Wednesday, January 28, 2009

Sammy Hagar files lawsuit against CABO WABO licensee

I always find it interesting when a lawsuit seemingly flies under radar screen of the press -- until one reporter writes a story about it and suddenly the news is everywhere (or perhaps reporters, like bloggers, sometimes don’t have time to investigate stories and simply report other reporter’s stories).

This seems to be the case with a trademark infringement lawsuit filed over a month ago by Red Head, Inc. (“Red Head”) against Fresno Rock Taco LLC (“Rock Taco”) over a Cabo Wabo Cantina restaurant franchise opened by Rock Taco in Fresno California. See Red Head, Inc. v. Fresno Rock Taco LLC, Case No. 08-cv-05703 (N.D. Cal. Filed December 22, 2008). A few days ago, there was a brief mention of the dispute in the Fresno Bee along with a posting of the complaint (which I’ve combined and posted here). It didn’t take long for the story to be picked up by San Jose Mercury News and Fresno ABC affiliate KFSN-TV (which provides a detailed “fair and balanced” report of the dispute).

The Cabo Wabo brand was originally developed by former Van Halen front man Sammy Hagar, who later assigned such rights to Red Head for marketing and licensing purposes. While the current owner of the intellectual property related to CABO WABO (or at least the named owner of numerous federal registrations and pending applications for the marks CABO WABO and CABO WABO CANTINA) appears to be Cabo Wabo, LLC, Red Head is apparently still tasked with the business of marketing and enforcing such rights.

Cabo Wabo Tequila

Red Head entered into a license agreement dated December 7, 2006, with Rock Taco to open a Cabo Wabo Cantina in the Fresno, California development of Village of Granite Park. Rock Taco is run by Milton Barbis, the developer of Granite Park. The restaurant opened in August 2008 and while the complaint indicates that the restaurant was open at the time of filing, the above ABC report indicates that the restaurant did in fact close in December. (The Fresno Bee has a background story here on the financial troubles faced by Barbis and the Granite Park development – another victim of the tightening credit markets).

The lawsuit alleges that Rock Taco never made any royalty payments the entire time the restaurant was open except for one check that bounced, and that instead, Barbis diverted all funds from the restaurant to other parts of the Granite Park development.

Red Head notified Rock Taco on November 6, 2008 that Rock Taco was in breach of its license agreement. When Rock Taco supposedly failed to cure such breaches, Red Head sent a second letter indicating that Rock Taco’s license to the CABO WABO trademarks and trade dress was terminated and that Rock Taco had to cease using the CABO WABO trademarks and trade dress and Hagar’s likeness by December 14th.

The lawsuit describes the Fresno Cabo Wabo Cantina as a “disaster . . .much like the entire Granite Park development” and puts much of the blame on the Barbis himself and his poor management of the restaurant and the Granite Park development in general. The complaint alleges that Barbis’ failure to pay employees, vendors, lenders, and even the City of Fresno damaged the Cabo Wabo brand and Sammy Hagar’s name.

Of course, there are two sides to every story. And while I have not reviewed the more recent filings with the court, Barbis apparently claims that Hagar did not live up to an agreement on his part to perform two concerts -- instead only performing one for which Barbis paid $27,000 (although Hagar claims that this check also bounced).

Red Head’s causes of action are for 1) federal registered trademark Infringement (15 U.S.C. §1114); 2) federal unfair competition (15 U.S.C. § 1125(a)); 3) false designation of origin (15 U.S.C. § 1125(a)); 4) trademark infringement and dilution under California law (Cal. Bus. & Prof. Code §§1432 et seq.); 5) unfair competition under California law (Cal. Bus. & Prof. Code §§ 17200 et seq.); 6) false advertising under California law (Cal. Bus. & Prof. Code §§ 17500 et seq.); 7) violation of Hagar’s right of publicity (Cal. Civ. Code §3344); and 8) breach of contract.

1 comment:

Anonymous said...

Actually this story was broken by The Business Journal in Fresno