ownership of building doesn't convey ownership of (once related) tenant's TM

Long Grove Investments, LLC v. Baldi Candy Co., No. 18-cv-5237, 2019 WL 3716841 (N.D. Ill. Aug. 7, 2019)

Plaintiff Long Grove owns a building in Long Grove, Illinois, “in which a beloved bakery, the Long Grove Apple Haus, once thrived, selling goods such as apple pies and ciders.”  It claimed that, because it bought the building, it acquired trademark rights in the name Long Grove Apple Haus. Baldi set up shop next door and sold goods bearing the putative mark, and Long Grove sued for violation of the federal Lanham Act and the Illinois Deceptive Trade Practices Act. The court granted summary judgment because buying a building, in itself, doesn’t confer rights in the name used by a building tenant.

From 1977 through 2011, non-party Long Grove Confectionary Co. (LGC) owned and operated the Long Grove Apple Haus, after which the building remained vacant. For at least some time, LGC used a pie box like this:

And it sold apple cider like this:

LGC operated two retail stores near Chicago and sold to wholesalers. After closing the Apple Haus Store, LGC continued selling apple pies for some time at its two other suburban retail stores, at Long Grove festivals, and to its wholesale customers.

In 2013, Baldi bought certain assets, properties, and rights related to LGC’s business. It took over and continued operating LGC’s other retail stores. In 2017, it bought a property near Long Grove’s and opened a coffee shop, and a store with a commercial kitchen and bakery. When it opened in 2018, it sold baked goods that used the Apple Haus name and red apple design:

Long Grove is a real estate investment firm that acquired the old Apple Haus building, via special warranty deed, in September 2014. It has never itself sold any goods or products. In 2017, Long Grove executed a lease for the building with a person who intends to open a store there named “Long Grove Apple Haus,” but who (wisely) waited on the resolution of this case.  In that year, Baldi filed an application to register “LONG GROVE APPLE HAUS” for unspecified goods/services that probably can be guessed at; Long Grove opposed and the PTO proceeding was stayed pending this litigation.

Actual use is required to own a trademark, and first use gives priority in ownership. “Plaintiff admittedly cannot demonstrate continuous use, or indeed any use, of the Apple Haus Mark.” Buying the building with which the mark is associated wasn’t enough.  Long Grove relied on Plitt Theatres, Incorporated v. American National Bank & Trust Company of Chicago, 697 F. Supp. 1031 (N.D. Ill. 1988), which held that trademark ownership “passes impliedly with ownership of the pertinent building or business with which the mark is associated, absent express provision to the contrary.” In that case, each successive owner to the historic Esquire Theatre—beginning with the original owners who established the “Esquire” mark—was held to have passed its ownership rights to that mark when it sold the building to the next buyer. The building’s original construction included a marquee and vertical sign containing the name “Esquire,” which has remained on the façade throughout time. Likewise, in Helpful Hound, L.L.C. v. New Orleans Building Corporation, 331 F. Supp. 3d 581 (E.D. La. 2018), t the City of New Orleans established continuous and prior use over the trademark “St. Roch Market” even though the City never actually operated services in the building housing the St. Roch Market. Instead, the City owned the building housing the market (which had been known as the “St. Roch Market” since the late 1800s), designed and built the market, chose its lessees, and significantly restored it after Hurricane Katrina. A food hall tenant’s argument that it held priority over the City as to the “St. Roch Market” mark thus failed.

But those cases were vastly different. “In both of those cases, the original property owners: (1) actually established first use of the marks; and (2) demonstrated that they or their successive owners continuously used the marks at the properties.” [Note that doesn’t quite describe the New Orleans situation, where the city didn’t itself “use” the marks—but I certainly agree that the entity that chose multiple simultaneous tenants over time plainly has a better claim than a single nonexclusive tenant.] Here, the original owner of the building didn’t create, or have any involvement with establishing, the Apple Haus Mark. LGC, a tenant, did so by, among other things, selling products bearing the Apple Haus Mark. In addition, instead of continuous use of the marks at the properties, the building had remained vacant since 2011 and Long Grove made no use of the mark when it acquired the building in 2014. More apposite was Russell Rd. Food & Beverage, LLC v. Galam, 180 F. Supp. 3d 724 (D. Nev. 2016), which held that the owner of the property where a former strip club had been didn’t own the associated mark. It “purchased only the real property” upon which the club was built, not “a going concern.” There was no authority “that the mere purchase of real property that was once associated with a trademark in the past can confer ownership.”

With the trademark claim gone, all other claims failed. There was no false advertising because the Apple Haus mark didn’t refer to or otherwise identify the building, nor was there other evidence that the labels suggested that Baldi’s products came from the building.