Maxim's Ltd. v. Badonsky

• Decision Date: 11 October 1985
• Docket Number: No. 84-2879,84-2879
• Citation: 227 USPQ 316,772 F.2d 388
• Parties: MAXIM'S LIMITED, Plaintiff-Appellant, v. George BADONSKY, d/b/a Maxim's Restaurant, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 388

772 F.2d 388

227 U.S.P.Q. 316

MAXIM'S LIMITED, Plaintiff-Appellant, v. George BADONSKY, d/b/a Maxim's Restaurant, Defendant-Appellee.

No. 84-2879.

United States Court of Appeals Seventh Circuit.

Argued April 19, 1985.

Decided Sept. 12, 1985.

Rehearing Denied Oct. 11, 1985.

David H.T. Kane, Kane, Dalsimer, Kane, Sullivan & Kurucz, New York City, for plaintiff-appellant.

Charles A. Laff, Laff, Whitesel, Conte & Saret, Chicago, Ill., for defendant-appellee.

Before CUDAHY and COFFEY, Circuit Judges, and PECK, Senior Circuit Judge. ^*

CUDAHY, Circuit Judge.

In 1963 Astor Tower Restaurant, Inc., a Chicago firm, solicited the agreement of Louis Vaudable of Paris to allow Astor Tower to use the name "Maxim's de Paris" for a Chicago restaurant. The facts surrounding the agreement are less than clear in the record. Vaudable apparently owned Maxim's in Paris, perhaps in partnership with Societe Investissement Commercial et Hotelier, S.A. (SICH).

The use of the mark in Chicago evidently benefited the Chicago restaurant. Under the agreement Astor Tower paid certain "royalties" for the use of the name, and Vaudable and SICH agreed to provide consulting services. It is not clear from the record whether Vaudable or SICH had asserted any legal right to control the use of the mark "Maxim's" in this country, or whether the agreement was entered into primarily to give the impression that the Chicago restaurant was in some way connected with the Paris restaurant. Certainly other restaurants in this country have used the name and even the typescript used by the Paris restaurant in its signs, and used them with impunity. For example, the Maxim's in Houston, Texas is a nationally advertised French restaurant; the menu of that establishment carries a wine known as "Caves de Maxim's," which is provided by the plaintiff in this case. The Houston restaurant has been in existence for thirty-five years, and its use of the name has never been licensed by the plaintiff or by anyone else.

In any event, in 1977 Astor Tower renegotiated the agreement with Maxim's Limited, plaintiff in this case. Maxim's Limited, at that time was owned by Vaudable and SICH; later Vaudable sold his share to the present owner, Pierre Cardin. It has not been made clear in the record what rights, if any, Maxim's Limited, had in either the Paris restaurant or the name "Maxim's." Plaintiff assures us that it is the owner of various U.S. Patent and Trademark Office registrations for "Maxim's" and "Maxim's de Paris" covering foods, wine and a variety of other products; the record shows only a registration covering frozen foods and sauces.

Whatever rights there were under the 1977 agreement were not assignable. The agreement provided that Astor Tower would not contest Maxim's Limited's right to the mark during the life of the contract. It also provided that Maxim's Limited, would make yearly inspection visits to Chicago, to be paid for by Astor Tower; defendant claims, however, that plaintiff neglected the agreement, and that the only contact between the plaintiff and the Chicago restaurant was a phone call and one visit by some guests of Vaudable. Astor Tower apparently stopped paying fees in 1980 or 1981. In 1981, some time after Pierre Cardin had acquired Maxim's Limited, that firm told the press that there was no Maxim's de Paris in Chicago. Astor Tower responded vigorously, insisting that the Chicago restaurant was alive and well, and a "lawfully authorized licensee." ¹

In 1982 the Chicago restaurant closed. In May, 1984, defendant George Badonsky purchased from Astor Tower the building in which the Chicago restaurant had been located, along with the restaurant's goodwill. Badonsky renovated the restaurant and announced his intention to reopen it as Maxim's. This suit followed. At some point Badonsky decided that the full name would not be "Maxim's de Paris" but rather "George Badonsky's Maxim's on Astor Street." Maxim's Limited, argued before the district court that it had a common law right to exclusive use of the name "Maxim's" for a restaurant, and requested an injunction against the use of that name by Badonsky. The day after filing its complaint, Maxim's Limited, moved for a preliminary injunction, and it is from the denial of the preliminary injunction that it now appeals.

The decision to deny a preliminary injunction is within the discretion of the trial court, and will not be disturbed except for an abuse of that discretion. Roland Machinery Co. v. Dresser Industries, 749 F.2d 380, 390-91 (7th Cir.1984) (as amended); Wesley-Jessen Division v. Bausch & Lomb, Inc., 698 F.2d 862, 864 (7th Cir.1983). The district court must weigh four factors in deciding whether to grant or deny the injunction: (1) whether there is an adequate remedy at law (that is, whether interim harm caused by the activity to be enjoined can be completely offset by a subsequent award of damages or other legal relief); (2) whether any such irreparable harm to the plaintiff caused by a failure to enjoin the activity outweighs irreparable harm to the defendant caused by an injunction; (3) whether the plaintiff has some likelihood of success on the merits; and (4) whether grant of the injunction would disserve the public interest. Wesley-Jessen, supra, at 864. These factors are to be balanced, one against the other, so that where harm to the plaintiff significantly outweighs the harm to the defendant, and the legal remedy would not be adequate, less of a likelihood that plaintiff will prevail is required. Our review is a deferential one, and although we are not limited to determining whether the action of the trial court is without basis in reason, Roland Machinery, supra, at 390, neither may we replace the district court's judgment with our own, id.

The district court refused the preliminary injunction largely on the ground that Maxim's Limited, had not established a fairly clear-cut probability of success at trial on the merits. On appeal plaintiff argues that the district court has this factor wrong, and that all that is required is some likelihood of success. Plaintiff cites Roland Machinery, supra, at 387: it suffices that " 'plaintiff's chances are better than negligible ...' " (citing Omega Satellite Products Co. v. City of Indianapolis, 694 F.2d 119, 123 (7th Cir.1982)). In the very next paragraph of Roland Machinery, however, we said that the necessary likelihood of success varied inversely with the excess of irreparable harm on the plaintiff's side. Roland Machinery, supra, at 387. If the balance of harms tips toward the plaintiff, but only slightly, then a greater likelihood of prevailing is required; if the balance tips toward the defendant, of course, the injunction must be denied, whatever the plaintiff's chance of winning on the merits. Thus the trial court would be right to require a fairly clear-cut probability of success if he did not find that harm to the plaintiff outweighed harm to the defendant to a significant degree. Here it found neither a clear-cut probability of success nor a balance of harms in plaintiff's favor. ²

The trial court found less than a clear-cut probability of success primarily because it was not clear whether plaintiff owned the mark, and because there was a fair chance, even if an interest could be established, that that interest had been abandoned by 1982. Maxim's Limited, has not registered the mark "Maxim's" as a name for restaurants and relies on a "common law" right; but Maxim's Limited, has not even established ownership of, or interest in, the Paris restaurant (indeed, it rather persistently skirts the issue of that relationship in its briefs). Moreover, there is evidence which suggests that even if Maxim's Limited, had owned the mark, it abandoned it for restaurant use prior to 1982.

The plaintiff insists that under 15 U.S.C. Sec. 1125(a) proof of ownership is not necessary to establish standing. But ownership, or some other lesser right, is necessary to control the use of the name, and thus the lack of evidence of such a right is relevant to the question of the probability that the plaintiff will prevail at trial. ³

The trial court must rely on the evidence before it in determining whether to grant a preliminary injunction, and we agree with the court that on the evidence now in the record, the chance of Maxim's Limited's proving an interest in the mark--and therefore its chance of prevailing on the merits--is not demonstrably very great.

If Maxim's Limited, is to win the preliminary injunction, therefore, it would have to impress the trial court with the amount by which the harm that threatens it (if there is no injunction) exceeds the harm threatening the defendant (if there is an injunction); for since the court determined that the chances of prevailing were slim, the balance of harms would have to lean rather obviously toward plaintiff's side to make a preliminary injunction appropriate. Specifically, the harm to the plaintiff, discounted by its chance of prevailing, must exceed the harm to the defendant discounted by his chance of prevailing.

Maxim's Limited argues that in a case of this sort, irreparable injury is assumed. See Processed Plastic Co. v. Warner Communications, Inc., 675 F.2d 852, 858 (7th Cir.1982). Although we agree that there is such a presumption, the significance of that fact is rather minimal; for what is necessary is that whatever irreparable injury there is to the plaintiff outweigh the injury to the defendant--in this case, outweigh it by a substantial margin. The trial court considered the harm that could be done, and, in light of the plaintiff's questionable chance of winning, denied the preliminary injunction.

Certainly the denial was no abuse of discretion. For one thing, the defendant stood to lose a good deal if the injunction was granted, and merely winning at trial would not undo that harm. Badonsky sees an advantage to using the name "Maxim's;" he would not be in court ot...