Claims of international scope count as "designation of origin"

Benihana of Tokyo, Inc. v. Benihana, Inc., --- F.Supp.2d ----, 2011 WL 6187098 (D. Del.)

Plaintiff Benihana of Tokyo (BOT) sued defendants (for convenience, Benihana) for breach of contract, false designation of origin, trademark infringement, and conversion. An earlier agreement transferred BOT’s trademarks in the US, Central America, South America, and the Caribbean islands to Benihana, while BOT owned the marks outside that territory. The parties agreed not to use the marks to reduce their value or usefulness to the other party. In 2010, though, Benihana applied for a WIPO international registration seeking protection in Iceland, Iran, Monaco, Singapore, Ukraine, Vietnam and Zambia, as well as Cuba. BOT sued for breach of the agreement; Benihana then renounced the registration except for as to Cuba.

BOT’s claims focused on three acts: (1) seeking registration of the BENIHANA trademark in the disputed countries, particularly with respect to Singapore and Vietnam where plaintiff had obtained prior registration; (2) purporting to be BOT or to be authorized by BOT in seeking the registration; and (3) falsely advertising that defendants have “[l]ocations throughout the United States, Latin America and the Caribbean.” BOT claimed trademark infringement based on Singaporean and Vietnamese trademark law.

The court refused to dismiss BOT’s conversion claim. Under the applicable law, Florida’s, a conversion claim can cover wrongful taking of intangible assets in a business venture.

The false designation of origin claim was predicated on Benihana’s allegedly deliberate use of plaintiff's name in applying for the registration. However, defendants showed as a matter of law that the “Benihana of Tokyo” reference was an error on the part of the USPTO and not the result of defendants’ intentional action, and thus the court granted the motion to dismiss. (That seems right, though it’s an interesting question what would have happened if there had been an intentionally deceptive act—yes, it’s a use in commerce, and yes, it’s probably likely to cause confusion, but this still doesn’t seem like the conduct that 43(a) of the Lanham Act is supposed to cover; it would be more like fraud on the PTO.)

False advertising: BOT alleged that, “In marketing [their] services, defendants advertise that they have ‘locations throughout the United States, Latin America and the Caribbean,” and that this was a false designation of origin because BOT owns the rights in Mexico. Defendants argued that this was a false advertising claim, and that BOT failed to plead that the misrepresentation involved an inherent or material quality of the product. However, BOT argued that “defendants' paraphrasing of the statutory provision relating to materiality omitted ‘geographic origin of his or her or another person's goods, services, or commercial activities.’”

BOT alleged literal falsity since defendants are precluded from operating in a large portion of Latin America. BOT also argued that geographic origin was material to the services offered. (I’m not sure that “geographic origin” extends as far as “licensed to operate in X”—unless it was offering franchise opportunities, it doesn’t really seem like Benihana was claiming to deliver services that originated in Latin America.) The court ruled that, on the pleadings, BOT sufficiently alleged a false advertising claim.

The court, however, declined to exercise its supplemental jurisdiction over BOT’s trademark claims under foreign laws based on the threat that Benihana might open restaurants in Singapore and Vietnam. “[I]nternational treaty obligations, comity, judicial economy, and other exceptional circumstances” justified this exercise of discretion.