On September 25, 2007, Cluck-U, Corp. filed a lawsuit in the U.S. District Court for the Eastern District of New York against Chicken Holiday, Inc., Maximum Quality Foods, Inc., and Gary Roccaro (the “Defendants”) alleging trademark infringement, false designation of origin, dilution, unfair competition, deceptive trade practices, and intentional interference with contractual relations. A copy of the complaint (courtesy of me) can be found
here.
Cluck-U operates and franchises the
Cluck-U Chicken fast-food restaurant chain, which has 30 locations in the U.S., mostly in Maryland, New Jersey, and the District of Columbia. Click
here to see the Wikipedia entry on the company.
Until recently, Cluck-U held two registered service marks with two other related applications pending, including
CLUCK-U-CHICKEN,
CLUCK U,
CLUCK-U CHICKEN (design) and
CLUCK U (design) (the “Cluck Marks”). I qualify the statement with “until recently” because what the complaint fails to mention (and which the Defendants surely will) is that ten days earlier on September 15, 2007, the
CLUCK-U-CHICKEN mark (the oldest registered mark) went abandoned for failure to file a Section 8 Declaration of Use in Commerce and Section 9 Application for Renewal of Registration of Mark, which were due to be filed sometime between 12/9/05 and 12/9/06 (which could’ve been extended for an extra $100 to 6/9/07). Having failed to file, the registration was canceled (or allowed to expire depending on your perspective) – and there is no recourse for Cluck-U other than to file a new application.
Defendant Chicken Holiday, Inc. owns the registered trademark
CLUCK U 'RE WINGS for chicken and dipping sauces. The trademark was registered on January 1, 2004, with date of first used alleged to be March 11, 2003.
While Cluck-U may have lost its oldest registered mark, it still has the CLUCK U registered service mark, which was registered on May 15, 2007, but claims use in commerce going back to January 1986.
The first part of Cluck-U’s complaint relates to Defendant’s registration and use of the CLUCK U 'RE WINGS trademark, which Cluck-U maintains is likely to be confused with the Cluck Marks. Cluck-U sets forth counts for a) §32 trademark infringement (for infringement of its registered service marks, even though Cluck-U now has one less trademark than it used to); b) §43(a) trademark infringement, false designation of origin, false representation, and unfair competition (for infringement of all of the Cluck Marks); and c) deceptive trade practices under New York Gen. Bus. Law §349 and dilution under New York Gen. Bus. Law §360-1.
Cluck-U also asks that the CLUCK U 'RE WINGS trademark registration be cancelled. Cluck-U did initiate a cancellation proceeding with the TTAB on February 23, 2007 (
Cancellation No. 92047110), but it was suspended on August 29, 2007 pending settlement negotiations, and set to resume November 29, 2007 (unless resumed earlier by either party). Because the CLUCK U word mark was not registered at the time the cancellation complaint was filed, the entire complaint was based on the now-cancelled CLUCK-U-CHICKEN mark, which just raises the question further as to how the §8/§9 filings could have been overlooked. And is Defendant now going to fight back with allegations of “unclean hands”? After all, Cluck-U’s website still reflects the CLUCK-U-CHICKEN as a registered trademark (with the ® symbol) (see related blog posting
here). One must also ask why it took Cluck-U nearly three years to file this cancellation and why someone didn’t catch the CLUCK U 'RE WINGS mark when it was published for opposition?
Getting back to the lawsuit, the second part of Cluck-U’s complaint involves Defendant’s distribution activities and an alleged unauthorized use of the Cluck Marks. Apparently, Cluck-U’s rights to the Cluck Marks were acquired through an Assignment Agreement dated May 22, 2000, from Cluck-U Chicken, Inc. and Robert Ilvento (together, “Cluck NJ”). However, Cluck NJ retained some rights to use the Cluck Marks in connection with certain preexisting Cluck-U restaurant franchises and to procure distribution of food products branded with the Cluck Marks for use in connection with the preexisting Cluck-U restaurant franchises. Cluck NJ entered into a distribution and sublicense agreement with the Defendants whereby Defendants were granted the limited right to produce or acquire, package, and brand with, on in connection with the Cluck Marks, frozen chicken wing products, blue cheese products, and sauces and dips and to sell and distribute such products to the preexisting Cluck-U restaurant franchises.
According to Cluck-U, the Defendants have been selling additional unauthorized products, such as fresh chicken and paper products (probably napkins) using the Cluck Marks. Cluck-U also alleges that the Defendants have falsely represented themselves to Cluck-U franchisees, including the preexisting Cluck-U restaurant franchises, as authorized to sell such products, which such franchisees have purchased from the Defendants.
These allegations are the basis for similar counts for a) §32 trademark infringement; b) 43(a) trademark infringement, false designation of origin, false representation, and unfair competition; and c) deceptive trade practices under New York Gen. Bus. Law §349 and dilution under New York Gen. Bus. Law §360-1. In addition, because the franchise agreements between Cluck-U and the preexisting Cluck-U restaurant franchises provide that such franchisees can only purchase branded Cluck-U food products solely from authorized distributors of such products, Cluck-U argues that Defendants are inducing a breach of contract between Cluck-U and those franchisees by inducing such franchisees to purchase its unauthorized goods. This is the basis for Cluck-U’s count for intentional interference with contractual relations.
Cluck-U seeks the usual remedies: injunctive relief, money damages, treble damages, lost profits, punitive damages, costs and attorney fees as well as a declaration that the CLUCK U 'RE WINGS mark is invalid and unenforceable and a court order to the Commissioner of Trademarks to cancel the registration.
Regarding the baseline question of likelihood of confusion between CLUCK-U and CLUCK U 'RE WINGS, the analysis that will be invoked by the District Court (within the Second Circuit) in determining whether consumers are likely to be confused when looking at the products as a whole, involves analyzing the following eight factors (courtesy of, who else, Ronald Coleman’s
Likelihood of Confusion®):
(1) strength of the trademark;
(2) similarity of the marks;
(3) proximity of the products and their competitiveness with one another;
(4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer’s product;
(5) evidence of actual consumer confusion;
(6) evidence that the imitative mark was adopted in bad faith;
(7) respective quality of the products; and
(8) sophistication of consumers in the relevant market.
Polaroid Corp. v. Polarad Electronics, Corp., 287 F.2d 492 (2d Cir. 1961);
Nora Beverages, Inc. v. Perrier Group of Am., Inc., 269 F.3d 114, 119 (2d Cir. 2001).
Factors favoring Cluck-U- Cluck-U mark, having likely been used in the New Jersey area since at least 1986, is fairly strong.
- Cluck-U’s sells chicken in its restaurants (and likely includes some dipping sauces). In this regard, Cluck-U’s products are similar to and do compete with Defendant’s products.
- Cluck-U already sells chicken and sauces as part of its restaurant services – as such, Cluck-U has already “bridged the gap” and is selling such products in the same market.
- Given the defendant’s prior involvement with the Cluck-U franchise, the evidence does suggest that Defendant’s adoption of the CLUCK U 'RE WINGS mark may have been in bad faith.
- The respective quality of the products are likely to be similar.
- The consumers of Cluck-U’s chicken and sauces are not likely to be of the level of sophistication where they would recognize a distinction between CLUCK U and CLUCK U 'RE.
Factors favoring Defendants
- The marks are very similar in appearance -- both prominently have the words CLUCK U – which favors Cluck-U. However, one important difference is their verbal pronunciations -- CLUCK U will be pronounced “Cluck You” whereas the CLUCK U 'RE will be pronounced “Cluck Your.” I think this actually tends to favor the Defendants.
Factors favoring neither party
- The complaint does not set forth any evidence of actual consumer confusion.
- The complaint does not set forth sufficient information regarding the sophistication of the consumers
At this stage with the limited facts set forth in the complaint, the factors tend to favor Cluck-U. But it’s still early in the game, and who knows what facts may come to light that could change picture entirely.
Personal Sidenote:
As a big fan of all things hot and spicy (anyone interested in seeing my Tabasco® sauce collection?), I was intrigued by Cluck-U’s 911 sauce (although I’ve always felt that the liability waiver gimmick is a little corny). I’ve visited many chicken wing restaurants and always try the “hottest” sauce. While many of them are indeed very spicy, the taste of not always that great. In my opinion, just because a sauce is spicy does not make it good – if a sauce doesn’t taste good, then who cares how spicy it is. That’s why I’m a big fan of Wing Stop and their “Atomic” sauce. This is by far the best tasting and spiciest “hot” sauce I’ve ever encountered.
