Beef & Brew, Inc. v. Beef & Brew, Inc.

• Decision Date: 31 December 1974
• Docket Number: Civ. No. 73-340.
• Citation: 389 F. Supp. 179
• Parties: beef & brew, inc., a Washington Corporation, Plaintiff, v. BEEF & BREW, INC., an Oregon Corporation, Defendant.
• Court: U.S. District Court — District of Oregon

389 F. Supp. 179

beef & brew, inc., a Washington Corporation, Plaintiff, v. BEEF & BREW, INC., an Oregon Corporation, Defendant.

Civ. No. 73-340.

United States District Court, D. Oregon.

December 31, 1974.

COPYRIGHT MATERIAL OMITTED

Jere M. Webb, Davies, Biggs, Strayer, Stoel & Boley, Portland, Or., for plaintiff.

James K. Buell, Phillips, Coughlin, Buell, Stoloff & Black, Portland, Or., for defendant.

OPINION

BURNS, District Judge:

Two imaginative and successful restaurants, one based in Seattle and the other in Portland, are before this Court in dispute about rights to exclusive use of their common name. Plaintiff, a Washington corporation, seeks damages and an injunction, alleging trademark infringement, unfair competition, and violation of Oregon's Anti-Dilution Statute, ORS 647.107. Defendant, an Oregon corporation, denies Plaintiff's allegations and asserts that Plaintiff has been guilty of laches. Jurisdiction is based upon diversity of citizenship, 28 U.S.C. § 1332(a). For the reasons set out below, Plaintiff's request for relief is denied.

FINDINGS OF FACT

In late 1969 and early 1970, Plaintiff and Defendant independently conceived the name Beef & Brew¹ (as the caption indicates, Plaintiff uses lower case letters) for a restaurant that would specialize in limited-menu single-price meals centered around high-quality beef and would offer a salad bar and unlimited beer or wine² with meals. Both parties drew their inspiration from trade publication articles about restaurants in New York City using a similar format, one named "Steak & Brew" and another "Roast Beef & Brew."

Plaintiff's unsuccessful "Village Square Restaurant," in the University Village Shopping Center in Seattle, was transformed into "Village Square beef & brew" and re-opened in April 1970. Success of the new concept under the new name was rapid. Plans were quickly made to open additional restaurants in the Seattle area. The second opened in May 1971 at the Renton, Washington, Sheraton Inn, the third at Burien, Washington, in September 1971 and a fourth in Lynnwood December 24, 1971. (As of the time of trial, Plaintiff had also opened 3 more restaurants: Tacoma, November 1972; Spokane, January 1973; and Anchorage, Alaska, in 1974). In May 1971 Plaintiff ordered (and shortly thereafter began using) cashier slips referring to planned restaurants in Portland and Vancouver. In the summer of that same year plaintiff gave casual consideration to possible sites in the Portland area. When Defendant's first restaurant opened in Portland on December 26, 1971, Plaintiff had four restaurants in operation — all in the Seattle area. Defendant's second restaurant opened in Beaverton in February 1973.

Both parties have done well, apparently reflecting capable business operations as well as validity of the concept coupled with the name. Plaintiff's business in 1970 with the single outlet was $302,285 which grew to $4,675,678 in 1973. Defendant has also shown strength, with gross sales in fiscal 1972 of $260,000 and in fiscal 1974 of $1,898,000.

Although the names and formats were independently devised, each of the parties had become aware of the other long before filing of this lawsuit. In late October 1970 (while attending a football game at the University of Washington) one of Defendant's architects, also an investor, learned that someone was using the name in the Seattle area. He heard an announcement over the stadium public address system.³ When he returned to Portland, he advised his fellow investors of this discovery. In mid-December 1970, Defendant's principals went to Seattle to investigate Plaintiff's restaurant and others in the area that they hoped might furnish useful examples of limited-concept operations. They were shown through the Village Square beef & brew by the manager and the chef.

During their discussion with the manager, the Defendant's principals indicated not only that they were planning to open a limited-concept restaurant but also that they planned to use the name Beef & Brew. They did not ask about Plaintiff's plans to expand. The substance of this conversation, according to Humphries, Plaintiff's Village Square beef & brew manager, was relayed within a few days to Boyd Graves, Plaintiff's president. (Humphries' dep. pp. 14, 24). Graves, on the other hand, denies this and denies that he heard of Defendant or its plans to use the name until about October or November, 1971. In light of my disposition of the case, it seems unnecessary to resolve this conflict. The visitors returned to Portland and continued with development of their venture; financing delays set the opening date back from July 1971 to December 1971.

In April 1971, Plaintiff's vice president wrote to the Secretary of State of Oregon inquiring about registration of the name "beef & brew". He was advised that the name was unavailable because already registered to someone else. Plaintiff was apparently uncertain whether the Oregon name was being used in connection with a restaurant. Plaintiff made no further inquiry at that time concerning the actual use of the name in Oregon by Defendant or anyone else.

As to the registration and corporate adoption of the disputed name, the evidence showed the following. Plaintiff's corporate name in Washington was Boyd H. Graves Restaurant, Inc., until June 3, 1971, when the name was changed to "beef & brew, inc." Plaintiff filed for registration of the name in Washington July, 1970, and in July 1971 refiled for trademark registration of both the name and logo. Similar filings by plaintiff occurred in Idaho (June 1972), Alaska and Montana (October, 1972) and California (March, 1973). In May 1973, Plaintiff filed in California for reservation of the name as a corporate name. Defendant filed for an assumed business name registration in Oregon in July 1970 for both Beef'N Brew and Barney's Beef'N Brew in the three counties comprising the Portland metropolitan area as well as two other counties. In November 1970 it applied for reservation in California and Washington of the corportate name "BEEF 'N BREW, Inc.". (Under Washington law, this name reservation lapsed if unused after 180 days). In February 1973, Defendant applied for and received Oregon's registration of its trademark BEEF 'N BREW. (Deft.Ex. 108)

Through a supplier, Plaintiff's principals heard rumors in October or November 1971 that a restaurant bearing the contested name was under construction in Portland. Mr. Graves traveled to Portland and visited the site of the restaurant sometime in December 1971 before it opened. In January or February 1972, the opening and operation of Defendant's first restaurant were confirmed by a visit by one of Plaintiff's employees.

From December 1970 or October 1971 (whenever Graves knew of Defendant's name and plans) until April 1973 with the dispatch of a demand letter by Plaintiff's counsel, Plaintiff made no effort to inform Defendant of its alleged infringement or to protect the claimed trademark in any other way. Plaintiff at no time inquired of Defendant about any of its expansion plans. Plaintiff did consult counsel in the summer of 1972, requesting that appropriate and necessary steps to challenge Defendant's right to use the name be taken. This resulted in no action until the April 1973 letter to Defendant demanding termination of use of the contested name. During this period of Plaintiff's inaction, Defendant opened its two restaurants, incurring liabilities in excess of $2.5 million.⁴

Some actual confusion occurred; in the record is one letter to Plaintiff from a patron unhappy with inconsistent beverage practices from one restaurant to another.⁵ Plaintiff has engaged in several advertising and promotion efforts aimed at the Portland market, keyed largely to the Sheraton Inn beef & brew. These were promotions aimed at Portlanders who might go to Seattle for horse racing, and Plaintiff hoped, while there, would lodge at Sheraton's Renton Inn and eat and drink at Plaintiff's Renton beef & brew. The true extent of confusion among actual or potential customers is quite uncertain, however. Plaintiff's expert, a marketing professor from the University of Washington, testified that in his opinion a substantial likelihood of confusion existed in December 1971. That testimony, as well as his evidence with regard to whether or not Plaintiff's name had a secondary meaning in the Portland area at that time was weak, though scholarly. His opinions on the elusive zone of expansion were not persuasive. This and the other evidence vital to Plaintiff's success here did not preponderate.

CONCLUSIONS OF LAW

I. DISTINCTIVENESS

With candor and in striking language, the Ninth Circuit has recently described the problems that confront lawyers and judges in the law regulating competition among businesses.

"Trademark infringement is a peculiarly complex area of the law. Its hallmarks are doctrinal confusion, conflicting results, and judicial prolixity. The source of this difficulty is that each case involves an effort to achieve three distinct objectives which, to a degree, are in conflict. These are: (1) to protect consumers from being misled as to the enterprise, or enterprises, from which the goods or services emanate or with which they are associated; (2) to prevent an impairment of the value of the enterprise which owns the trademark; and (3) to achieve these ends in a manner consistent with the objectives of free competition. The third objective dictates a degree of restraint in the pursuit of the first two; the second can be pushed beyond the reasonable needs of the first; and each requires for its proper implementation the exercise of judicial intuition supported, to the extent possible, by relevant facts. This case is no different from its kind, and we approach it with a keen awareness of its difficulty and our peril." HMH v. Brincat, 504 F.2d 713 (9th Cir. 1974).

At the heart of trademark infringement and unfair...