Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc.

• Decision Date: 24 February 1997
• Docket Number: Nos. 94-8700,95-8656 and 95-8767,s. 94-8700
• Citation: 106 F.3d 355
• Parties: , 41 U.S.P.Q.2d 1896, 97 FCDR 2117, 10 Fla. L. Weekly Fed. C 727 LONE STAR STEAKHOUSE & SALOON, INC., Plaintiff-Counterdefendant-Appellant, v. LONGHORN STEAKS, INC., Defendant-Appellee. LONE STAR STEAKS, INC., Plaintiff-Counterdefendant-Appellee, v. LONE STAR STEAKHOUSE & SALOON OF GEORGIA, INC., Lone Star Steakhouse & Saloon, Inc., Defendants-Counterclaimants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 355

106 F.3d 355

65 USLW 2600, 41 U.S.P.Q.2d 1896, 97

FCDR 2117,

10 Fla. L. Weekly Fed. C 727

LONE STAR STEAKHOUSE & SALOON, INC., Plaintiff-Counterdefendant-Appellant, v. LONGHORN STEAKS, INC., Defendant-Appellee.

LONE STAR STEAKS, INC., Plaintiff-Counterdefendant-Appellee, v. LONE STAR STEAKHOUSE & SALOON OF GEORGIA, INC., Lone Star

Steakhouse & Saloon, Inc.,

Defendants-Counterclaimants-Appellants.

Nos. 94-8700, 95-8656 and 95-8767.

United States Court of Appeals Eleventh Circuit.

Feb. 24, 1997.

J. Comer Yates, Nations, Yates & Freeman, Atlanta, GA, Jerome Gilson, PHV, Jeffery A. Handelman, PHV, Colleen Connors Butler, Willian Brinks Hofer Gilson & Lione, Chicago, IL, for Appellants.

Mark Stephen VanderBroek, Lesley G. Carroll, Troutman Sanders, Atlanta, GA, Martin J. Elgison, Alston & Bird, Atlanta, GA, for Appellee.

Appeals from the United States District Court for the Northern District of Georgia.

Before COX and BLACK, Circuit Judges, and FAY, Senior Circuit Judge.

FAY, Senior Circuit Judge:

In these consolidated appeals and cross-appeals, we are asked to review various orders entered by the district court in a trademark infringement case. ¹ Appellants and Cross-Appellees, Lone Star Steakhouse & Saloon, Inc. and Lone Star Steakhouse & Saloon of Georgia, Inc. ("Plaintiff"), ² and Appellees and Cross-Appellants, Lone Star Steaks, Inc. and Longhorn Steaks, Inc. ("Defendant"), ³ are involved in the restaurant business. The parties' main dispute surrounds which party's trade name for restaurant services, Plaintiff's LONE STAR STEAKHOUSE & SALOON and LONE STAR CAFE or Defendant's LONE STAR STEAKS, has prior and superior rights. The United States District Court for the Northern District of Georgia, concluded that Defendant's rights were superior in Georgia, and thus granted Defendant's motion for a preliminary injunction. Subsequently, the district court (1) entered a clarification order discussing the scope of the preliminary injunction, (2) entered a permanent injunction against Plaintiff, enjoining it from using the LONE STAR STEAKHOUSE & SALOON mark in Georgia, (3) awarded Defendant damages, attorneys' fees, costs, and final judgment on its pendent state law claims, and (4) entered two separate orders further explaining the relief. The issues raised in this consolidated appeal arise from these various orders. For the reasons discussed below, we affirm the district court in all of its rulings, except that part of the district court's order which grants Defendant attorneys' fees under Georgia law. However, in vacating the award of attorneys' fees under Georgia law, we remand the matter to the district court to determine if Defendant is entitled to attorneys' fees under the Lanham Act.

Plaintiff operates over one hundred and seventy "Lone Star Steakhouse & Saloon" restaurants throughout the United States. The first such restaurant was opened in October 1989 in Winston Salem, North Carolina, and since then the business has expanded considerably. In connection with these restaurants, Plaintiff holds a federal trademark registration for the mark LONE STAR STEAKHOUSE & SALOON. This registration covers various clothing items but does not cover restaurant services. ⁴ Additionally, Plaintiff holds a federal trademark registration for the mark LONE STAR CAFE. The LONE STAR CAFE mark covers both clothing items and restaurant services. The mark covering restaurant services was registered in 1981 by a New York City nightclub operator. Plaintiff's predecessor corporation purchased the LONE STAR CAFE mark from the nightclub in 1992; the mark was later transferred to Plaintiff. ⁵

Defendant operates two "Lone Star Steaks" restaurants in Atlanta, Georgia. ⁶ The first Lone Star Steaks was opened in 1984, and in that same year, the LONE STAR STEAKS mark was registered as a trade name in several of Georgia's metropolitan counties. In March of 1992, the mark was registered as a service mark with the Georgia Secretary of State.

In August 1992, Plaintiff's general counsel sent a letter to Defendant stating that Plaintiff was planning to expand into Georgia; Plaintiff demanded that Defendant stop its use of the mark LONE STAR STEAKS. Defendant's counsel responded with the assertion that Defendant had prior and superior rights in its mark. In August 1993, Plaintiff opened a Lone Star Steakhouse & Saloon restaurant in Augusta, Georgia. By letter dated October 22, 1993, Defendant demanded that Plaintiff cease and desist its use of the LONE STAR STEAKHOUSE & SALOON mark. After Plaintiff refused to comply, Defendant filed suit. Plaintiff filed suit on the same day. Both complaints alleged violations of the Lanham Act, 15 U.S.C. §§ 1051-1127 (1994), as well as other pendent state law claims. More specifically, both sides alleged violations of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), which creates a federal cause of action for unfair competition by prohibiting the use in interstate commerce of any "false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same...." 15 U.S.C. § 1125(a). In order to prevail on this claim, each party had the burden of showing (1) that it had trademark rights in the mark or name at issue and (2) that the other party had adopted a mark or name that was the same, or confusingly similar to its mark, such that consumers were likely to confuse the two. Conagra, Inc. v. Singleton, 743 F.2d 1508, 1512 (11th Cir.1984); see also Investacorp, Inc. v. Arabian Inv. Banking Corp., 931 F.2d 1519, 1521-22 (11th Cir.), cert. denied, 502 U.S. 1005, 112 S.Ct. 639, 116 L.Ed.2d 657 (1991).

Plaintiff and Defendant agreed that the use of Plaintiff's LONE STAR STEAKHOUSE & SALOON mark together with the use of Defendant's LONE STAR STEAKS mark created and would continue to create consumer confusion. The district court was thus faced with the sole task of determining which party had prior and superior rights to its mark. Not surprisingly, each party believed its rights were superior to the other's and each moved for a preliminary injunction to enjoin the other's use.

Defendant's first used the LONE STAR STEAKS mark in January of 1984, while Plaintiff's first used the LONE STAR STEAKHOUSE & SALOON mark in October of 1989. Based on these dates, Defendant argued that its mark had prior and superior rights over Plaintiff's mark. Plaintiff, in turn, argued that its LONE STAR STEAKHOUSE & SALOON mark had priority because of the 1981 federal registration of the LONE STAR CAFE mark. In support of this argument, Plaintiff pointed to the fact that it used both marks in the sale and advertising of its restaurant services. Plaintiff also pointed to the fact that the words "Lone Star" were the dominant, identifying features of both parties' marks. Accordingly, Plaintiff contended that in determining infringement and priority, the court should consider which party first developed rights in the words "Lone Star," without regard to the accompanying generic words. The district court rejected Plaintiff's arguments, denied Plaintiff's motion for a preliminary injunction, ⁷ and by granting Defendant's motion for a preliminary injunction, prohibited Plaintiff from using the LONE STAR STEAKHOUSE & SALOON mark in the state of Georgia. ⁸

Plaintiff subsequently filed a motion seeking clarification and modification of the preliminary injunction order. Plaintiff sought an order from the court that would allow it to use the federally registered LONE STAR CAFE mark in Georgia. The court granted the motion partly because it was not convinced the LONE STAR STEAKS mark and the LONE STAR CAFE mark were similar enough to cause confusion. ⁹

Defendant thereafter moved for summary judgment, and requested the court (1) to enter a permanent injunction against Plaintiff, (2) to cancel Plaintiff's LONE STAR STEAKHOUSE & SALOON clothing registration, and (3) to enter final judgment on Defendant's claims for monetary damages, attorneys' fees, and costs. The district court granted in part Defendant's motion for summary judgment and made the following rulings: (i) granted Defendant's motion for a permanent injunction; (ii) denied Defendant's motion to cancel Plaintiff's nationwide registration of its mark for clothing; (iii) granted final judgment on Defendant's claims under (a) the Georgia Uniform Deceptive Practices Act, O.C.G.A. §§ 10-1-371 to -375, (b) the Georgia Fair Business Practices Act of 1975, O.C.G.A. §§ 10-1-390 to -407, (c) as well as on its claim for infringement of a registered mark under O.C.G.A. § 10-1-450, (iv) denied without prejudice Defendant's request for the profits Plaintiff made from its Augusta restaurant during the period of infringement; (v) granted Defendant's motion for summary judgment under O.C.G.A. 10-1-450 for liquidated damages in the amount of $10,000.00; (vi) denied Defendant's request for attorney fees under the Lanham Act; (vii) granted Defendant's attorneys' fees pursuant to Georgia's Fair Business Practices Act, O.C.G.A. § 10-1-399(d); and finally, (viii) granted Defendant's request for costs under both the Lanham Act and Georgia statutes.

At the conclusion of the order granting in part Defendant's motion for summary judgment, the district court directed the parties to file briefs concerning whether Defendant was entitled to profits from the operation of Plaintiff's Augusta restaurant during the time of infringement, the amount of attorneys' fees and costs Defendant could collect, and a proposed order containing language for the permanent injunction. The district court conducted an evidentiary hearing on these and other issues. Following the evidentiary hearing, the district court entered an order that (i) permanently enjoined Plaintiff from using either the LONE STAR STEAKHOUSE & SALOON mark or LONE STAR STEAKS mark in connection with the operation of any restaurant(s) in Georgia, (ii) canceled Plaint...