Hot Stuff Foods, LLC v. Mean Gene's Enterprises, No. CIV. 06-4085.

• Decision Date: 13 December 2006
• Docket Number: No. CIV. 06-4085.
• Citation: 468 F.Supp.2d 1078
• Parties: HOT STUFF FOODS, LLC, F/K/A Orion Food Systems, LLC, Plaintiff, v. MEAN GENE'S ENTERPRISES, INC., Gene Okerlund, Blaze Okerlund, Todd Okerlund, and Mark McKee, Defendants, and Eugene Okerlund, Counterclaim Plaintiff, v. Hot Stuff Foods, LLC, Counterclaim Defendant.
• Court: U.S. District Court — District of South Dakota

468 F.Supp.2d 1078

HOT STUFF FOODS, LLC, F/K/A Orion Food Systems, LLC, Plaintiff, v. MEAN GENE'S ENTERPRISES, INC., Gene Okerlund, Blaze Okerlund, Todd Okerlund, and Mark McKee, Defendants, and Eugene Okerlund, Counterclaim Plaintiff, v. Hot Stuff Foods, LLC, Counterclaim Defendant.

No. CIV. 06-4085.

United States District Court, D. South Dakota, Southern Division.

December 13, 2006.

Appeal from the District Court, 2006 WL 1788311.

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James S. Simko, Stephen C. Landon, Shawn M. Nichols, Cadwell, Sanford, Deibert & Garry, Sioux Falls, SD, for Plaintiff.

Jon C. Sogn, Lee A. Magnuson, Lynn, Jackson, Shultz & Lebrun, Sioux Falls, SD, Dean Karau, Fredrikson & Byron, PC, Minneapolis, MN, for Defendant.

MEMORANDUM OPINION AND ORDER RE: MOTION TO CANCEL TRADEMARK REGISTRATIONS AND REQUEST FOR PERMANENT INJUNCTION

PIERSOL, District Judge.

PROCEDURAL BACKGROUND

Plaintiff, Hot Stuff Food. LLC, (Hot Stuff) filed a motion for preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure. Doc. 3. Hot Stuff sought injunctive relief against Defendants Mean Gene's Enterprises, Inc., Gene Okerlund, Blaze Okerlund, Todd Okerlund and Mark McKee preventing any further use of the Mean Gene's Burgers® and Mean Gene's Pizza^TM marks and trade dress. Hot Stuff also sought injunctive relief against Defendants Mark McKee and Blaze Okerlund to prevent them from any further or continued breach of their severance and non-compete agreements with Hot Stuff. After a hearing was held on May 25, 2006, and after the parties submitted a Stipulation for Temporary Restraining Order (Doc. 24), the Court entered a Temporary Restraining Order. The Temporary Restraining Order (Doc. 26) provided that Defendants not contact Hot Stuff Foods licensees or franchisees, that Defendants not make business contacts for the purpose of selling Mean Gene Enterprises, Inc., product, and that Defendants not use or cause to be published the "Mean Gene's Burgers" or "Mean Gene's Pizza" names or logos. By its terms, the Temporary Restraining Order was effective through the date of the hearing on Plaintiffs Motion for Preliminary Injunction.

A Court trial was held on Plaintiff's Motion for Preliminary Injunction on June 19, 20 and 21, 2006. At the completion of the trial on June 21, 2006, The Court orally announced that a preliminary injunction would issue prohibiting Defendants' use of the Mean Gene's Burger registered trademarks. The Court reserved ruling on the issues concerning the common law trademark claim and claims regarding covenants not to compete. The Court issued a Memorandum Opinion and Order Granting Preliminary Injunction in Part (Doc. 56) which was consistent with its rulings from the bench.

On June 29, 2006, Defendants filed "Defendants' Joint Answer and Counterclaim of Eugene Okerlund." Doc. 59. In his counterclaim, Defendant Gene Okerlund seeks an Order under 15 U.S.C. § 1119 directing the Commissioner of Patents and Trademarks to cancel the trademark registration of MEAN GENE'S BURGERS, Registration No. 2,327,876, which covered franchising services, and to cancel the trademark registration of MEAN GENE'S BURGERS, Registration No. 2,188,577, which covered restaurant services. Defendant Gene Okerlund also brought counterclaims for breach of covenant of good faith and fair dealing, trademark infringement, breach of contract, false advertising, trademark dilution, and violation of the right of publicity. On July 13, 2006, Defendant Gene Okerlund filed a Motion to Cancel Trademark Registrations for Mean Gene's Burgers. Doc. 62.

On Friday, August 4, 2006, this Court heard additional evidence regarding Hot Stuff's request for a permanent injunction. At the end of the August 4, 2006, hearing, counsel for Defendants requested the opportunity to submit a reply to Plaintiffs Brief in Resistance to Defendants' Motion to Cancel Trademark Registration (Doc. 70). Also; at the end of the hearing, this Court advised that it would also consider briefs addressing what, if any, equitable considerations are applicable in the determination of whether any of the parties are entitled to any of the relief requested.

This Court has jurisdiction over the trademark claims pursuant to 15 U.S.C. § 1121¹, and 28 U.S.C. §§ 1331, 1338² and has supplemental jurisdiction pursuant to 28 U.S.C. § 1367.

FACTUAL BACKGROUND

Defendant and cross-claimant Gene Okerlund has been an announcer, interviewer and/or host to televised professional wrestling for several years. In 1978, during an interview, Jesse Ventura said to Gene Okerlund, "You know something, you are mean, Gene." Since that time Gene Okerlund has been called "Mean Gene" in his work with professional wrestling, and at family gatherings, social affairs and charity appearances.

Gene Okerlund first worked with the American Wrestling' Association. In 1983 Gene Okerlund began working full time as a wrestling announcer and host with the World Wrestling Federation, which became the World Wrestling Entertainment in 1999. Gene Okerlund was the ongoing host of Wrestling Mania 1 through 23, and hosted a number of weekly wrestling shows. In 1993, Gene Okerlund began working for World Champion Wrestling which broadcast wrestling programs on cable stations, TNT and TBS. In 2001 Gene Okerlund went back to work with the World Wrestling Entertainment. Gene Okerlund's involvement with the World Wrestling Entertainment opened up other entertainment avenues, and Gene Okerlund has voiced television commercials, done commercial work for manufacturers associated with wrestling, appeared on various television shows, and played himself, "Mean Gene," in a number of movies. In April of 2006, Gene Okerlund became the first announcer to be introduced into the World Wrestling Entertainment Hall of Fame.

Orion Foods Systems, Inc., (Orion), a wholly owned subsidiary of Schwan Sales Enterprises, was in the business of marketing multiple branded food systems in non-traditional locations, a majority of which were franchised operations. Jeff Okerlund, Gene Okerlund's nephew, was the President of Orion Foods from 1984 to 2003. Orion was sold to Kohlberg Investment Fund in 2002, and then sold in 2006 to Allied Capital. Orion became Hot Stuff Foods, LLC.

Gene Okerlund became involved with Orion through his nephew, Jeff Okerlund, when Orion wanted to use the name, Mean Gene, for a hamburger Orion wanted to market. Wrestling was thought to be popular with the demographic target for the burgers. Gene Okerlund eventually signed a Personality Endorsement Agreement with Orion in November of 1997. The 1997 Personality Endorsement Agreement, which had a term of five years, provides:

Endorser grants to Orion the exclusive right to use the "Mean Gene's" name, personality, picture, portrait likeness, voice and endorsement on and in connection with the advertisement, promotion and sale of Orion Food Products at Mean Gene's Units in any marketing area in which Orion or its licensees now or hereafter during the term of this Agreement do business.

In 2001, Orion began offering Mean Gene's pizza. Pursuant to the Personality Endorsement Agreement, Gene Okerlund appeared at openings and other events at the Mean Gene's units. In addition he was involved with the development, control, advertising and branding of the Mean Gene's products sold by Orion, although there was no contractual provision requiring Orion to follow any of his suggestions. Hot Stuff has entered in to contracts with over two hundred licensees and franchisees doing business under the brand Mean Gene's Burgers and Mean Gene's Pizza. Approximately 40 of these entities are "Mean Gene's Burgers." Hot Stuff has generated more than 26 million dollars of sales of Mean Gene's products, and Gene Okerlund has collected more than a million dollars in royalties.

In January of 2002, Gene Okerlund entered into a "Mean Gene's Personality Endorsement Agreement" with Orion. This 2002 Agreement superceded and replaced all prior endorsement agreements between Orion and Gene Okerlund. Like the 1997 Personality Endorsement Agreement, the 2002 Agreement granted Orion the exclusive right to use the "Mean Gene's" name, personality, picture, portrait, likeness, voice and endorsement during the term of the agreement. The 2002 Agreement provided that Gene Okerlund could terminate the Agreement if there would be a change in ownership or control of Orion. The 1997 Personality Endorsement Agreement had a covenant against competition clause prohibiting Gene Okerlund, for one year after the expiration of the Agreement, from rendering services to or permitting the use of his name or likeness by businesses which competed with Mean Gene's Units in the United States and Canada. The 2002 Personality Agreement did not have this one-year-after-expiration covenant against competition clause. An addendum to the 2002 Personality Agreement contains a covenant against competition effective "[d]uring this Agreement." Both the 1997 and 2002 Personality Endorsement Agreements were drafted by Orion.

In May of 1997 Orion submitted an application to the United States Patent and Trademark Office for a service mark registration for Mean Gene's Burgers in restaurant services. In April of 1998 Orion submitted an application to the United States Patent and Trademark Office for a service mark registration for Mean Gene's Burgers in franchising services. The service mark for Mean Gene's Burgers was registered by the United States Patent and Trademark Office for both restaurant and franchising services. It is undisputed that Orion did not receive the written consent of Gene Okerlund to register the service mark for Mean Gene's Burgers. Hot Stuff has filed Section 8 and 15 affidavits with the United States Patent and Trademark Office so that the registration of the Mean Gene's Burgers could become...