Earlier this year, the Museum of Modern Art in New York City, known as “MoMA,” sued a cafe and art gallery, MoMaCha, also located in New York City, asserting claims of trademark infringement, trademark dilution, and unfair competition. As discussed in my post a couple months ago, although MoMaCha has some well-founded arguments and defenses, the allegations of the complaint are compelling, based on the similarity of the marks and the relatedness of the parties’ goods/services that are offered in the same city. MoMA’s motion for a preliminary injunction, filed in the Southern District of New York, is still pending. The case is The Museum of Modern Art v. MoMaCha IP LLC et al., No. 18-cv-03364-LLS (S.D.N.Y.)
Despite the threat of MoMA’s claims and motion for preliminary injunction, MoMaCha has announced plans to expand to three additional locations in New York City. This type of significant expansion — growing from one to four locations — is a bold move in light of MoMA’s claims, even if MoMaCha is feeling confident in the merits of its arguments and defenses. In particular, damages for trademark infringement under 15 U.S.C. 1117(a) can consist of all the defendant’s profits from its sales of goods/services under the infringing mark, which can add up quickly. Adding three more locations could mean a quadrupling of such potential damages, depending on their profit streams. Furthermore, damages can be tripled under Section 1117(a) based on the circumstances of the case. Therefore, a pending infringement claim can warrant a conservative approach to a defendant’s business expansion — or even limiting the use of the claimed infringing mark — until the dispute is resolved, to mitigate the risk of damages.
Nevertheless, it is possible that MoMaCha might be following this conservative approach. Despite their announcement several months ago to expand to three locations, and coverage of that expansion in the media including articles linked above, after a quick Google search I’m not seeing that any new locations have actually opened, but any New Yorkers out there, let me know if you’ve seen more MoMaCha’s opening up. Stay tuned for updates.