Burger King Corp. v. Hall
| Decision Date | 21 May 1991 |
| Docket Number | No. 90-2430-CIV.,90-2430-CIV. |
| Citation | 770 F. Supp. 633 |
| Parties | BURGER KING CORPORATION, Plaintiff, v. Carole HALL, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
Stephen R. Lang, Howard S. Wolfson, Breed, Abbott & Morgan, New York City, and T. Joan Lawrence, Steel, Hector & Davis, Miami, Fla., for Burger King Corp.
Robert Zarco, Weil, Lucio, Mandler & Croland, Miami, Fla., for Carole Hall.
ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
This cause came before the Court on May 15 through 16, 1991, on plaintiff Burger King Corporation's ("BKC") Motion for a Preliminary Injunction to enjoin the defendant Carole Hall from using BKC's registered trademarks and service marks (the "BKC Marks") at her restaurant. Having considered the papers filed in support of and in opposition to the Motion, the evidence submitted at the preliminary injunction hearing, and the arguments of counsel for the parties, this Court finds as follows:
FINDINGS OF FACT
1. BKC is incorporated under the laws of the State of Florida and maintains its principal place of business in Miami, Florida. BKC is engaged in the business of operating a national and worldwide system of company-owned and franchised Burger King® restaurants.
2. Defendant Hall is a citizen and resident of the State of Michigan and a former franchisee of BKC.
3. BKC employs, advertises and publicizes throughout the United States the BKC Marks.
4. The following BKC Marks are registered in the United States Patent and Trademark Office:
Year
Reg. No. Description Registered
782,990 HOME OF THE WHOPPER 1965
869,775 BURGER KING 1969
899,775 WHOPPER 1970
901,311 BURGER KING with logo 1970
924,409 WHALER 1971
961,014 BURGER KING with logo 1973
1,057,250 BURGER KING (Design) (lined 1977
for the colors orange and
red)
1,070,331 WHALER 1977
1,076,177 BURGER KING 1977
1,146,721 BURGER KING with logo 1981
1,451,533 A.M. EXPRESS 1987
1,550,398 CROISSAN'WICH 1989
5. The registrations of the BKC Marks are currently in full force and effect.
6. Ten of the twelve BKC Marks were registered over five years ago and are therefore now incontestable pursuant to 15 U.S.C. § 1065.
7. All right, title and interest to the BKC Marks and the design, decor and image of Burger King® restaurants is vested solely in BKC and its wholly-owned subsidiary, Burger King Brands, Inc.
8. BKC and its franchisees have for many years spent vast sums of money advertising and promoting Burger King® restaurants, and the products and services sold under the various BKC marks. In the year 1990 alone, BKC spent approximately $230 million.
9. As a result of this extensive advertising and promotion, valuable goodwill has been developed for the BKC Marks and for the restaurants, products and services which bear the BKC Marks and thus identify BKC as their sponsor and source.
10. BKC franchisees are granted a limited license to use and display the BKC Marks during the term of their franchise agreements. Franchisees are not, however, authorized to use the BKC Marks following the expiration or termination of their franchises. Thus, for example, Hall's Franchise Agreement with BKC expressly provides that upon termination of the Agreement, Hall's right to use or display the BKC Marks "shall terminate forthwith." (Franchise Agreement, Section XII. B.1. & 3.)
11. On or about December 2, 1976, BKC entered into a Franchise Agreement with Robert L. Williams, pursuant to which BKC franchised Williams to operate Burger King® Restaurant No. 1813 located at 9700 Van Dyke, Detroit, Michigan, and granted him a limited license to use the BKC Marks and the Burger King® System of restaurant operation in connection with the restaurant.
12. The Franchise Agreement for Restaurant No. 1813 was assumed by Hall as part of a divorce settlement entered into between Hall and Robert L. Williams, her former husband, in 1983. Following Hall's assumption of the Franchise Agreement, Hall became and remained the individual franchisee of Restaurant No. 1813. No evidence was presented at the hearing to support Hall's claim that Bomarke Corporation ("Bomarke"), a corporation in which she allegedly is the president and principal shareholder, is the actual franchisee of Restaurant No. 1813.
13. To the contrary, in both her Answer to BKC's Complaint in this action and her affidavit in opposition to BKC's Motion for a Preliminary Injunction, Hall admits that she is the individual franchisee of Restaurant No. 1813. Hall also admits that she is the franchisee of Restaurant No. 1813 in a Complaint filed against BKC in another action pending before this Court (Hall, et al. v. Burger King Corp., No. 89-0260-Civ-Kehoe). Bomarke is not mentioned in any of Hall's pleadings.
14. Under the terms of defendant Hall's Franchise Agreement with BKC, in consideration for her license to use the BKC Marks, Hall agreed to pay monthly royalties and advertising and sales promotion contributions to BKC based upon her restaurant's gross sales.
15. Hall received monthly statements from BKC setting forth the amounts due and owing to BKC. The statements directed Hall to contact her credit analyst at BKC if she had any questions regarding the accuracy of her account as stated by BKC. Hall never contacted her credit analyst at BKC to dispute the accuracy of the statements of account or to assert that she was not the individual franchisee of the restaurant.
16. For the period of November 1988 through February 1989, and July 1989 through August 17, 1990, Hall failed to pay her monthly royalties and advertising and sales promotion contributions to BKC as provided in her Franchise Agreement.
17. The failure to pay monthly royalties or advertising and sales promotion contributions is an act of default under Hall's Franchise Agreement with BKC for Restaurant No. 1813. (Franchise Agreement, Section XII A.2.)
18. By letter dated July 12, 1990, BKC sent Hall Notice of Default of her payment obligations under the Franchise Agreement and demanded that she cure the default within thirty days by paying BKC the monies due and owing to it. A statement of account detailing Hall's indebtedness to BKC was attached to the Notice of Default as Exhibit A.
19. Hall received BKC's Notice of Default.
20. Hall failed to cure her payment defaults within thirty days in accordance with the Notice of Default. In fact, subsequent to receipt of BKC's Notice of Default, Hall neither contacted BKC to question the accuracy of the statement of account attached to the Notice or to protest the termination of her Franchise Agreement for nonpayment.
21. As a result of her failure to cure the default at Restaurant No. 1813, by letter dated August 17, 1990, BKC notified Hall that the Franchise Agreement for Restaurant No. 1813 and, accordingly, her license to use the BKC Marks, was terminated effective immediately.
22. BKC's August 17, 1990 Notice of Termination demanded that Hall immediately comply with the post-termination covenants of her Franchise Agreement, including that she cease holding out her restaurant to the public as an authorized Burger King® restaurant and desist from all use of the BKC Marks at the restaurant.
23. Hall received BKC's Notice of Termination.
24. Despite BKC's termination of her Franchise Agreement, Hall admittedly continues to hold out her restaurant to the public as an authorized Burger King® restaurant and to use the BKC Marks at her restaurant.
25. Hall's continued use and display of the BKC Marks is without the license or consent of BKC, and has caused or is likely to cause mistake, confusion or deception in the minds of the public as to the source, affiliation and sponsorship of her restaurant.
26. By virtue of the termination of Hall's Franchise Agreement, BKC is unable to control the nature and quality of the goods and services that Hall now provides at her restaurant.
27. Consumers who presently patronize Hall's restaurant have no way of knowing that Hall's Franchise Agreement with BKC was terminated and that her restaurant is no longer affiliated with BKC. Accordingly, any shortcomings of Hall's restaurant will be attributed to BKC.
28. To enjoin Hall's infringement of its Marks, BKC commenced this action in October 1990 and promptly moved for entry of a preliminary injunction.
(a) Section 1332(a)(1) of the Judicial Code, 28 U.S.C. § 1332(a)(1), since the matter in controversy is between citizens of two different states and exceeds the value of $50,000, exclusive of interest and costs;
(b) Section 39 of the Lanham Trademark Act of 1946 ("Lanham Act"), 15 U.S.C. § 1121, and Sections 1331, 1337 and 1338(a) of the Judicial Code, 28 U.S.C. §§ 1331, 1337, 1338(a); and
(c) Section 1338 of the Judicial Code, 28 U.S.C. § 1338(b), and the doctrines of ancillary and pendent jurisdiction.
3. BKC's claims arise out of Hall's alleged violation of Sections 32(1)(a) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1)(a) and 1125(a), the Florida common law of trademark infringement, service mark infringement and unfair competition, and Hall's breach of the terms of her Franchise Agreement with BKC, which is governed by Florida law.
4. In trademark infringement...
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