In an unusual split decision, a federal district court in Georgia ruled last week that a former franchisee was not in contempt of an injunction order against use of the franchisor’s trademarks. AFC Enterprises, Inc. v. The Restaurant Group LLC, 2010 U.S. Dist. LEXIS 117240 (N.D. Ga. Nov. 3, 2010). The franchisee had simply closed the store in face of an order not to “operate” it and not to “use” the POPEYES® marks of the franchisor. The signs apparently stayed up, and the franchisor moved for contempt. The court held, however, that its order not to “use” the marks meant only that the franchisee could not promote its business with them. Since the store was closed, the franchisee was not using the marks for any commercial gain. Since there had been no specific order to “remove” the marks, the franchisee was not in contempt.
In all other respects, the injunction ruling of the court was upheld over the former franchisee’s jurisdictional challenge and request for a stay on appeal.
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