Internal Business Dispute Over “The Cupcakery” Trademark Reignites

The Cupcakery is a specialty bakery specializing in baking and selling gourmet cupcakes with locations in Las Vegas and Texas.

On January 14, 2011, Texas resident Ricky Perritt (along with several of his wholly-owned LLCs) filed a lawsuit in the U.S. District Court for the Eastern Distirct of Texas against his niece, Pamela Jenkins, and her Nevada-based company The Cupcakery, LLC (“Cupcakery NV”). See Perritt et al v. The Cupcakery, LLC, et al, Case No. 11-cv-00023 (E.D. Tex. January 14, 2011). A copy of the complaint (with exhibits) can be downloaded here.

The new lawsuit is actually a continuation of an earlier dispute over ownership of “The Cupcakery” that originally arose between Perritt and Jenkins back in September 2009, but which was resolved at that time by a written settlement agreement (attached to the complaint as Exhibit A).

According to the complaint, Cupcakery NV was originally formed by three individuals – Pamela Jenkins, Laura Santo Pietro, and Dawn Kalman – in July 2005 with each owning 1/3 of Cupcakery NV. Jenkins, in order to contribute capital to the new business, purportedly received a $95,000 loan from her uncle, Perrit. Jenkins later sought to borrow additional money from Perritt in order to allow Jenkins to buy-out the interests in Pietro and Kalman. Perritt agreed to pay the funds but only if Jenkins assigned over the 2/3 combined interests of Pietro and Kalman to Perritt. Perritt and Jenkins entered into an Agreement on April 20, 2007, which assigned over Pietro’s and Kalman’s 2/3 interests in Cupcakery NV to Perritt.

When Jenkins later proposed opening a second store in Las Vegas, Perritt loaned an additional $187,500 to Cupcakery NV. That stored opened in January 2008. Thereafter, Perritt, with the full knowledge of Jenkins, decided to open up his own “The Cupcakery” stores – first in Frisco, Texas (owned by the Texas based, and co-Plaintiff ,The Cupcakery, LLC), and then a second store in Dallas, Texas (owned by co-Plaintiff Buster Baking, LLC), and later a third store in The Woodlands, Texas (owned by co-Plaintiff The Woodlands Baking, LLC). Perritt’s Texas stores used the same name, recipes and other intellectual property used by Cupcakery NV.

In September 2009, Perritt and Jenkins became embroiled in a dispute over ownership of “The Cupcakery,” which led to Perritt filing a lawsuit against Jenkins in Texas. Jenkins never answered the suit, but through counsel, a settlement agreement was reached in late October 2009 whereby Perritt transferred of his interests in Cupcakery NV to Jenkins in return for receiving an undivided 50% interest in all trademarks, tradenames, and intellectual property owned by the Jenkins and Cupcakery NV with respect to the cupcake business. Jenkins also gave up any interests she might in the Perritt-owned LLCs. Perritt also had the exclusive right for four years to develop additional “Cupcakery” stores in all states except Nevada. The settlement agreement also established that, with respect to the website thecupcakery.com, all inquiries outside of Nevada would go to Perritt and all inquiries inside of Nevada would go to Jenkins.

The end result of the settlement agreement was that Jenkins received 100% of the stores in Nevada and Perritt received 100% of the stores in Texas (along with the exclusive right for four years to develop additional “Cupcakery” stores in all states except Nevada). Perritt and Jenkins individually would own an undivided 50% interest in all THE CUPCAKERY trademarks, tradenames and intellectual property and both agreed to conduct business in a manner consisting with protecting the marks and to work together to maintain the website for The Cupcakery.

According to the latest complaint, Jenkins has become dissatisfied with the settlement agreement and has acted in a manner in breach of the settlement agreement. Specifically, Perritt alleges that Jenkins has supposedly refused to pay her share of legal expenses advanced by Perritt (approx. $8000) that were incurred by the business in pursuing a lawsuit against a third party regarding the “Cupcakery” name (perhaps referring to the “Sift: A Cupcakery” dispute previously blogged about here and here and here?). Perritt also claims that Perkins has stated that she will “not pay any monies or take any measures necessary” to protect the intellectual property and “will give the right to use the name to third parties without consideration of any sort” [ed.—probably a little bit of an exaggeration].

The complaint also alleges that Jenkins, claiming ownership and control over the website “TheCupcakery.com,” told Perritt on January 12, 2011, that she is going to pull down the website on January 17, 2011, and that Perritt must create his own website. Perritt’s position is that he owns a 50% undivided interest in all the intellectual property of “The Cupcakery” including the website and that to switch websites from the one website that gets the most hits when “Cupcakery” is entered on any search engine would cause substantial and irreparable harm to his business. Perritt also maintains that since website inquiries outside the State of Nevada are directed to him, he will be unable to communicate with potential investors, franchisees, or licensees if the website is down for any length of time.

Perritt seeks a temporary restraining order enjoining Jenkins from changing or interfering with the current website pending a hearing on Perritt’s motion for preliminary injunction. Perritt also seeks a declaratory judgment that he owns an undivided 50% interest in the intellectual property of The Cupcakery, that Jenkins is obligated to pay 50% of the attorneys fees and costs associated with protecting The Cupcakery’s intellectual property rights, and that Jenkins cannot modify the website without Perritt’s consent. Finally, Perritt sets forth causes of action for breach of contract, breach of duty of loyalty, and breach of fiduciary duty.

Comment: One wonders if the parties genuinely thought that the co-ownership of the “The Cupcakery” intellectual property rights worked out as part of their 2009 settlement agreement was really going to work in the long term.

UPDATES:

Las Vegas Sun coverage: Website at center of The Cupcakery legal dispute (Steve Green, January 18, 2011).

In a very interesting and surprising twist, on January 19, 2011, Pamela Jenkins, the public face for The Cupcakery (at least in Las Vegas) issued her own press release which seems to announce that she is no longer claiming any exclusive trademark rights to the term CUPCAKERY in connection with a cupcake bakery:

Through research, I've found that the word cupcakery existed before I opened The Cupcakery. I believe the use of cupcakery as a noun can only maximize the exposure for myself and others who believe in the delicious spirit of cupcakes and cupcakeries. It is not, and never has been, my intent to limit the use of the word cupcakery or purport to own the word, as my former partner is attempting to do. As I have received numerous requests nationwide regarding the phenomenon of cupcakes, the word cupcakery and other cupcake-related questions of late, I felt it was the right time to share the glory of The Cupcakery and all cupcakeries freely.

Las Vegas Sun coverage: Cupcakery owner hoping for an end to trademark disputes (Steve Green, January 20, 2011).

Jenkins’ statement then prompted her uncle to seek another TRO to stop her from talking, which was promptly denied (link to amended TRO application and court denial here).

Las Vegas Sun coverage: Cupcakery legal battle escalates with request for gag order (Steve Green, January 27, 2011).

Hard Rock Hotel Fires Back Against Hard Rock Café Trademark Lawsuit. . .and Reveals the True Story Behind the Dispute

I previously blogged (link here) about the trademark infringement lawsuit filed by Hard Rock Café against the Hard Rock Hotel.

Last Friday, the Hard Rock Hotel fired back with its own counterclaims against Hard Rock Care for breach of contract and tortious interference with business relations arising from Hard Rock Café’s alleged interference with Hard Rock Hotel’s sublicensing activities. A copy of the Hard Rock Hotel’s Answer and Counterclaims can be downloaded here (HT: Steve Green). The Las Vegas Sun has an article on the court filing here.

When the lawsuit was filed back in September, it had all of the tell-tale signs of “something else is going on here.” It seemed pretty obvious (at least to me) that the Hard Rock Café was using some slight “breaches” to try to gain some kind of business advantage. Now, with the Hard Rock Hotel’s Answer, it becomes a little clearer what this dispute is really about – and no surprise, it’s about money.

The true nature of this dispute is revealed in the Hard Rock Hotel’s Preliminary Statement which states the following:

The Hard Rock Defendants have done nothing wrong and, in fact, are victims of systematic legal and business harassment by the Café, which today’s countersuit seeks to remedy. The Hard Rock Defendants enjoy an exclusive, perpetual and royalty-free right to use the “Hard Rock” family of marks for hotel-casinos and casinos west of the Mississippi and in certain international locations. These rights are clearly spelled out in a 1996 license agreement, which the Café is unhappy with but legally bound by. Under that license, the Hard Rock Defendants operate the popular Hard Rock Hotel and Casino Las Vegas; have developed Hard Rock Hotel-Casinos in Tulsa and Albuquerque, through tribal sublicensees; and are actively pursuing other hotel-casino and casino development opportunities in the territories where they enjoy exclusive rights. Per the license agreement, none of the revenue from these ventures goes to the Café or ever will.

The Café has brought the present lawsuit – a meritless grab bag of claims for breach of license, trademark infringement, trademark dilution and unfair competition – in an attempt to terminate or rewrite the 1996 license agreement. The Café complains about a range of alleged trademark abuses that in many cases it has long known about, tolerated or even approved. Most notably, the Café claims to be shocked and disturbed by the popular reality television show “Rehab: Party at the Hard Rock Hotel,” filmed at the Hard Rock Hotel and Casino Las Vegas – despite the fact that this show and the lively behavior it portrays have already been on the air for two years; depicts an event similar to the “Detox” party held at one of the Café’s properties; and has brought enormous positive publicity to the Hard Rock brand. Likewise, the Café purports to be upset about the Tulsa and Albuquerque ventures despite having offered public praise about both ventures. The meritless and untimely nature of the Café’s allegations confirms that this lawsuit is nothing more than an attempt to escape the disadvantageous 1996 license agreement.

Frustrated at being contractually excluded from a lucrative business in a large territory, the Café, in addition to filing the Complaint, has also resorted to improper business tactics. The Café has actively pursued its own projects in the Hard Rock Defendants’ exclusive territories in direct violation of the letter and spirit of the license agreement. The Cafe has interfered with the Hard Rock Defendants’ development projects, including by making untrue and overreaching public statements to deter potential partners from doing business with the Hard Rock Defendants. This misconduct by the Café violates the license agreement and the law, and it must stop.

Of course, Hard Rock Café would say that this is just the Hard Rock Hotel's spin on the dispute. But looking at the situation impartially, what makes more sense? That the Hard Rock Café feels that the Hard Rock Hotel and the “Rehab” show is harming the “rock and roll image” of the Hard Rock trademark so badly that it filed this action – or that Hard Rock Café is looking for a way to rescind the Hard Rock Hotel's license (and sublicense) agreement so that it can have the entire bundle of trademark rights to itself?

Hard Rock Café Sues Hard Rock Hotel & Casino

On September 21, 2010, Hard Rock Cafe International (USA), Inc. (“HRCI”) filed a lawsuit in the U.S. District Court for the Southern District of New York against various defendants that use the “Hard Rock” trademark, most notably the group of companies which own and/or operate the Hard Rock Hotel & Casino in Las Vegas, Nevada (the “Defendants”). See Hard Rock Cafe International (USA), Inc. v. Hard Rock Hotel Holdings, LLC et al, Case No. 10-cv-07244 (S.D.N.Y. Filed September 21, 2010). A copy of the complaint can be downloaded here (HT: Steve Green). The Las Vegas Sun has an article on the lawsuit here (see also Courthousenews.com and Las Vegas Review Journal).

HRCI filed the action “in order to protect the enormous goodwill in its world-renowned trademarks from being systematically diminished, devalued and damaged by the wrongful conduct of Defendants.” HRCI claims that the Defendants are using the “Hard Rock” trademarks in a manner that has intentionally, materially breached the terms of a 1996 license agreement entered into with HRCI’s predecessor-in-interest and violates HRCI’s trademark rights to such marks.

More specifically, HRCI claims that the Defendants’ actions at the Hard Rock Hotel/Casino have caused HRCI’s marks to “become associated with objectionable and offensive conduct that is at odds with the brand imagery of the HARD ROCK trademarks” and “failed to use their best efforts to protect the goodwill associated with” HRCI’s trademarks.

The complaint spends several pages going through the history of the Hard Rock Café and the creation of the worldwide successful HARD ROCK brand by original founders Peter Morton and Isaac Tigrett.

Then, in 1990, The Rank Group, Plc (“Rank”), HRCI’s predecessor-in-interest, acquired all of Tigrett’s interests in the business then operated under the HARD ROCK Marks at that time. In June 1996, Rank entered into a transaction with Morton whereby Morton sold to Rank his interests in the business then conducted under the HARD ROCK Marks, with the exception of ownership of the Hard Rock Hotel & Casino in Las Vegas and the option to develop other properties using the HARD ROCK HOTEL and HARD ROCK CASINO marks in certain geographic areas.

According to the complaint, Rank acquired all right, title and interest to all HARD ROCK marks registered and used around the world and Morton received a license from Rank (through a Rank IP licensing special purpose entity, Rank Licensing, Inc.) to use the HARD ROCK HOTEL and HARD ROCK CASINO marks on a limited basis and subject to a number of conditions. Rank Licensing later assigned all right, title and interest in the HARD ROCK Marks to HRCI. (Note: The few assignment records reviewed regarding the some HARD ROCK registrations did not show this precise chain of title – see, e.g., here and here).

The complaint next asserts that in February 2007, as part of a buyout of Peter Morton’s interests in the Hard Rock Hotel/Casino business, Morton assigned the rights granted to and obligations imposed on him by the 1996 License Agreement to one of the Defendants, HRHH IP, LLC. And since that time, HRHH IP, LLC and Hard Rock Hotel Holdings, LLC have been licensees of HRCI under the 1996 License Agreement (and apparently represented to third party sublicensees that they are licensees under such agreement).

After detailing various sections of the License Agreement regarding use of the marks and protecting the goodwill, the complaint then gets into the juicy details which give rise to the dispute.

(looks like harmless, innocent fun)

In November 2008, a reality television program titled “Rehab: Party at the Hard Rock Hotel” (“Rehab”) began airing throughout the United States. Rehab supposedly depicts events occurring during pool parties held on Sundays at the Hard Rock Hotel & Casino in Las Vegas. [I use the word “supposedly” because does anybody really believe that “reality” shows actually depict reality anymore – as opposed to carefully calculated and constructed entertainment programs designed to appear as if they depict reality?]

According to the complaint, the behavior depicted in Rehab is “entirely at odds with the brand image of the HARD ROCK Marks.” Specifically,

Rehab portrays the Las Vegas HARD ROCK HOTEL & CASINO, a property operated under trademarks owned and licensed by HRCI, as a destination that revels in drunken debauchery, acts of vandalism, sexual harassment, violence, criminality and a host of other behavior that most members of the general consuming public of the United States who regularly frequent or are potential patrons of HRCI’s HARD ROCK CAFE restaurants and other properties operated under the HARD ROCK Marks would find unseemly and objectionable.

[Comment: Isn’t the "Hard Rock" brand image one that is associated closely with rock and roll music, which itself is associated with the image of sex, drugs, and rock and roll – sounds like the behavior depicted complements the brand imagery of the HARD ROCK marks quite nicely].

The complaint also maintains that the Rehab show portrays the staff of the Las Vegas Hard Rock Hotel & Casino as “unprofessional, incompetent, and/or physically and emotionally abusive to hotel guests and other staff.” [ed. – have you seen how rowdy and obnoxious some guests get while living it up in “Vegas”?] Of course, HRCI claims that it “prides itself on offering guests at its HARD ROCK CAFE restaurants and other properties operated under the HARD ROCK Marks dining and entertainment experiences that are pleasurable, fun and consistent with the democratic free spirit of rock music.” [Comment: I think the people engaging in the debauchery at the Rehab pool party were certainly having an entertainment experience that was pleasurable, fun and consistent with the democratic free spirit of rock music – and those watching the show from their homes would surely switch places if they could.]

HRCI then references some highly publicized arrests that occurred in September 2009 at the Rehab pool party where eight patrons were arrested for engaging in acts of solicitation of prostitution and drug distribution (Las Vegas Sun article here) – alleging that Defendants “allowed” the Rehab pool parties to become associated with criminal activity.

The complaint then quotes various communications from members of the public expressly various negatives comments about the Hard Rock Hotel/Casino after viewing the Rehab television show, including communications by members of the public who believe HRCI is responsible for the conduct depicted in the show.

HRCI received assurances from Defendants that the “negative associations” created by the show would be addressed, HRCI alleges that the third season of Rehab “depict the same offensive and depraved conduct portrayed in the first two seasons.” [ed. – does this type of language make anybody else want to check out this show now?]

HRCI maintains that this is harming the reputation and goodwill of the HARD ROCK Marks in violation of the 1996 License Agreement (which requires Defendants to use best efforts to maintain the goodwill of the HARD ROCK Marks). HRCI further maintains that by allowing the Rehab TV show to be aired – and causing the HARD ROCK Marks to become associated with “unsavory, offensive conduct that the majority of the American consuming public finds to be objectionable” [ed.—And yet, the ratings have been high enough to bring it back for a third season so people are watching!] – are intentionally damaging such goodwill.

HRCI also argues that Defendants breached a provision of the 1996 License Agreement by using the mark “HARD ROCK HOTEL” in the title of the Rehab show without HRCI authorization.

HRCI next argues that Defendants have begun branding certain facilities at the Las Vegas property using the acronym HRH (e.g., HRH Tower, HRH Beach Club, HRH Beach Club Bar & Grill) and even branding the property itself as the HRH HARD ROCK HOTEL & CASINO – with the HRH acronym being more prominent than the HARD ROCK HOTEL & CASINO trademark – in an attempt to create a sub-brand of the Hard Rock Marks over which Defendants can claim possesses independent goodwill and capable of being used independently of HRCI (HRCI does have one trademark registration for HRH for clothing items). HRCI maintains that such actions violate the 1996 License Agreement because Defendants are using a mark which is likely to cause confusion with and dilute the distinctive quality of the HARD ROCK Marks.

HRCI’s next focus is on Defendant’s sublicensing of the HARD ROCK HOTEL and HARD ROCK CASINO trademarks to the Cherokee Nation Enterprises, which operates a Hard Rock Hotel & Casino in Tulsa, Oklahoma, and to Pueblo of Isleta Indian tribe which operates a Hard Rock Hotel & Casino in Albuquerque, New Mexico.

Without getting much into specifics, HRCI alleges that the way the HARD ROCK Marks are being used at the Tulsa property are “inconsistent with the brand image HRCI has cultivated over many years” – citing on that “the range of services, character of the establishment and the experience offered to customers is incompatible with consumer expectations for goods and services branded with the HARD ROCK Marks.” [Comment: Are they not offering debaucherous pool parties?]. HRCI cites to some signage that is supposedly not the type of use allowed under the 1996 License Agreement and also mentions the use of the HARD ROCK HOTEL & CASINO mark in the restaurant name “Toby Keith’s I Love This Bar & Grill” where the HARD ROCK mark is subordinate (again, in violation of the provisions in 1996 License Agreement requiring the HARD ROCK Marks to be depicted more prominently, requiring HRCI consent, and requiring HRCI to have copies of all sublicense agreements made between Defendants and third party sublicensees).

HRCI maintains that Defendants have failed in their obligations to ensure that, for its sublicensees, the HARD ROCK Marks are used in a manner that is consistent with the reputation and goodwill of the HARD ROCK Marks. Similar allegations are made regarding Defendants sublicensing at the Albuquerque property.

HRCI’s final focus is the registration by the Defendants of numerous Internet domain names containing variations of the HARD ROCK Marks, including cherokeehardrockhotel.com, hrhpokeronline.com and hardrockroyalty.com, in violation of provisions of the 1996 License Agreement preventing the registration of domain names containing any HARD ROCK Marks.

HRCI’s causes of actions are for breach of contract, declaratory judgment regarding the enforceability of the 1996 License Agreement in light of Defendants’ intentional breaches, federal and state trademark dilution, registered and common law trademark infringement, and federal and common law unfair competition.

Third Lawsuit is a Charm in Ongoing Dispute Between Everest Poker and Harrah’s over World Series of Poker Sponsorship

The latest trademark infringement lawsuit filed in the District of Nevada is a continuation of an ongoing dispute between the online poker company Everest Poker and the owner of the World Series of Poker.

Back in April, Ultra Internet Media S.A. (“UIM”), a Nevis company that owns the online poker website Everest Poker, sued Harrah’s License Company, LLC (“Harrah’s”), the company which owns the World Series of Poker (“WSOP”), for breach of contract relating to a 3 year “on-felt” sponsorship deal that UIM had with Harrah’s to have the Everest Poker logo appear prominently on the felt of every table in the competition as well as the inner rung of the table used during the WSOP finals. See Ultra Internet Media, S.A. v. Harrah’s License Company, LLC, Case No. 10-cv-00455 (D. Nev. Filed April 1, 2010) (complaint here) (Las Vegas Sun article here).

The agreement called for UIM to pay Harrah’s $6.2 million for the 2008 WSOP tournament, $7.9 million for the 2009 WSOP tournament, and $8.4 million for the 2010 WSOP tournament.

UIM notified Harrah’s before the filing of the lawsuit that it was going to withdraw its sponsorship of the 2010 tournament (and not pay the $8.4 million due) based on what UIM calls a breach by Harrah’s of the sponsorship agreement. Specifically, UIM indicated that in the 2008 and 2009, ESPN broadcasts of the WSOP by a French television affiliate, RTL9, electronically projected the name and logo of competitor Full Tilt Poker on the table felt rather than UIM’s Everest Poker logo.

(courtesy of PokerJunkie.com)

According to that lawsuit, UIM had meetings with officials from Harrah’s and ESPN in February 2009 to discuss the RTL9 broadcasts and both agreed to take the necessary steps to stop RTL9 from projecting the Full Tilt Poker logo during its WSOP broadcasts. Yet, UIM claims that as recent as February 14, 2010, RTL9 was still showing the Full Tilt Poker logo during a WSOP event broadcast. UIM claims that its largest source of revenue comes from customers in France since U.S. law prevents UIM from generating gaming revenue in the United States through the Internet or telephone [ed. – wink wink].

The lawsuit seeks damages for breach of contract and unjust enrichment as well as a declaration that Harrah’s is in breach of the sponsorship agreement.

In Harrah’s Answer to UIM’s breach of contract complaint (Answer here), Harrah’s argues that the sponsorship agreement did not require events to be broadcast into any country and that no representations regarding WSOP broadcasts in France were made by ESPN or Harrah’s. (Las Vegas Sun article here).

Harrah’s argues that UIM’s everestpoker.net website received all of the coverage it could have hoped for and more through the broadcast of the WSOP tournaments in over 170 countries to over 250 million households for over 6000 hours. Harrah’s maintains that UIM also benefited from being able to use the WSOP trademark in advertising and promotions as well as being provided with “substantial hospitality consideration -- numerous hotel rooms and access to hospitality spaces and amenities and entry into the WSOP.”

Harrah’s further notes that UIM did not have an online gaming license recognized by French authorities at the time of its discussions with Harrah’s and ESPN at which Harrah’s and ESPN noted to UIM that poker programming was not distributed by French television stations unless tournaments were sponsored by a French licensee.

According to Harrah’s, when the concerns were raised by UIM regarding the French broadcasts in 2009, a “make-good” agreement was reached among the parties in which ESPN would broadcast the WSOP in Spain and Italy and not extra cost to UIM (on the idea that Spain and Italy combined have about the same number of potential viewers as France) and that Everest Poker would be described as the “presenting sponsor” of the WSOP during broadcasts in certain European countries – except for France where a “unique provision of French law” allowed RTL9 to use the digital advertising techniques that enabled it to put the Full Tilt Poker logo in place of UIM’s Everest Poker logo on the ESPN broadcasts.

A related breach of contract complaint was filed on April 27, 2010, by Harrah’s Interactive Entertainment, Inc., the predecessor-in-interest to Harrah’s License Company, LLC, with respect to UIM’s WSOP sponsorship agreement, seeking damages for breach of contract, breach of good faith and fair dealing, and unjust enrichment. See Harrah’s Interactive Entertainment, Inc. v. Ultra Internet Media, S.A. et al, Case No. 10-cv-00607 (D. Nev. April 27, 2010) (complaint here).

Which leads to the latest lawsuit filed last Friday. This time Everest Gaming Limited (“Everest Gaming”) is suing Harrah’s License Company, LLC and Harrah’s Interactive Entertainment, Inc. for trademark infringement. See Everest Gaming Limited v. Harrah’s Interactive Entertainment, Inc. et al., Case No. 10-cv-00904 (D. Nev. Filed June 11, 2010) (complaint here)(Las Vegas Sun article here).

Everest Gaming, a company organized in Malta, is the currently named registered owner of the EVEREST POKER trademark (purportedly assigned over by UIM to Everest Gaming on April 8, 2010, after first going through a Canadian intermediary, but the assignment was not recorded until June 4, 2010 (record here)).

According to the complaint, Harrah’s continues to use the Everest Poker trademark on the table felts being used in the 2010 WSOP tournament as well as banners and wall posters, the inner rung of certain WSOP tables, and on TV monitors through the Rio casino showing the WSOP schedule of events.

Everest Gaming maintains that Harrah’s is refusing to remove its trademark “in an effort to try to force payment by Everest for defendant’s use of such marks, and in order to bolster the legitimacy of the World Series of Poker in the minds of tournament participants, fans and the viewing public” in violation of Everest’s rights to control the use of its “well-known and distinctive trademarks” and that Harrah’s refusal is causing irreparable harm to Everest’s trademark and associated goodwill. [Comment: The Everest Poker name received worldwide exposure and its website probably received millions of hits by appearing on TV broadcasts in connection with one of the most popular poker tournaments in the world . . .and that harmed Everest’s reputation and goodwill how exactly??]

How long before Harrah’s fires back with claims against Everest Gaming for unauthorized use of the WSOP marks? Two can play at that game.

Anytime Fitness Sues Las Vegas Franchisee

On August 20, 2009, Anytime Fitness, Inc. (“Anytime Fitness”) filed a lawsuit in Minnesota Federal District Court against Las Vegas residents Lawrence Fagan and Linda Fagan and several of their Nevada limited liability companies (Rainbow Fitness, LLC; Fort Apache Fitness, LLC; and Blue Diamond Fitness, LLC) for breach of contract and trademark infringement. See Anytime Fitness, Inc. v. Rainbow Fitness, LLC et al, Case No. 09-cv-02185 (D. Minn.). A copy of the complaint (but without the over 100 pages of exhibits) can be downloaded here. [Update: The full complaint with exhibits can be downloaded here.]

AFI is the franchisor of the international Anytime Fitness franchise of small-scale 24 hour fitness centers. AFI owns the U.S. registered trademark ANYTIME FITNESS for “health and fitness club services.”

In April 2008, the Fagans, through their LLCs, entered into five year Franchise Agreements with AFI to open Anytime Fitness centers at three Las Vegas valley locations. The agreements each contained a forum selection clause choosing Minnesota as the sole forum for litigating disputes under the Agreement.

According to the complaint, as a franchisee of the Anytime Fitness “System,” the Fagans received information and know-how about operating a largely unstaffed 24-hour co-ed fitness center (with a limited “menu” of services that purportedly allows AFI’s business model to succeed where others have failed).

The Agreements included a covenant not to compete whereby the Fagans agreed that during the term of the Agreements, they would not start a competing fitness center business in their protected territory or within five miles of any Anytime Fitness location. The Agreements also gave the Fagans the right to use AFI’s trademarks in the promotion of their franchised locations.

Apparently, sometime in April 2009, AFI showed Lawrence Fagan a closed Anytime Fitness center location at 6300 West Charleston Blvd. in Las Vegas to see if he would be interested in taking over that location. The landlord had purchased the equipment from the former franchisee and had apparently been speaking with Fagan about reopening the center. Fagan declined AFI’s offer to open an Anytime Fitness location at this Charleston location.

Then, according to AFI, the Fagans turned around and began operating a fitness center at this location on Charleston under the name Lifestyle Fitness 24/7 (“Lifestyle Fitness”). Of course, according to the City of Las Vegas, the business license for the Lifestyle Fitness located on Charleston is in the name of Anthony Pasquale and was issued on July 23, 2009. [Of course, his own Linked-In page states that he is a co-owner and the City of Las Vegas’ records also reflect his title as President 100% although there is no indication of a corporation as owner].

AFI claims that Lifestyle Fitness is using AFI’s “System” including the same membership agreement, the same keyless entry system, same equipment layout, the same limited menu of services, and has been using materials and equipment obtained from AFI’s suppliers. [Query – if a third party came in and took over a location that was formerly an Anytime Fitness just as it was before it was closed but simply changed the name, wouldn’t one expect that the same equipment, keyless entry system, services menu, etc. would simply be part of what was left over to purchase.]

AFI also claims that the Fagans intend to open another fitness location (currently under construction) under the Lifestyle Fitness name at the intersection of Warm Springs Road and South Durango Drive in Las Vegas. AFI further claims that the Fagans are promoting their Lifestyle Fitness locations using AFI’s registered mark. AFI also claims that the “key fobs” located at the fitness center locations which allow patrons 24 hour access to the fitness center were purchased through an affiliate of AFI and use AFI’s proprietary software. [Weren’t the key fobs already installed at the Charleston location?]

AFI further alleges that the Fagans are planning on allowing members of its three Anytime Fitness locations access to their two Lifestyle Fitness centers. AFI also asserts that the Fagans are informing the members at their Anytime Fitness locations that they will either be converted to Lifestyle Fitness centers or closed down (and such members transferred to their Warm Springs & Durango location). Finally, AFI claims that the Fagans are soliciting employees and members at their existing Anytime Fitness locations to come over to their Lifestyle Fitness locations.

AFI sent a letter to the Fagans on August 7, 2009, reminding them of their non-compete obligations under the Franchise Agreements and demanding that they cease any competition. The Fagans responded to AFI’s letter with an e-mail on August 17, 2009, but apparently did not address the issue of whether they were competing with AFI. AFI responded to this e-mail with two specific questions about any involvement by the Fagans with the Charleston location or any other fitness center in Las Vegas. The Fagans answered “No” to both questions on August 19, 2009. Apparently, AFI did not believe the Fagans’ answers.

AFI’s causes of action are for breach of contract, federal and common trademark infringement, federal and common law unfair competition, violations of Minnesota’s deceptive trade practices act and unlawful trade practices act, unjust enrichment, misappropriation of trade secrets, and tortious interference with contractual relations and prospective economic relations. AFI is seeking the usual injunctive relief and damages (actual and treble), as well as costs and attorneys fees.

GIRLS GONE WILD Sues Wireless Companies Over GIRLS GONE MOBILE

Xbiz reports (link here) on the trademark infringement lawsuit filed last week in the U.S. District Court for the Central District of California by the companies behind the GIRLS GONE WILD brand (Mantra Films, Inc. and GGW Marketing, LLC) against several wireless carriers (including AT&T and Verizon) and mobile phone content providers for using the mark GIRLS GONE MOBILE to promote “adult themed entertainment products” such as downloadable videos, photos, and wallpaper of “youthful women.” See Mantra Films, Inc. et al v. Oasys Mobile, Inc. et al, Case No. 09-cv-04420 (C.D. Cal. June 19, 2009). A copy of the complaint can be downloaded here.

One of the Defendants, Oasys Mobile, Inc., filed an intent-to-use application to register the mark GIRLS GONE MOBILE back in 2007. No opposition was filed when it was published for opposition in December 2008 and a notice of allowance has issued.

In addition to the usual trademark infringement, unfair competition, trademark dilution, cybersquatting, and intentional interference claims, there is also a breach of contract claim against one of the Defendants, Waat Media, Inc. According to the complaint, Waat had a Wireless Distribution Agreement with Mantra for exclusive rights to distribute Girls Gone Wild content over wireless networks. Mantra claims that Waat has breach this Agreement by not paying the quarterly royalties due since June 30, 2008.

Eric Gardner over at THR,Esq. gives his thoughts on the complaint.

Chicago Cubs Sue Another Wrigley Field Rooftop Club

I previously wrote (link here) about the trademark infringement lawsuit filed in February 2008 by the Chicago National League Ball Club, L.L.C., the owner of the Chicago Cubs Major League Baseball team (the “Cubs”), against the owners of two baseball clubs in the business of selling rooftop seats which allow patrons to watch Cubs games played at Wrigley Field because of the close proximity of Wrigley Field to the building rooftops where the clubs operate.

Aerial Photo of Wrigley Field showing building rooftops in the distance.
(Photo Credit: Aerial Views)

While that particular lawsuit was settled by the parties in May 2008, the Cubs are at it again. On March 10, 2009, Chicago National League Ball Club, L.L.C., brought a similar lawsuit against T. Lamb, Inc. (doing business as the “Lakeview Baseball Club”) in the U.S. District Court for the Northern District of Illinois. See Chicago National League Ball Club, L.L.C. v. T. Lamb, Inc., Case No. 09-cv-01523 (N.D. Ill.). A copy of the complaint can be downloaded here.

The complaint notes that the Cubs, through years of investing substantial sums of money both in advertising and promotion as well as the baseball team itself, have built up substantial consumer recognition and goodwill with respect to its numerous trademarks relating to the “Cubs” and “Wrigley Field” including:

• CHICAGO CUBS;
• the circle CUBS logo;
• The name WRIGLEY FIELD (Note: this particular application for federal registration was abandoned -- apparently facing a likelihood of confusion rejection over the many WRIGLEY related trademarks held by the William Wrigley Jr. Company);
• Wrigley Field Home of Chicago Cubs; and
• the Wrigley Field marquee logo.

The Lakeview Baseball Club is located at 3633 North Sheffield, Chicago, Illinois 60613 –across the street from Wrigley Field and with an excellent view of the field from its rooftop. The complaint alleges that T. Lamb has been charging patrons fees to view the Cubs’ home games from this rooftop and supposedly made over $2 million in 2008 alone.

Lakeview Baseball Club

This lawsuit, however, is slightly different than the one that the Cubs previously filed. In this case, the Cubs had filed lawsuits against T. Lamb (along with other rooftop owners) in 2003 resulting in a settlement agreement whereby T. Lamb was permitted to charge admission on the day of any Cubs home games in return for paying a fee to the Cubs. T. Lamb paid the fees due to the Cubs under the settlement agreement for the 2004 through 2007 seasons. Then, in early 2009, T. Lamb apparently notified the Cubs that it would not pay the fee for the 2008 season. Based on this breach, the Cubs terminated the settlement agreement.

In addition to this breach of contract, the complaint alleges that T. Lamb is still improperly using the Cubs’ trademarks in promoting its rooftop club despite a cease and desist notification from the Cubs. [Ed – click here to view the club’s own brochure and decide for yourself if T. Lamb is using the Cubs’ trademarks in any sense that is other than fair.] The complaint specifically focuses on the fact that when an individual visits the Lakeview Baseball Club website, the title of the website’s home page reads “Lakeview Baseball Club (Chicago Cubs© Wrigley Field© Rooftop).” [Ed – do you think they meant to use the © copyright symbol instead of the ® symbol for a registered tradmark?] The Cubs’ trademarks also appear in other parts of T. Lamb’s website [ed. – although arguably in fair use sense: e.g., “Whether you just want to catch a Chicago Cubs game at Wrigley Field” “rooftop entertaining, including employee and client parties overlooking Wrigley Field©.” In the past we've hosted Cubs© themed wedding receptions]. The complaint also alleges that the website claims that the club is “endorsed by the Chicago Clubs” (although I was unable to find such language on the website in conducting my own quick search).

The Cubs’ causes of action are for breach of contract for T. Lamb’s breach of the settlement agreement as well as the same single count (citing 15 U.S.C. §§ 1114, 1116(d) and 1125) cited in the Cubs previous rooftop lawsuit which argues that T. Lamb’s marketing efforts are willful and wanton actions designed to trade off of the Cubs trademarks and goodwill and which are likely to cause confusion as to the affiliation, association or connection between T. Lamb’s club and the Cubs and as to the sponsorship or approval of T. Lamb’s business activities by the Cubs and adversely affect Cubs’ ticket sales as well as the ticket sales of the Cubs’ rooftop licensees.

The Cubs are asking for injunctive relief to stop T. Lamb from using the Cubs’ trademarks and engaging in any marketing which is likely to cause consumer confusion regarding affiliation with or sponsorship or approval by the Cubs of T. Lamb’s business. The Cubs also seek compensatory damages, T. Lamb’s profits, treble damages, statutory damages under 15 U.S.C. § 1117(c) (for alleged counterfeiting), interest, costs and attorneys’ fees.

It is not yet apparent whether the Cubs, as they did in the prior lawsuit, will threaten to obstruct this particular rooftop view of Wrigley Field enjoyed by T. Lamb’s club.

Weight Watchers Sues Campbell Soup Over Weight Watcher’s POINTS

On September 16, 2008, Weight Watchers International, Inc. (“WWI”) filed a trademark infringement lawsuit against Campbell Soup Company (“Campbell”) in the U.S. District Court for the Southern District of New York. See Weight Watchers International, Inc. v. Campbell Soup Company, Case No. 08-cv-8014 (S.D.N.Y.). A copy of the complaint can be downloaded viewed at The Trademark Blog.

WWI is famous for its diet program marketed under the WEIGHT WATCHERS mark. Since 1997, one of WWI’s diet program (the “Flex Plan”) has involved a “Points” system whereby Weight Watcher dieters are given an individual “Points” budget and all food items are assigned a particular “Points” value based on WWI’s own derived formula (pictured below).

p = Points
c = Calories
f = Fat Grams

r = Dietary Fiber Grams

WWI has even registered the mark POINTS for various goods and services including for “food nutrition consultation and advice.”

In July 2008, Campbell introduced a line of “light” soups marketed under its “Select Harvest” brand name. As part of its marketing strategy, Campbell apparently has labeled (or will be labeling) these soups with the “Weight Watcher Points” value as calculated by Campbell according to WWI’s formula. Campbell is also marketing its soups on retail store display racks and online.

Campbell attempted to protect itself by having the following disclaimer on the can’s label as well as on its website:

WEIGHT WATCHERS®, POINTS®, and POINTS VALUE® are registered trademarks of Weight Watchers International, Inc. The number of POINTS® provided here was calculated by Campbell's based on published Weight Watchers International, Inc. information and does not imply sponsorship or endorsement of such number of POINTS® or Campbell's® products by Weight Watchers International, Inc.

However, WWI is apparently unsatisfied with such a disclaimer and feels that Campbell is improperly using without authorization WWI’s trademarks and its reputation and goodwill in the weight-loss industry in order to market its Select Harvest Light product line to consumers trying to lose weight. WWI further argues that consumers are likely to be confused into believing that WWI has approved Campbell’s use of its marks on Campbell’s Select Harvest Light soup products.

WWI sent Campbell a cease and desist letter on August 13, 2008. Campbell responded to WWI’s letter on September 9, 2008, but the complaint does not provide any insight into that response. According to WWI, Campbell is already stocking grocery store shelves with its Select Harvest Light soup products having the infringing label.

WWI’s causes of action are (1) Registered Trademark Infringement under 15 U.S.C. §1114, (2) Unfair Competition/False Designation of Origin under 15 U.S.C. §1125(a), (3) Trademark Dilution under 15 U.S.C. §1125(a), (4) Common law trademark infringement, (5) Common law unfair competition, (6) Dilution under New York law, (7) Unjust enrichment, and (8) Breach of Contract.

The breach of contract cause of action relates to a February 2006 Permitted Use Agreement between WWI and Campbell to which WWI listed the POINTS values for various Campbell's products in the 2006 version of its Complete Food Companion and in WWI's food database at http://www.weightwatchers.com/. According to WWI, one provision in the Agreement provided that Campbell agreed not to use any of the logos, trademarks, or copyrights belonging to WWI in any advertising, packaging, public relations and promotional materials, or in any other manner other than as set forth in the Agreement. Another provision in the Agreement specifically stated that WWI’s inclusion of Campbell's products in its publication and food database was not an endorsement of Campbell's products and that Campbell may not use WWI’s trademarks to suggest any such endorsement. Campbell further agreed not use WWI’s trademarks, including the POINTS values of Campbell’s products, in any advertising or promotional materials (including online websites) or on any packaging and may not provide information to consumers about a POINTS value of its products in any manner without WWI’s express approval. The parties entered into a second Permitted Use Agreement for the 2008 version of WWI's Complete Food Companion, whereby Campbell agreed not to use WWI’s trademarks in a manner that would create a likelihood of confusion as to the source of any products or services or as to the sponsorship or endorsement of any products or services. WWI claims that Campbell’s use of its trademarks is in breach of these agreements.

In addition to seeking injunctive relief, WWI requests damages in the amount of Campbell’s profits, treble damages, attorneys' fees and costs, and punitive damages.

Britney Spears’ Stint at “Rehab” Leads to Trademark Infringement Lawsuit Against the Hard Rock Hotel & Casino

On August 8, 2008, Jimmy Daniel Alexander, a member of the rock band “Rehab,” filed a trademark infringement lawsuit in the U.S. District Court for the District of Nevada against the owners of the Hard Rock Hotel & Casino (“Hard Rock”) in Las Vegas. See Alexander v. Hard Rock Hotel, Inc. et al, Case No. 08-cv-01035 (D. Nev). A copy of the complaint can be downloaded here.

According to the complaint, Alexander, along with two other musicians, formed “Rehab” in the late 1990s in Atlanta, Georgia (see also Wikipedia write-up). The band has released 5 albums to date (its major label debut “Southern Discomfort” was released in 2000 and sold over 170,000 albums). The band even played in Las Vegas as recently as August 5, 2008 (The Las Vegas Weekly here even noted that "It's not Hard Rock's Rehab but they do rock hard").

CD cover of Rehab's 2005 "Graffiti The World" Album

Alexander also currently owns a federal trademark registration for the mark REHAB for music (August 31, 1999 first use date) and clothing (September 2000 first use date) which he acquired by assignment from Destiny Music, Inc. on January 31, 2005. You can see the “Rehab” clothing line here. Alexander also has an application pending for the mark REHAB for live performances by a musical band.

A REHAB hoodie.

Sometime in 2004, the Hard Rock began hosting Sunday afternoon pool parties under the name “Rehab.” (For those with high-speed modems, click here to check out the Hard Rock’s interactive view into the world of “Rehab” – complete with its own “movie trailer”).

The Hard Rock, through its IP Holding company, HRHH IP, LLC, also holds its own trademark registrations for the design marks REHAB RX and REHAB RX SUNDAYS AT THE POOL -- both for "seasonal poolside party held weekly with food, drinks and entertainment" with first use dates of April 5, 2004. In addition to hosting these parties, the Hard Rock also sells clothing (t-shirts, hats, etc.) ornamentally displaying its Rehab marks.

According to the complaint, sometime in March 2006, a fan of the band “Rehab” forwarded a photo of Britney Spears wearing a “Rehab” shirt thinking that it was referring to the band, but in actuality it was a shirt from the Hard Rock’s “Rehab” party.

Possibly the photo that sparked it all?

On April 7, 2006, Alexander’s attorney at the time contacted the Hard Rock's legal counsel regarding its “infringing use” of Alexander’s REHAB mark. Hard Rock's counsel supposedly told Alexander’s attorney that all infringing merchandise had been removed and offered a $7500 settlement (claiming that the Hard Rock had never grossed more than $13,000 from the sale of such merchandise). The attorneys supposedly reached an agreement on the terms of a settlement involving a $10,000 payment along with an agreement for the Hard Rock to sell Alexander’s “Rehab” merchandise through the Hard Rock’s retail outlet, but the agreement had to be approved by the Hard Rock.

This settlement, however, was apparently never approved and finalized before the Hard Rock was sold to Morgan Hotel Group in 2007. Afterwards, Alexander's attorney was put in touch with Mr. Phillip Shahala, the newly appointed Vice President of Marketing, and the two came to some kind of “agreement” through a series of e-mails whereby Alexander would allow the Hard Rock to continue to use the name “Rehab” in exchange for a $13,000 payment to Alexander, a percentage of all clothing sales from the Hard Rock “Rehab” pool parties, space for Alexander’s “Rehab” clothing to be sold at the retail store located at the Hard Rock, and a promise to schedule 3 performances for the band to play at the Hard Rock’s concert venues.

It is not clear from the complaint whether an agreement was actually reached (and subsequently breached) by the Hard Rock or whether the parties were still in the negotiation phase. While Alexander claims to have acted pursuant to the terms of this “settlement agreement” with Shahala by not pursuing any action to stop the Hard Rock from using the “Rehab” name, it appears that Alexander was never paid the $13,000 nor was there any final written agreement memorializing the terms of any such settlement. [Ed. – Wouldn’t you have been a little suspicious when the Hard Rock didn’t at least pay the $13,000? Is there really an enforceable settlement agreement here if there are only e-mail exchanges negotiating terms of a settlement? Did Shahala have authority to enter into such an agreement? And why didn't Shahala turn the matter over to Hard Rock's legal counsel?] The Hard Rock apparently broke off contact with Alexander and did not take any actions consistent with the supposed terms of settlement.

Alexander claims that the Hard Rock’s use of its “Rehab” mark is likely to cause confusion with its own REHAB mark. Alexander’s causes of action are for registered trademark infringement (15 U.S.C. § 1114), federal unfair competition (15 U.S.C. § 1125(a)), common law trademark infringement, breach of contract, and unjust enrichment.

Alexander seeks an injunction to stop the Hard Rock from using the name “Rehab” (and the request is not limited to just the use on clothing but appears to cover use by the Hard Rock of the name "Rehab" for pool parties as well). Alexander also seeks an accounting of Hard Rock’s profits from any infringement [Query—profits just from the sale of clothing or from the pool parties as well, which is where the real money is likely to be] as well as damages for the “breach” of the settlement agreement, which Alexander values at in excess of $1,000,000 because of the promotional value to the band of the promised concert appearances.

Vegas™Esq. Comments:
With all of the talk these days about celebrities going to “rehab,” I don’t think the mark, at least with respect to clothing goods, is especially strong given that the word "rehab" is well recognized to be short for "rehabilition." In addition, the word “Rehab” appears on the clothing as more of an ornamental feature and not necessarily functioning as a source identifier and it's arguable whether it would even be recognized by consumers as an indicator of secondary source or sponsorship (i.e., recognizing “Rehab” to be a reference to the band “Rehab”) although the PTO was apparently satisfied with the specimens submitted with the application and even with the most recent Statement of Use filed in 2007.

The primary goods/services at issue (pool party entertainment versus rock band music CDs) are different enough that it will probably be enough for Hard Rock to prevail on a likelihood of confusion analysis. After all, the PTO didn't seem to find the marks to be confusingly similar. The Hard Rock's use of the term "rehab" is most likely to be recognized as a suggestive play on "rehabilitation" (i.e., going to the Hard Rock's pool party is like going to rehab) and not likely to be recognized as the official pool party of the band Rehab. But then again, Alexander could play up the rock & roll connection between his band and the Hard Rock.

As for the Hard Rock’s sale of clothing bearing the Hard Rock’s own “Rehab” mark, this may be more of a challenge for the Hard Rock given the similarity of the marks, similarity of the goods, similar marketing channels, low degree of consumer care regarding purchases of clothing, and evidence of actual confusion (however weak), all of which tend to favor Alexander. Of course, given that the Hard Rock's use of the word “Rehab” on clothing is likely to be recognized more as ornamental or as an indicator of secondary source or sponsorship and not as a trademark for such clothing, the Hard Rock may end up having to rely on a more fundamental argument that its use of the word "Rehab" on its clothing does not even constitute "use in commerce" under the Lanham Act. See 15 U.S.C. § 1127.