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PRORIVER, INC. v. RED RIVER GRILL

November 24, 1999

PRORIVER, INC., T/A RED RIVER BARBEQUE & GRILLE, PLAINTIFF,
v.
RED RIVER GRILL, LLC, T/A RED RIVER GRILL, DEFENDANT.



The opinion of the court was delivered by: Stanley S. Harris, District Judge.

OPINION

Before the Court are plaintiff's motion for partial summary judgment, defendant's motion for summary judgment, and plaintiff's supplemental motion for summary judgment, as well as certain oppositions, replies, and supplements thereto. Upon consideration of the entire record, the Court (1) grants in part, and denies in part, plaintiff's motion for partial summary judgment; (2) grants in part, and denies in part, defendant's motion for summary judgment; and (3) grants plaintiff's supplemental motion for summary judgment. Although "[f]indings 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

At the heart of this case is a dispute over the right to use conjointly the words "Red River" and "Grill" (or "Grille") in the names of restaurants located in the greater Washington, D.C., area. Plaintiff Proriver, Inc., operates restaurants in northern Virginia and Maryland under the name "Red River Authentic Barbeque & Grille." Defendant Red River Grill, LLC, operates a restaurant in Washington, D.C., under the name "Red River Grill."*fn1 Both parties trace their rights to use these restaurant names to separate agreements that they entered into with Cattle Barons, Inc. ("CBI"), an Ohio corporation which once owned the rights to the federal trademark RED RIVER CATTLE COMPANY, Registration No. 1,498,999.*fn2

Defendant entered into a "License Agreement" with CBI in May 1995. The 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 provided that CBI would not open or operate any restaurant incorporating the terms "Red River" and "Grill" in its name. The License Agreement also provided that if CBI did not use the RED RIVER CATTLE COMPANY mark for a consecutive period of eighteen months, CBI would voluntarily assign that mark, as well as all of the rights and goodwill associated with it, to defendant.

For its part, plaintiff entered into an "Assignment and Option Agreement" with CBI in November 1995. In that agreement, CBI assigned the RED RIVER CATTLE COMPANY mark to plaintiff. Although the agreement contained several references to CBI's agreement with defendant, plaintiff did not accept the assignment of all of CBI's rights and obligations under the License Agreement, but rather only those regarding the voluntary assignment of the RED RIVER CATTLE COMPANY mark to defendant if the mark fell into disuse for eighteen months. In the agreement, plaintiff also warranted that it would not "bring an action for infringement against the Licensee [defendant] based solely" on the RED RIVER CATTLE COMPANY mark.

Plaintiff's motivation for acquiring the RED RIVER CATTLE COMPANY mark from CBI grew out of its inability to register the marks RED RIVER and RED RIVER AUTHENTIC BARBEQUE & GRILLE with the Patent and Trademark Office ("PTO"); on May 5, 1995, the PTO had denied registration of these marks, primarily on the ground that, when used in connection with restaurant services, they so resembled the RED RIVER CATTLE COMPANY mark "as to be likely to cause confusion, to cause mistake, or to deceive." The subsequent assignment of CBI's trademark, however, enabled plaintiff to successfully register its desired marks with the PTO on May 7, 1996.*fn3 At this point, therefore, plaintiff owned the rights to three trademarks: RED RIVER CATTLE COMPANY, RED RIVER, and RED RIVER AUTHENTIC BARBEQUE & GRILLE. Nevertheless, on May 15, 1996, defendant sent plaintiff a letter informing it that operating a restaurant in Maryland, Virginia, or the District of Columbia under a name incorporating the terms "Red River" and "Grill" would violate defendant's rights under the License Agreement. Plaintiff filed the instant action shortly thereafter, apparently to pre-empt legal action that defendant had threatened in its letter. As amended, plaintiff's complaint requests, inter alia, a declaration that defendant has no right to use the RED RIVER mark in the relevant territory, an injunction barring defendant from using that mark, and damages for defendant's alleged infringement of plaintiff's RED RIVER trademark. Defendant counterclaimed for breach of the Licensing Agreement, trademark infringement, unfair competition, and breach of the Assignment and Option Agreement.*fn4

The parties filed several dispositive motions. Plaintiff filed a motion for partial summary judgment asserting that it was entitled to judgment as a matter of law that defendant did not possess any rights in the name RED RIVER, and also filed a motion to dismiss defendant's amended counterclaim. For its part, defendant moved for summary judgment on plaintiff's amended complaint and its own amended counterclaim on the grounds that defendant had acquired superior rights to RED RIVER through the License Agreement and its own use of the mark, and that plaintiff was contractually estopped from asserting any claims or defenses against defendant.

The Court ruled on the parties' motions in its June 25, 1998, Opinion. The Court denied plaintiff's motion to dismiss defendant's amended counterclaim as to Counts 1-3; as to Count 4, however, the Court converted plaintiff's motion to dismiss into one for summary judgment, and granted it. Proriver, Inc. v. Red River Grill, LLC, 27 F. Supp.2d 1, 7-8 (D.D.C. 1998). As to the parties' summary judgment motions, the Court first found that defendant had not acquired any trademark rights in RED RIVER through the License Agreement or defendant's prior use of the mark. Id. at 4-5. The Court then considered whether the License Agreement gave defendant any contract rights in RED RIVER. Although the Court concluded that the License Agreement created contractual rights between defendant and CBI regarding use of the name, it found that these rights were not binding on plaintiff because, as an assignee, plaintiff was responsible only for those obligations of CBI, an assignor, that it had contracted to undertake. Id. at 6 (citing Rittenberg v. Donohoe Constr. Co., 426 A.2d 338, 341 (D.C. 1981)). Finding that plaintiff had assumed only those rights and obligations in the License Agreement regarding the transfer of the RED RIVER CATTLE COMPANY mark to defendant if the mark fell into disuse for eighteen months, the Court concluded that plaintiff was not bound by defendant's contractual right to use RED RIVER.

Despite finding that defendant had no affirmative contract right that was enforceable against plaintiff, the Court indicated that defendant may have a complete defense to plaintiff's infringement claims insofar as the Assignment and Option Agreement bars plaintiff from bringing an action for infringement against defendant based solely on the RED RIVER CATTLE COMPANY mark. The Court found that plaintiff's infringement claims against defendant were in fact based solely on the RED RIVER CATTLE COMPANY mark because they alleged violations of plaintiff's rights to the RED RIVER and RED RIVER AUTHENTIC BARBEQUE & GRILLE marks, the registration of which the PTO had approved solely on the basis of the rights to the RED RIVER CATTLE COMPANY mark that plaintiff had acquired from CBI. Accordingly, the Court tentatively concluded that plaintiff was "contractually estopped from bringing a claim of infringement against defendant." Id. This conclusion was tentative because it relied on the assumption that the relevant provision in the Assignment and Option Agreement was enforceable, which first requires a finding that enforcement of the contract provision would not result in "injury to the public through confusion." Proriver, 27 F. Supp.2d at 6 (quoting VISA Int'l Serv. Ass'n v. Bankcard Holders of Am., 784 F.2d 1472, 1473 (9th Cir. 1986)). Because the parties had presented no evidence on the likelihood of confusion or injury to the public, the Court directed the parties to submit supplemental memoranda on this issue, and deferred consideration of plaintiff's motion for partial summary judgment and defendant's motion for summary judgment pending those submissions. See id. at 4, 7. The parties have since addressed the enforceability of the contract provision in filings with the Court. In one of those filings, plaintiff also moved for summary judgment on defendant's claim that it is entitled to assignment of the RED RIVER CATTLE COMPANY mark under the terms of the Assignment and Option Agreement.

In sum, the Court is presented with two questions: (1) whether the provision in the Assignment and Option Agreement barring plaintiff from suing defendant for infringement is enforceable; and (2) whether defendant is contractually entitled to assignment of the RED RIVER CATTLE COMPANY mark. Resolution of the first question will enable the Court to reach a final decision on plaintiff's motion for partial summary judgment and defendant's motion for summary judgment on plaintiff's amended complaint, while resolution of the second question will determine the outcome of plaintiff's supplemental motion for summary judgment and defendant's motion for summary judgment on its amended counterclaim.

STANDARD OF REVIEW

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 motion for summary judgment, all evidence and the inferences to be drawn from it must be considered in the light most favorable to the non-moving party. See Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Mere allegations in the pleadings, however, are not sufficient to defeat a summary judgment motion; if the moving party shows that there is an absence of evidence to support the non-moving party's case, the ...


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