Kastanis v. Eggstacy Llc

• Decision Date: 20 October 2010
• Docket Number: No. 10 C 3561.,10 C 3561.
• Citation: 752 F.Supp.2d 842
• Parties: Taki KASTANIS and Kpokos, Inc., an Illinois corporation d/b/a/ Yolk Café, Plaintiffs,v.EGGSTACY LLC, and Illinois limited liability company, and New Yolk New Yolk LLC, an Illinois limited liability company, Defendants.
• Court: U.S. District Court — Northern District of Illinois

752 F.Supp.2d 842

Taki KASTANIS and Kpokos, Inc., an Illinois corporation d/b/a/ Yolk Café, Plaintiffs,

v.EGGSTACY LLC, and Illinois limited liability company, and New Yolk New Yolk LLC, an Illinois limited liability company, Defendants.

No. 10 C 3561.

United States District Court, N.D. Illinois, Eastern Division.

Oct. 20, 2010.

Nicholas V. Dizonno, Belongia, Shapiro & Franklin, LLP, Chicago, IL, Edward E. Campbell, Serpe, Dizonno & Associates, LTD., Itasca, IL, for Plaintiffs.Michael James Mullen, Amy E. Collins, Kralovec & Marquard, Chartered, Hector Ledesma, John J. Piegore, Sanchez & Daniels, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

JEFFREY T. GILBERT, United States Magistrate Judge.

This matter is before the Court on Plaintiffs' motion for preliminary injunction [Dkt. # 4].¹ For the reasons set forth below, the motion for preliminary injunction is denied.

BACKGROUND

Plaintiffs Taki Kastanis and Kpokos Inc. own three restaurants that operate under the name Yolk in and around downtown Chicago, Illinois.² Kastanis opened his first Yolk in November 2006. Transcript of 9/15/10 Preliminary Injunction Hearing at 58 (hereinafter referred to as “Hearing Tr.”). All three restaurants serve breakfast and lunch. On March 22, 2007, Kastanis registered the word “yolk” with the United States Patent and Trademark Office (“USPTO”), Reg. No. 3,347,771, Serial No. 77137603. Pls.' Motion [Dkt. # 4], Group Ex. A. Kastanis also registered the “yolk” word design utilized by Yolk with the USPTO, Reg. No. 3,347,784, Serial No. 77137839. Id.

Eggstacy is a restaurant located in Oakbrook, Illinois that also serves breakfast and lunch. Hearing Tr. at 11. Defendants also operate an Eggstacy restaurant in Woodridge, Illinois. Id. Defendants Eggstacy LLC (“Eggstacy”) and New Yolk New Yolk LLC (“New Yolk New Yolk”) opened the restaurant New Yolk New Yolk in Hinsdale, Illinois on March 31, 2010. Defs.' Resp. [Dkt. # 26], at 1. According to Defendants, New Yolk New Yolk is a New York-themed restaurant that serves breakfast and lunch and includes in its menu many of the same dishes that Eggstacy has on its menu. Id.; Hearing Tr. at 21, 24, 48.

Plaintiffs have sued defendants Eggstacy and New Yolk New Yolk for trademark infringement, false designation of origin and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a). They also have asserted parallel state law claims for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, and the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1. Plaintiffs argue that Defendants' use of the name New Yolk New Yolk for their restaurant infringes on Plaintiffs' trademark Yolk. Plaintiffs filed a motion for preliminary injunction seeking to bar Defendants from operating their restaurant under the name New Yolk New Yolk. The parties have submitted extensive briefing on the preliminary injunction motion, and the Court conducted a hearing on September 15, 2010 at which Taki Kastanis, owner of Yolk, and Peter Verros, owner of New Yolk New Yolk and Eggstacy, testified. This matter is ripe for decision.

ANALYSIS

A party seeking a preliminary injunction must demonstrate that: (1) it has some likelihood of success on the merits; (2) no adequate remedy at law exists; and (3) it will suffer irreparable harm if the injunction is not granted. Girl Scouts of Manitou Council Inc. v. Girl Scouts of the United States of America Inc., 549 F.3d 1079, 1085 (7th Cir.2008). In order to succeed on a motion for preliminary injunction, the movant must show that it has a “better than negligible” chance of success on the merits.³ Id. at 1096 (citing Ty Inc. v. Jones Group Inc., 237 F.3d 891, 897 (7th Cir.2001)). If the moving party satisfies these three elements, the court then must consider any irreparable harm an injunction would cause the nonmoving party and any consequences to the public from denying or granting the injunction. Promatek Indus. v. Equitrac Corp., 300 F.3d 808, 811 (7th Cir.2002) (citing Ty, 237 F.3d at 895). These considerations are weighed applying a “sliding scale approach” in which “the more likely the plaintiff's chance of success on the merits, the less the balance of harms need weigh in its favor.” Ty, 237 F.3d at 895–896.

I. Plaintiffs' Likelihood of Success on the Merits

The Lanham Act provides, in relevant part, that a plaintiff may bring a civil action against:

[a]ny person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin ... which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activity by another person.

15 U.S.C. 1125(a). In order to succeed on a trademark infringement claim, Plaintiffs must demonstrate that: (1) the Yolk marks are protectable; (2) Defendants have used the marks in commerce; and (3) their use of the term is likely to cause confusion. Ty, 237 F.3d at 897.A. Whether The Yolk Marks Are Protectable

In order to determine whether Defendants have violated the Lanham Act, the Court must first determine whether the word “yolk” is a protectable trademark. The law classifies trademarks into five categories of increasing distinctiveness: generic, descriptive, suggestive, arbitrary, and fanciful. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 767–68, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992); Packman v. Chicago Tribune Co., 267 F.3d 628, 638 (7th Cir.2001).

In general, the level of trademark protection corresponds to the distinctiveness of the mark. Id. A generic term is one that is commonly used and does not identify any particular source. Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir.1986). A generic term is not entitled to any trademark protection. Id. A descriptive mark is one that “describes the ingredients, qualities, or characteristics of an article of trade or a service” and, generally, it is not protected as a trademark because a merely descriptive mark is a “ ‘poor means of distinguishing one source of services from another.’ ” Id. (quoting M.B.H. Enters. v. WOKY, Inc., 633 F.2d 50, 54 (7th Cir.1980)). A descriptive mark may receive trademark protection, however, if it acquires secondary meaning “in the collective consciousness of the relevant community.” Mil–Mar Shoe Co. Inc. v. Shonac Corp., 75 F.3d 1153, 1157 (7th Cir.1996) (citing Gimix, Inc. v. JS & A Group, Inc., 699 F.2d 901, 907 (7th Cir.1983)). Finally, terms that are either suggestive, arbitrary, or fanciful automatically are entitled to trademark protection because they are inherently distinctive. Two Pesos, 505 U.S. at 767–68, 112 S.Ct. 2753.

It is not disputed that Plaintiffs registered the name Yolk with the USPTO without proof of secondary meaning. Pls.' Motion [Dkt. # 4], Group Ex. A. Registration of a trademark without qualification or proof of secondary meaning creates the presumption that the mark is valid and therefore entitled to protection. Chattanoga Mfg. Inc. v. Nike Inc., 140 F.Supp.2d 917, 923 (N.D.Ill.2001) (holding that “registration of the mark ‘without proof of secondary meaning’ creates the presumption that the mark is more than merely descriptive”); see also 15 U.S.C. § 1057(b).

Notwithstanding Plaintiffs' registration of their trademark, Defendants argue that the word “yolk” is generic and thus is unprotectable under the Lanham Act. The Court can consider several factors when determining whether a mark is generic, including the plaintiff's use, the competitor's use, dictionary definitions, media usage, testimony of persons in the trade, and consumer surveys. 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 12:13 (4th ed. 2006).

A generic term is one that “serve[s] to denominate a type, a kind, a genus or a subcategory of goods.” Henri's Food Products Co., Inc. v. Tasty Snacks, Inc., 817 F.2d 1303, 1305–06 (7th Cir.1987). In other words, a generic mark merely specifies the type or genus of the goods or services being sold. Id. Thus, the relevant inquiry is: (1) what genus of services is at issue; and (2) whether the relevant public uses that term primarily to refer to that genus of service. See Lettuce Entertain You Enterprises Inc. v. Leila Sophia AR LLC, 703 F.Supp.2d 777, 784 (N.D.Ill.2010). Plaintiffs are using the trademarked term “Yolk” as the name for their restaurants. Although Plaintiffs' restaurants sell dishes in which eggs and egg yolks are used as ingredients, they do not sell eggs or yolks in isolation. The genus of services provided by Plaintiffs is not selling eggs or yolks but rather providing restaurant services, and it is not disputed that Plaintiffs' Yolk marks are registered for restaurant services. Pls.' Motion [Dkt. # 4], Group Ex. A. Therefore, the relevant inquiry is whether the word “yolk” is a generic term for the kind of breakfast-themed restaurant services offered by Plaintiffs.

Plaintiffs argue that the general public associates the word “yolk” with eggs, specifically the middle of an egg and not restaurant services. Pls.' Memorandum [Dkt. # 11], at 4. We agree. The word “yolk” is a generic term for the yellow center of an egg. Indeed, both parties provide similar dictionary cites for the definition of “yolk” as the yellow substance of an egg that is surrounded by a white substance. See Defs.' Resp. [Dkt. # 26], Ex. D.; Pls.' Reply [Dkt. # 30], Ex. A. Yolk, however, does not sell yolks or eggs exclusively or in isolation. Rather, Yolk is a restaurant that serves breakfast and lunch, including many specialty egg-based dishes. Pls.' Motion [Dkt. # 4], at 3. The word “yolk” is not a generic term for a restaurant serving breakfast food and egg based dishes. Therefore, the Court...