue to use such marks. See T.G.I. Friday’s, Inc. v.
Nat’l Restaurants Mgmt., Inc., No. 91 CV 5412 (KMW)(KAR), 1994 WL 419911, at *27
(S.D.N.Y. Aug. 10, 1994), rev’d on other grounds, 59 F.3d 368 (2d Cir. 1995) (finding that a
reservation of the “right to use” a mark constituted a license rather than a grant of ownership).
Accordingly, Plaintiff’s motion for summary judgment is granted to the extent that it seeks
dismissal of the aspect of Defendant’s 3rd Counterclaim that seeks a declaration that the Port
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Authority owns the WORLD TRADE CENTER and WTC service marks. Defendant’s
corresponding motion for summary judgment on this aspect of the counterclaim is denied.
The Port Authority also requests a declaration that it is entitled to use the
WORLD TRADE CENTER and WTC service marks in connection with the NYWTC free from
interference by WTCA. This argument is seemingly premised on the assumption that the Port
Authority retained ownership of these marks, which as just explained, were actually conveyed to
WTCA. Because the Port Authority does not dispute that it is bound by the restrictions in the
1986 License Agreement to the extent WTCA acquired ownership of the service marks, the Port
Authority has failed to demonstrate its entitlement to a declaration that it can use of these service
marks free from WTCA’s interference, as its use of the service marks is subject to the 1986
License.
As to the aspect of Defendant’s counterclaim that seeks a declaration that it has
the right to use the WORLD TRADE CENTER and WTC trademarks affixed to goods in
connection with the NYWTC free from WTCA’s interference, the Court finds that Defendant has
met its burden of demonstrating its entitlement to summary judgment granting such relief.
Because Defendant did not assign its trademark rights to WTCA, Defendant’s continuous prior
use of the trademark constitutes an effective defense to any attempt by WTCA to enforce its
claim of rights in the trademarks on the types of goods that the Port Authority has previously
offered or authorized for sale. 15 U.S.C. § 1115(b)(5); Haggar Int’l Corp v. United Co. for Food
Industry Corp., 906 F. Supp. 2d 96, 129-130 (S.D.N.Y. 2012) (explaining that the prior use
defense requires that a defendant have used the mark continuously and without interruption and
that such use must have predated the plaintiff’s registration date or date of constructive use).
The Port Authority has proffered uncontroverted evidence that it affixed or authorized third
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parties to affix the WORLD TRADE CENTER or WTC marks to goods offered for sale at the
NYWTC as souvenirs and other goods prior to any commercial use by WTCA.19 Such sales
were interrupted only by the terrorist attack that destroyed the site, after which the complex was
rebuilt and such goods were again offered for sale at the site. See City of New York v. Tavern
on the Green, L.P., 427 B.R. 233, 242 (S.D.N.Y. 2010) (finding that, under New York law, an
approximately two-year renovation of a restaurant excused any disruption in continuous use of
the mark and, in fact, evidenced an intent to resume such use). Accordingly, the Court grants
Defendant’s request for a declaration that it is entitled to use the WORLD TRADE CENTER and
WTC trademarks consistent with its prior use in connection with the NYWTC without
interference from WTCA.20
The Court next examines Defendant’s 3rd Counterclaim insofar as it relates to
ownership of WORLD TRADE CENTER and variations on that term as trademarks in
connection with its activities at or relating to the NYWTC. It is undisputed that the Port
Authority has not registered the term as a trademark. Common law rights, however, which are
also protected by the Lanham Act and state law, attach to the first party to use a trademark in
commerce. See Time, Inc. v. Petersen Publ’g Co., 173 F.3d 113, 117 (2d Cir. 1999) (stating that
the Lanham Act protects common law trademarks); see also Blue Planet, 334 F. Supp. 2d at 437
(stating that common law trademark rights attach based on a mark’s first use in commerce). To
19
20
No proffered evidence suggests that WTCA ever made use of WORLD TRADE
CENTER or WTC as trademarks, only that it produced some WTCA-branded
promotional goods. (Def. 56.1 St. ¶¶ 264-265.) The parties proffer images of four items
that display WTCA’s Map Design Logo and the name of a member WTC, but do not
explain WTCA’s role in producing or authorizing the production of such goods, the
distribution of such goods, or when such goods were produced. (Id. ¶ 266.)
For the same reasons, the Court denies Plaintiff’s motion for summary judgment striking
the Port Authority’s prior use defense (7th Affirmative Defense).
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establish ownership of a trademark, a party must demonstrate that the mark would qualify for
registration, insofar as the mark is “capable of distinguishing the applicant’s goods from those of
others.” Prof’l Sound Servs. v. Guzzi, 349 F. Supp. 2d 722, 730-31 (S.D.N.Y. 2004), aff’d, 159
F. App’x 270 (2d Cir. 2005) (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767
(1992)). An unregistered mark generally qualifies for registration if it is sufficiently distinctive
or has acquired secondary meaning with respect to the particular kinds of goods or use of the
mark.21 Genesee Brewing Co. v. Srtoh Brewing Co., 124 F.3d 137, 142-43, 143 n.4 (2d Cir.
1997).
Although Defendant has proffered uncontroverted evidence that it made use of the
WORLD TRADE CENTER trademark affixed to goods in commerce in connection with the
NYWTC before Plaintiff did, and that it did not assign its rights in the trademark to WCTA,
neither party has advanced any evidence or argument as to whether the trademark qualifies for
protection as sufficiently distinctive or as having acquired secondary meaning with respect to its
relevant use on goods. The Court therefore denies summary judgment to both parties with
respect to this aspect of the counterclaim. In light of the Court’s independent duty to examine
subject matter jurisdiction and the Court’s determination that WTCA has no ownership interest
in WORLD TRADE CENTER or WTC as a trademark affixed to goods, Defendant will be
ordered to show cause as to why the Court should not dismiss the aspect of the counterclaim
seeking a declaration of ownership by the Port Authority as failing, in light of the Court’s finding
that WTCA has no relevant rights in the trademark, to present a case in controversy between two
21
“Under New York law, as under § 43(a) of the Lanham Act, to prevail on a claim for
trademark infringement of an unregistered mark, a plaintiff must establish secondary
meaning.” Rockland Exposition, 894 F. Supp. 2d at 325 (citing Allied Maint. Corp. v.
Allied Mech. Trades, Inc., 42 N.Y.2d 538 (1977)).
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parties that have an adversarial interest in the ownership of the WORLD TRADE CENTER and
WTC trademarks on goods. Fed. R. Civ. P. 12(h)(3); see Maryland Casualty Co. v. Pacific Coal
& Oil Co., 312 U.S. 270, 273 (1941) (stating that in order to grant declaratory judgment, the
Court must find “a substantial controversy, between parties having adverse legal interests”).
Accordingly:
(1) Plaintiff’s motion for summary judgment is granted, and Defendant’s motion
is accordingly denied, dismissing Defendant’s 3rd Counterclaim insofar as it seeks a declaration
that the Port Authority owns or has the right to use without WTCA’s interference the WORLD
TRADE CENTER or WTC service marks in connection with the NYWTC.
(2) Both parties’ motions for summary judgment are denied as to Defendant’s
general claim of ownership of the WORLD TRADE CENTER and WTC trademarks affixed to
goods. The Port Authority will be ordered to show cause as to why this aspect of its 3rd
Counterclaim should not be dismissed for lack of subject matter jurisdiction.
(3) Defendant’s motion for summary judgment is granted, and Plaintiff’s motion
is accordingly denied, with respect to the Port Authority’s claim for a declaration stating that the
Port Authority is entitled to use the WORLD TRADE CENTER and WTC trademarks affixed to
goods in connection with the NYWTC without WTCA’s interference, to the extent such
particular uses predate any corresponding use by the WTCA.
4. Petition to Cancel Plaintiff’s Federal Service Mark Registration (4th Counterclaim)
In its 4th Counterclaim, Defendant petitions the Court to cancel Plaintiff’s federal
registration for the WTC service mark (Registration No. 1,469,489) pursuant to section 37 of the
Lanham Act, 15 U.S.C. § 1119, which empowers a court to “determine the right to registration,
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order the cancelation of registrations, in whole or in part . . . and otherwise rectify the register
with respect to the registrations of any party to the action.” 15 U.S.C.S. § 1119 (LexisNexis
2006). After a mark has been registered and continuously used for five years, however, it
becomes incontestable and the registration thus represents conclusive evidence of the validity of
the mark, unless one of several enumerated defenses is established, including, inter alia,22 that
the registration was procured through fraud on the Patent and Trademark Office. 15 U.S.C. §§
1115(b), (b)(1), 1065.23 A court may conclude that a trademark registration was procured by
fraud when it finds, by clear and convincing evidence, that the trademark applicant “knowingly
ma[de] false, material representations of fact in connection with his application.” MPC
Franchise, LLC v. Tarntino, 826 F.3d 653, 658 (2d Cir. 2016) (internal quotation marks and
citation omitted); Haggar Int’l, 906 F. Supp. 2d at 108 (requiring a clear and convincing evidence
standard). To establish scienter, the party seeking to invalidate the mark must demonstrate that
the applicant knew or should have known that its declaration was false or misleading. MPC
Franchise, 826 F.3d at 659. The disclosure of the identity of a person or entity that has superior
rights in the mark, including another entity that first used the mark, is material to the PTO’s
22
23
In its counterclaim, Defendant asserts other grounds to cancel the service mark, but in its
briefing papers seemingly concedes Plaintiff’s arguments that those grounds for
cancelation are time barred, and the Court thus deems these arguments abandoned. See
Jackson v. Fed. Express, 766 F.3d 189, 198 (2d Cir. 2014).
Plaintiff argues that the Defendant’s counterclaim to cancel the service mark based on
fraud is time barred, citing to Beauty Time, Inc. v. VU Skin Sys. In., 118 F.3d 140, 143
(3d Cir. 1997). The Third Circuit has subsequently held that an action to cancel a
trademark may be brought at any time under section 14(3) of the Lanham Act, 15 U.S.C.
§ 1064(3), but that such a claim will be subject to the analogous state law statute of
limitations if brought pursuant to section 38 of the Lanham Act, 15 U.S.C. § 1120.
Marshak v. Treadweel, 240 F.3d 184, 192-95 (3d Cir. 2001). Defendant does not specify
under which statute it brings its cancelation counterclaim, but cites to section 14(3) in its
briefing papers. (Def.’s Mem of Law in Supp. of its Mot. for Summ. J. and in Opp’n to
Pl.’s Mot. for Partial Summ. J., Docket Entry No. 163, at 47.) The Court will therefore
allow the claim to proceed under section 14(3), which has no time bar.
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determination, and, if misrepresented, may support a finding of fraud. MPC Franchise, LLC v.
Tarntino, 19 F. Supp. 3d 456, 478-479 (W.D.N.Y. 2014), aff’d, 826 F.3d 653 (2d Cir. 2016).
Defendant contends that Plaintiff’s representations to the PTO, through Tozzoli,
that the first use of the mark was in March 1961 and that “to the best of his knowledge and belief
[that] no other person . . . has the right to use said mark in commerce . . . when applied to the
services of such other person to cause confusion” were fraudulent. (Federal Service Mark
Application at 3-4.) Here, Plaintiff proffers evidence that the date of first use matches that of the
state service mark applications submitted by Defendant and subsequently assigned to Plaintiff.
37 C.F.R. section 2.38(a) explicitly permits an applicant to claim the date a related company or
predecessor in title first used the mark if the applicant concurrently discloses that first use was by
a predecessor. 24 Because Plaintiff stated in its application that the first use of the mark in 1961
was by Defendant, from which Plaintiff grew and to which Defendant assigned the relevant state
service marks, the stated date of first use is not false, and also conclusively demonstrates a lack
of scienter regarding the representation as to the date of first use.
Defendant next proffers a memorandum by Port Authority’s counsel stating that
several WTCA member WTCs opened before the NYWTC and the formation of WTCA, as
evidence that another entity had the right to use the service mark, contrary to the declaration in
plaintiff’s federal application. Here too, the Court must determine whether Plaintiff exhibited
the requisite scienter, specifically whether Plaintiff knew or should have known that its
24
Defendant also asserts that the March 1961 date of first use is false because the mark was
not, at that time, used specifically for the association services for which Plaintiff sought
the mark in its application. Plaintiff did not, however, specify in its application that the
first use was for such services, only that the mark “was first used by said predecessor in
the sale or advertising of services rendered in interstate commerce.” (Federal Service
Mark Application, Docket Entry No. 149-22, at 1-2.)
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declaration was false or misleading. MPC Franchise, 826 F.3d at 659. Defendant has proffered
evidence that Plaintiff was aware of the purported rights of these other WTCs prior to the
application and that Tozzoli was generally uncomfortable about applying for a federal service
mark for that reason. Plaintiff contends that there is a genuine issue of fact as to whether it knew
or should have known that the rights of any prior users were superior, because all were WTCA
members at the time of the service mark application. WTCA’s unique relationship with its
members, in which it licensed its centralized intellectual property to them, is a sufficient basis for
a jury to conclude that WTCA did not believe that it was subject to any allegedly superior rights
to the marks retained by its members. 25 See Haggar, 906 F. Supp. 2d at 107 (quoting Maids to
Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d 1899, 1908 (T.T.A.B. 2006) (stating
that an applicant has a reasonable basis for believing “no one else has the right to use the mark in
commerce” unless the right is known to be “superior or clearly established, e.g. by court decree
or prior agreement of the parties”).
Because both parties have proffered sufficient evidence to permit, but insufficient
to compel, a reasonable jury to conclude that Plaintiff either did or did not act with scienter in
declaring that no other parties enjoyed a superior right to use the service mark, the Court denies
summary judgment to both parties with respect to that aspect of Defendant’s invalidation
demand. Because Plaintiff’s March 1961 first use date was neither false nor offered with the
25
In its reply, Defendant asserts that by the time of the federal service mark application, the
Dallas WTC, which existed prior WTCA’s incorporation in 1969, had terminated its
WTCA membership (Def.’s Reply Mem. of Law in Supp. of its Mot. for Summ. J.
(“Def.’s Mem.”), Docket Entry No. 185, at 22-23; see Def. 56.1 Reply ¶ 168.) Because
Defendant only raised this factual issue on reply, the Court declines to consider it. See
Rowley v. City of New York, No. 00 CIV. 1793 (DAB), 2005 WL 2429514, at *5
(S.D.N.Y. Sept. 30, 2005) (finding that a court may decline to consider new arguments
offered only on reply).
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requisite scienter to establish fraud, the Court grants summary judgment to Plaintiff, denies
summary judgment to Defendant, and dismisses Defendant’s counterclaim to cancel the service
mark on the basis of misrepresentation of date of first use (4th Counterclaim).26 27 28
5. Defendant’s Counterclaim to Enjoin Plaintiff’s Pending Federal Application for WORLD
TRADE CENTER and WTC Trademark (5th Counterclaim)
Defendant seeks to enjoin Plaintiff from proceeding on its pending federal intent
to use application for WORLD TRADE CENTER and WTC trademarks, arguing that Plaintiff
has not demonstrated a bona fide intent to use the marks. “The Trademark Law Revision Act of
1988 (TLRA) . . . changed the Lanham Act by permitting applicants to begin the registration
process before actual use of the mark at the time of filing, so long as the applicant had a ‘bona
26
27
28
To the extent Defendant asserts that Plaintiff fraudulently declared to the PTO that
Defendant assigned ownership of service marks to it, Plaintiff is granted summary
judgment and that aspect of the claim is dismissed based on the previously explained
conclusion that ownership of the service marks was indeed assigned to Plaintiff in 1986.
The Court accordingly denies Defendant’s motion for summary judgment seeking
cancelation of the federal service mark based on a misrepresentation of ownership.
Plaintiff moves to dismiss two aspects of Defendant’s 5th Affirmative Defense: that
Plaintiff’s federal and state registrations were void ab initio and that they were procured
through fraud. Defendant has proffered no evidence that the state registrations, which the
Port Authority itself applied for, were procured by fraud. To the extent this defense is
based on the fraudulent procurement of the federal service marks, it is dismissed to the
same extent as Defendant’s corresponding 4th Counterclaim. To the extent there is
another theory as to why any federal marks were void ab initio, Defendant has failed to
assert it and any remaining aspect of that claim is deemed abandoned and will be
dismissed. See Summit Health, Inc. v. APS Healthcare Bethesda, Inc., 993 F. Supp. 2d
379, 397-98 (S.D.N.Y. 2014), aff’d sub nom., APEX Employee Wellness Servs., Inc. v.
APS Healthcare Bethesda, Inc., 725 F. App’x 4 (2018) (finding that when a defendant
fails to oppose a plaintiff’s motion for summary judgment to dismiss an affirmative
defense, such defense should be deemed abandoned)
In its counterclaim, Defendant alleges that a second federal service mark registration
application received by the PTO on May 21, 1992 and granted as trademark number
1,749,086, was also fraudulently procured. (Am. Counterclaims ¶¶ 96-97.) Because
Defendant fails to respond to Plaintiff’s motion for summary judgment as to this aspect of
his claim, the Court deems it abandoned and grants summary judgment dismissing it. See
Jackson, 766 F.3d at 198.
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fide intention to use the mark in commerce’ at a later date.” M.Z. Berger & Co. v. Swatch AG,
787 F.3d 1368, 1374 (Fed. Cir. 2015) (quoting 15 U.S.C. § 1051(b)(1)) (alterations and emphasis
omitted). “[A] ‘bona fide intent’ to use the mark in commerce at the time of the applications
requires objective evidence . . . that the applicant’s intent to use the mark was firm and not
merely intent to reserve a right in the mark.” Id. at 1376. The party opposing registration bears
the burden of proving, by a preponderance of evidence, the registrant’s lack of bona fide intent,
which may be established by the lack of contemporaneous documentary evidence from which a
trier of fact could infer such intent. See The Saul Zaentz Co. DBA Tolkien Enterprises, 95
U.S.P.Q. 2d 1723, 1727 (T.T.A.B. June 28, 2010). If the prima facie case is made, the burden
shifts to the registrant to establish intent to use the mark at the time of filing. Id. at 1729.
These proffers
29
See Loreal S.A. & Loreal USA, Inc., 102 U.S.P.Q.2d 1434, at *11 (T.T.A.B. Mar. 20,
2012) (quoting Commodore Elecs. Ltd. V. CBM Kabushiki Kaisha, 26 U.S.P.Q.2d 1503,
1507 (T.T.A.B. Feb. 3, 1993) (stating that, to rebut a lack of documentary evidence, the
registrant may “adequately explain or outweigh the failure of an applicant to have any
documents supportive of or bearing upon its claimed intent to use its mark in
commerce”).
.
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present genuine issues of material fact as to WTCA’s intentions at the time of its applications,
and both parties’ motions for summary judgment with respect to Defendant’s 5th Counterclaim
must be denied. Cf. Loreal S.A. & Loreal USA, Inc., 102 U.S.P.Q.2d 1434, at *11 (T.T.A.B.
Mar. 20, 2012) (“[V]ague allusions to using the mark through licensing or outsourcing, and
failure to take any concrete actions or to develop any concrete plans for using the mark –
demonstrates that applicant lacks the requisite bona fide intent.”).
6. Counterclaim for Equitable Relief based on Breach of the 1986 Assignment and 2001
Letter (6th Counterclaim)
Defendant claims that Plaintiff breached the 1986 Assignment and 2001 Letter by
interfering with its “use of the [WROLD TRADE CENTER or WTC] mark at the [NYWTC],
and commencing this litigation.” (Def.’s Mem. of Law in Supp. of its Mot. for Summ. J. and in
Opp’n to Pl.’s Mot. for Partial Summ. J., Docket Entry No. 163, at 41.) In its briefing papers,
Defendant points to Plaintiff’s attempts to require that the Port Authority obtain its approval for
certain actions regarding the marks. (See Def. 56.1 St. ¶ 273.) Defendant does not, however,
specify the contractual duties Plaintiff has allegedly breached. See Paul v. Bank of Am. Corp.,
No. 09-CV-1932 ENV JMA, 2011 WL 684083, at *5 (E.D.N.Y. Feb. 16, 2011) (“In a fatal flaw,
[the plaintiff’s] complaint fails to identify the specific contractual provision or provisions in the
cardholder agreement allegedly breached by defendants and, as a result, the claims must be
dismissed.”). The Court, therefore, denies defendant’s motion for summary judgment on its 6th
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Counterclaim and directs Defendant to show cause why this counterclaim should not be
dismissed.
CONCLUSION
For the foregoing reasons, the Court partially grants Defendant’s motion for
summary judgment. Plaintiff’s complaint is dismissed in its entirety. Defendant is granted
summary judgment on its counterclaims for non-infringement (1st Counterclaim) and non-breach
of the licensing agreements (2nd Counterclaim), and is granted summary judgment on its 3rd
Counterclaim with respect to its right to use the WORLD TRADE CENTER or WTC trademarks
affixed to goods in connection with the NYWTC without interference by Plaintiff. The Court
denies Defendant’s motion for summary judgment with respect to its counterclaims for
cancelation of Plaintiff’s federal service mark registration (4th Counterclaim); injunction against
Plaintiff’s pending intent to use trademark registration application (5th Counterclaim); and breach
of the 1986 Assignment and the 2001 Letter by Plaintiff (6th Counterclaim), Defendant’s motion
is also denied as to the balance of its 3rd Counterclaim for a declaration of ownership of the WTC
and WORLD TRADE CENTER trademark and its ownership of and right to use the service
marks at the NYWTC without interference from WTCA.
Plaintiff’s motion for summary judgment is granted in part. The portion of
Defendant’s 3rd Counterclaim that seeks a declaration that Defendant owns the WTC service
marks and is free to use them without WTCA’s interference dismissed. The portion of
Defendant’s 4th Counterclaim that seeks the cancelation of Plaintiff’s federal service mark on the
basis that it provided a false date of first use to the PTO is also dismissed. Defendant’s defense
of sovereign immunity (9th Affirmative Defense) is stricken with respect to its federal law claims
(Claims for Relief 1 and 2) and the 9th Affirmative Defense is also stricken insofar as it relates to
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Plaintiff’s claim for a declaration (Claim for Relief 7) that the 1986 License and 2006 Agreement
bind the Port Authority to refrain from using the relevant trademarks on goods without WTCA’s
permission. Defendant’s 5th Affirmative Defense with is stricken insofar as it asserts that
Plaintiff’s state registrations are invalid and that its federal registrations are invalid because they
were procured by fraud regarding the date of their first use. Plaintiff’s motion for summary
judgment is denied insofar as it seeks judgment in Plaintiff’s favor on its 6th Claim for Relief for
breach of contract and dismissal of Defendant’s counterclaims for non-breach of the license
agreements (2nd Counterclaim), and an injunction against Plaintiff’s pending trademark
application (5th Counterclaim). Plaintiff’s motion for summary judgment is also denied insofar
as it seeks dismissal of the balance of Defendant’s 3rd Counterclaim with respect to Defendant’s
ownership of the WTC trademarks and Defendant’s right to use the WORLD TRADE CENTER
or WTC trademarks in connection with the NYWTC without interference by Plaintiff, and
insofar as it seeks dismissal of the aspect of Defendant’s 4th Counterclaim that is based on
Defendant’s contention that Plaintiff fraudulently represented to the PTO that no party had a
superior right to use the federal service mark. Plaintiff’s motion for summary judgment is denied
to the extent it seeks to strike Defendant’s prior use defense (7th Affirmative Defense), its
sovereign immunity defense with respect to state law claims for injunctive relief (9th Affirmative
Defense), and its 5th Affirmative Defense insofar as that defense rests on the assertion that
Plaintiff fraudulently represented to the PTO that no other party had a superior right to use the
mark.
By separate order, Defendant will be directed to show cause as to why its 6th
Counterclaim should not be dismissed and why the the 3rd Counterclaim, to the extent that it
seeks a declaration that the Port Authority owns the WORLD TRADE CENTER and WTC
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marks used on goods in connection with the NYWTC, should not be dismissed for lack of
subject matter jurisdiction.
The claims remaining for trial are: (1) Defendant’s counterclaim for cancelation
of Plaintiff’s federal service mark registration as procured by fraud, to the extent that
counterclaim rests on Defendant’s contention that Plaintiff falsely affirmed that it was aware of
no other entity with a superior right to use the mark (4th Counterclaim); and (2) Defendant’s
counterclaim seeking an injunction against the prosecution of Plaintiff’s federal trademark
applications (5th Counterclaim).
This case remains referred to Magistrate Judge Lehrburger for general pre-trial
management. The parties are directed to meet with Judge Lehrburger promptly to discuss
settlement. The final pre-trial conference is scheduled for February 8, 2019 at 10:30 a.m.
(Docket Entry No. 221.) The parties are directed to confer and make submissions in advance of
the conference in accordance with the pre-trial scheduling order. (Docket Entry No. 43.)
This Memorandum Opinion and Order resolves Docket Entry Nos. 146 and 162.
SO ORDERED.
Dated: New York, New York
December 18, 2018
/s/ Laura Taylor Swain
LAURA TAYLOR SWAIN
United States District Judge
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