TGI Friday's, Inc. v. INTERNAT'L REST. GROUP, INC.

• Decision Date: 16 December 1975
• Docket Number: Civ. A. No. 73-387,74-13.
• Parties: T. G. I. FRIDAY'S, INC. v. INTERNATIONAL RESTAURANT GROUP, INC. INTERNATIONAL RESTAURANT GROUP, INC., et al. v. T. G. I. FRIDAY'S, INC.
• Court: U.S. District Court — Middle District of Louisiana

405 F. Supp. 698

T. G. I. FRIDAY'S, INC. v. INTERNATIONAL RESTAURANT GROUP, INC.

INTERNATIONAL RESTAURANT GROUP, INC., et al. v. T. G. I. FRIDAY'S, INC.

Civ. A. Nos. 73-387, 74-13.

United States District Court, M. D. Louisiana.

December 16, 1975.

COPYRIGHT MATERIAL OMITTED

William C. Kaufman, III, Seale, Smith & Phelps, Baton Rouge, La., William D. Harris, Jr., Charles S. Cotropia, Richards, Harris & Medlock, Dallas, Tex., for T.G.I. Friday's, Inc.

John V. Parker, Gerald E. Songy, Sanders, Miller, Downing & Kean, Baton Rouge, La., Charles C. Finch, Batesville, Miss., for Intern. Restaurant Group, Inc., Tiffany English Pub. Inc., F. R. Trainor and Ben E. Pittman.

E. GORDON WEST, District Judge:

These cases involve claims of service mark infringements, unfair trade practices, and breaches of a restaurant licensing agreement. T.G.I. Friday's, Inc. (Friday's), a New York corporation engaged in the restaurant and bar business, brought suit against International Restaurant Group, Inc. (International), alleging service mark infringement, unfair competition, and breach of a licensing agreement entered into between Friday's and a corporation known as Tiffany English Pub, Inc. (Tiffany). It seeks both injunctive relief and monetary damages. International Restaurant Group, Inc. and its two major stockholders, Ben E. Pittman and Frank R. Trainor, brought suit against T.G.I. Friday's, Inc. seeking a declaratory judgment that it, International, was not and is not bound by the licensing agreement referred to in the suit brought by Friday's. The two suits were consolidated for trial. For convenience, in this opinion T.G.I. Friday's, Inc., or Friday's, will be referred to as the plaintiff, and International Restaurant Group, Inc. and its major stockholders will be referred to as the defendants.

The cases involve the operation by International of a restaurant in Baton Rouge, Louisiana, under the name of "Ever Lovin' Saturday's," which Friday's contends is confusingly similar to its restaurants operated under the name of "T.G.I. Friday's." Both restaurants employ what is known in the trade as a "turn of the century" motif.

Plaintiff contends that International's use of the designation "E. L. Saturday's" or "Ever Lovin' Saturday's" for a restaurant business infringes its federal service mark "T.G.I. Friday's" in violation of the Lanham Act, 15 U.S.C. § 1114(1), and its Louisiana service mark "Saturday's" in violation of La.R.S. 51:222. Defendants deny that their adoption and use of the restaurant name "E.L. Saturday's" or "Ever Lovin' Saturday's" would likely cause confusion as to the source of the restaurant services it offers the consuming public, and denies that Friday's federal or state service marks have been infringed.

Plaintiff further contends that International, through its principal owners and operating officers, Ben E. Pittman and Frank R. Trainor, both Mississippi citizens, utilized the name and reputation of the Friday's establishment in Jackson, Mississippi, to organize and promote the Saturday's restaurant in Baton Rouge. Plaintiff alleges that Pittman and Trainor acquired knowledge of the concepts of plaintiff's restaurant operations through their experience as owners and operators of a corporation known as Tiffany English Pub, Inc. (Tiffany), the licensee-operator of the Friday's franchise in Jackson, Mississippi, and that their promotion of Saturday's in Baton Rouge, including the appropriation of Friday's "trade dress," constitutes unfair competition. The defendants deny this contending that plaintiff provided Tiffany no special expertise to operate Friday's in Jackson, Mississippi, which was utilized to operate Saturday's in Baton Rouge, and that plaintiff has no exclusive right to a "turn-of-the-century" theme in its restaurant operations.

Finally, plaintiff contends that the obligations imposed upon Tiffany under the licensing agreement for the Friday's franchise in Jackson were binding upon, and were breached by Pittman and Trainor individually, and by International, in their operation of Saturday's in Baton Rouge. The defendants deny this contention on the grounds that International was not a party to the franchise agreement between Friday's and Tiffany; that it was formed in good faith by Pittman and Trainor for legitimate purposes as a separate business venture from Tiffany; that the assets and liabilities of the two corporations are distinct and have never been commingled; and that the two corporations have never been mere agencies for the transaction of Pittman and Trainor's own private business. Thus, the defendants urge that plaintiff cannot "pierce the corporate veil" to impose personal liability on Pittman and Trainor. The defendants further urge that the licensing agreement between plaintiff and Tiffany was signed by Pittman and Trainor only on behalf of Tiffany, and was not binding upon them individually, nor upon International.

Defendants seek a declaratory judgment to the effect that the restaurant licensing agreement entered into between Tiffany and Friday's, Inc. in no way interferes with their rights to operate the Saturday's establishment in Baton Rouge. They further claim to be entitled to an injunction permanently enjoining Friday's, Inc. from interfering in any way with the operation of the Saturday's restaurant in Baton Rouge or in any other location. Friday's, Inc. counter-claims for a declaratory judgment that International, Tiffany, Pittman, and Trainor either individually or collectively violated Section 14 of the licensing agreement pertaining to "Other Tradenames and Marks." In that section, Tiffany acknowledged plaintiff's "vital interest" in the marks "Tuesday's," "Wednesday's," "Thursday's," and "Sunday's," and agreed not to use "the names of the days of the week, singly or in combination . . . in connection with the operation of a business" other than the Friday's franchise in Jackson, Mississippi. Friday's, Inc. further counter-claims for injunctive relief to permanently enjoin the defendants from any "further violations" of the licensing agreement, and from operating any business, other than the Friday's in Jackson, that "utilizes the names of the days of the week singly or in combination."

These consolidated cases were tried to the Court without a jury on June 11 and 12, 1975. After careful consideration of the evidence and the excellent briefs of counsel, the Court concludes that defendant International's use of the designations "E. L. Saturday's" or "Ever Lovin' Saturday's" did not infringe plaintiff's federal service mark "T.G.I. Friday's"; that plaintiff's Louisiana service mark "Saturday's" is not entitled to infringement protection due to non-use, and that the overall business conduct of International, Pittman, and Trainor did not, as a matter of law, constitute unfair competition. The Court further concludes that Tiffany did not breach the licensing agreement, but assuming arguendo that it did, plaintiff failed to prove any sustained damage as a result. Finally, the Court concludes that the licensing agreement between plaintiff and Tiffany did not bind Pittman and Trainor individually, nor International, and further assuming a breach of the agreement by Tiffany, that corporateness could not be disregarded to impose personal liability on Pittman and Trainor. International, Pittman, and Trainor are thus entitled to declaratory and injunctive relief as requested. In connection herewith, the Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

"T.G.I. Friday's" was the brainchild of Alan Stillman, a former beauty oils salesman, who in 1965 founded the first Friday's restaurant on the upper East side of Manhattan in New York City as a "restaurant/bar and gathering place" for upwardly mobile single adults. The timeliness of Stillman and his business partner's decision to capitalize on the burgeoning singles entertainment market soon became evident. Their efforts yielded over one-half million dollars gross profit in their first year of business, and led to other restaurant ventures which apparently have been equally successful. These other establishments, all in New York City, have been variously named "Tuesday's," "Wednesday's," "Thursday's," and "Sunday's," all possessing themes distinct from each other and from "T.G.I. Friday's".

The basic theme of the original Friday's in New York and subsequent Friday's establishments located elsewhere in the United States is "turn-of-the-century," that is, an eclectic collection of Tiffany lamps, stained glass, old pictures, outdoor awnings, beadboard walls, tin ceilings, and other period pieces which suggest an atmosphere circa the late 1800's through the late 1920's.

Stillman and his original partner, Lawrence Horton, initially formed Euromart, Inc. which wholly owned Friday's in New York City. They then formed Friday's, Inc. in 1969 to organize and promote other Friday's franchises in locations outside of the New York City metropolitan area. On October 29, 1970, Euromart, Inc. contractually granted plaintiff the exclusive license to use the name "Friday's" in connection with the operation of restaurants, bars, and grills. This contract further granted plaintiff the right to enter into agreements with third parties conferring the right to use of the name "Friday's." This exclusive licensing authority vested in plaintiff became effective on May 1, 1970.

"T.G.I. Friday's" was registered by Euromart, Inc. as a service mark for restaurant and liquor bar services with the Principal Register of the United States Patent Office on December 14, 1971, based upon use of the mark since March 15, 1965. (Principal Register #925,656) The federal registration is effective for a term of twenty years from the date of registry and has been in effect at all times pertinent to this litigation.

Plaintiff undertook its corporate development by granting licenses to third parties to operate "T.G.I....