Parks & Rec. California v. Bazaar Del Mundo

• Decision Date: 24 May 2006
• Docket Number: No. 05-55828.,05-55828.
• Citation: 448 F.3d 1118
• Parties: DEPARTMENT OF PARKS AND RE-CREATION FOR THE STATE OF CALIFORNIA, Plaintiff-Appellant, v. BAZAAR DEL MUNDO INC., a California Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

448 F.3d 1118

DEPARTMENT OF PARKS AND RE-CREATION FOR THE STATE OF CALIFORNIA, Plaintiff-Appellant, v. BAZAAR DEL MUNDO INC., a California Corporation, Defendant-Appellee.

No. 05-55828.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 7, 2005.

Filed May 24, 2006.

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Richard P. Sybert, San Diego, California, for the plaintiff-appellant.

John T. Brooks, San Diego, California, for the defendant-appellee.

Appeal from the United States District Court for the Southern District of California, Jeffrey T. Miller, District Judge, Presiding. D.C. No. CV-04-02244-JTM.

Before BEEZER, HALL, and WARDLAW, Circuit Judges.

WARDLAW, Circuit Judge.

The Department of Parks and Recreation for the State of California (the "State") appeals the denial of its motion to preliminarily enjoin Bazaar del Mundo from using the registered trademarks CASA DE BANDINI and CASA DE PICO in the operation of restaurants located outside the boundaries of the Old Town San Diego State Historic Park ("Old Town"). The critical issue in dispute is whether the State owns any protectible interest in the trademarks. Because we agree with the district court that the State failed to introduce sufficient evidence of ownership of the marks and thereby failed to establish the requisite degree of likelihood of success on the merits, we affirm the district court's denial of injunctive relief.

I.

In 1968, the State of California acquired title to about fourteen acres of land by condemnation judgment in order to establish Old Town. The sale included the Casa de Pico and Casa de Bandini properties, which were both built in the 1820s. Each building has a rich history: Casa de Pico was built by Pio Pico, the last Mexican governor of California, while Casa de Bandini was built by a Peruvian immigrant of Italian descent who became a prominent San Diegan, Don Juan Bandini. Before the State acquired the property, the Casa de Pico building was operated as the "Casa de Pico Motel," while the Casa de Bandini house was operated as a hotel and stage coach station, which included a restaurant. Afterwards, the buildings were used to house shops and, in 1969, the Casa de Bandini house served as the headquarters for the Fiesta 200 celebration of San Diego's bicentennial. In conjunction with the Fiesta 200 festival, the State produced a brochure which mentioned the Pico and Bandini families. Casa de Bandini was registered as a California Historical Landmark in 1932.

On June 21, 1971, the State and Bazaar del Mundo entered into a "Concession Agreement." The Agreement provided that the State grant Bazaar del Mundo the "privilege and duty" to construct or modify, equip, operate and maintain a Mexican-Style Shopping Arcade in the Casa de Pico Buildings in Old Town for a five-year period, in return for rent and a percentage of receipts. The Agreement was amended several times. In 1972, Bazaar del Mundo was permitted to extend its concession activities into the "Bandini House — Cosmopolitan Hotel," and the Agreement was extended five years. In 1981, the parties executed Amendment Three, which stipulated that the "subject premises shall be used by the Concessionaire to establish a Mexican Shopping Arcade, Lino's, Hamburguesa, Casa de Pico, and the Casa de Bandini Restaurants," and extended the Agreement another ten years. When the third amendment was executed on November 18, 1981, Bazaar del Mundo had been operating its Casa de Pico restaurant for ten years and its Casa de Bandini restaurant for one year. In 1991, Bazaar del Mundo exercised its option to extend the term of the Concession Agreement for ten more years.

Before the Agreement was to expire, on June 30, 2001, the State initiated an open bidding process for the next concession agreement. In connection with its Request for Proposals, the State prepared a Sample Contract containing a provision that would govern intellectual property rights. Objecting to the intellectual property rights provision, Bazaar del Mundo nevertheless submitted a bid for the concession. On October 17, 2003, the State issued a "Notice of Intent to Award" the concession to Delaware North, Inc., a Delaware corporation. Bazaar del Mundo submitted to the State a "Protest of Bid Award" on October 27, 2003, commencing a state administrative review process. The State allowed Bazaar del Mundo to continue operating as a holdover tenant in Old Town during the pendency of its administrative appeal. During this time, Bazaar del Mundo also filed a federal trademark infringement action in the Southern District of California against Delaware North and Ruth Coleman, the Director of the State Department of Parks and Recreation. The district court dismissed that action on March 3, 2004, finding that (1) the Eleventh Amendment barred suit against Director Coleman; (2) the case was not yet ripe for adjudication; and (3) Bazaar del Mundo had failed to exhaust its administrative remedies.

On July 12, 2004, an Administrative Law Judge ("ALJ") denied Bazaar del Mundo's administrative bid protest. Director Coleman adopted the ALJ's decision on July 23, 2004. Bazaar del Mundo petitioned for a writ of mandate to review the decision before the San Diego Superior Court on January 20, 2005, but the petition was denied. The State issued a "Notice to Vacate" the premises effective March 15, 2005. Delaware North took over the concession on June 1, 2005.

Previously, in 1985, Bazaar del Mundo applied to the United States Patent and Trademark Office ("USPTO") and the Secretary of the State of California, to register the trademarks CASA DE PICO, CASA DE BANDINI, LINO'S, and HAMGURGUESA for restaurant services. The trademarks were published and received no opposition. The USPTO granted federal registration to Bazaar del Mundo for the mark CASA DE BANDINI on July 16, 1985 and for the mark CASA DE PICO on October 8, 1985. In its application, Bazaar del Mundo distinguished the terms "Pico Pollo" and "Pico de Gallo" from CASA DE PICO, representing that "[t]he Pico in Bazaar del Mundo's mark refers not to an animal but to General Pio Pico, the last Mexican governor." Bazaar del Mundo went on to state that "[t]he site on which the restaurant stands was the home of General Pico which was later converted into a motel in 1930 . . . [and] subsequently converted into a restaurant."

In May 2005, after it had vacated its Old Town location, Bazaar del Mundo announced its plans to open restaurants under the names "Casa de Pico Restaurant" and "Casa de Bandini Restaurant" in La Mesa, California and on the waterfront in downtown San Diego. This announcement prompted the State to file this action against Bazaar del Mundo, seeking (1) declaratory judgment of trademark ownership under California Code of Civil Procedure § 1060; (2) rectification of the trademark registry under 15 U.S.C. § 1119; and damages for (3) common law trademark infringement; (4) fraudulent federal trademark infringement under 15 U.S.C. § 1120; (5) unfair competition under California Business and Professions Code § 17200; (6) false advertising under California Business and Professions Code § 17500; and (7) false designation of origin under 15 U.S.C. § 1125.

To prevent Bazaar del Mundo from using the marks in connection with its new restaurants, the State moved for a preliminary injunction. Bazaar del Mundo responded by filing a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). The district court denied both motions by Order dated May 17, 2005. Only the State appeals the district court's ruling. The district court found, based on the state of the record at that time, that the State failed to demonstrate a protectible trademark interest in the marks so as to demonstrate a sufficient probability of success on the merits warranting injunctive relief.

II.

We review a district court's denial of injunctive relief for an abuse of discretion. See Hecht Co. v. Bowles, 321 U.S. 321, 331, 64 S.Ct. 587, 88 L.Ed. 754 (1944); Petroleum Exploration, Inc. v. Pub. Serv. Comm'n, 304 U.S. 209, 218, 58 S.Ct. 834, 82 L.Ed. 1294 (1938). We review the district court's findings of fact for clear error, see Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1239 (9th Cir.2001), and the district court's conclusions of law de novo, see Brown v. Cal. Dep't of Transp., 321 F.3d 1217, 1221 (9th Cir.2003).

III.

To obtain injunctive relief, the movant must demonstrate either: (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised as to the merits and that the balance of hardships tips in its favor. Arcamuzi v. Cont'l Air Lines, Inc., 819 F.2d 935, 937 (9th Cir.1987); see also Sardi's Rest. Corp. v. Sardie, 755 F.2d 719, 723 (9th Cir.1985) (applying test in a trademark case).

The district court both articulated and applied the correct legal standard to the State's request for an injunction against Bazaar del Mundo's use of the CASA DE PICO and CASA DE BANDINI marks. Quoting Arcamuzi, 819 F.2d at 937, the district court set forth the two tests, noting that "`[t]hese two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases.'" The district court also recognized that under both formulations of the test, the party seeking injunctive relief must demonstrate a "fair chance of success on the merits" and a "significant threat of irreparable injury." And, as we also held in Arcamuzi, "[i]f the plaintiff shows no chance of success on the merits, . . . the injunction should not issue," because "[a]s an irreducible minimum, the moving party must demonstrate a fair chance of success on the merits, or questions serious enough to require litigation." Arcamuzi, 819 F.2d at 937 (internal quotation marks omitted). The district court also noted that if the public interest is implicated,...