Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc. , 106 F.3d 355 ( 1997 )

United States Court of Appeals,
Eleventh Circuit.
Nos. 94-8700, 95-8656 and 95-8767.
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.
Feb. 24, 1997.
Appeals from the United States District Court for the Northern
District of Georgia. (Nos. 1:93-CV-2936, 2938-ODE), Orinda D.
Evans, Judge.
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,
1
The parties in this appeal each filed separate but related
complaints in the United States District Court for the Northern
District of Georgia: Case No. 93-CV-2963 and Case No. 93-CV-
2938. The two cases were consolidated pursuant to Rule 42(a) of
the Federal Rules of Civil Procedure.
2
Although Lone Star Steakhouse & Saloon of Georgia, Inc. is
listed as a separate defendant in Case No. 93-CV-2938, it is a
wholly-owned subsidiary of Lone Star Steakhouse & Saloon, Inc.
To simplify our discussion, we treat the two corporations as a
single entity, and we consequently refer to only one "Plaintiff."
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,
3
Again, for simplicity's sake, we treat these separate
entities as if they were one.
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
4
Plaintiff has an application for the mark LONE STAR
STEAKHOUSE & SALOON, which does cover restaurant services, now
pending before the United States Patent and Trademark Office.
5
More specifically, Plaintiff describes its trademarks as
follows:
A. United States Service Mark Registration No.
1,555,907, issued on May 26, 1981 for the mark LONE
STAR CAFE, which registration is now incontestable
under 15 U.S.C. § 1065. This registration covers
restaurant services and nightclub services featuring
musical entertainment.
B. United States Trademark Registration No.
1,318,227, issued on February 5, 1985 for the mark LONE
STAR CAFE, which registration is now incontestable
under 15 U.S.C. § 1065. This registration covers adult
clothing for everyday wear—namely, men's and women's
jackets, sweatshirts, T-shirts, hats, ball caps, vests,
boots, shoes, socks, shirts, jeans, and trousers, and
tie tacks, and belt buckles.
C. United States Trademark Registration No.
1,731,247, issued on November 10, 1992 for the mark
LONE STAR STEAKHOUSE & SALOON. This registration
covers clothing: namely, men's and women's sport
shirts, sweatshirts, polo shirts, and caps.
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
D. United States Service Mark Application No. 74-
248,299, for the mark LONE STAR STEAKHOUSE & SALOON,
which application is presently pending in the United
States Patent and Trademark Office. This application
covers restaurant services.
R1-1-3.
6
As a result of Longhorn Steaks' acquisition of Lone Star
Steaks, a Lone Star Steaks' restaurant has been converted to a
Longhorn Steaks' restaurant.
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
7
Plaintiff filed an appeal challenging the district court's
denial of its motion for a preliminary injunction. That appeal
has been carried with the other appeals pertaining to this case
and is presently before this Court.
8
More specifically, the order granting Defendant's
preliminary injunction stated:
Plaintiff is hereby enjoined, together with its
agents, subsidiaries, affiliates, franchisees and
assigns (including Lone Star Steakhouse & Saloon of
Georgia, Inc.), from (a) using the LONE STAR STEAKHOUSE
& SALOON [mark], the trade name Lone Star Steakhouse &
Saloon, or any other colorable or similar imitation of
either the LONE STAR STEAKS mark or the LONE STAR
STEAKHOUSE & SALOON [mark], in connection with the
operation of any restaurant in Georgia or in connection
with the sale, offering for sale, promotion, marketing,
or advertising of their restaurants, goods or services
in Georgia and (b) otherwise infringing upon Lone Star
Steaks' service marks and registrations therefore in
the State of Georgia. Plaintiff is further ORDERED to
take prompt, affirmative action to change the name of
their restaurant in Augusta, Georgia and to withdraw
from the public any advertisements or promotional
materials which contain or use the LONE STAR STEAKHOUSE
& SALOON mark in relation to its restaurant in Augusta,
Georgia.
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-
R3-43-27-28.
9
Defendant appealed the clarification order in appeal no.
94-8734. On January 17, 1996, this Court granted the parties'
joint motion to dismiss that appeal as moot.
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
Plaintiff's clothing registration within the state of Georgia and
directed the United States Patent and Trademark office to issue
Defendant a clothing registration within Georgia for its LONE STAR
STEAKS mark, (iii) awarded Defendant $50,000.00 of the profits from
Plaintiff's Augusta restaurant pursuant to 15 U.S.C. § 1117(a),
(iv) awarded Defendant attorneys' fees in the amount of $99,868.50,
and (v) awarded Defendant costs in the amount of $13,754.17.
Thereafter, Plaintiff again sought a clarification of the permanent
injunction's language; again the court ruled that the permanent
injunction did not enjoin Plaintiff's use of the LONE STAR CAFE
mark within the state of Georgia. In this clarification order, the
court also awarded Defendant additional attorneys' fees and costs
in the respective amounts of $12,073.99 and $743.70.
On appeal, the parties contest the various orders entered by
the district court. Plaintiff argues that the district court
erred: (1) in denying its motion for preliminary injunction, (2)
in granting in part Defendant's motion for summary judgment with
regard to its request for a permanent injunction, and (3) in
awarding Defendant's profits, attorneys' fees and liquidated
damages.
In its appeal, Defendant argues: (4) that Plaintiff's appeal
of the district court's denial of its motion for preliminary
injunction is moot or in the alternative that the motion was
properly denied; (5) that the district court erred in its order
clarifying the scope of the permanent injunction to allow Lone Star
Steakhouse & Saloon to use the LONE STAR CAFE mark to identify its
restaurant in Georgia; and (6) the district court erred in
refusing to completely cancel Plaintiff's clothing registration
mark, "or at least in failing to hold further proceedings on the
issue of whether Lone Star Steakhouse & Saloon [was] entitled to
concurrent registration of this mark."
Because we believe our ruling on Plaintiff's appeal of the
permanent injunction (issue # 2), will effectively resolve both
Plaintiff's appeal of the preliminary injunction order (issue # 1)
and Defendant's suggestion that Plaintiff's appeal of the
preliminary injunction is moot (issue # 4), we will first address
Plaintiff's appeal of the permanent injunction.10
As stated earlier, to prevail under 15 U.S.C. § 1125(a), a
party must show (1) that it had prior rights to its mark or name
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. See Conagra Inc. v. Singleton, 743
F.2d 1508, 1512 (11th Cir.1984). It is undisputed that the
parties' respective marks created confusion among the restaurants'
consumers. Thus, the dispute centered around which party had the
prior and superior rights to its mark. In granting Defendant's
motion for preliminary injunction, the district court concluded
that Defendant's mark was the superior mark. Thereafter, Defendant
filed a motion for summary judgment seeking in part a permanent
injunction on its claims of trademark infringement. The district
court again found that Defendant's mark was the superior mark and
granted Defendant's request for a permanent injunction.
On appeal, Plaintiff argues that the district court erred in
concluding that Defendant's mark is superior and consequently in
granting Defendant's request for a permanent injunction. Instead,
Plaintiff believes its acquired LONE STAR CAFE mark is the superior
mark and that it is entitled to prevail on the trademark
infringement claims. In support of this contention, Plaintiff
advances the following arguments: First, Plaintiff argues that its
10
Our discussion of the district court's order granting
Defendant a permanent injunction applies equally to Plaintiff's
appeal of the preliminary injunction. For the same reasons we
believe the district court was correct in granting a permanent
injunction, we believe the district court was correct in denying
Plaintiff's motion for a preliminary injunction.
prior federally registered LONE STAR CAFE mark is superior to
Defendant's state registered LONE STAR STEAKS mark. Second,
Plaintiff asserts that the words "Lone Star" were the dominant,
identifying features of both parties' marks. Accordingly,
Plaintiff contends 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. Since Plaintiff's purchased rights in the LONE STAR CAFE
mark date back to 1981, it argues that it was first in developing
rights in the words "Lone Star." Next, Plaintiff attempts to argue
that it was adequately using the LONE STAR CAFE mark to identify
its restaurant services. Finally, Plaintiff contends that since it
complied with the district court's preliminary injunction order by
using the LONE STAR CAFE mark to identify its restaurant, the
district court erred in granting Defendant a permanent injunction.
All of Plaintiff's arguments listed above were considered and
rejected by the district court. Moreover, Plaintiff concedes that
there are no genuine issues of material fact. Plaintiff further
agrees that the questions presented on appeal are purely legal.
Thus, to the extent that Plaintiff argues the district court erred
in granting Defendant's motion for a permanent injunction, the
error must be that the district court failed to apply the correct
law or misapplied the law. Accordingly, we will review the
district court's legal conclusions de novo. Great Lakes Dredge &
Dock v. Tanker Robert Watt Miller, 92 F.3d 1102, 1106 (11th
Cir.1996). In sum, our review of the relevant law and the cases
cited by the parties lead us to conclude that the district court
properly applied the law and was correct in granting Defendant's
motion for summary judgment as it pertains to Defendant's request
for a permanent injunction.
For instance, Plaintiff cites John R. Thompson Co. v.
Holloway, 366 F.2d 108 (5th Cir.1966) and Dawn Donut Co. v. Hart's
Food Stores, Inc., 267 F.2d 358 (2d Cir.1959) for the proposition
that the senior owner of a federal registration has nationwide
priority over all junior users. In support of this proposition,
Plaintiff attempts to argue that Defendant's first use of its mark
in 1984 is inferior to Plaintiff's 1992 acquisition of the LONE
STAR CAFE mark which was federally registered in 1981. The
district court concluded otherwise.
The parties agree that factually the LONE STAR CAFE mark was
used on a sign displayed on an interior wall of Plaintiff's Augusta
Restaurant. The district court found as a matter of law that this
did not constitute a valid service mark use because it was not
being used to identify or distinguish the services being offered.
We agree.11
11
15 U.S.C. § 1127 states:
The term "service mark" means any word, name, symbol,
or device, or any combination thereof—
(1) used by a person, or
(2) which a person has a bona fide intention to use in
commerce and applies to register on the principal register
established by this chapter, to identify and distinguish the
services of one person, including a unique service, from the
services of others and to indicate the source of the
services, even if that source is unknown. Titles, character
names, and other distinctive features of radio or television
programs may be registered as service marks notwithstanding
that they, or the programs, may advertise the goods of the
sponsor.
The Plaintiff then argues that it has prior rights in the
words "Lone Star" through its acquisition of the LONE STAR CAFE
mark. Plaintiff relies upon its prevailing in
Lone Star Steakhouse
& Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922 (4th
Cir.1995). In Alpha of Virginia, plaintiff Lone Star Steakhouse &
Saloon, Inc., filed suit against defendant Alpha of Virginia, Inc.,
alleging defendant violated the Lanham Act and other state laws by
operating a restaurant under the name "Lone Star Grill." The
defendant there began operating the "Lone Star Grill" in 1991,
after plaintiff's 1981 federal registration of the LONE STAR CAFE
mark. The district court agreed with plaintiff that defendant
violated the Lanham Act and entered a permanent injunction
enjoining defendant from using any mark containing the words "Lone
Star." Defendant appealed. On appeal, the Fourth Circuit rejected
defendant's argument that the federal registration of LONE STAR
CAFE did not extend to the words "Lone Star," stating:
The original federal registration of "Lone Star Cafe"
effectively gave Max Shayne the exclusive right to use the
term "Lone Star" because the registration explicitly
disclaimed the word "Cafe" apart from the complete mark "Lone
Star Cafe," see Registration number 1,155,907; and this right
to use the mark "Lone Star" was subsequently assigned to Lone
Star Steakhouse. Furthermore, the mark "Lone Star," apart
from "Cafe," is important to this case because this Court has
held that courts should concentrate on the words not
disclaimed in assessing the likelihood of confusion necessary
for trademark infringement. See Pizzeria Uno Corp. v. Temple,
747 F.2d 1522, 1529-30 (4th Cir.1984).
Alpha of Virginia, 43 F.3d at 926 n. 1. In the case before us, the
district court reached a contrary conclusion on somewhat similar
facts. The district court found that Plaintiff's "1981 federal
registration applies to the LONE STAR CAFE mark as a composite
whole and does not establish priority to the general ...
descriptive term "Lone Star' by itself." R3-43-24. The district
court added that:
Plaintiff has no federal registration for the words "Lone
Star" by themselves. In determining whether a composite mark
such as LONE STAR CAFE is entitled to protection, courts do
not assess the individual parts of the name. McCarthy at §
14.06; California Cooler, Inc. v. Loretto Winery, Ltd., 774
F.2d 1451, 1455 (9th Cir.1985). Instead, the validity of a
composite mark is determined by looking at the mark as a
whole. McCarthy at § 14.06; California Cooler, 774 F.2d at
1455.
R3-43-23-24. In addition, the district court specifically
considered and rejected Plaintiff's argument that it has exclusive
right to the words "Lone Star" because it disclaimed the word
"Cafe" from its LONE STAR CAFE registration covering restaurant
services. The district court, quoting from a leading commentator
on trademark and unfair competition law stated:
The disclaimer does not have the effect of removing from the
registered mark the matter disclaimed. It disclaims only a
claim that the federal registration gives an exclusive right
in those disclaimed words or symbols per se. That is, the
applicant is merely stating that he is claiming only the whole
composite mark as his property, and makes no claim to those
particular portions disclaimed.
R3-43-24 (quoting McCarthy on Trademarks and Unfair Competition,
(3d ed. 1992) at § 19.20[1] (emphasis added)). With great respect
for the Fourth Circuit, we believe the district court correctly
applied the controlling principles of law.
The district court properly concluded that the validity of
Plaintiff's LONE STAR CAFE mark is to be determined by viewing the
trademark as a whole and not just the words "Lone Star." Estate of
P.D. Beckwith, Inc. v. Commissioner of Patents, 252 U.S. 538, 545-
46, 40 S. Ct. 414, 416-17, 64 L. Ed. 705 (1920) ("The commercial
impression of a trade-mark is derived from it as a whole, not from
its elements separated and considered in detail."); see also
California Cooler v. Loretto Winery, Ltd., 774 F.2d 1451, 1455 (9th
Cir.1985) ("[T]he validity of a trademark is to be determined by
viewing the trademark as a whole.") (citing Union Carbide Corp. v.
Ever-Ready Inc., 531 F.2d 366, 379 (7th Cir.), cert. denied, 429
U.S. 830, 97 S. Ct. 91, 50 L. Ed. 2d 94 (1976)). In addition, the
district court appropriately found that Plaintiff's disclaimer of
the word "Cafe" from its registration of the LONE STAR CAFE mark
does not establish priority to the words "Lone Star." See Country
Floors, Inc. v. Partnership Composed of Gepner and Ford, 930 F.2d
1056, 1065 (3d Cir.1991) ("The descriptive portions of a mark can
be disclaimed, although the entire composite mark, including the
descriptive terms, is considered for purposes of infringement.");
Giant Food, Inc. v. Nation's Foodservice, Inc., 710 F.2d 1565, 1570
(Fed.Cir.1983) ("[I]t is well settled that the disclaimed material
still forms a part of the mark and cannot be ignored in determining
likelihood of confusion."); Schwarzkopf v. John H. Breck, Inc.,
340 F.2d 978, 980 (C.C.P.A.1965) (court agreeing with statement "It
is of course well established that disclaimed material forming part
of a trademark cannot be ignored in determining whether the marks
are confusingly similar."). Accordingly, we agree with the
district court's that Plaintiff is not entitled to priority over
the descriptive words "Lone Star."
As to Plaintiff's remaining arguments that its mark is
superior, for the reasons discussed in the district court's orders,
we summarily agree with the district court's application of the law
and affirm the district court's ruling granting Defendant's motion
for summary judgment as it pertains to the permanent injunction.
Plaintiff also appeals from the portions of the district
court's orders that awarded Defendant: (1) profits pursuant to 15
U.S.C. § 1117(a), (2) attorneys' fees under the Georgia Fair
Business Practices Act, O.C.G.A. §§ 10-1-390 to -407, and (3)
liquidated damages under O.C.G.A. § 10-1-450.
I. Profits
Under the Lanham Act, a successful party "subject to the
principles of equity" may recover: "defendant's [the infringer's]
profits; (2) any damages sustained by the plaintiff, and (3) the
costs of the action." 15 U.S.C. § 1117(a); See Babbit
Electronics, Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 (11th
Cir.1994). After hearing uncontradicted evidence on the issue, the
district court determined that the principles of equity weighed in
Defendant's favor and awarded Defendant $50,000.00 of the profits
from Plaintiff's Augusta, Georgia restaurant. The district court's
findings of profits are questions of fact subject to the clearly
erroneous standard of review. St. Charles Mfg. Co. v. Mercer, 737
F.2d 891, 893 (11th Cir.1983) (citing Boston Professional Hockey
Ass'n Inc. v. Dallas Cap & Emblem Mfg., Inc., 597 F.2d 71, 76 (5th
Cir.1979)). We do not believe the district court was clearly
erroneous in awarding Defendant these profits. Accordingly, we
affirm the award.
II. Attorneys' Fees
Defendant sought recovery of its attorneys' fees under both
the Lanham Act and Georgia law. The Lanham Act authorizes
reasonable attorneys' fees "in exceptional cases." 15 U.S.C. §
1117(a). "[E]xceptional cases are those where the infringing party
acts in a "malicious,' "fraudulent,' "deliberate,' or "willful'
manner." Burger King Corp. v. Pilgrim's Pride Corp., 15 F.3d 166,
168 (11th Cir.1994). The district court, unsure if the present
case constituted an "exceptional case," circumvented the question
of attorneys' fees under the Lanham Act. However, the district
court granted Defendant's attorneys' fees under the Georgia Fair
Business Practices Act ("FBPA"). O.C.G.A. § 10-1-399(d). In
awarding these fees, the district court rejected Plaintiff's
arguments that only consumers may bring actions under the FBPA and
that the Lanham Act preempts the FBPA's attorney's fees statute.
On appeal, Plaintiff again argues that the FBPA only provides
relief for consumers and not competitors. Thus, the argument goes
that Defendant a non-consumer is not entitled to FBPA coverage and
an award of attorneys' fees. In support of this argument,
Plaintiff cites a case not available to the district court at the
time of its decision. In Friedlander v. PDK Labs, Inc., 266 Ga.
180, 465 S.E.2d 670 (1996), the Georgia Supreme Court in response
to a question certified by this Court in Friedlander v. PDK Labs,
Inc., 59 F.3d 1131 (11th Cir.1995), recently held that:
A person who suffers injury or damages, or whose business or
property has been injured or damaged, as a result of consumer
acts or practices may bring an action under FBPA
"individually, but not in a representative capacity...." OCGA
§ 10-1-399(a). A suit predicated upon an alleged violation of
the FBPA must be brought in the plaintiff's "capacity as an
individual member of the consuming public...." Zeeman v.
Black, 156 Ga.App. 82, 84, 273 S.E.2d 910 (1980). See also
Gross v. Ideal Pool Corp., 181 Ga.App. 483, 484(1), 352 S.E.2d
806 (1987). A suit is not brought in the capacity of an
individual member of the consuming public when the plaintiff's
only allegation of an injurious consumer act or practice
relates to representations made by his competitor in the
marketing of competing products to the general consuming
public. Of course, if a business, as a consumer, sustains
damage, it may bring suit under OCGA § 10-1-399(a). OCGA §§
10-1-391(a); 10-1-392(a)(7). However, we are not empowered
to expand the coverage of the FBPA to provide a cause of
action to non-consumers against their competitors. See State
of Ga. v. Meredith Chevrolet Inc., supra [145 Ga.App. 8,] 13-
14(2), 244 S.E.2d 15 [ (1978) ].
Friedlander, 465 S.E.2d at 671. Defendant relying on the following
language "if a business, as a consumer, sustains damage, it may
bring suit under [the FBPA]," argues it is entitled to bring suit
under the FBPA and recover attorneys' fees. Yet, Defendant fails
to explain how it is a consumer who has sustained damage.
Moreover, it seems Defendant is a non-consumer attempting "to
expand the coverage of the FBPA to provide a cause of action ...
against their competitors [Plaintiff]," which the Georgia Supreme
Court refused to do. Id. Accordingly, based on this recent
development in FBPA law, we vacate the award of attorneys' fees
under the FBPA. However, we remand the case to allow the district
court to determine if the case is an exceptional one entitling
Defendant to an award of attorneys' fees under the Lanham Act.
III. Liquidated Damages
Finally, Plaintiff appeals from the district court's award of
liquidated damages under O.C.G.A. § 10-1-450. As the district
court stated, "Under § 10-1-450, a prevailing party is entitled to
$10,000.00 in liquidated damages for an act of infringement "if
such act has been committed with knowledge that the trademark or
service mark has been registered under this part and such act has
been committed without previously obtaining the consent of the
owner thereof.' " There is no dispute that Plaintiff knew of
Defendant's Georgia registration prior to the opening of
Plaintiff's Georgia's restaurant. Thus, liquidated damages are
proper under Georgia law.
We now turn our attention to Defendant's two appeals: First,
Defendant appeals from the clarification order allowing Plaintiff
to use the LONE STAR CAFE mark to identify its restaurant. Second,
Defendant appeals from the district court's order that only
partially canceled Plaintiff's clothing registration within the
state of Georgia.
For the same reasons discussed in the district court's
clarification of the preliminary injunction, the district court in
its modification of the permanent injunction order permitted
Plaintiff to use the LONE STAR CAFE mark in Georgia. Defendant
argues that since Plaintiff has been found guilty of trademark
infringement, well-established trademark law requires the
injunction to be broad enough to keep Plaintiff "a safe distance
away from the dividing line between violation of, and compliance
with, the injunction." Howard Johnson Co. v. Khimani, 892 F.2d
1512, 1517 (11th Cir.1990) (quoting Eskay Drugs v. Smith, Kline &
French Laboratories, 188 F.2d 430, 432 (5th Cir.1951)). The
district court considered and dismissed this argument. The
district court found that Defendant is unlikely to prevail on the
merits that its LONE STAR STEAKS mark has priority over Plaintiff's
LONE STAR CAFE mark.
We review for abuse of discretion a district court's
modification of a permanent injunction. See Beefy King Int'l Inc.
v. Veigle, 464 F.2d 1102, 1104 (5th Cir.1972). The district court
provided several reasons why it thought Plaintiff was entitled to
use the LONE STAR CAFE mark and why it modified the scope of the
permanent injunction. Any of the reasons provided by the district
court could justify the modification of the permanent injunction.
We find no abuse of discretion.
As to Defendant's second issue on appeal, Defendant contends
that the district court erred as a matter of law in failing to
completely cancel the clothing registration for Plaintiff's LONE
STAR STEAKHOUSE & SALOON mark. In the alternative, Defendant
argues that in canceling Plaintiff's registration in Georgia, the
district court has effectively given Plaintiff a concurrent
registration without determining whether Plaintiff is entitled to
a concurrent registration. Because Defendant argues that the
district court misapplied the law in only partially canceling
Plaintiff's mark or erred in not holding a hearing to determine if
Plaintiff is entitled to concurrent registration, we will review
the district court's application of the law de novo. E. Remy
Martin & Co. v. Shaw Ross Intern. Imports, 756 F.2d 1525, 1529
(11th Cir.1985).
The district court entered an order directing the United
States Patent and Trademark Office to issue Defendant a clothing
registration mark for its LONE STAR STEAKS mark within Georgia, and
to cancel Plaintiff's LONE STAR STEAKHOUSE & SALOON clothing mark
within the state of Georgia. Interpreted differently, the district
court's order could be construed as a concurrent registration
allowing Defendant to use its mark in Georgia while simultaneously
allowing Plaintiff to use its mark everywhere but Georgia.
Although Defendant sought nationwide cancellation of Plaintiff's
clothing registration, the district court found "that cancellation
of this scope was not warranted, since during a previous hearing
Lone Star Steaks' counsel had conceded that the potential area of
trademark confusion was confined to Georgia." R5-81-3.
Initially, we find that in territorially restricting
Plaintiff's and Defendant's marks, the district court must have
issued a concurrent registration. See Snuffer & Watkins
Management, Inc. v. Snuffy's, Inc., 17 U.S.P.Q.2d 1815, 1816 (TTAB
1990) ("geographic limitations will be considered and determined
only in the context of a concurrent use proceeding."); Hollowform,
Inc. v. Aeh, 515 F.2d 1174, 1176 (C.C.P.A.1975) (court agreeing
with statement "no authority is found for issuing a restricted
registration to an applicant which has established its superior
[prior] rights in a mark."). Because we find that the district
court issued a concurrent registration, our analysis will center on
concurrent use and not cancellation.
In a concurrent registration proceeding we turn to Section
2(d) of the Lanham Act, 15 U.S.C. § 1052(d).12 The statute permits
12
The statute states in pertinent part:
No trademark by which the goods of the applicant may be
distinguished from the goods of others shall be refused
registration on the principal register on account of
the nature unless it—
(d) Consists of or comprises a mark which so resembles
a mark registered in the Patent and Trademark Office,
or a mark or trade name previously used in the United
States by another and not abandoned, as to be likely,
when used on or in connection with the goods of the
applicant, to cause confusion, or to cause mistake, or
to deceive: Provided, That if the Commissioner
determines that confusion, mistake, or deception is not
likely to result from the continued use by more than
one person of the same or similar marks under
registration of a mark for concurrent use to an applicant (1) who
has become entitled to use the mark as a result of his concurrent
lawful use of the mark in commerce and (2) where there is no
likelihood of confusion for the same or similar marks of two or
more parties as a result of the territorial distinctions of the
place of use of the goods or services. BellSouth Corp. v.
DataNational Corp., 60 F.3d 1565, 1569 (Fed.Cir.1995).
Here, the district court granted concurrent use of the
parties' marks based upon the territorial boundaries of actual use
and the conclusion that such would eliminate the risk of
confusion.13 We agree with the district court's application of the
law and affirm its order granting concurrent use to the parties
with the restrictions imposed.
conditions and limitations as to the mode or place of
use of the marks or the goods on or in connection with
which such marks are used, concurrent registrations may
be issued to such persons when they have become
entitled to use such marks as a result of their
concurrent lawful use in commerce prior.... In issuing
concurrent registrations, the Commissioner shall
prescribe conditions and limitations as to the mode or
place of use of the mark or the goods on or in
connection with which such mark is registered to the
respective persons.
15 U.S.C. § 1052(d).
13
We note that there is a circuit split regarding who has
the authority to define the territories for concurrent
registration, the courts or the Patent and Trademark Office.
Compare Safeway Stores, Inc. v. Safeway Quality Foods, Inc., 433
F.2d 99, 103 (7th Cir.1970) ("Commissioner should be the one to
determine the place or places of use of the mark by defendants.")
with Old Dutch Foods, Inc. v. Dan Dee Pretzel & Potato Chip Co.,
477 F.2d 150, 156 (6th Cir.1973) (court may place restrictions).
This circuit has not addressed the issue. However, because the
parties did not raise the issue before the district court or on
appeal, we need not resolve this question. Narey v. Dean, 32
F.3d 1521, 1526-27 (11th Cir.1994).
In conclusion, all of the district court's rulings are
affirmed, except the portion which granted Defendant attorneys'
fees under Georgia law. We vacate this ruling and remand the issue
to the district court for consideration de novo.
AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH
INSTRUCTIONS.