IP Law Daily, TRADEMARK—S.D.N.Y.: Trial needed to decide Indian restaurant’s trademark, trade dress, and trade secret claims , (Sep 28, 2015)

By Cheryl Beise, J.D.

Disputed issues of material fact precluded deciding on summary judgment whether Kati Junction, Inc.—a Manhattan quick service Indian restaurant that sold “kati rolls”—infringed The KatiRoll Company, Inc.’s registered “The Kati Roll Company” service mark, copied its restaurant trade dress, engaged in unfair competition, or misappropriated its recipe trade secrets, the federal district court in New York City has determined (The KatiRoll Company, Inc. v. Kati Junction, Inc., September 25, 2015, Scheindlin, S.).

Plaintiff The KatiRoll Company, Inc. (TKRC) is a quick-service Indian restaurant that first opened in June 2002 in Manhattan. There currently three TKRC restaurants in Manhattan and one in London, England. TKRC primarily sells “kati rolls,” Indian food, using flatbread (paratha or roti) prepared on a griddle and then wrapped around one or more fillings. KatiRoll obtained federal service mark registration for “The Kati Roll Company” for restaurant and carry-out restaurant services in December 2007. TKRC also claimed common-law trade dress rights in the appearance of its restaurants.

Defendant Kati Junction, Inc., opened a takeout-style restaurant called Kati Junction in Manhattan in February 2014. Kati Junction also sells wraps described as “kati roll.” According to TKRC, Kati Junction hired seven “current and former” TKRC employees, who allegedly used TKRC’s proprietary recipes and techniques to copy the TKRC menu.

TKRC filed suit against Kati Junction and the seven employees, asserting claims for service mark infringement, trade dress infringement, unfair competition, and trade secret misappropriation under New York’s unfair competition law. According to TKRC, Kati Junction hired seven “current and former” TKRC employees. The defendants moved for summary judgment on all of TKRC’s claims.

Trademark infringement. The defendants moved for summary judgment as to KatiRoll’s claims for service mark infringement on the grounds that the term “kati roll” is a generic term referring to a type of common Indian street food and because there was no likelihood of customer confusion between the parties’ marks.

The court rejected the defendants’ genericness argument because the TKRC’s registered mark was not for “kati roll” for a food product, but for the “The Kati Roll Company” to indicate the source of TKRC’s restaurant services. TKRC’s registered mark was presumed valid, and the court declined to dissect the mark in analyzing its connotation.

With regard to likelihood of confusion, the court said that summary judgment was inappropriate because genuine issues of material fact existed as to the majority of the Polaroid factors, including the most probative factors—the strength of TKRC’s mark, the similarity between the parties’ marks, and evidence of actual confusion.

Trade dress infringement. The defendants argued that TKRC could not prove that it possessed a distinctive trade dress, that the trade dress was non-functional, or that Kati Junction’s use of that trade dress would be likely to cause confusion. However, when viewing the record in the light most favorable TKRC, the court found that a reasonable fact finder could determine that, taken together, the specific components TKRC listed as protectable elements—the store banner, the unified color scheme, the decorative elements, and the open kitchen layout, among others—comprised a distinctive, non-functional trade dress. A fact finder must decide which of the parties’ competing accounts was true, and whether KatiRoll has a protectable trade dress and whether that trade dress has been infringed upon, the court said.

Unfair competition. The disputed facts underlying TKRC’s trademark and trade dress infringement claims were the same for their Lanham Act unfair competition claim. The court noted that a claim for unfair competition under New York common law requires a finding of bad faith. Although neither party specifically addressed this element the court determined that there was sufficient evidence in the record for a reasonable fact finder to find that Kati Junction entered into business with the bad faith intent to trade on KatiRoll’s good will through copying its service mark, trade dress, and menu.

Trade secret misappropriation. TKRC identified as trade secrets its recipes, consisting of lists of ingredients and their proportions, without further instructions on preparation. The defendants claimed that this was too vague to qualify as a “formula, pattern, device or compilation of information” protectable as a trade secret. It was undisputed that recipes for versions of many of the items prepared by TKRC were publicly available. According to the defendants, the specific ingredients and proportions used by KatiRoll were “matters of general knowledge” readily available online, and thus, they could not achieve the status of a trade secret as a matter of law.

The defendants’ position conflated production methods with production inputs, the court observed. TKRC was not arguing that the general recipes and preparation methods for its various foods were protected trade secrets, but rather the lists of specific ingredients and precise proportions. “[I]t is possible for mere proportions to be trade secrets—even if the entire ingredient list is in the public domain,” the court said. This is a genuine issue of material fact that cannot be decided on summary judgment.

The defendants’ motion for summary judgment was denied in its entirety.

The case is No. 1:14-cv-01750-SAS.

Attorneys: Elizabeth Shieldkret (Elizabeth Shieldkret, Attorney At Law) for The KatiRoll Co. Inc. Stephen Edward Feldman and Kalpana Nagampalli (Feldman Law Group) for Kati Junction Inc.

Companies: The KatiRoll Co. Inc.; Kati Junction Inc.

Cases: Trademark TradeSecrets NewYorkNews