City of New York v. Blue Rage Inc.

MEMORANDUM & ORDER   Plaintiff the City of New York (“Plaintiff” or the “City”) commenced this action against defendants Blue Rage, Inc. d/b/a The Cop Shop (“Cop Shop”), Salvatore Piccolo (“Salvatore”), and Susan Piccolo¹ (“Susan”) (collectively “Defendants”) alleging, inter alia, violations of the Lanham Act, 15 U.S.C. §1051, et seq., and of state law. Currently before the Court are the parties’ cross-motions for summary judgment. See Plaintiff’s Motion, Docket Entry (“DE”) [42]; Defendants’ Motion, DE [54]. For the reasons set forth below, Plaintiff’s motion is granted in part and denied in part, and Defendants’ motion is denied in its entirety. I. BACKGROUND A. Factual History² 1. The City’s Trademark Registrations The City, which holds various trademarks obtained through registration with the United States Patent and Trademark Office (“PTO”), claims that Defendants have sold products that are trademarks, logos, names and insignia associated with the New York Police Department (the “NYPD Trademarks”), including the abbreviation NYPD (the “NYPD Mark”) and a design consisting of the words “POLICE DEPARTMENT CITY OF NEW YORK around a shield design (the “NYPD Shield,” below): The federal trademark registrations are for the NYPD Mark, the NYPD Shield, and one for each of seven specialized NYPD units (mounted, emergency squad, special operations division, aviation, bomb squad, harbor unit, highway patrol, collectively “NYPD Units”) and pertain to the use of the marks in various classes of souvenir merchandise. The City also asserts ownership over all trademarks, logos, names, and insignia associated with the Fire Department of the City of New York, including the abbreviation “FDNY” (the “FDNY Mark”), and a distinctive shield with the words FIRE DEPARTMENT CITY OF NEW YORK, the colors red, white, and blue, and a stylized Maltese cross with flames inside over a representation of the New York City skyline (the “FDNY Shield,” below): The City additionally claims ownership over the number 343 (the “343 Mark”) representing the number of FDNY members who died in the line of duty on September 11, 2001, and a Maltese cross design containing the letters FDNY (the “FDNY Maltese Cross”): The City holds numerous federal trademark registrations for the FDNY Mark, the FDNY Shield, the FDNY Maltese Cross, and the 343 Mark in various classes of souvenir merchandise. Registrations for one or more of the marks designate eleven (11) classes of merchandise:³ International Class 006 metal goods including key chains, key rings, holiday ornaments (“Class 006/Metal goods”); International Class 009 electric and scientific apparatus including thermometers not for medical use, mouse pads, decorative refrigerator magnets, children’s videotapes, children’s educational software, videotapes featuring public safety and health information (“Class 009/Scientific goods”); International Class 014 jewelry including lapel pins, costume jewelry, cuff links, pendants, tie clips, tie pins (“Class 014/Jewelry”); International Class 016 including calendars, notepads, pens, pencils, pencil boxes, stickers, bumper stickers, decals, books, magazines, and brochures featuring information on fire safety (“Class 016/Decals”); International Class 18 including sports bags and umbrellas (“Class 018/Bags”); International Class 020 furniture and articles not otherwise classified including plastic key chain tags, cushions, plastic figurines, picture frames (“Class 020/Misc.”); International Class 021 housewares and glasses, mugs, lunch boxes, thermal insulated containers for food and beverages, drinking glasses, commemorative plates, decorative plates, souvenir plates (“Class 021/Housewares”); International Class 24 for blanket throws (“Class 024/Blankets”) for the FDNY Mark only; International Class 025 clothing including caps, t-shirts, sweatshirts (“Class 025/Clothing”); International Class 026 for cloth patches for clothing (“Class 026/Cloth Patches”); International Class 028 toys and sporting goods including model cars, stuffed animals, dolls and accessories, articulated toy figurines, toy banks, Christmas tree ornaments (“Class 028/Toys”). Class 025/Clothing is the only class for which all the marks have registered. The following chart depicts the classes, which marks are registered in the class, and the date of first registration of that mark: Class of merchandise       Marks registered (Registration Yr) 006/Metal goods                NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006) 009/Scientific goods         NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006) 014/Jewelry NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006); FDNY Maltese Cross (2009); 343 Mark (2015) 016/Decals FDNY Mark (2005); FDNY Shield (2006); 343 Mark (2015) 018/Bags  FDNY Mark (2005); FDNY Shield (2006) 020 /Misc. NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006) 021/Housewares                NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006) 024/Blanket throws            FDNY Mark (2005) 025/Clothing      NYPD Mark (2005); NYPD Shield (2006); NYPD Units (2009 or 2010); FDNY Mark (2002); FDNY Shield (2006); FDNY Maltese Cross (2007); 343 Mark (2017) 026/Cloth patches             FDNY Mark (2005); FDNY Shield (2006) 028/Toys  NYPD Mark (2005); NYPD Shield (2006); FDNY Mark (2005); FDNY Shield (2006); FDNY Maltese Cross (2009) In addition to the class of merchandise, each registration includes the year that the mark was first used in commerce for merchandise in that class. According to the registrations, the majority of the marks were first used in commerce in 2000 or later, with the following exceptions: Mark  1st Use in Commerce — Class NYPD Shield      1971-025/Clothing NYPD Mark  1993-025/Clothing FDNY Shield      1994-025/Clothing, 1999-020/Misc. & 028/Toys FDNY Mark  1996-025/Clothing & 016/Decals 1999-006/Metal goods, 020/Misc., & 028/Toys Defendants do not dispute that the City has registered trademarks for the marks to the extent set forth in the various registrations. They dispute, however, that the City owns the abbreviations and all logos, names and insignia associated with the NYPD and FDNY. They further argue that Defendants used the marks in commerce prior to 2000. The City operates an extensive merchandise licensing program administered by NYC & Company as exclusive agent for the licensing of the City’s various trademarks. Officially licensed souvenir merchandise with the NYPD and FDNY trademarks are sold to the general public. This merchandise generally has a hologram, hangtag, label and/or packaging identifying the NYPD and FDNY trademarks as trademarks owned by the City. The City engages in extensive advertising to promote the sale of officially licensed NYPD and FDNY souvenir merchandise. There are forty-five (45) licensees that, having been brought into the program by public process in conformance with the City’s charter and concession rules, distribute officially licensed NYPD and FDNY merchandise in the United States. In addition, there are twenty-seven (27) international licensees who distribute such merchandise in Europe, Australia, China, and Japan. The City’s trademark licensing program generates annual retail sales of tens of millions of dollars, the vast majority attributable to the sale of officially licensed NYPD and FDNY souvenir merchandise. 2. The Cop Shop Defendant Salvatore Piccolo owns, and is the Chief Executive Officer of, defendant Blue Rage, which does business as the Cop Shop. His wife, Susan Piccolo, is a manager at the Cop Shop. The Cop Shop operates a retail store located at 560 Broadway, Massapequa, New York, and in addition, defendants operate a website. Prior to opening the storefront, Salvatore, who retired in 2001 after twenty years as a Transit Policeman for the City, began making and selling t-shirts to fellow members of the transit bureau police force in or about 1987. He also printed and sold t-shirts, referred to as “house,” “precinct” or “buff” shirts, designed and ordered by individual precincts or firehouses. Deposition of Salvatore Piccolo (“Salvatore P. Dep.”), at 38, Singleton Decl., Ex. B.⁴ Salvatore testified about an incident in 1990 wherein he was in front of the precinct on his day off selling t-shirts with the Transit Police logo. Salvatore P. Dep. at 45-47. His superior, Chief O’Connor, observed the activity and asked Salvatore who had given him permission to sell the shirts, to which Salvatore responded that he did not need permission. When O’Connor tried to transfer Salvatore’s duty station, the latter called William Bratton, then Commissioner of the Transit Police.⁵ During the call, Salvatore asked Bratton “for permission to use the transit police shield and [Bratton] says I didn’t need permission to use the transit police shield because it was a City logo and it was owned by the people of the City of New York.” Id. at 43. Salvatore took this to constitute permission to sell anything with the transit police logo. Id. at 95; Salvatore P. Decl., 34.⁶ In 1995, the Transit Police, which was previously a separate unit, merged with the NYPD. That year, Susan wrote to Bratton because she wanted to make sure they “were allowed to do that we were doing with no problems because they were all merged into one. So I wanted to make sure we could still use the transit, the housing, etc.” Susan P. Dep. 61-62. It was a “short letter” in which she asked Bratton “if we could still use all those logos or we just had to use the NYPD logo.” Deposition of Susan Piccolo (“Susan P. Dep.”), at 63, Singleton Decl., Ex. C. Susan claims Bratton wrote a response in which he said they could keep using the logo as long as they did not disgrace the department. Id. at 71-72. Defendants do not have a copy of either Susan’s letter or Bratton’s response. Defendants have never had any communications with Bratton regarding the use of any FDNY marks. Defendants’ Response to Requests to Admit (“RFA Resp.”) 19, Singleton Decl. Ex. A. The City has submitted a declaration from Commissioner Bratton in which he states, inter alia, that (1) he does not recall having met or spoken with Defendants; (2) he would not have given permission for Defendants to use NYPD marks for merchandising nor told them they were free to do so because he did not possess authority to give such permission; and (3) he would not have told Defendants that the NYPD insignia could be freely used due to concerns regarding criminal impersonation. See Declaration of William J. Bratton, Singleton Decl., Ex. K. At some unspecified time, Defendants’ activities “developed into a business for making tshirts and other insignia related items such as baseball-style hats, coffee mugs and trinkets all decorated with symbols used by New York City Police Department and the Fire Departments of the City of New York.” Declaration of Salvatore Piccolo in Opposition (“Salvatore P. Decl.”), 2, DE [47]. Defendants claim that, by “at least 1995,” Blue Rage, through its predecessors, has been selling essentially the same items as it presently sells “bearing the insignia of, among others, the NYPD and FDNY, applied as decoration to such items in order to identify the New York City Police Department and the Fire Department of the City of New York.” Def. Resp/Counterstmt, 36. In response, the City “does not dispute the fact that, since 1995, Defendants have been selling essentially the same items it is now selling bearing marks associated with the NYPD and FDNY.” Pl. Resp., 36. There are no specific indications in the record as to when Defendants began to sell each type of merchandise, which logos or insignia they used, or how consistently they made any sales. Defendants “do not contest they make and sell a wide variety of unlicensed merchandise bearing the NYPD and FDNY trademarks” through the retail store, but deny selling such merchandise online. Def. Resp/Counterstmt 17. They concede that the Cop Shop sells both licensed unlicensed merchandise, but state that they “label clearly whether the merchandise is licensed from the City of New York, or not.” Salvatore P. Decl. 27. A placard is posted in a display case in the store that states: Some of the Various NYPD and FDNY products Sold in this store. Are sold as decoration and not a brand. Thank you. Blue Rage Inc (The Cop Shop). Singleton Declaration, 43. Defendants also make t-shirts at the request of various precincts or firehouses to be used as fundraisers or worn by the unit members and their families. The City acknowledges that various NYPD and FDNY fraternal organizations have permission to make and sell merchandise bearing the NYPD or FDNY marks at organization events, but notes that such merchandise may not be sold to the general public. While Defendants state that the Cop Shop is “not a souvenir shop” but rather a police supply store that sells police uniforms and related items, Pl. Reply. 48, they do not dispute that the store is open to the general public.⁷ 3. Pre-Litigation Conduct Between the Parties On March 4, 2014, the City sent a cease and desist letter to Defendants regarding the sale of unlicensed and unauthorized merchandise bearing the NYPD and FDNY trademarks. A follow-up letter sent to Defendants by the City’s attorneys on or about December 11, 2014 threatened commencement of a civil trademark infringement action should Defendants continue to sell the merchandise. A telephone call between the City’s attorney and Susan took place on or about December 22, 2014 at which time, the City claims, Susan advised that the merchandise referenced in the March 4, 2014 letter had been donated and that the Cop Shop was no longer in possession of unlicensed merchandise bearing the NYPD or FDNY marks. On or about January 30, 2015, the City’s attorney spoke by telephone with Salvatore who, according to the City, advised that the Cop Shop was no longer selling any unlicensed merchandise bearing the NYPD or FDNY marks. Defendants claim that any references to unlicensed merchandise made during these telephone calls pertained only to goods presented for sale online. As a result of these calls, Defendants have “refrained from listing any of what the City calls ‘unlicensed’ merchandise on Blue Rage Inc. website. Such merchandise is sold only locally in Blue Rage Inc. store or when Blue Rage Inc. attends local trade shows and exhibitions.” Def. Resp/Counterstmt, 48. On June 15, 2016 and May 17, 2017, investigators from NYC & Company, the City’s licensing agent, visited the Cop Shop and observed and photographed substantial quantities of unlicensed souvenir merchandise for sale bearing the NYPD or FDNY marks. The City commenced this litigation on June 9, 2017. At subsequent inspections conducted on October 2 and 6, 2017, substantial quantities of unlicensed merchandise were observed and photographed. Defendants do not dispute that the Cop Shop sells unlicensed merchandise, but contend that they “do not operate a souvenir store” and that the merchandise “was sold to members and their families of uniform services of the NYPD and FDNY to signify their affiliation with the service.” Def. Resp/Counterstmt