The ringing in of the New Year marked not only the end of a decade, but also the end of an era for New York landmark Tavern on the Green. January 1st marked the expiration of the operating license for the Leroy family, who had operated the restaurant since the 1970s, and had successfully maintained the former sheepfold as the second highest earning restaurant in America (grossing more than $34 million in 2008 and $38 million in 2007).

As a result of the city’s granting of the new operating license to Dean J. Poll, operator of the equally famous Central Park Boathouse, the Leroy family filed for bankruptcy on September 9, 2009, with 452 listed creditors looking to reclaim $8 million. The bankruptcy action has sparked media attention, as the assets of Tavern on the Green are auctioned off, with items generally ranging from $100 to $1 million.

The most valuable asset for Tavern on the Green, and the most controversial, is its name, which has been appraised at a value of $19 million. Initially, the city took the position that it did not own the name Tavern on the Green, and would leave it to the Leroy family to control. The city subsequently changed its stance, and the ownership of the Tavern on the Green trademark is now being hotly contested in federal court.

Judge Cedarbaum of the Southern District, whose decision on the trademark ownership is expected shortly, recognizes that the ownership of the name is not a clear-cut issue. Warner Leroy, who took control of Tavern on the Green in 1976, was granted a trademark for the restaurant name in 1981, and has expended legal fees throughout the years defending the legality of the trademark against other restaurants attempting to use the restaurant’s name. The burden for the city will be overcoming that incontestable trademark. The city’s arguments lie primarily in the failure by Mr. Leroy to disclose in his trademark application that the city has owned a building in Central Park known as Tavern on the Green since 1934, more than 40 years before the name and operating license were granted to Mr. Leroy. Moreover, the idea to turn the former sheep pasture into a restaurant was incontestably that of the city, and not of Warner Leroy.

Meanwhile, the restaurant’s doors remain closed for the first time in more than 30 years, and its more than 400 staff members remain unemployed. In an effort to avoid further delays in the reopening of the restaurant under the operation of Dean J. Poll, and because the city refuses to partake in a bid war on a name it believes it owns, the city chose a backup name for the restaurant: Tavern in the Park.

In December 2009, however, the United States Patent and Trademark Office (the “Trademark Office”) denied the city’s application for a trademark on Tavern in the Park because the new name “merely describes a feature or characteristic of the applicant’s services, in that they take place in a tavern-style restaurant in a park.” The decision of the Trademark Office accords with trademark law generally, in that a name that merely describes a thing is not worthy of a trademark, since the function of a trademark is to identify and distinguish the goods and services of one seller from those sold by all others.

Some see the Trademark Office’s decision as a setback for the city, but Gerald E. Singleton, senior intellectual property lawyer for the New York City Law Department, told the New York Times that the finding “was not a blow to the city at all,” since the Trademark Office “didn’t say that the city can’t use the Tavern in the Park name.” The New York Times further noted that the Trademark Office might have been attempting to “avoid conflict with other restaurants called Tavern in the Park, most notably the Tavern in the Park in Chicago.”

If the name Tavern in the Park is not sufficiently distinct to qualify for a trademark, however, does that decision strengthen the Leroy family’s argument in bringing an unfair competition claim against the city if Judge Cedarbaum decides that the Leroys own the trademark?

Unfair competition applies where a product name is confusingly similar to the name of a trademarked product. As the Eleventh Circuit noted in John H. Harland Co. v Clarke Checks, Inc., 711 F.2d 966 (11th Cir. 1983), where a defendant adopts a product name with the intent of deriving benefit from the reputation of the plaintiff, the court should infer confusing similarity in violation of unfair competition regulations.

That seems to be exactly what the city is trying to do. The city “intentionally chose a name that was as close to the actual name as possible” to evoke in potential consumers the reputation of the former Tavern on the Green. Since new restaurants require an enormous amount of advertising and difficulties in building brand awareness, using a name reminiscent of Tavern on the Green essentially provides the city with a shortcut to the “expensive and time-consuming process that is necessary to build the kind of awareness that Tavern on the Green would immediately bring to mind.”

If the federal court decides that the Leroy family owns the trademark, the Leroys plan to use the international reputation of Tavern on the Green to sell restaurant memorabilia, gift items, salad dressings, and cooking oils. The city’s similar use of that reputation could provide unfair competition to the Leroys as trademark owners.

The Trademark Office’s denial of the city’s application for an independent trademark on Tavern in the Park could strengthen that claim because it recognizes that “the LeRoys’ operations at Tavern on the Green provided specific goods and services that were unique and important — that went beyond the description in the name.” Either way, it seems that “What’s in a name?” is really a large sum of money, and a constant stream of litigation.