Thursday, October 28, 2010

Ale House still generic; other claims no help either

Miller's Ale House, Inc. v. Boynton Carolina Ale House, LLC, 2010 WL 3943550 (S.D. Fla.)

Plaintiff Miller's has continuously operated a chain of over 40 restaurants in Florida for over 20 years. Each Miller’s uses a geographic prefix, typically the city, street, or neighborhood location, followed by “Ale House.” (From the website, there appear to be a bunch of locations using the term “Orlando Ale House.”) Miller’s operates several locations outside Florida with the same naming system. Each Miller’s location displays its name in red letters on the outside of the building, and “Ale House” appears regularly inside the restaurant, including on specific menu items.

Miller’s locations also have some other common features: “server uniforms consisting of a dark polo shirt and khaki pants, two persons present at the host station, dock wood on the walls, a centrally located rectangular peninsular bar with seating on both sides, a soffit over the bar, an open kitchen that allows customers to see food preparation, and high-top tables on the right hand side of the restaurant. Miller's claims copyright in a number of the common floor plans that it uses in its restaurants.

Miller’s promotes the “Ale House” restaurants through a shared website,, and other social media, and uses an “Ale House” brand on flyers, posters, and banners. Miller’s submitted testimony that as a result of its promotional efforts, many Florida residents associate “Ale House” exclusively with Miller’s restaurants.

In 2008, defendant BCAH opened the Carolina Ale House in Boynton Beach, Florida, about a mile from Miller’s Boynton Beach Ale House. BCAH operates under a license from an entity known as LMR, as do 12 other restaurants across North Carolina, South Carolina, and Florida licensed to use the Carolina Ale House brand. Like Miller’s, BCAH uses a red logo prominently featuring “Ale House,” prominently featured on the building and on employees’ uniforms. BCAH also sells menu items with the Ale House prefix. BCAH servers wear dark polo shirts with khaki shorts or slacks, and the floor plan is “similar” to Miller’s, with a centrally located bar area, an open kitchen, dock wood on the interior walls, and high-top seating on the right side.

The parties have offered similar promotions, such as $5 off $25 coupons. BCAH's coupons say they are valid at "participating Palm Beach area locations," even though there is only one Carolina Ale House location in Palm Beach County. The parties both advertise pay-per-view mixed martial arts "fight nights," though other Carolina Ale House locations outside of Florida apparently don’t advertise these events. The parties both advertise day-specific dining discounts such as lunch specials, "Kids Eat Free Nights" and "Ladies Night."

There have been a number of instances of customer confusion and questions about whether the restaurants are related. Customers with take-out orders have come to the Carolina Ale House instead of Miller’s, and Carolina Ale House patrons have asked for menu items only available at Miller’s. Customers have arrived at Miller's expecting to meet friends or family who are actually waiting for them at the Carolina Ale House, and vice versa. People have attempted to redeem Carolina Ale House coupons at Miller's.

Miller’s sued for trademark and trade dress infringement, copyright infringement, unfair competition, and state-law trademark dilution.

Unfortunately for Miller’s, in 1998, its predecessor in interest sued another LMR licensee, Raleigh Ale House, for trademark/trade dress/copyright infringement and unfair trade practices. Affirming summary judgment for the defendant, the Fourth Circuit held that “ale house” was generic for Miller’s services. Ale House Management, Inc. v. Raleigh Ale House, Inc., 205 F.3d 137 (4th Cir. 2000).

Since the 1998 suit, more than 20 new Miller’s locations have opened, and Miller’s now appears to be the predominant user of the term in Florida. Local dining guides don’t use “ale house” as a category. However, other parties in South Florida use “Ale House,” including another LMR licensee in Weston and an unrelated restaurant in Palm Beach County. BCAH’s expert, a professor of English at Duke, examined several dictionaries and found that they
defined the word "alehouse" as an "establishment that serves ale," and identified numerous restaurants outside of Florida that use the term "ale house" or "alehouse" in their names. (Query whether this is appropriate expert testimony.)

BCAH moved for summary judgment, arguing that Miller’s was bound by the Fourth Circuit’s holding on genericness. Miller’s argued that the decision only covered genericness to North Carolina consumers then, not Florida consumers now.

The law is that a generic term can’t be protected even if it has some secondary meaning. In rare instances, courts have allowed “recapture” of a term previously categorized as generic. (“Recapture,” though, indicates a key point—never “capture.” That is, a trademark that suffered genericide may be recaptured under this precedent, but not a term born generic.)

But the first question was whether issue preclusion prevented Miller’s from relitigating the protectability of the term. Issue preclusion operates when (1) the issue at stake is identical to the one involved in the prior litigation; (2) the issue was actually litigated in the prior suit; (3) the determination of the issue in the prior litigation was a critical and necessary part of the judgment in that action; and (4) the party against whom the earlier decision is asserted had a full and fair opportunity to litigate the issue in the earlier proceeding. (Part (4) was satisfied because Miller’s was the direct successor in interest of the plaintiff in the Fourth Circuit case; they were either in privity or had a substantive legal assignor-assignee relationship permitting issue preclusion to apply.)

Miller’s relied on Opryland USA Inc. v. Great American Music Show, Inc., 970 F.2d 847 (Fed. Cir. 1992), which allowed a party to present evidence of public perception before the TTAB despite a prior finding of genericness. There, Opryland was allowed to show the public perception of “opry” as a significant component of its asserted marks as part of an opposition and cancellation proceeding. The court found Opryland USA of limited value, since the Federal Circuit “stopped well short of holding that Opryland had recaptured the generic term ‘opry,’ instead only concluding that Opryland was entitled to oppose a trademark registration with evidence of public perception.”

Changed circumstances can avoid issue preclusion. And consumer perception of words and symbols can change over time. However, relitigating trademark validity is onerous, and claimants should show a significant intervening factual change before being allowed to do so. For genericness, a plaintiff must present evidence that the term has “ceased” to have generic meaning. Here, Miller's didn’t do that.

To start with, BCAH met its initial burden by providing substantial evidence that “ale house” continues to be generic, including third party uses and dictionary definitions.

There were two critical problems with Miller’s contrary evidence. First, virtually all of its consumer perception evidence was confined to Florida. It couldn’t divide the country into regions where the mark is generic and regions where it’s not. (The court cited only registration cases—registration provides nationwide rights, so this is not on point for a §43(a) claim—but I think there’s some force to this argument even under §43(a) given the policies that refusing to protect generic terms promotes.) Miller’s was unable to show changed consumer perception nationwide, even though it operates several locations outside Florida. Miller’s expansion was “markedly different” from that in the classic Singer case, where the Singer company spent half a century selling its brand of sewing machines nationwide before the court found it had recaptured the mark. Without “pervasive, prolonged presence in the national restaurant market,” there was genuine issue of material fact about changed consumer perception.

The second problem was that Miller’s evidence was insufficient to raise a genuine issue of material fact as to whether a significant intervening factual change occurred. The absence of "ale house" from the category headings of phone books and web directories did nothing to raise a question of fact as to whether "ale house" no longer carried any generic meaning for the relevant dining public. Many common restaurant terms, such as "café" or "bistro," may be absent from such category headings, but they’re still generic.

The actual confusion evidence was irrelevant unless the mark is protectable in the first instance. Moreover, Miller’s anecdotal confusion evidence was “much less comprehensive and much less reliable than a traditional, systematically conducted consumer survey.” It shed little light on genericness in particular, given that the people being surveyed were already dining at Miller’s and might not have had the same perception as the general dining public. No reasonable jury could find that the anecdotal evidence proved that “ale house” had lost all generic meaning to the public.

The trademark infringement claim was barred by issue preclusion.

Miller’s also claimed infringement of its trade dress in its interior décor, layout, and red logos. The Fourth Circuit case held that Miller’s interior floorplan was neither “unique” nor “unusual,” and that Miller's had "not advanced sufficient evidence to support its claim to a proprietary interest in the appearance and service it employs in the interior of its facilities." In this case, Miller’s added menu design (use of “ale house” on menu items), red logo signs, interior décor, and service staff appearance to its claim of distinctiveness, and so its current claim was not barred by issue preclusion. (Can the elements the Fourth Circuit found nondistinctive count at all in the definition of the trade dress? Of course, adding new elements to the claimed trade dress may make it harder to show that defendant has copied enough to cause confusion.)

To win, Miller’s would have to show distinctiveness, nonfunctionality, and likely confusion. First, the court found that the trade dress lacked inherent distinctiveness. Distinctiveness of (non-product design) trade dress depends on whether the claimed trade dress is a "common" basic shape or design, whether it is unique or unusual in a particular field, and whether it is a mere refinement of a commonly-adopted and well-known form of ornamentation for a particular class of goods viewed by the public as a dress or ornamentation for the goods. The overall impression must be examined, not little pieces.

Here, there was nothing unique or unusual about the claimed interior elements. “Numerous restaurants have a centrally located bar, two hosts at the host station, an open kitchen, servers with dark Polo shirts and khaki lower garments, and wood on the walls.” The centrally located bar and open kitchen were also arguably functional. There was nothing noteworthy about the menu design, red signs, or promotional materials. The claimed trade dress was “merely a refinement of the commonly-adopted form of ornamentation for sports bars and casual restaurants.”

There was also insufficient evidence to create a factual issue on secondary meaning in the trade dress. All Miller’s secondary meaning evidence was about “ale house”; none referred to interior appearance or décor.

Miller’s further alleged false advertising through BCAH’s coupons, which stated that they were "valid at participating Palm Beach Area locations” and thus falsely traded on Miller’s goodwill, since BCAH’s is the only Carolina Ale House in Palm Beach County. BCAH argued that the coupons weren’t false because there’s a Carolina Ale House in Weston, in Broward County. Miller’s disagreed: Weston isn’t part of the “Palm Beach Area.”

Analyzing the message as a whole, the physical addresses and phone numbers of both Carolina Ale House locations in South Florida were printed prominently by the coupons, accompanied by the "Carolina Ale House" logo and website address. Thus, there was no literal falsity in context. Anecdotal evidence that BCAH customers sometimes attempted to use Miller's coupons and vice versa couldn’t substitute for “reliable consumer or market research” showing that a significant part of the audience was deceived. Summary judgment was also appropriate here.

Miller’s further claimed that BCAH unfairly copied its promotions and special events such as its “fight nights.” Even assuming intentional copying, this isn’t unfair as a matter of law. Unless protected by an IP right, anything can be copied, including dining specials and lunch promotions.

Copyright infringement in the floor plans: The court also rejected the copyright claim for want of substantial similarity between the parties’ floor plans. (No issue preclusion because BCAH’s floor plan wasn’t litigated in the Fourth Circuit case.) Though summary judgment is sometimes disfavored in copyright cases, it’s appropriate when no reasonable jury could find two works substantially similar, and this is particularly so when the infringement claim “involves an architectural work that is merely a compilation of common design ideas.” Because of the Copyright Act’s narrow definition of “architectural work,” which covers "the arrangement and composition of spaces and elements in the design" but excludes "individual standard features," such as windows, doors, and other common architectural features, "modest dissimilarities are more significant than they may be in other types of art works." As there are only so many ways to divide up a rectangle into rooms, "similarities in the general layout of rooms can easily occur innocently."

At a broad level of generality, the two floor plans were arguably similar: both feature restrooms at the rear left and a kitchen on the rear right, a central bar with booth seating on the left side, and "high-top" tables and stools to the right accompanied by pool tables. But the question was substantial similarity in protected expression. There were numerous differences in arrangement. The centrally located bars were in different locations relative to each restaurant's entryway. Much of the interior seating was markedly dissimilar. BCAH’s bathroom entrances were divided from the dining area with a solid wall and Miller’s weren’t. The arrangement of the pool tables and video games inside each restaurant was different: Miller's put its pool tables in a column between the dining tables, while BCAH separated the pool tables from the diners. BCAH had a separate outside corner bar and outside seating, while Miller's floor plan didn’t specify any outdoor seating at all, creating a “dramatic[] differen[ce].”

Given the thinness of the protection available, the differences here were overwhelming and the similarities only at a broad conceptual level. Summary judgment for BCAH.

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