Wednesday, April 27, 2011

Egg Works Loses 9th Circuit Appeal Despite No Opposition From Egg World

The owners of the Las Vegas breakfast restaurants The Egg & I and Egg Works got another dose of egg on their face when the Ninth Circuit Court of Appeals affirmed a lower court’s decision to deny the restaurant chain's motion for preliminary injunction that had been sought against a competing Las Vegas restaurant named Egg World (which did not even file any kind of brief in the appeal).

Last June, Bradley Burdsall, along with his two companies Egg Works, Inc. and Egg Works 2, LLC (collectively “Egg Works”), brought a trademark infringement lawsuit against Egg World, LLC, and two of its principals, Gabrijel Krstanovic, and Dejan Debeljak (collectively “Egg World”). See Egg Works, Inc. et al v. Egg World LLC et al, Case No. 10-cv-01013 (D. Nev.). On September 14, 2010, the lower court entered an order denying Egg Works’ Motion for Preliminary Injunction. (a copy of that order can be viewed here). For my previous blog post discussing the lower court’s decision, click here.

Because the counsel of record for Egg World in the lower court case withdrew from the case soon after the court’s decision (the basis for withdraw was a dispute over money – an unfortunate, all too common issue in litigations), Egg Works recognized that if it appealed the court’s denial of its motion for preliminary injunction, the Egg World defendants would probably not file any kind of brief in such an appeal. And so Egg Works filed an appeal to the Ninth Circuit Court of Appeals of the lower court's decision to deny Egg Works’ Motion for Preliminary Injunction. And if the defendants don’t file an any kind of brief in the appeal, Egg Works would easily win, right? Well as this case aptly demonstrates, that’s not necessarily true.

On September 27, 2011, the Ninth Circuit Court of Appeals in an unpublished decision rendered without oral argument (and without the benefit of any kind of briefs from the Egg World defendants) affirmed the Nevada District Court’s decision to deny Egg Works’ Motion for Preliminary Injunction. See Egg Works, Inc., et al v. Egg World LLC, et al, Appeal No. 10-17534 (9th Cir. April 27, 2011) (unpublished). A copy of the decision can be downloaded here.

The decision is fairly straightforward, with the Court of Appeals finding no abuse of discretion on the part of the lower court in denying Egg Works’ Motion for Preliminary Injunction:

The district court correctly identified the legal standard for likelihood of confusion of a trademark, its findings were not clearly erroneous, and the district court did not clearly err in finding no likelihood of confusion concerning appellants’ trademark. See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). We conclude that the district court did not abuse its discretion in concluding that appellants failed to meet the requirements to merit preliminary injunctive relief. Accordingly, we affirm the district court’s denial of appellants’ motion for a preliminary injunction.

So where does the case go from here? Well, assuming Egg Works decides not to waste any more money by seeking reconsideration or appealing to the U.S. Supreme Court, the case goes back to Nevada district court and continues to move forward. But with Egg World not currently represented by counsel, Egg Works will now be able to obtain a default and seek a default judgment against thecompany. And Egg Works may try to seek defaults against the individual defendants as well, who have not show any particular interest in continuing the fight in court (even though they did win both at the lower court and on appeal – although admittedly only at an early preliminary stage).

Of course, given that the Egg World restaurant that gave Egg Works so much heartburn last year closed down earlier this year [Comment—I know from firsthand experience that running a restaurant is tough, and probably more so in these economic times], does Egg Works really want to continue to spend legal fees fighting this out after suffering two battle defeats – even after having essentially won the war at the end of the day? We shall see.

[Full Disclosure: My law firm has represented one of the Defendants in other legal matters, but did not represent any of the Defendants in this case.]

Thursday, April 14, 2011

Caesars Palace Files Declaratory Judgment Action Over OCTAVIUS TOWER

In so many trademark lawsuit stories that grab the media’s attention, the story is often one of a large corporation enforcing its trademark rights against individuals and small businesses in a manner that is often described as “trademark bullying” (but which, of course, from the corporation’s perspective could be seen as zealous protection of the company’s valuable trademark rights). The story behind this lawsuit is quite the opposite – in this case, it is the large corporation that is being bullied (or more accurately, majorly inconvenienced since a large corporation has sufficient resources to fight a legal battle in court) by an individual that is seeking to enforce highly questionable trademark rights.

On April 8, 2011, Caesars World, Inc. (“Caesars”), the owner of the CAESARS PALACE brand of hotel-casinos (including Caesars Palace in Las Vegas), filed a declaratory judgment action against a German man named Marcel July and his Nevada limited liability company, Octavius Tower LLC, based on the defendants claims to have exclusive ownership rights to the mark OCTAVIUS TOWER and demands that Caesars stop using the name in connection with a hotel tower. See Caesars World, Inc. v. July et al, Case No. 11-cv-00536 (D. Nev. April 8, 2011). A copy of the complaint (with exhibits) can be downloaded here.

Back in 2007, Caesars World’s parent company, Harrah’s Entertainment, Inc. (which has since been renamed Caesars Entertainment Corporation) announced a $1 billion expansion of the Caesars Palace Hotel-Casino in Las Vegas. One of the new hotel towers built as part of the expansion was going to be named the “Octavius Tower” (going along with Caesars “Roman” themed hotel/casino – presumably named after Julius Caesar’s adopted nephew, Gaius Octavius [for you Roman history scholars, feel free to correct me]).

The Octavius Tower at Caesars Palace in Las Vegas

Two days after Caesars’ announcement regarding its plans to build Octavius Tower, Mr. July, being the enterprising fellow that he appears to be, decided to registered several domain names such as octaviustowercom;;; and The same day, July also registered the domain;;;; and The websites at those domain names promoted that “The new Caesars Palace Towers are Coming Soon” and that the domain names were for sale (see Exhibit B of the Complaint). Caesars filed domain name arbitration actions against July under the UDRP with respect to those domain names that incorporated the mark Caesars Palace (but chose not to go after the Octavius Tower domain names without any trademark registration). The domain names were transferred to Caesars after the arbitrator determined that the domain names had been registered in bad faith. See Caesars World, Inc. v Marcel July Ra Christian Kaldenhoff, Nat'l Arb. Forum, FA 0801001126341 (March 3, 2008).

On July 20, 2007, Caesars filed its own intent-to-use application for the mark OCTAVIUS TOWER for “hotel services.” The application was allowed by the PTO on January 29, 2008; however, because of well-publicized construction delays due to lack of funding after the major downturn in the economy (see news articles here and here), Caesars was not able to provide a Statement of Use before the January 29, 2011 deadline and the application went abandoned (although Caesars, anticipating that its original application would go abandon, filed a new application on December 10, 2010).

Of course, what happened during the interim? Mr. July filed his own trademark registration applications with the PTO for the mark Octavius Tower in connection with entertainment services – specifically on May 7, 2008, July filed for the mark OCTAVIUS TOWER for “Entertainment services, namely, providing a web site featuring musical performances, musical videos, related film clips and photographs”. A registration was issued September 1, 2009. [Query—given that Caesars was already aware of Mr. July propensity for opportunism as illustrated by his domain name registrations and the fact that the marks were identical, why didn’t Caesar file an Opposition against Mr. July’s applications when it had the chance?] On July 23, 2009, July filed a second application for OCTAVIUS TOWER for “Entertainment in the nature of visual and audio performances, and musical, variety, news and comedy shows; Presentation of live show performances; Theatrical and musical floor shows provided at discotheques and nightclubs; Theatrical and musical floor shows provided at performance venues.” A registration for this second application issued on January 12, 2010. In addition to these federal registrations, July also filed three Nevada state trademark registrations for the mark OCTAVIUS TOWER in connection with entertainment services (here, here, and here) as well as a Florida trademark registration. Caesars alleges in its complaint that July has not used the mark in connection with any of the entertainment services identified in the registration (while I have not reviewed the specimens of use submitted by July in order to get his marks registered, I would not be surprised if they are questionable on their face).

Given that the PTO allowed Mr. July’s applications to register despite Caesars pending application for OCTAVIUS TOWER for hotel services, one would naturally not expect Caesars second application for OCTAVIUS TOWER to encounter any objections from the PTO, right? Wrong. On February 24, 2011, the PTO issued a non-final office action rejecting Caesars new application on the basis of a likelihood of confusion with Mr. July’s registration. So what did Mr. July do once he learned of the rejection? He got an attorney to send a cease and desist letter to Caesars (see Exhibit D of the Complaint) demanding that Caesars stop using Mr. July’s “trademarked name” Octavius Tower in any manner and threatening to pursue “all legal remedies available to him.” Caesars counsel wrote back on March 21, 2011, arguing no likelihood of confusion and offering to enter into a coexistence agreement. On March 23, 2011, July’s attorney later wrote back rejecting the coexistence agreement and reiterating the threat to take legal action. Subsequently, July purportedly modified his website at to add a page that includes Caesars' 2007 announcement of its plan to launch Octavius Tower and includes copies of the correspondence July’s counsel sent to Caesars along with the message to the public about Caesars “infringement” of July’s trademark rights:

Public awareness of this unacceptable corporate behavior is crucial to eradicating it and we are asking you to take a stand and make a difference on this issue. Your collective voice is more compelling than the lobbying power of corporate giants and it is a voice that cannot be ignored. Together we can make a difference and help keep our freedom intact, for us, for our children, and for our grandchildren.

Caesars, recognizing its opportunity to file a declaratory judgment action against Mr. July in order to redress this mess, filed the instant action. In addition to seeking declarations of non-infringement of Mr. July’s trademark rights, Caesars also seeks to cancel July’s federal and state trademark registrations on the basis of non-use and fraud.

So with all of Mr. July’s talk about enforcing his trademark rights, we shall see how important those marks truly are to him and how strongly he feels about his trademark rights (and the strenghth of such rights). Too many individuals seem to have this impression that registration of a particular mark is the end-all-be-all for solidifying exclusive rights to a particular term. But registration is merely prima facie evidence of trademark rights. If you don't actually have any underlying trademark rights to a mark (i.e., some associated goodwill that the consuming public associates with your mark and thegoods/serivces sold using the mark), then you will not be entitled to make a claim of exclusive rights to a term (especially against a third party using the mark in connection with a substantially differnet good or service).

And while I suspect that Mr. July may try to turn this dispute into a "David vs. Goliath" battle (as reflected by his website) of a large corporation using its corporate power and the legal system to steal his valuable trademark, this is one time where I side with the big company.