City Prevails in Eatery Trademark Dispute

This story, in slightly different form, originally appeared in the New York Law Journal.

NEW YORK CITY-A federal judge ruled Wednesday that the city had presented “compelling evidence” that it owned the right to the name Tavern on the Green. The decision comes more than two months after the famous Central Park eatery closed its doors on Dec. 31. It caps a bitter battle between the city and descendants of famed restaurateur Warner LeRoy, who licensed the right to run Tavern on the Green in the 1970s.

Tavern on the Green, L.P., and LeRoy Adventures Inc., claimed a 1981 “incontestible” trademark registration conclusively established its right to the name. The city, which owns the property on which the storied restaurant stands, countered that its rights as a “prior use” trumped the LeRoys’ limited right to use the name, and argued that Leroy had fraudulently registered the mark.

In a 22-page ruling, Southern District Judge Miriam Goldman Cedarbaum sided with the city. “Because the undisputed facts show that the City established and continuously maintained a restaurant under the name ‘Tavern on the Green’ at the same location…since 1934,” it has a “protectible interest in that name,” she wrote in City of New York v. Tavern on the Green, L.P.,

The judge also agreed with the city that the 1981 registration should be canceled, since LeRoy “made deliberate misstatements and omissions” to the US Patent and Trademark Office. But Cedarbaum denied as premature the city’s petition for cancellation of the LeRoy descendants’ registration of “Tavern on the Green” for cooking oils.Meanwhile, the restaurant, which was once the highest-grossing independently run restaurant in the United States, remains mired in bankruptcy proceedings before Southern District Judge Allan L. Gropper. Just last week, Gropper agreed to convert the Chapter 11 case of Tavern on the Green to a Chapter 7 liquidation and said that an independent trustee would be appointed to oversee the bankruptcy proceeding.

David H.T. Kane of Locke Lord Bissell & Liddell, who represents the debtors in the trademark dispute, said in an interview Wednesday that he expects Cedarbaum’s decision to be appealed, since the name of the restaurant has been described as the only remaining asset of substantial value in the debtors’ estate. Kane said the Chapter 7 trustee, who has not yet been identified by Judge Gropper, will ultimately decide whether to appeal.Tavern on the Green first opened its doors in 1934, when Parks Commissioner Robert Moses transformed the Victorian Gothic structure from a sheepfold into a reasonably priced restaurant. In 1973, after being run by a number of concessionaires, the city gave LeRoy, creator of Manhattan’s legendary MaxWell’s Plum, a license to operate Tavern on the Green.

Under the agreement, LeRoy had the right to rename the restaurant, provided the city agreed to the change. But LeRoy, who spent three years and $10 million remodeling the restaurant, decided to stick with the name chosen by Moses in 1934.

On Aug. 31, 1976, a “reincarnated” tavern opened its doors, according to the restaurant’s Web site. “With LeRoy’s addition of the glass enclosed Crystal and Terrace Rooms, his lavish use of brass, stained glass, etched mirrors, original paintings, antique prints, and above all, chandeliers,” Tavern on the Green “became a glittering palace, Central Park’s most spectacular structure.”

In 1981, LeRoy registered the mark “Tavern on the Green” for restaurant services, and in May 1985 he entered into a new license with the city to operate the 25,000-square-foot restaurant. After LeRoy died in 2001, his daughter, Jennifer Oz LeRoy, whose grandfather, Mervyn LeRoy, produced the 1939 classic film The Wizard of Oz, took over the landmark. But in August 2009, the city announced that it had awarded a 20-year contract to Dean J. Poll, the operator of the Central Park Boat House Restaurant.

Less than two weeks later, Tavern on the Green filed for bankruptcy. Soon after, the city attempted to stop the debtors from using the name Tavern on the Green at locations other than Central Park “in violation of the City’s longstanding common law rights.”

As a “prior user” since 1934, the city argued that the debtors, as licensees, had a limited right to use the trade name, which had become “singularly associated in the minds of consumers with the world-famous landmarked premises in Central Park.”

The debtors countered that they were not only owners of an “incontestable” trademark registration, but had also “developed strong rights” in the name through their “persistence, investment, hard work and dedication to quality.” After the city petitioned to have the dispute heard by a judge outside of bankruptcy court, Cedarbaum took over the case. Yesterday, she said the city had presented “compelling evidence” that it owned the name.The judge noted that the 1973 agreement required that the debtors obtain the city’s consent if they changed the restaurant’s name and contained provisions “for city oversight” of the restaurant. “The City chose the name and each concessionaire and made significant investments to ensure the success of the restaurant—such that ‘Tavern on the Green’ was closely associated in the public mind with a building owned by the City and located in New York’s Central Park,” she wrote.

In addition to rejecting the debtor’s argument that the city’s “continuing use” of the mark was broken when the restaurant closed for periodic renovations, the judge held that the debtors’ trademark registration had been obtained fraudulently.

Although LeRoy knew that his “venture was merely a licensee taking over operations from the concessionaire,” Cedarbaum ruled that he nonetheless told the patent office that his joint venture owned the mark and “knowingly misstated the date” when the name was first used in commerce. “Even viewing the claim of fraud through the City’s heightened evidentiary burden, the Debtors have adduced no facts which would permit a reasonable fact finder to conclude that LeRoy’s conduct was anything but a deliberate attempt to mislead” the patent office, Cedarbaum wrote.Michael A. Cardozo, corporation counsel with the city’s Law Department, calls yesterday’s decision a “major victory” for the city and all New Yorkers. “We have ensured that the legacy of the long-treasured restaurant will be preserved for generations to come,” he says in a statement.

Adrian Benepe, the city’s Parks and Recreation commissioner, also applauded the decision. “With new operator Dean Poll, we look forward to continuing this fine dining experience in one of the city’s most historic and bucolic settings for years to come,” Benepe says in a statement.

A spokesman for the city’s Law Department said Wednesday that Poll has yet to sign a lease for the eatery.

Noeleen G. Walder can be reached at [email protected].