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Firebirds International, LLC v. Firebird Restaurant Group, LLC

United States District Court, N.D. Texas, Dallas Division

August 15, 2019

FIREBIRDS INTERNATIONAL, LLC, Plaintiff,
v.
FIREBIRD RESTAURANT GROUP, LLC, MICHAEL D. KARNS, and FIREBIRD IP, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE, UNITED STATES DISTRICT JUDGE

         This is a trademark infringement dispute. Plaintiff Firebirds International LLC owns and operates restaurants under the mark “Firebirds.” Defendant Firebird Restaurant Group operates a restaurant-management company, Firebird Restaurant Group. Plaintiff sued Defendants under various trademark-infringement-related laws. Before the Court are the parties' crossmotions for summary judgment. Plaintiff seeks partial summary judgment on the issue of Defendants' liability for trademark infringement and the related claims. Doc. 71, Pl.'s Mot. Defendants seek partial summary judgment on Plaintiff's claim for damages and unjust enrichment. Doc. 72, Defs.' Mot. Because fact issues preclude both requests, the Court DENIES these motions (Docs. 71 & 72).

         I.

         BACKGROUND

         Plaintiff Firebirds International LLC owns and operates a chain of nearly fifty restaurants in nineteen states across the country. Doc. 77, Pl.'s Br., 3; Doc. 78, Pl.'s App., 31-32 (chart listing restaurants). The restaurants are steakhouses that offer "an upscale dining experience at a casual, or affordable, price point." Doc. 78, PL's App., 2 ¶ 6 (Decl. Eason). All of Plaintiffs restaurants operate under the "Firebirds" mark. Id. at 2 ¶ 5. Some restaurants display only "Firebirds":

         (Image Omitted)

         While some restaurants display a sign that says "Firebirds Wood Fired Grill":

         (Image Omitted)

         Id. at 41, 45. The mark puts emphasis on both the “F” and the “S” in the word “Firebirds.” There are currently no Firebirds restaurants in Texas, but Plaintiff plans to expand into this market by 2020. Id. at 2 ¶ 4. And Plaintiff recently opened its first restaurant in Oklahoma. Id.

         In 2001, the United States Patent and Trademark Office (“USPTO”) issued Plaintiff a registration for the “Firebirds” mark to be used for restaurant services. Doc. 77, Pl.'s Br., 4 (citing Doc. 78, Pl.'s App., 46-49). Additionally, Plaintiff owns four related registrations: (1) “Firebirds Wood Fired Grill” for restaurant services; (2) “Firebirds Firebar” for restaurant and bar services; (3) “Firebirds” for wine; and (4) “Firebirds” design for restaurant and bar services, as well as wine. Id. at 5 (citing Doc. 78, Pl.'s App., 59-66). Plaintiff also has a pending application for the mark “Firebirds Inner Circle” used for a consumer-loyalty program. Id. (citing Doc. 78, Pl.'s App., 67-73). Plaintiff uses these marks for commercial, promotional, and advertising purposes. Doc. 96-1, Pl.'s Resp., 5-6. For example, they're used on menus, flyers, print advertisements, and in television and radio advertisements, internet promotions, social media, and event sponsorships. Id. at 6.

         Defendant Firebird Restaurant Group (“FRG”) is a restaurant-management company that owns various restaurants in north Texas. Doc. 73, Defs.' Br., 5-6. FRG owns and operates restaurants doing business under six brands: El Fenix Mexican Restaurant, Snuffer's Restaurant & Bar, Village Burger Bar, Meso Maya, Taqueria La Ventana, Tortaco, and Sunrise Mexican Foods. Doc. 98, Defs.' Resp., 8. These brand restaurants, in turn, own around fifty restaurant locations. Id.[1]

         Defendant Michael Karns started FRG in 2008 as a holding company for the El Fenix restaurants, the first of the brand restaurants he purchased. Doc. 77, Pl.'s Br., 6. Karns continued to use the El Fenix mark for marketing and business purposes; FRG was merely used as a shell company to acquire El Fenix. Id. It was not until 2012 that Karns decided to “rebrand”[2] and start using the “Firebrand Restaurant Group” mark as a logo. Id. Defendants commissioned someone to create a logo for their FRG mark. Plaintiff contends that Karns “rebranded” FRG for several reasons. First, FRG started adding new restaurant brands to the company. Id. Second, Plaintiff argues that “Karns felt that he was having trouble looking cool as a restaurant group with El Fenix as the mother brand.” Id. (internal quotations omitted). Then, in 2013, Plaintiff claims that Defendants started to use their mark as a “motherbrand” to advertise and market the brand restaurants. Id. The mark can be seen in the upper right-hand corner of this photo:

         (Image Omitted)

         Id. at 7 (citing Doc. 78, Pl.'s App., 182). The type-written portion of the mark displays the word “Firebird” in large print and “restaurant group” in smaller print. The mark is also typically featured with the large flame, as displayed above. Plaintiff argues that, since 2012 or 2013, Defendants Karns and FRG “advertise and promote the restaurants that they own and operate under the infringing ‘Firebird' mark both locally and nationally within the restaurant industry.” Id. Plaintiff produces evidence that shows that Defendants have used the FRG mark on, among other things, restaurant menus, flyers, business cards, print advertisements, websites, promotional information, press releases, social media, and in event and charity sponsorships. Id. at 6. Defendants dispute that they use the FRG mark as a trademark or anything other than a “business name.” Doc. 98, Defs.' Resp., 9. They also push back on Plaintiff's characterization of their use of the FRG logo as a “motherbrand.” Id. at 6. On the other hand, Karns has expressed that he wanted to use the newly designed logo to “add other restaurants underneath it.” Doc. 73, Defs.' Br., 3.

         In 2013, Defendant Firebird IP, LLC filed a trademark registration with the USPTO for the FRG mark to be used for “[r]estaurant management for others.” Doc. 78, Pl.'s App., 249. Plaintiff contends that at some point before or during this process Defendants became aware of the “Firebirds” marks through a clearance search conducted by their attorneys. Doc. 77, Pl.'s Br., 7. Despite this, Defendants proceeded with their trademark application. Id. The USPTO attorney assigned to the application issued an initial refusal based on likelihood of confusion with the Firebirds mark. Id. at 8 (citing Doc. 78, Pl.'s App., 274-310). Ultimately, the examining attorney issued a Final Office Action that maintained the initial refusal decision. Id. at 9. The examining attorney found that the marks were very similar and that the parties' services were closely related. Doc. 78, Pl.'s App., 316. Then, Defendants filed a request for reconsideration in response to the Final Office Action, renewing arguments and evidence they previously submitted and submitting additional evidence. Doc. 99-10, Defs.' App., 583-86. In a turn of events, the USPTO allowed Defendants' application and published the FRG mark in the Trademark Official Gazette. Doc. 99-11, Defs.' App., 587. Plaintiff proceeded to oppose Firebird IP's application in the Trademark Trial and Appeal Board (“TTAB”). Doc. 77, Pl.'s Br., 9. That proceeding was stayed pending the outcome of this litigation. Id. at 10.

         On October 4, 2017, Plaintiff filed its original complaint in this case. Doc. 1, Orig. Compl. The complaint brought claims for federal and common law trademark infringement and unfair competition. Id. ¶¶ 47-66. It also brought a claim for unjust enrichment. Id. ¶¶ 67-71. As relief, Plaintiff sought: (1) a permanent injunction preventing Defendants from, inter alia, continuing to use its allegedly infringing mark; (2) damages based on illicit profit, reasonable royalties, corrective advertising, and other harm suffered as a result of the complained activity; and (3) attorneys' fees and costs under 15 U.S.C. § 1117. Id. ¶¶ A-J. Plaintiff demanded a jury trial on all issues of triable fact. Id. at 15. Plaintiff filed an amended complaint on June 22, 2018, which made essentially the same allegations and claims as the original, but included Michael Karns as a defendant and added allegations specific to him. Doc. 38, First Am. Compl. The first amended complaint is currently the operative complaint in this case.

         Now, before the Court are the parties' motions for summary judgment. Plaintiff seeks partial summary judgment against Defendants on their liability for the trademark and unfair competition claims. Doc. 71, Pl.'s Mot. Defendants seek partial summary judgment on Plaintiff's claim for damages and unjust enrichment. Doc. 72, Defs.' Mot. Both motions have been fully briefed, so the Court addresses them now.

         II.

         LEGAL STANDARD

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute “is ‘genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the non-moving party.” Burrell v. Dr. Pepper/Seven Up Bottling Grp., 482 F.3d 408, 411 (5th Cir. 2007). And a fact “is ‘material' if its resolution could affect the outcome of the action.” Id.

         In reviewing crossmotions for summary judgment, courts examine “each party's motion independently” and view “the evidence and inferences in the light most favorable to the nonmoving party.” JP Morgan Chase Bank, N.A. v. Data Treasury Corp., 823 F.3d 1006, 1011 (5th Cir. 2016) (quoting Morgan v. Plano Indep. Sch. Dist., 589 F.3d 740, 745 (5th Cir. 2009)). “A genuine issue of material fact exists if a reasonable jury could enter a verdict for the non-moving party.” Am. Family Life Assurance Co. of Columbus v. Biles, 714 F.3d 887, 896 (5th Cir. 2013) (per curiam).

         III.

         ANALYSIS

         A. Plaintiff's Motion for Partial Summary Judgment on Liability

         In its motion for partial summary judgment, Plaintiff asks the Court to find that there is no genuine dispute that Defendants are liable for trademark infringement, false designation of origin, and unfair competition. Doc. 77, Pl.'s Br., 1. The dispositive inquiry for these claims is whether there is a likelihood of confusion between the parties' marks.[3] Thus, the Court's likelihood of confusion analysis below for Plaintiff's federal trademark infringement claim applies also to Plaintiff's federal claims for unfair competition and false designation of origin and common law claims for trademark infringement and unfair competition. And because a reasonable jury could find no likelihood of confusion between the parties' marks, the Court denies Plaintiff's request for summary judgment as to liability on each of these claims.

         To establish trademark infringement, a plaintiff must demonstrate ownership of a legally protectable mark and a likelihood of confusion between the marks. Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 235-36 (5th Cir. 2010). First, the Court considers whether Plaintiff has a legally protectable interest in the Firebirds mark. Proof of registration with the United States Patent and Trade Office is “prima facie evidence that the mark is valid and that the registrant has the exclusive right to use the registered mark in commerce with respect to the specified goods or services.” Id. at 237. Plaintiff owns five related and valid United States trademark registrations for the Firebirds mark. Doc. 77, Pl.'s Br., 4-5. The first registration was issued on December 18, 2001. Id. at 4. Defendants do not challenge the registrations, the ownership, or the incontestible status of the Firebirds marks. Doc. 98, Defs.' Resp., 20. Plaintiff has also used the mark in commerce since around the time it was first registered.[4] From this, the Court can conclude that Plaintiff has established that it owns a legally protectable mark.

         Next, to show a “likelihood of confusion, ” Plaintiff must show that Defendants' use of their mark “create[d] a likelihood of confusion in the minds of potential consumers as to the source, affiliation, or sponsorship” of Defendants' products or services. Springboards to Educ., Inc. v. Hou. Indep. Sch. Dist., 912 F.3d 805, 811-12 (5th Cir. 2019) (quoting Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir. 1998)). “Likelihood of confusion is synonymous with a probability of confusion, which is more than a mere possibility of confusion.” Elvis Presley Enters., 141 F.3d at 193. Courts consider a non-exhaustive list of eight factors to determine whether a party has established likelihood of confusion. The factors include: “(1) strength of the plaintiff's mark; (2) similarity of design between the marks; (3) similarity of the products [or services]; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendant's intent; (7) actual confusion; and (8) degree of care exercised by potential purchasers.” Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008). “The absence or presence of any one factor ordinarily is not dispositive; indeed, a finding of likelihood of confusion need not be supported even by a majority of the . . . factors.” Id. (quoting Conan Props., Inc., v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985)). Word association between the marks is, in itself, insufficient to establish a probable likelihood of confusion. Viacom Int'l v. IJR Capital Inv., L.L.C., 891 F.3d 178, 192 (5th Cir. 2018). And “the court must consider the marks in the context that a customer perceives them in the marketplace.” Id. (internal quotations omitted) (quoting Scott Fetzer, 381 F.3d at 485).

         Plaintiff asserts that each of the eight digits weighs in favor of finding a likelihood of confusion and, thus, that the Court should rule for it as a matter of law. “Likelihood of confusion is a question of fact.” Id. “However, summary judgment is proper if the record compels the conclusion that the movant is entitled to judgment as a matter of law.” Id. (internal quotations omitted) (quoting Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009)). The Court analyzes each factor in turn.

         (1) Strength of Plaintiff's Mark

         The focus here is on Plaintiff's “Firebirds” mark because Plaintiff is the senior user. See Elvis Presley Enters., 141 F.3d at 201. The stronger Plaintiff's mark, the greater the protection it receives “because the greater the likelihood that consumers will confuse the junior user's use with that of the senior user.” Id. Two separate considerations are relevant-the conceptual strength and the commercial strength of the mark. Conceptual strength “considers where the mark falls on a spectrum: ‘Marks may be classified as generic, descriptive, suggestive, or arbitrary and fanciful. . . . Within this spectrum the strength of a mark, and of its protection, increases as one moves away from generic and descriptive marks toward arbitrary marks.” Am. Rice, 518 F.3d at 330 (alterations incorporated) (quoting Falcon Rice Mill, Inc. v. Cmty. Rice Mill, Inc., 725 F.2d 336, 346 (5th Cir. 1984)). Commercial strength is the standing of the mark in the marketplace. Id. Plaintiff argues there is no fact issue that its mark is strong based on both of these considerations.

         Starting with the conceptual strength, Plaintiff argues its mark is arbitrary and thus inherently distinctive. Doc. 77, Pl.'s Br., 18. Marks that are suggestive, arbitrary, or fanciful are deemed “inherently distinctive and are entitled to protection.” Xtreme Lashes, 576 F.3d at 227 (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992)). Arbitrary marks have no relation to the product or service with which they are used. Springboards, 912 F.3d at 814. For example, the mark “APPLE” is arbitrary when used for computers because it neither describes nor suggests anything about the nature of the computers. J. Thomas McCarthy, 2 McCarthy on Trademarks and Unfair Competition § 11:11 (5th ed. 2019) (hereinafter “McCarthy on Trademarks”). Defendants dispute that the Firebirds mark is arbitrary. Doc. 98, Defs.' Resp., 21.[5] Defendants argue that the mark should not be afforded the same degree of protection as “coined and fanciful terms such as Kodak or Xerox.” Id. (quoting Amstar Corp v. Domino's Pizza Inc., 615 F.2d 252, 260 (5th Cir. 1980) (holding that the mark ...


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