The Franchise Memorandum

In MPC Franchise, LLC v. Tarntino, 2016 WL 3512500 (2d Cir. June 27, 2016), the United States Court of Appeals for the Second Circuit affirmed a ruling cancelling a federal trademark registration on the grounds that it was obtained by fraud in violation of the Lanham Act. MPC, a franchisor of Pudgie’s pizza restaurants in upstate New York, brought suit against a nephew of the original Pudgie’s founder after the nephew, Brent Tarntino, applied for and received registration of the mark PUDGIE’S for use with restaurant services. MPC alleged that Tarntino procured the mark fraudulently when he certified in his application that he was the sole owner of the mark, despite knowing that MPC was already franchising pizzerias using the same mark.

The court’s ruling centered on whether Tarntino actually knew that the statements in his trademark application were false, or whether he merely should have known about those falsehoods. Relying largely on the precedent set by In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009), Tarntino argued that the standard for fraud on the PTO is actual knowledge. The court agreed, but found that even under this more stringent standard, Tarntino still committed fraud because there was abundant evidence that he knew at the time of his application that other Pudgie’s restaurants were using the same mark.