United States District Court, W.D. Texas, Austin Division
STOCKADE COMPANIES, LLC and STOCKADE FRANCHISING, LP, Plaintiffs,
KELLY RESTAURANT GROUP, LLC, Defendant.
PITMAN UNITED STATES DISTRICT JUDGE
the Court in the above-entitled matter is Plaintiffs'
Motion for Preliminary Injunction. (Dkt. 14). Having reviewed
the instant motion, relevant law, and the entire case file,
the Court finds that the motion should be GRANTED IN PART AND
DENIED IN PART.
BACKGROUND AND OVERVIEW
Stockade Companies, LLC and Stockade Franchising, LP
(collectively, “Plaintiffs” or
“Stockade”) own and license the trademarks for
the Sirloin Stockade, Coyote Canyon, and Montana Mike's
restaurants. (Compl., Dkt. 1, ¶ 1). On June 4, 2014,
Stockade entered into fifteen franchise agreements with
Defendant Kelly Restaurant Group (“KRG” or
“Defendant”). (Id. ¶ 17). KRG
defaulted on the royalty payments due under the franchise
agreements in May 2016. (Id. ¶ 25). On January
30, 2017, Stockade sent KRG a Notice of Default, Demand for
Payment, and Opportunity to Cure (collectively, “the
Default Notice”) (Id. ¶ 27). The Default
Notice stated that KRG was in default and gave KRG until
February 10, 2017 to pay all amounts due. (Id.). KRG
failed to cure the default by that date. (Id. ¶
28). Stockade then sent KRG a Notice of Termination, which
advised that the franchise agreements had terminated and that
KRG “was to immediately cease use” of any
proprietary marks. (Id. ¶ 29). KRG has
continued to use Stockade's proprietary marks and to
operate multiple Sirloin Stockade, Coyote Canyon, and Montana
Mike's restaurants. (Id. ¶ 30).
February 24, 2017, Stockade filed suit in this Court. (Dkt.
1). It subsequently filed a Motion for Preliminary
Injunction, which asks the Court to (1) immediately enjoin
KRG from infringing on or otherwise using any of
Stockade's proprietary marks, (2) immediately enjoin KRG
from violating the noncompetition provisions in Section 7.04
of the franchise agreements, and (3) immediately enjoin KRG
from using or transferring Stockade's confidential
information. (Mot. Prelim. Inj., Dkt. 14, at 2-3).
does not dispute Stockade's allegations regarding
KRG's default and ongoing use of Stockade's
proprietary marks. (Resp., Dkt. 18). Instead, it argues that
it “wants nothing more than to de-brand its operating
restaurants” and “has, on multiple occasions,
offered to de-brand pursuant to a reasonable de-branding
schedule.” (Id. at 5). KRG is especially
opposed to any suggestion by Stockade that the
non-competition provisions of the franchise agreements should
be interpreted to prevent KRG from operating the restaurants
in question even after successful re-branding. (Id.
Court held a hearing on the Motion for a Preliminary
Injunction on May 12, 2017. (Dkt. 22).
preliminary injunction is an extraordinary remedy, and the
decision to grant such relief is to be treated as the
exception rather than the rule. Valley v. Rapides Parish
Sch. Bd., 118 F.3d 1047, 1050 (5th Cir. 1997). “A
plaintiff seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.”
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7,
20 (2008). The party seeking injunctive relief must
“carr[y] the burden of persuasion on all four
requirements.” PCI Transp. Inc. v. W. R.R.
Co., 418 F.3d 535, 545 (5th Cir. 2005).
requests three separate types of injunctive relief.
Specifically, it asks the Court to enjoin KRG from (1)
infringing on or otherwise using any of Stockade's
proprietary marks; (2) violating the noncompetition
provisions in Section 7.04 of the franchise agreements; and
(3) using or transferring Stockade's confidential
information. (Mot. Prelim. Inj., Dkt. 14, 2-3). The Court
will apply the four-part rubric detailed above to each of
these requests in turn.
KRG's Use of Stockade's Proprietary Marks
asserts that it is entitled, under both the Lanham Act and
Texas law, to an injunction preventing KRG from infringing on
or otherwise using any of Stockade's proprietary marks.
(Id. at 2). The Court agrees.
proprietary marks are registered with the United States
Patent and Trademark Office, (Mot. Prelim. Inj., Dkt. 14, at
4-5), and KRG does not dispute that it continues to operate
restaurants using those proprietary marks. Where such
infringement exists, “all that must be proven to
establish liability and the need for an injunction against
infringement is the likelihood of confusion-injury is
presumed.” Abraham v. Alpha Chi Omega, 708
F.3d 614, 626-27 (5th Cir. 2013); see also Quantum
Fitness Corp. v. Quantum Lifestyle Ctrs. L.L.C., 83
F.Supp.2d 810, 831 (S.D. Tex. 1999) (“When a likelihood
of confusion exists, the plaintiff's lack of control over
the quality of the defendant's goods or services
constitutes an ...