A Clear Case of Trademark Dilution: Court’s Response to Trademark Infringement via Granting Default Judgment

8th February, 2022 - 4:15 am Categories: Trademark 0 Comments

Bob and Me Productions, Inc., an American restaurant and trademark owner brought this civil action against Lemon Leaf Café, LLC. The civil action was brought at the United States District Court for the Central District of California(“District Court”) (Bob & Me Prods. v. Lemon Leaf Café, LLC, 2020 U.S. Dist.). The grounds of civil action were federal infringement of trademark, federal dilution of trademark, unfair competition, and common law trademark infringement under the Lanham Act. The Plaintiff sought default judgment under Federal Rule of Civil Procedure 55, granting damages is within “wide latitude” of the district court’s discretion. It also requested for the following relief: (1) statutory damages, (2) costs of the action and (3) an injunction. The court after considering the fourth Eitelfactor leaned in favor of the plaintiff and granted their motion of default judgment. The defendants also filed certain strike motions, which were, however, dismissed by the district court.

Since 2005, the plaintiff has owned and managed “The Lemon Leaf Café: Gourmet Marketplace” at 653 West Lancaster Boulevard in Lancaster, California. In 2018, Plaintiff registered the restaurant’s trademark (hereinafter, the “Mark”) with the U.S. Trademark Registration. The Lemon Leaf Café’s name is included in the Mark, along with a picture of a lemon in lieu of the “O” in “Lemon.” Plaintiff has been using the Mark in its storefront, menu, and print advertisements since 2005, as well as on social media and the restaurant’s website. Plaintiff contended that he has spent a significant amount of money marketing and promoting the Mark in California and across the United States, culminating in a contract for in-house catering with a national defense contractor. Plaintiff also asserts to have been recognized on KTLA News in Southern California, as well as other television food programmes, resulting in food orders and shipping across the United States.

Defendant owns and runs a restaurant in 916 West Burbank Blvd Ste. H, Burbank, California, that is 60 miles away from Plaintiff’s eatery. Plaintiffs argued that Defendant provides the same patrons comparable restaurant goods. Plaintiff contends that Defendant uses a word design that is “confusingly similar” to the Mark on its storefront, menu, print advertising, and internet channels. Plaintiff claims that between April 2019 and January 2020, his attorney sent two cease and desist letters to Defendant, informing him of his ownership of the Mark, the “extensive and valuable goodwill” the Mark enjoys, and the resulting confusion among potential customers due to the similarity of Defendant’s logo to Plaintiff’s Mark. Additionally, Plaintiff argued that Defendant’s continual use of the Mark has resulted in written and telephonic questions concerning Defendant’s restaurant, indicating that customers are confused about the two establishments.

The legal standard in reference to “Default Judgment” mentions that An application for default judgment must be supported by a statement in accordance with Federal Rule of Civil Procedure 55(b) stating, among other things, when and against whom the default was entered, as well as the identification of the pleading to which default was made. This has been given by the plaintiff.

The District Court after duly analyzing the Eitel factors, entitles the Plaintiff default judgment on three of the four claims. The first factor considers “Possibility of Prejudice to Plaintiff”. Plaintiff claims that if a default judgment is not entered, customers would continue to mistake his business with the Defendant’s and incorrectly conclude that the Defendant’s restaurant is affiliated with his. In the absence of a favorable decision, Plaintiff will continue to “hear written and telephonic queries, customer testimonies expressing their confusion between the two places.”

The next important factor considered by the court in consideration of the case Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994) was “The Merits of Plaintiff’s Substantive Claims and Sufficiency of the Complaint”. Upon all the claims brought up by the plaintiff against the defendant, the court took count of 1^st, 3^rd and 4^th while rejected the 2^nd claim. The court took account of the standards provided by the Lanham Act and ruled that the plaintiff had a valid trademark and the defendant’s use of that mark was likely to cause consumer confusion.By presenting copies of the essential registration documents, the plaintiff sufficiently claims and exhibits its ownership and right to the mark in dispute. Customers inquired if the plaintiff’s business was affiliated with the defendants since defendants use the same consumer base and make similar items. As a result, there is a lot of misunderstanding.

The court further considered the other factors like “The Sum of Money at Stake”, “Possibility of a Dispute Concerning Material Facts”, “Possibility of Excusable Neglect” and “The Strong Public Policy Favoring Decisions on the Merits” while referring the case of Aztec Shops Ltd. v. State St Grill SDSU Inc., 2014 U.S. Dist. The court viewed that there was no issue of genuine material facts in question, on April 28, 2020, defendant was declared in default for failing to answer to the complaint or otherwise engage in any element of this case. As a result, the likelihood of excusable neglect is remote. Similarly, according to the Federal Rules of Civil Procedure, a court’s predisposition for deciding matters on the merits does not bar it from giving a default decision.

Lastly, for the reasons mentioned above, the Court determines that Plaintiff is entitled to $25,000 in statutory damages for willful trademark infringement by the defendant, as well as $505 in costs, which includes filing fees and expenditures connected to service of process. Finally, Plaintiff was granted an injunction prohibiting Defendant from exercising the Lemon Leaf Café Mark indefinitely. 15 U.S.C. 1116(a) gives the district court the authority to issue injunctions based on equitable considerations and on such terms as the court deems appropriate to prevent the infringement of the trademark owner’s rights.

Author: Saransh Chaturvedi an associate at Khurana & Khurana, Advocates and IP Attorney,  in case of any queries please contact/write back to us via email saransh@iiprd.com