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A federal court in Mississippi recently denied motions to dismiss filed by various wholesalers of Pepsi and Dr. Pepper products, challenging tortious interference and unfair competition claims brought against them by Brown Bottling Group, a bottler, seller, and distributor of Pepsi and Dr. Pepper products. Brown Bottling Group, Inc. v. Imperial Trading Co., LLC, 2022 WL 667780 (S.D. Miss. March 4, 2022).

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A federal court in Missouri partially granted franchisees’ motion to dismiss a franchisor’s Lanham Act claims and stayed the proceedings on the surviving claims pending the resolution of parallel proceedings in North Carolina state court. Window World Int’l, LLC v. O’Toole, 2020 WL 7041814 (E.D. Mo. Nov. 30, 2020). Window World, a franchisor of home remodeling products, was sued by dozens of its franchisees in North Carolina state court for various claims, some of which related to the franchisees’ rights to use Window World’s trademarks. Window World later sued three ...

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A federal court in Florida granted a franchisor preliminary injunctive relief for trademark infringement claims, but denied the franchisor’s request to enforce a noncompete against defendants who had not signed a franchise agreement. Interim Healthcare, Inc. v. Interim Healthcare of Se. La., Inc., 2020 WL 3078531 (S.D. Fla. June 10, 2020). Interim is the franchisor of a system that provides nursing, therapy and non-medical home care, hospice, and healthcare staffing. Defendants operated Interim franchises in and around New Orleans and Livingston Parish, Louisiana. The ...

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A federal court in Michigan has denied a restaurant chain’s motion for preliminary injunction because it failed to demonstrate likelihood of success on its claim that a competing franchisor was infringing trademarks and trade dress. Eastpointe DWC, LLC v. Wing Snob Inc., 2020 WL 3412266 (E.D. Mich. June 22, 2020). Detroit Wing Company has been operating restaurants primarily selling chicken wings since 2015. Wing Snob Inc. subsequently opened its first restaurant and rapidly expanded, opening locations in near proximity to other Detroit Wing Company locations. Detroit Wing ...

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A storm shelter manufacturer’s “vast infringement campaign” against a dealer’s trademarks was an exceptional case that warranted the award of attorneys’ fees under the Lanham Act, the U.S. Court of Appeals for the Seventh Circuit recently held, reversing the district court’s denial and granting attorneys’ fees to the dealer. 4SEMO.com Inc. v. S. Ill. Storm Shelters, Inc., 939 F.3d 905 (7th Cir. 2019). This dispute arose from a dealership agreement between Southern Illinois Storm Shelters (“SISS”) and 4SEMO, which granted 4SEMO the exclusive territorial ...

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The U.S. Supreme Court has resolved a circuit court split by holding that a bankrupt licensor’s rejection of a trademark license under section 365 of the Bankruptcy Code does not deprive the licensee of its rights to the licensed trademarks. Mission Prod. Holdings, Inc. v. Tempnology, LLC, 587 U.S. ___, 2019 WL 2166392 (May 20, 2019). The decision holds that the licensor’s rejection of the trademark license under bankruptcy law constitutes a breach of the license by the licensor and that the legal effects of that breach on the licensee’s rights to the trademarks are determined ...

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The U.S. Court of Appeals for the Sixth Circuit recently affirmed a district court’s grant of summary judgment dismissing multiple counterclaims brought by a former franchisee against the plaintiff-franchisor, Buffalo Wild Wings (“BWW”). Buffalo Wild Wings, Inc. v. BW-3 of Akron, Inc., 2019 WL 994040 (6th Cir. Mar. 1, 2019). The parties had entered into a license agreement that authorized BW-3 to operate a Buffalo Wild Wings restaurant in Akron, Ohio. The agreement required BW-3 to operate the restaurant in conformance with the system developed by BWW and to maintain ...

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A Massachusetts federal court recently granted summary judgment to the defendants in a trademark dispute that stemmed from their development of restaurants under the plaintiff’s trademarks. Xiao Wei Yang Catering Linkage In Inner Mongolia Co. v. Inner Mongolia Xiao Wei Yang USA, Inc., 2018 WL 4516682 (D. Mass. Sept. 20, 2018). Linkage entered into a five-year cooperation agreement with the defendants to support the defendants’ promotion and development of a franchise market under trademarks owned by Linkage, including the federally registered trademark LITTLE LAMB. The ...

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The United States Court of Appeals for the Third Circuit affirmed on alternative grounds the Western District of Pennsylvania's finding that a manufacturer owned a trademark used to distribute its products, but the court vacated and remanded the case as to damages. Covertech Fabricating, Inc. v. TVM Building Prods., Inc., 855 F.3d 163 (3d Cir. Apr. 18, 2017). Covertech manufactures insulation products under the umbrella of its rFOIL brand, which includes the products CONCRETE BARRIER (a registered trademark) and ULTRA (an unregistered trademark). Covertech entered into two ...

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The Eighth Circuit Court of Appeals recently overturned an award of monetary damages for trademark infringement under the Lanham Act and violations of the Minnesota Deceptive Trade Practices Act. Martinizing Int’l, LLC v. BC Cleaners LLC, 855 F.3d 847 (8th Cir. Apr. 28, 2017). Martinizing International entered into two franchise agreements with KM Cleaners authorizing the use of Martinizing’s trademarks and system in KM Cleaners’ two dry cleaning stores. The agreements prohibited KM Cleaners from selling the franchise locations or assigning the franchise agreements ...

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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 ...

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The federal district court in Minnesota granted a franchisor's motion for summary judgment against a competitor who used variations of its trademark in online advertisements and when interacting with customers. Zerorez v. Distinctive Cleaning, Inc. 2015 U.S. Dist. LEXIS 58635 (D. Minn. May 5, 2015). Zerorez Franchising System, a carpet cleaning franchisor, brought suit against Distinctive Cleaning, a competing carpet cleaning business located in the same area, and its owner and day-to-day manager after discovering online advertisements for "Zero Rez Carpet Cleaning" with ...

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In a recent case a federal court in New Jersey granted a franchisee's motion to dismiss trademark infringement claims brought by the franchisor, but granted the franchisor leave to amend its claim. 7 Eleven, Inc. v. Maia Inv. Co., 2015 U.S. Dist. LEXIS 50753 (D.N.J. Apr. 17, 2015). 7-Eleven brought suit against its franchisee, Maia, after discovering that it had sold 7-Eleven branded products at a competing convenience store. Specifically, 7-Eleven alleged that Maia had sold various 7-Eleven proprietary products, such as Cheeseburger Bites and BIG BITE hot dogs, at its own store ...

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The U.S. Supreme Court recently held that, under certain circumstances, rulings by the Trademark Trial and Appeal Board (TTAB) of the United States Patent and Trademark Office on the core issue of "likelihood of confusion" in contested trademark registration (opposition or cancellation) proceedings can be binding on a court considering the same issue in infringement litigation. B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293 (March 24, 2015). The TTAB had held, in an opposition proceeding, that there was a likelihood of confusion between B&B's senior registered mark ...

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In Ledo Pizza System, Inc. v. Singh, 2014 U.S. Dist. LEXIS 46906 (D. Md. Apr. 3, 2014), a federal court in Maryland granted a franchisor’s motion for contempt against a former franchisee who failed to comply with a temporary restraining order prohibiting his continued operation of a pizza franchise following termination. The franchisor, Ledo Pizza, terminated Singh’s franchise agreement after he defaulted on several of his obligations under the contract. Ledo also filed suit for breach of contract and various violations of the Lanham Act. The court granted Ledo’s request ...

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A franchisor whose trademark was being infringed in a domain name recently obtained transfer of the domain to its control through a Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) arbitration action. U.S. Structures, Inc. v. Ginger Storm, FA1401001540563 (NAF Mar. 5, 2014). Gray Plant Mooty represented the franchisor in the matter. In this case, U.S. Structures’ trademark ARCHADECK® was infringed by the domain name archadeck-chicagoland.com. Chicagoland is a common reference to the Chicago metropolitan area, where U.S. Structures has an Archadeck ...

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The United States District Court for the Northern District of Texas held that the failure of a terminated franchisee and its successor to fully deidentify a hotel and remove all signage related to its former franchise system, even signage that is difficult to access and costly to remove, constituted trademark infringement. Choice Hotels Int’l, Inc. v. Goldmark Hospitality, LLC, 2014 U.S. Dist. LEXIS 20666 (N.D. Tex. Feb. 19, 2014). The franchisee, Goldmark, acquired a former Choice Hotels franchisee’s property through bankruptcy and foreclosure and converted it from ...

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A federal judge in Seattle has denied a franchisor’s motion for a contempt order to enforce a consent judgment obtained against an accused trademark infringer and his company. Two Men & A Truck/Int’l, Inc. v. T&S Transp., Inc., 2014 U.S. Dist. LEXIS 4759 (W.D. Wash. Jan. 13, 2014). In this case, Two Men and a Truck had sued the defendants for trademark infringement based on their use of various iterations of the plaintiff’s trademark, TWO MEN AND A TRUCK, in connection with moving services identical to those offered by the franchise system. In a consent judgment resolving the ...

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A Michigan federal court recently denied a franchisor’s motion for summary judgment on its trade dress infringement and unfair competition claims. Happy’s Pizza Franchise, LLC v. Papa’s Pizza, Inc., 2013 U.S. Dist. LEXIS 10130 (E.D. Mich. Jan. 25, 2013), involved a lawsuit brought by Happy’s Pizza Franchise, LLC, against Papa’s Pizza, Inc. and Phil Almaki, who once was a passive investor in one Happy’s Pizza location. Almaki later sold his interest in the Happy’s Pizza store and opened several pizza restaurants under the mark Papa’s Pizza. Happy’s claimed that ...

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The Supreme Court’s decision in Already, LLC v. Nike, Inc., 568 U.S. ___, 184 L. Ed. 2d 553 (U.S. Jan. 9, 2013), is important for franchisors who may be considering bringing a trademark infringement action against a competitor (including a former franchisee) using a similar mark, as well as for recipients of such infringement claims. The unanimous court affirmed the lower courts’ rulings that, once a trademark plaintiff has voluntarily dismissed its infringement suit and issued a covenant not to sue, the district court loses federal jurisdiction under Article III of the U.S ...

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The United States District Court for the Southern District of Ohio recently granted summary judgment in favor of Choice Hotels on a claim for trademark infringement by a terminated Econo Lodge franchisee. In Choice Hotels International, Inc. v. Jagaji, Inc., 2012 U.S. Dist. LEXIS 128048 (S.D. Ohio Sept. 10, 2012), the hotel franchisor sent its franchisee notices of default, citing the franchisee’s failure to respond to guest complaints and its failure to pay amounts due under the franchise agreement. Choice subsequently terminated the franchise agreement when the franchisee ...

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Wine & Canvas, an Indiana franchisor whose franchisees organize parties where guests can enjoy cocktails during painting classes, sued YN Canvas, which operated a Wine & Canvas location in San Francisco. Wine & Canvas Development, LLC v. YN Canvas CA, LLC, et al., 2012 U.S. Dist. LEXIS 111273 (S.D. Ind. Aug. 7, 2012). The nature of the parties’ relationship was in dispute, including whether the arrangement was a license or a franchise. The suit alleged trademark infringement, unfair competition, breach of contract, and a number of other claims. The complaint named several ...

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In Phelan Holdings, Inc. v. Wendy’s International, Inc., 2012 U.S. Dist. LEXIS 101643 (M.D. Fla. July 3, 2012), the United States District Court for the Middle District of Florida dismissed three trademark-related claims because the plaintiff failed to cite properly to statutory causes of action. The dispute arose in connection with the alleged misuse of plaintiff’s service mark “you can’t fake fresh.” (The plaintiff operates seafood restaurants under the mark “Pincher’s Crab Shack.”) The court granted leave for the plaintiff to amend its complaint, but ...

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Last month, the United States Court of Appeals for the Fourth Circuit issued a highly anticipated ruling on the legality of the use of others’ trademarks in Google’s keyword ad/sponsored links program, AdWords. The case is Rosetta Stone Ltd. v. Google, Inc., 2012 U.S. App. LEXIS 7082 (4th Cir. Apr. 9, 2012). The appellate court reversed most of a 2010 ruling by a federal district court in Virginia, which had granted summary judgment in Google’s favor on all claims. The lawsuit claimed that the search giant committed direct and contributory trademark infringement and trademark ...

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In Big O Tires, LLC v. Felix Bros. Inc., 2011 U.S. Dist. LEXIS 143087 (D. Colo. Dec. 13, 2011), a federal district court in Colorado denied a franchisor’s motion for summary judgment on its trademark and trade dress claims against the owners of three Big O Tires franchises in California. The defendants had elected not to renew their franchise agreement for one of the units, and requested early termination of the remaining two units. After Big O, the franchisor, declined that request, the defendants continued to operate their remaining two franchises and changed the name of their third ...

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A United States District Court in California last month dismissed Pinkberry’s case against parties who registered the trademark “Pinkberry” in Japan, concluding the Lanham Act did not extend to defendants’ activities outside the United States. Pinkberry, Inc., et al., v. JEC International Corp., et al., 2011 U.S. Dist. LEXIS 140669 (C.D. Cal. Dec. 7, 2011). The defendants registered the trademark at issue in Japan but never used it. After unsuccessfully attempting to purchase the right to the trademark from defendants, Pinkberry initiated a proceeding in Japan to ...

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In Century 21 Real Estate, LLC v. Destiny Real Estate Properties, et al., 2011 U.S. Dist. LEXIS 147075 (N.D. Ind. Dec. 19, 2011), the United States District Court for the Northern District of Indiana held that a holdover franchisee’s continued unauthorized use of a franchisor’s trademark constitutes use of a counterfeit mark, which allows the franchisor to seek additional damages and attorneys’ fees and costs under the Lanham Act. To establish counterfeiting, a plaintiff must prove that the mark is identical with or substantially indistinguishable from a registered mark ...

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In Super 8 Worldwide, Inc. v. Riro, Inc., 2011 U.S. Dist. LEXIS 134163 (D. Neb. Nov. 18, 2011), the United States District Court for the District of Nebraska denied a motion to strike filed by the defendant, a terminated Super 8 franchisee. The franchisor brought suit against the terminated franchisee for trademark infringement and trademark dilution based on the former franchisee’s use of confusingly similar marks after termination. The former franchisee moved to strike, as scandalous, immaterial, and impertinent, portions of the complaint averring that the franchisor’s ...

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The United States District Court for the Western District of Missouri recently granted a preliminary injunction against a franchisee and ordered the franchisee to cease using the franchisor’s trademarks due to the poor condition of the franchisee’s store.  The case is American Dairy Queen Corp. v. McMurray, No. 11-00859-CV-W-GAF (W.D. Mo. Sept. 2, 2011). Gray Plant Mooty represented American Dairy Queen (ADQ) in the action. 

ADQ brought the action after store inspections revealed health and food safety violations at the store. The decades-old contract between the parties did ...

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In Eva’s Bridal Ltd v. Halanick Enterprises, Inc., 2011 U.S. App. LEXIS 9539 (7th Cir. May 10, 2011), the United States Court of Appeals for the Seventh Circuit affirmed a district court’s decision that the plaintiffs abandoned their trademark because they had granted a naked license under which the plaintiffs had no “reasonable control over the nature and quality of the goods, services, or business on which the [mark] is used” by the defendants. The plaintiffs had granted various family members licenses to use their trademark Eva’s Bridal to operate bridal salons in the ...

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In Masters v. UHS of Del., Inc., No. 09-3543 (8th Cir. Jan. 6, 2011), the Eighth Circuit affirmed a jury verdict finding that UHS, the owner of psychiatric hospitals, willfully infringed on the plaintiff’s service mark and breached a licensing agreement with the plaintiff. Although this was not a franchise case, the scenario could easily arise in franchising. Under the parties’ license agreement, the plaintiff licensed its service mark to UHS for a certain use. But UHS expanded its use of the mark beyond the scope of the license by using it to promote other programs. The licensor ...

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In Doctor’s Associates, Inc. v. Subway.SY LLC, 2010 U.S. Dist. LEXIS 83223 (D. Minn. Jul. 30, 2010), the plaintiff franchisor, which owns numerous trademarks associated with the SUBWAY sandwich restaurant chain, obtained a permanent injunction against a defendant who operated an infringing Web site in Syria. The defendant formed Subway.SY LLC in 2008 and used images copied directly from plaintiff’s Web site on its own Web site and Facebook page, which advertised the opening of a “Subway” restaurant shop in Syria. Although the defendant claimed that the Web site was not ...

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The Ninth Circuit in Toyota Motor Sales, USA, Inc. v. Farzad Tabari, et al., 2010 U.S. App. LEXIS 13903 (9th Cir. July 8, 2010), vacated and remanded an order granting a preliminary injunction in favor of Toyota enjoining the use of one of its trademarks in a domain name. Toyota, the exclusive distributor of Lexus vehicles in the United States, sued the defendant auto brokers based on the use of the term “Lexus” in their business Web site domain names. The district court found that the defendants’ domain names, buy-a-lexus.com and buyorleaselexus.com, infringed the trademark ...

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A federal bankruptcy court has held that continued use of a franchisor’s trademark as part of a domain name after termination was trademark infringement. In re Gharbi, 21 Real Estate LLC v. Gharbi, 2010 Bankr. LEXIS 1247 (Bankr. W.D. Tex. April 19, 2010). The defendant, a former franchisee of the Century 21 real estate franchise system, continued to use domain names that included the mark CENTURY 21 on various Web sites after termination and featured the mark itself prominently on the home page of another Web site. The court granted summary judgment to the franchisor on the issue of ...

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The United States Court of Appeals for the Eighth Circuit has affirmed the rejection of a franchisee’s claims for breach of contract and violation of the South Dakota Franchise Act in an interesting case involving trademark rights.  Pinnacle Pizza Co., Inc. v. Little Caesar Enterprises, Inc., 2010 U.S. App. Lexis 5801 (8th Cir. Mar. 22, 2010).  A Little Caesar franchisee had brought suit over use of the HOT-N-READY trademark.  The franchisee alleged that it originated the phrase “Hot-N-Ready” in advertising ready-to-pick-up pizzas, and that the later adoption of the phrase by ...

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After an oil change shop’s contract to purchase Valvoline products ended, the shop no longer can display the brand’s signs and other trademarked items, the United States District Court for the Eastern District of Michigan ruled last week. Valvoline Co. v. Magic Quick Lube, 2009 WL 3497805 (E.D. Mich. Oct. 29, 2009). The ruling was based on federal trademark law, which prohibits the use of trademarks without permission in such circumstances.

In enjoining the former dealer, the court found that the trademark use became “unauthorized” when the shop’s contract to buy the ...

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In Doctor’s Associates Inc. v. Agnello, 2009 WL 2526171 (S.D.N.Y. July 28, 2009), a federal magistrate judge considered a request by a franchisor for damages against a former franchisee who had used the franchisor’s trademarks in connection with the operation of a strip club. The franchisee had formerly operated a Subway restaurant. After the franchisor terminated his franchise agreement, the franchisee continued to use the Subway trademarks to operate a deli at a different location during the day, and also began operating a strip club at that deli at night, advertised as ...

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In Homes & Land Affiliates, LLC v. Homes & Loans Magazine, LLC, 2009 WL 260992 (M.D. Fla. Feb. 4, 2009), the court granted a franchisor partial summary judgment against one of its competitors on claims of trademark infringement. In this case, the franchisor published Homes & Land, a free magazine containing real estate advertisements found in display racks, which the franchisor licensed to franchisees in several markets across the country. The franchisor owned a federal registration of its mark HOMES & LAND®, which it first used in commerce in 1973, and also owned a domain name ...

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In Dudley v. HealthSource Chiropractic, Inc., 2008 WL 4507714 (W.D.N.Y. Sept. 30, 2008), the owner of a chiropractic practice brought claims against a franchisor and local franchisee alleging trademark infringement and cybersquatting. The plaintiff had used the trademark HEALTHSOURCE in connection with a chiropractic practice in the Rochester, New York area prior to the defendant franchisor’s adoption of the same mark. The franchisor’s system expanded to over 170 franchisees, including one in the Rochester area. The plaintiff brought suit alleging that links to that ...

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In Jay Bharat Developers, Inc. v. Minidis, 2008 WL 4173626 (Cal. App. 2 Dist. Sept. 11, 2008), the California Court of Appeals this month upheld the trial court’s entry of a preliminary injunction prohibiting a former master franchisee of the Red Brick Pizza franchise system from continuing to display the franchisor’s trademarks after the termination of its franchise rights. The master franchisee sued Red Brick Pizza’s co-founders, alleging that those individuals had fraudulently induced the franchisee to enter its franchise agreement. While that action was pending, Red ...

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In Pearle Vision, Inc. v. Romm, 2008 WL 4059793 (7th Cir. Sept. 3, 2008), the United States Court of Appeals for the Seventh Circuit reviewed the lower court’s decision holding a former multi-unit franchisee in contempt for failing to comply with a preliminary injunction, and awarding a judgment on the contempt in favor of the plaintiff franchisor in the amount of $321,000. 

The defendant is an optometrist and former franchisee who had operated (by himself and through his companies) four Pearle Vision stores, pursuant to separate franchise agreements. After the plaintiff had ...

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In Molly Maid v. Carlson, 2008 WL 2620109 (E.D. Mich. July 1, 2008), the United States District Court for the Eastern District of Michigan recently granted Molly Maid’s motion for preliminary injunction to restrain its former franchisee from infringing on Molly Maid’s trademarks. This decision provides good support to franchisors who wish to avoid customer confusion when a former franchisee, in operating a competing business, continues to use a telephone number that had been associated with the terminated franchise.

In granting the franchisor’s motion, the court first ...

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 In Pinnacle Pizza Co., Inc. v. Little Caesar Enterprises. Inc., 2008 WL 2381678 (D.S.D. June 5, 2008), a Little Caesar’s® pizza franchisee sued the franchisor for claims related to the franchise system’s use and federal registration of the trademark HOT N’ READY. The franchisee began using the mark HOT N’ READY in 1997 to advertise promotional offers for ready-to-takeaway pizza. Based on the success of the promotion, the franchisee shared the promotional concept with other franchisees. In 2000, the franchisor began distributing an implementation guide for the ...

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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