Frisch's Restaurants, Inc. v. Elby's Big Boy of Steubenville, Inc.

• Citation: 214 USPQ 15,670 F.2d 642
• Decision Date: 03 February 1982
• Docket Number: Nos. 81-3095,81-3098,s. 81-3095
• Parties: FRISCH'S RESTAURANTS, INC., Plaintiff-Appellee, Cross-Appellant, v. ELBY'S BIG BOY OF STEUBENVILLE, INC.; the Boury Corporation; Elby's Family Restaurants, Inc.; Elby's Commissionary, Inc.; George Boury, Ellis Boury and David Carr, Defendants-Appellants, Cross-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 642

670 F.2d 642

214 U.S.P.Q. 15

FRISCH'S RESTAURANTS, INC., Plaintiff-Appellee, Cross-Appellant, v. ELBY'S BIG BOY OF STEUBENVILLE, INC.; the Boury Corporation;

Elby's Family Restaurants, Inc.; Elby's Commissionary, Inc.;

George Boury, Ellis Boury and David Carr,

Defendants-Appellants, Cross-Appellees.

Nos. 81-3095, 81-3098.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 1, 1981.

Decided Feb. 3, 1982.

Keith A. Sommer, Sommer & Antill, Martins-Ferry, Ohio, Arthur M. Recht, Ray A. Byrd, Schrader, Stamp, Byrd, Byrum Johnson & Companion, Wheeling, W. Va., Thomas J. Collin, Thompson, Hine & Flory, Cleveland, Ohio, for defendants-appellants, cross-appellees.

Gary D. Greenwald, Carl Genberg, Schottenstein, Zox & Dunn, Columbus, Ohio, for plaintiff-appellee, cross-appellant.

Before WEICK ^* and BROWN, Circuit Judges, and PRATT, District Judge. ^**

BAILEY BROWN, Circuit Judge.

Marriott Corporation is the owner of the "Big Boy" trademark and service mark, which is used by a network of family restaurants around the country. The plaintiff, Frisch's Restaurants, Inc. (Frisch's), has the exclusive license from Marriott to use these marks in Ohio and currently operates eighty restaurants in Ohio under the Big Boy trademark. One of the defendants, The Boury Corporation, operates the network of "Elby's Family Restaurants" in western Pennsylvania (five restaurants), northern West Virginia, referred to in the record as "the panhandle," (seven restaurants), and eastern Ohio (eight restaurants in six different cities). The Boury Corporation holds the exclusive right to use the Big Boy trademark in the panhandle of West Virginia and in most of western Pennsylvania. Prior to 1971, the Elby's Restaurants in eastern Ohio were authorized under a franchise agreement with Frisch's to use the Big Boy trademark, but that agreement was terminated at Elby's request in late 1971.

When the Ohio Elby's restaurants continued to use the Big Boy trademark after the franchise agreement was terminated, Frisch's sought and obtained a preliminary injunction from the West Virginia Supreme Court of Appeals in 1973, enjoining the Ohio Elby's organization from using the Big Boy trademark "in any manner whatsoever in connection with (Elby's) business operations within the State of Ohio." The Ohio Elby's restaurants have avoided using the Big Boy trademark in their restaurants and in Ohio advertising media since that time. However, the present action by Frisch's challenges the spillover effects of Elby's West Virginia advertising utilizing the Big Boy trademark. This advertising reaches eastern Ohio consumers and allegedly creates the false impression that Big Boy products are available at the Ohio Elby's restaurants as well as Elby's West Virginia operations.

The Ohio and the West Virginia Elby's restaurants conduct joint advertising and promotional campaigns under the direction of the parent corporation. A major avenue of media advertisement is the Wheeling, West Virginia television station WTRF. Most of Elby's commercials on WTRF which advertise for the entire chain contain a pictorial representation of the Big Boy figure, ¹ advertise "Big Boy" food items, or contain jingles which strongly identify all Elby's Family Restaurants with the Big Boy trademark. However, whenever a specific Ohio Elby's restaurant is advertised on WTRF or another West Virginia medium, no reference to the Big Boy trademark is made.

The WTRF signal is broadcast from Bridgeport, Ohio, across the Ohio River from Wheeling, West Virginia, and is widely received by television viewers in certain counties in the eastern portion of Ohio. Under their reciprocal advertising agreements with WTRF, the Ohio Elby's restaurants have erected billboards on their restaurant properties directing the attention of their Ohio customers to Elby's advertisements on station WTRF. These Ohio Elby's restaurants also utilize various in-store promotional devices, including matchbooks and sugar packets, advertising station WTRF.

The Elby's chain also places newspaper advertisements in newspapers published in Wheeling, West Virginia which have considerable circulation in the counties of eastern Ohio where the Elby's restaurants are located. These advertisements publicize food items and specials available at all Elby's Family Restaurants with the aid of the Big Boy trademark.

Frisch's filed a complaint against the Elby's organization and related corporations in an Ohio state court on November 27, 1978, alleging federal trademark infringement, breach of its prior franchise agreement with the Ohio Elby's restaurants, and a violation of Ohio's "Deceptive Trade Practices Act." Elby's removed the action to the United States District Court for the Southern District of Ohio. Frisch's amended its complaint on February 21, 1980, adding state law trademark infringement and common law unfair competition as well as § 43(a) of the Lanham Act (15 U.S.C. § 1125(a) (1976)) claims to its previous allegations. Frisch's had previously demanded a permanent injunction against Elby's advertisements; its amended complaint sought for the first time a preliminary injunction.

Frisch's moved for a preliminary injunction on October 21, 1980, requesting that Elby's be enjoined from using the Big Boy trademark in "any advertising medium that reaches a not insubstantial number of Ohioans" without disclosing Ohio Elby's disaffiliation with the Big Boy restaurant organization. On January 20, 1981, District Judge Robert M. Duncan, in an opinion reported at 514 F.Supp. 704 (S.D.Ohio 1981), issued a preliminary injunction enjoining Elby's from "using the 'Big Boy' trademark and service mark in their WTRF advertising without making a prominent disclosure that the Elby's Family Restaurants within the state of Ohio are not associated with the 'Big Boy' restaurant organization. Alternatively, defendants may wish to eliminate all reference to the 'Big Boy' mark on WTRF advertisements." Id. at 712. Judge Duncan based his holding solely on "the unfair competition provisions of (§ 43(a) of) the Lanham Act, 15 U.S.C. § 1125(a)," id., and expressed no view on Frisch's alternative theories of recovery. However, Judge Duncan refused to extend his preliminary injunction to Elby's newspaper and radio advertisements, noting that Frisch's failed to establish a "causal connection between the public's confusion (the confusion of eastern Ohio consumers over the availability of Big Boy products at Ohio Elby's restaurants) and defendants' advertising in such media." Id. at 711 (emphasis in original). Elby's has appealed the grant of the WTRF preliminary injunction, and Frisch's cross-appealed the district court's failure to enjoin Elby's newspaper advertisements. ²

Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (1976), provides:

Any person who shall ... use in connection with any goods or services ... a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce ... shall be liable to a civil action by any person doing business in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.

The intent of the Lanham Act is set forth in § 45 thereof, 15 U.S.C. § 1127 (1976):

The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce ... (and) to protect persons engaged in such commerce against unfair competition ....

It has been suggested that § 43(a) of the Lanham Act "created a sui generis federal statutory cause of action for 'false representation,' " Chevron Chemical Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695, 702 (5th Cir. 1981). The Fifth Circuit also concluded that " § 43(a) proscribes not only what had been considered 'false advertising' but also what had been differentiated as 'unfair competition.' " Id. In addition, the Chevron Chemical court described the distinctions between these two concepts:

In sum, the essential misrepresentation in "false advertising," which we have noted forms the basis of the "false representation" leg of § 43(a), is fundamentally different from the essential misrepresentation in "unfair competition": in the former case, the defendant makes no secret of the origin of the goods in himself, but merely misrepresents certain qualities or characteristics that his goods may or may not have; in the latter case, the defendant misrepresents his goods to be those of another.

Id. at 701 (footnote omitted).

It is undisputed that Elby's has a right to use the Big Boy trademark in connection with its West Virginia operations; indeed, it has an obligation to promote the Big Boy trademark in the panhandle of West Virginia under its licensing agreement with Marriott. It is also undisputed that the Ohio Elby's restaurants have no right to use the Big Boy trademark. Frisch's contends that the Ohio Elby's restaurants, through their participation in Elby's West Virginia advertisements which have substantial exposure in eastern Ohio, are improperly using the Big Boy trademark to promote their products, thereby creating a "false designation of origin" or a "false description or representation" of their goods as being sponsored by the Big Boy organization in the minds of Ohio consumers in violation of § 43(a).

We conclude that Frisch's contentions are properly within the scope of § 43(a) of the Lanham Act. Frisch's primary concern is that Ohio consumers will assume that all Elby's restaurants, including the Ohio Elby's, sell food which is sponsored by or originates from the "Big Boy" chain of restaurants. This court previously concluded that false representations about the...