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PRORIVER, INC. v. RED RIVER GRILL

June 25, 1998

PRORIVER, INC., t/a Red River Authentic Barbeque & Grille, Plaintiff,
v.
RED RIVER GRILL, LLC, t/a The Red River Grill, Defendant.



The opinion of the court was delivered by: HARRIS

Before the Court are plaintiff's motion for partial summary judgment, defendant's motion for summary judgment, and plaintiff's second motion to dismiss counterclaim, as well as certain oppositions and replies thereto. After careful consideration, the Court defers judgment on the parties' motions for summary judgment, and denies plaintiff's motion to dismiss Counts I-III of the amended counterclaim. With respect to Count IV of the amended counterclaim, however, the Court concludes that plaintiff's motion to dismiss should be converted to a motion for summary judgment and granted. Although "findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56," the Court nonetheless sets forth its reasoning. See Fed. R. Civ. P. 52(a).

 BACKGROUND

 In May 1995, defendant Red River Grill, LLC ("RRG") opened a restaurant in the Capitol Hill section of Washington, D.C., under the name "Red River Grill." Apparently in order to ensure its legal right to use the name "Red River Grill," in early May defendant entered into a "License Agreement" with Cattle Barons Inc. ("CBI"), an Ohio corporation which owned the rights to the federal trademark RED RIVER CATTLE COMPANY, Registration No. 1,498,999. *fn1" The License Agreement purported to give defendant a license to use RED RIVER in connection with the offering of restaurant services in Maryland, Virginia, and the District of Columbia, and stated that CBI would not open or operate any restaurants incorporating RED RIVER and GRILL in the name. The License Agreement also provided that: "If Licensor [CBI] does not use the Mark [Registration No. 1,498,999] for restaurant services for eighteen (18) months Licensor agrees to voluntarily assign Registration No. 1,498,999 and all rights and good will associated with the Mark to Licensee [RRG]. . . ."

 Earlier, on December 16, 1994, plaintiff Proriver, Inc. ("Proriver"), had filed for registration with the Patent and Trademark Office ("PTO") the trademark RED RIVER and the trademark and design RED RIVER AUTHENTIC BARBEQUE & GRILLE. On May 5, 1995, the PTO refused registration of both marks, primarily on the grounds that the marks "when used on or in connection with the identified [restaurant] services, so resembled the mark in U.S. Registration No. 1,498,999 [CBI's RED RIVER CATTLE COMPANY mark] as to be likely to cause confusion, to cause mistake, or to deceive."

 Apparently in order to remove the impediment to the registration of its marks, on November 3, 1995, plaintiff entered into an "Assignment and Option Agreement" with CBI. In the agreement, which contained several explicit references to the License Agreement, CBI agreed to assign Registration No. 1,498,999 to plaintiff. Plaintiff also accepted the assignment of the rights and obligations of CBI in the provision of the License Agreement regarding the voluntary transfer of Registration No. 1,498,999 to defendant should the mark fall into disuse, and warranted that "PRORIVER shall not bring an action for infringement against the Licensee [RRG] based solely on the Registration [No. 1,498,999]." Plaintiff then submitted responses to the PTO, noting that Registration No. 1,498,999 was no longer an impediment to the registration of plaintiff's marks since it was no longer "a mark registered in the Patent and Trademark Office . . . by another . . ." likely to cause confusion with plaintiff's marks. See 15 U.S.C. ยง 1052(d). The PTO subsequently issued registrations to plaintiff for RED RIVER and RED RIVER AUTHENTIC BARBEQUE & GRILLE (and design), on May 7, 1996.

 On May 15, 1996, defendant contacted plaintiff and informed it that opening a restaurant in Maryland, Virginia, or the District of Columbia under a name including RED RIVER and GRILL would violate defendant's rights. *fn2" The letter also threatened legal action. After various other correspondence, plaintiff, as an apparently pre-emptive move, filed the instant action. Plaintiff's amended complaint requests, inter alia, a declaration that defendant has no right to use the mark RED RIVER in the relevant territory, injunctive relief, and damages for defendant's infringement of plaintiff's registered trademark RED RIVER. Defendant counterclaimed for breach of the Licensing Agreement, trademark infringement, unfair competition, and breach of the Assignment and Option Agreement.

 STANDARDS OF REVIEW

 A motion to dismiss should not be granted "unless plaintiff[] can prove no set of facts in support of [its] claim which would entitle [it] to relief." Kowal v. MCI Communications Corp., 305 U.S. App. D.C. 60, 16 F.3d 1271, 1276 (D.C. Cir. 1994); Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). All factual doubts must be resolved and all inferences made in favor of the plaintiff. Tele-Communications of Key West, Inc. v. United States, 244 U.S. App. D.C. 335, 757 F.2d 1330, 1334-35 (D.C. Cir. 1985). In the event matters outside the pleadings are presented to and not excluded by the court, and the court assures itself that such treatment would be fair to both parties, a motion to dismiss may be treated as one for summary judgment and disposed of as provided in Federal Rule of Civil Procedure 56. Fed. R. Civ. P. 12(b); Americable Int'l Inc. v. Department of the Navy, 327 U.S. App. D.C. 159, 129 F.3d 1271, 1274 n.5 (D.C. Cir. 1997); Marshall County Health Care Auth. v. Shalala, 300 U.S. App. D.C. 263, 988 F.2d 1221, 1227 (D.C. Cir. 1993) (Mikva, J., dissenting); Tele-Communications, 757 F.2d at 1334.

 Summary judgment may be granted only if the pleadings and evidence "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering a summary judgment motion, all evidence and the inferences to be drawn from it must be considered in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Mere allegations in the pleadings are not sufficient to defeat a summary judgment motion; if the moving party shows that there is an absence of evidence to support the nonmoving party's case, the nonmoving party must come forward with specific facts showing that there is a genuine issue. See Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 DISCUSSION

 I. Proriver's Motion for Partial Summary Judgment

 Plaintiff contends that because CBI did not have federal or common law trademark rights to RED RIVER, defendant could not have acquired rights to RED RIVER through the License Agreement. Plaintiff thus concludes that it is entitled to judgment as a matter of law that defendant has no rights in the words RED RIVER.

 The Court agrees with plaintiff that defendant did not acquire any trademark rights, common law or federal, in the name RED RIVER through the Licensing Agreement. It is undisputed that CBI successfully registered the trademark RED RIVER CATTLE COMPANY on August 2, 1988. See Reg. No. 1,498,999. This registration did not, however, give CBI any federal trademark rights in RED RIVER alone. Registration of a trademark gives the owner rights in the mark as a whole, not in the individual components. See In re National Data Corp., 753 F.2d 1056, 1059 (Fed. Cir. 1985). Thus, since CBI did not have any federal trademark rights in the individual phrase RED RIVER, it could not transfer any federal trademark rights in those words to defendant.

 CBI also did not have any common law trademark rights in the relevant territory that it could transfer to defendant. Under common law, the adoption and use of a trademark in a limited market does not create an exclusive ownership of the mark in all geographical markets. See Hanover Star Milling Co. v. D.D. Metcalf, 240 U.S. 403, 416-418, 60 L. Ed. 713, 36 S. Ct. 357 (1916); Foxtrap, Inc. v. Foxtrap, Inc., 217 U.S. App. D.C. 130, 671 F.2d 636, 640 n.1 (D.C. Cir. 1982). Defendant has admitted that, at the time the License Agreement was executed, CBI had never rendered restaurant services in Maryland, Virginia, or the District of Columbia. See Def.'s Response to the Court's Order Regarding Facts Recited in Pl.'s Mot. for S.J., at 2. Thus, since a "mark, of itself, cannot travel to markets where there is no article to wear the badge and no ...


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