Supreme Court Decides Special Proceeding to Enjoin Trademark Violation Despite Co-Pending Federal Trademark Action

On August 4, 2014, Justice Ramos of the New York County Commercial Division issued a decision in Matter of Explorers Club Inc. v. Diageo PLC, 2014 NY Slip Op. 24218, granting judgment and a permanent injunction to the plaintiff in a summary proceeding brought under GBL § 135.

Section 135 of the General Business Law permits a summary proceeding to obtain permanent injunctive relief:

No person, society or corporation shall . . . adopt or use the name of a benevolent, humane or charitable organization incorporated under the laws of this state, or a name so resembling it as to be calculated to deceive the public . . . . an application may be made to a court or justice having jurisdiction to issue an injunction, upon notice to the defendant of not less than five days, for an injunction to enjoin and restrain said actual or threatened violation . . . without requiring proof that any person has in fact been misled or deceived thereby.

The Explorers Club brought a GBL § 135 proceeding against Diageo—a large London-based alcohol distributor—alleging that Diageo had used its name in marketing its "Johnny Walker Explorer's Club" brand.

Diageo moved to dismiss the petition on a number of grounds, one of which was that the petition should be stayed in light of a co-pending trademark infringement action in the Southern District of New York.

The court refused to stay the summary proceeding on the grounds that the relief available under GBL § 135 is "separate and not to be confused" with the relief sought in the federal action. "Special proceedings in the sense used in the CPLR are unknown in federal court [and are] designed to facilitate a summary disposition of the issues and [have] been described as a fast and cheap way to implement a right . . . . For these reasons federal courts often decline to exercise supplemental jurisdiction over summary proceedings."

The court also found that, although the parties were the same and the facts undoubtedly overlapped, "the questions of law are separate and distinct." Under the Lanham Act, the plaintiff is required to show that its mark has "acquired distinctiveness or a secondary meaning." No such requirement exists in a GBL § 135 special proceeding.

Accordingly, the court refused to stay or dismiss the New York action in light of the federal action, and after a consideration of the merits awarded a permanent injunction to the Explorers Club against Diageo.

This ruling is interesting because a GBL § 135 special proceeding is a specific, seldom-utilized action which must be unfamiliar to many practitioners. It is also interesting on a more general level, in that it shows that a party litigating in federal court can also bring a New York law special proceeding. Given that the special proceeding will probably be decided first, it could have a decisive effect, perhaps mooting large portions of the federal action.