By Cheryl Beise, J.D.
The federal district court in New Orleans has preliminarily enjoined the operator of a New Orleans restaurant from using the name “Lucy’s” and surfer-themed trade dress because they were confusingly similar to the licensed marks and trade dress that were associated with the restaurant when it was operated under license as “Lucy’s Retired Surfer’s Bar & Restaurant” (TWTB, Inc. v. Rampick, January 20, 2016, Brown, N.).
TWTB, Inc. and Frank Eugene Raper (collectively “TWTB”) previously operated a surfer-themed restaurant called “Lucy’s Retired Surfer’s Bar & Restaurant,” located at 701 Tchoupitoulas Street in New Orleans, Louisiana. The restaurant was operated pursuant to a 2012 trademark license agreement with LRSBR, LLC, a company formed by defendant Bruce Rampick. The agreement authorized TWTB to use trademarks owned by LRSBR, including “federally registered trademarks … and all other tradenames, trademarks, service marks, marks or terms … owned by Licensor its successors and assigns.” In August 2015, LRSBR terminated TWTB’s license agreement. TWTB continued operating the restaurant, but changed its name to “Lucy’s.”
TWTB filed suit against Rampick for breach of fiduciary duty as an officer and director of TWTB. LRSBR filed a third-party complaint against TWTB for trademark and trade dress infringement. TWTB cross-claimed against LRSBR for breach of the license agreement. Before the court was LRSBR motion for a preliminary injunction and its request for attorney fees and costs. LRSBR argued that TWTB’s use of the word “Lucy’s” and its restaurant trade dress infringed LRSBR’s (1) registered trademarks, including its mark LUCY’S RETIRED SURFER’S BAR & RESTAURANT, (2) common law mark “Lucy’s,” and (3) unregistered surfer-themed trade dress.
Trademark infringement. The court found that LRSBR was likely to succeed on all three of its infringement claims. Following the termination of the License Agreement, TWTB changed the name of the business from “Lucy’s Retired Surfer’s Bar & Restaurant” to “Lucy’s.” However, it continued to operate out of the same location and provide the same restaurant and bar services as it did prior to the termination of the License Agreement. The new restaurant advertised in the same places, through social media and print media, and there was evidence that the business operating as “Lucy’s” used the same social media accounts as it did when it was using the name “Lucy’s Retired Surfer’s Bar & Restaurant.”
LRSBR claimed to own common law rights in the name LUCY’S. LRSBR argued, and the court agreed, that TWTB was estopped from challenging LRSBR’s ownership of LUCY’s, based on the license agreement. The Fifth Circuit has held that a licensee, by virtue of the agreement, recognizes the holder’s ownership and is therefore estopped from contesting the validity of the licensor’s title during the course of the licensing arrangement. The license agreement in this case was ambiguous in that it did not explicitly list “LUCY’S” as one of LRSBR’s protected marks. However, there was sufficient extrinsic evidence that the parties intended the agreement to cover the mark LUCY’S. A shareholder’s agreement executed concurrently with the trademark license agreement made it clear that the mark “Lucy’s” fell within the catch-all category in the license agreement.
With regard to LRSBR’s registered LUCY’S RETIRED SURFER’S BAR & RESTAURANT trademark, as well as its unregistered mark LUCY’s, the court concluded that TWTB’s use of the name “Lucy’s” was “highly likely to create confusion in the mind of the ordinary consumer” as to the “source, affiliation, or sponsorship” of its products and services.
Trade dress infringement. LRSBR sought to enjoin TWTB from using surfboards, explicitly surfer-related decorative items, and menu items that contain references to surfing. LRSBR’s trade dress was not mentioned in the license agreement. The Fifth Circuit has found that trade dress is protectable if it is inherently distinctive or has achieved secondary meaning in the public’s mind, and is not functional.
The court found that LRSBR presented sufficient evidence to demonstrate that the trade dress involving surf imagery was inherently distinctive to identify the business known as “Lucy’s Retired Surfer’s Bar & Restaurant.” The court also found that the trade dress was not functional. Finally, the court determined that the restaurant décor used by TWTB was essentially the same as the trade dress that was used when the restaurant was “Lucy’s Retired Surfer’s Bar & Restaurant.” The similarity of the trade dress weighed strongly in favor of a likelihood of confusion, in the court’s view.
Relief. The court determined that LRSBR established a substantial likelihood of success on trademark infringement claims. The court also found that LRSBR established that it would suffer irreparable harm if the injunction were denied. LRSBR presented evidence that it would be unable to license its trademarks without the injunction. The threatened injury to LRSBR, through the potential harm to its trademarks and the potential loss of the prospective licensee, outweighed the injury to TWTB, whose lease to operate a restaurant at the Tchoupitoulas Street would expire in less than a year.
The court accordingly enjoined TWTB from using the word “Lucy’s” or “any of LRSBR’s registered trademarks in connection with its restaurant” and “using surfboards, explicitly surfer-related decorative items, and all menu items that contain references to surfing.”
The court, however, denied LRSBR’s request for attorney fees and costs. LRSBR failed to demonstrate by clear and convincing evidence that this case was exceptional. TWTB asserted that it did not believe that LRSBR has ownership rights to either the word “Lucy’s” or its surfer bar trade dress. Although TWTB’s arguments were ultimately unpersuasive, they were not made in bad faith, the court said.
The case is No. 2:15-cv-03399-NJB-JCW.
Attorneys: Steven J. Irwin (Steven J. Irwin, Attorney at Law) for TWTB, Inc. Mark A. Thurmon (Roy Kiesel Ford Doody & Thurmon, APLC) for Bruce J. Rampick.
Companies: TWTB, Inc.; LRSBR, LLC
MainStory: TopStory Trademark LouisianaNews
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