Overview
The restaurant business is extremely competitive. Restaurateurs work really hard to find identifiers for their eateries that make them stand out. One way they do so is by coining interesting names for their restaurants.
The savvier Canadian operators take steps to protect the trademarks (or names) under which they offer their restaurant services, usually by applying for a trademark registration. A recent court decision from Ontario well illustrated the value of doing so … but only for a while.
As the judge explained, “the term ‘frankie’ refers to a common street food in India, which has been in use since the 1930s, and denotes a wrap that can be filled with many things.”
Before opening a single restaurant, the plaintiff filed a federal application to register the trademark BOMBAY FRANKIES. Thereafter, the plaintiff invested time, money, and creative energy in opening a system of franchised Indian restaurants bearing the BOMBAY FRANKIE trademark.
In the meantime, the defendant began using the name BOMBAY FRANKIE for two restaurants. The defendant then applied for registration of BOMBAY FRANKIE as a trademark.
Not only did the plaintiff sue the defendant pursuant to the provisions of the Trademarks Act, it sought an interlocutory injunction prohibiting the defendant from using BOMBAY FRANKIE as the name of any restaurant or franchising business. In the result, the plaintiff got the order sought; the defendant, at least on an interim basis, was forced to stop using the BOMBAY FRANKIE mark in association with its restaurants.
The plaintiff argued that the defendant could not secure registration of the BOMBAY FRANKIE trademark since, on the date the defendant filed its application, there already was an application pending for a “confusing trademark” — the plaintiff’s application for the same trademark.
Further, the plaintiff argued that the defendants’ use of BOMBAY FRANKIE caused confusion. The plaintiff led evidence to the effect that potential landlords questioned whether the plaintiff was affiliated with BOMBAY FRANKIE, expressed concern at this confusion, and hesitated to lease space to the plaintiff.
The plaintiff also argued that the confusion was slowing its entry into the market, and that the longer it took for the plaintiff to enter the market, the more the defendant would unfairly appropriate the plaintiff’s “first mover advantage.” Further, the longer the defendant was able to use the confusing trademark, the stronger would be the association between the parties in the mind of the public. Once that happened, the plaintiff maintained that it would be unable to develop goodwill in the trademark.
In the result, the judge decided that the plaintiff would suffer undue disadvantage given the circumstances, and would suffer irreparable harm not compensable monetarily if the injunction order was not granted.
At least in the short term, the plaintiff’s approach to protecting the trademark by filing a trademark application at its first opportunity allowed it to gain the “first mover advantage” over the defendant. That advantage was short-lived — the injunction did not survive an appeal as the court hearing the appeal noted that as the plaintiff had not used the mark in association with restaurant services, it could not have acquired goodwill in the mark.
The takeaway? Even though successful on appeal, the lesson hard learned here by the defendant is that before offering its restaurant services, it ought to have first conducted a trademark search and then, if the coast was clear, filed a trademark application. If it had filed its application before the plaintiff, the defendant would have won the day at first instance.