Here is the first of two surveys of recent trademark cases filed in the Georgia District Courts.

Franchise Operating Under New Name, but Using the Same Technique

On June 25, 2013, SmallBizPros, Inc. d/b/a Padgett Business Services (“Padgett”), with its principle place of business in Athens, Georgia, filed a complaint against Stephen G. Hunt (“Hunt”), of Marietta, Georgia, Right Path Tax and Accounting (“Right Path”), based in Dallas, Georgia, Ginger Sonnier and Leiah Harris, both of Dallas, Georgia, alleging Hunt violated his Franchise Agreement with Padgett by selling his franchise to his employees, Sonnier and Harris, who subsequently changed the name, but offered the same services trademarked by Padgett.

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In May 1996, Padgett and Hunt entered into a written Franchise Agreement, which granted Hunt the right to operate a Padgett Business Services franchise in five Georgia counties. The Franchise Agreement gave Hunt access to Padgett’s trade secrets and manuals on how to operate a successful Padgett business. According to the complaint, around 2010, Hunt stopped making payments to Padgett and subsequently sold the franchise to his employees. Sonnier and Harris now operate Right Path in the same location where Padgett used to do business.” Padgett alleges that Right Path is representing to customers either that it is still affiliated with Padgett or, alternatively, that it is no longer affiliated. Padgett claims that either way Right Path is deceiving customers and engaging in unfair competition. Padgett further alleges trademark infringement, breach of contract, conversion and unjust enrichment.

On July 31, the Defendants filed a motion to dismiss or, alternatively, to transfer to a proper venue. They claim that venue is improper as none of the named Defendants reside in the Middle District of Georgia, nor did any of the events or omissions Plaintiff claims occurred take place in the Middle District.  Defendants claim that they all live in the Northern District and further that the five Georgia counties covered by Hunt’s contract are all in the Northern District.  Briefing on the motion is still ongoing.

The case is SmallBizPros, Inc. v. Stephen G. Hunt, Case No. 3:13-cv-00071-CDL, United States District Court for the Middle District of Georgia, Athens Division, and is assigned to Judge Clay D. Land.

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Mellow Mushroom Obtains TRO and Stipulated Preliminary Injunction

On June 21, 2013, Home-Grown Industries of Georgia, Inc. d/b/a Mellow Mushroom (“Mellow Mushroom”), based in Atlanta, Georgia, filed a complaint against Danesh 2 Enterprises, Inc.  (“Danesh Enterprises”), Ali Danesh, and Setareh Danesh (collectively “Danesh”) for trademark infringement, unfair competition and breach of contract, after Danesh continued to operate its franchise following a letter from Mellow Mushroom advising them that a Franchise Agreement between the parties had been terminated. In May 2012, Mellow Mushroom and Danesh entered into a Franchise Agreement in which Danesh was given the rights to use the Mellow Mushroom name and System to open a restaurant in San Antonio, Texas. According to the complaint, Danesh failed to keep the restaurant up to Mellow Mushroom’s standards. After notifying Danesh of their concerns several times and conducting follow up inspections, Mellow Mushroom terminated the Franchise Agreement.

Mellow Mushroom seeks a preliminary and permanent injunction enjoining Danesh from using their name or passing off their products as associated with Mellow Mushroom. Further, they have asked the Court for an order enjoining them from opening a competitive business within 10 miles of their current restaurant, for a period of two years.

On June 24, Mellow Mushroom filed a motion for a temporary restraining order to prohibit Danesh from operating the restaurant. It argued a TRO was necessary to prevent irreparable injury that could occur by the franchisee not maintaining the quality standards Mellow Mushroom seeks to maintain, thus damaging the goodwill they have established.  At a hearing on June 27, Judge Jones granted Mellow Mushroom's motion and entered the TRO.  Shortly thereafter, Danesh filed an agreed preliminary injunction order, which, once approved by the Court on July 8, continued the directives established in the TRO.   

The case is Home-Grown Industries of Georgia, Inc. v. Danesh 2 Enterprises, Inc., Case No. 1:13-cv-02087-SCJ, United States District Court for the Northern District of Georgia, Atlanta Division, and is assigned to Judge Steve C. Jones

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AT&T Declaratory Judgment Suit

On June 6, 2013, AT&T Intellectual Property II, L.P. (“AT&T”), based in Atlanta, Georgia and Aio Wireless LLC (“Aio Wireless”), based in Alpharetta, Georgia, filed suit against aioTV Inc. (“AIO”), based in Centennial, Colorado, seeking a declaratory judgment that the trademarks and service marks “Aio”, “Aio Wireless”, “aio” (Stylized) and “aio Wireless” (Stylized) (collectively, the "Aio Marks") do not infringe on AIO’s claimed common law trademarks: “aio”, “aioTV”, “aio basic”, “aio cloud” and others (collectively, the "AIO Marks"). 

Aio Wireless is a wireless voice, text and data service provider, who also sells mobile devices through independent dealers as well as online. AIO, on the other hand, focuses on television content by bundling licensed and unlicensed content and then selling it to service providers, who then offer on-demand television streaming to subscribers. This declaratory judgment action arose after AIO threatened to file suit against AT&T and Aio Wireless for trademark infringement and unfair competition in violation of the Lanham Act, and demanded they cease and desist from using the Aio Marks. AT&T and Aio Wireless refused to stop using the Aio Marks as the marks had already been approved and registered at the USPTO.

AT&T and Aio Wireless assert that even if AIO did have rights to the AIO Marks, use of the the Aio Marks is not likely to cause confusion because (1) the AIO Marks are commercially weak; (2) the parties’ products and services are distinct; (3) the parties’ target customer base is entirely different; and (4) AT&T and Aio Wireless adopted the Aio Marks without knowledge of, or intent to associate with the AIO.  

Not long after AT&T and Aio Wireless filed this complaint, AIO filed suit in the District of Colorado alleging trademark infringement. AT&T and Aio Wireless responded by filing a Motion to Enjoin AIO from prosecuting this subsequently filed action and further filed a Motion to Stay in the District Court of Colorado pursuant to the “first-to-file rule.” AIO then filed a Motion to Dismiss or Transfer based on lack of personal jurisdiction and improper venue. The parties then filed a Joint Motion and Stipulation for Entry of Order Temporarily Staying Case filed in the District of Colorado, staying that action until the Judge Forrester of the Northern District of Georgia decides AIO’s pending motion to dismiss or transfer the case.  The Court recently granted AT&T and Aio Wireless leave to conduct some limited jurisdictional discovery relating to the motion to dismiss. 

    The case is AT&T Intellectual Property II, L.P. v. aioTV Inc., Case No. 1:13-cv-01901-JOF, United States District Court for the Northern District of Georgia, Atlanta Division, and is assigned to Judge J. Owen Forrester.

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“Always Baked” and “Insomnia” in Battle of the Bakeries

On June 27, 2013, Triple Play Foundation, LLC (“Always Baked”), based in Sandy Springs, Georgia, filed a complaint in the Northern District of Georgia against Insomnia Cookies, Inc. (“Insomnia”), based in New York, New York, seeing a declaratory judgment that Always Baked does not infringe any valid trademark of Insomnia.

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Always Baked filed the complaint after Insomnia sent an cease and desist letter to Always Baked regarding their logo. Always Baked responded to the letter by way of the complaint. First, Always Baked argues that its logo in no way infringes Insomnia’s logo. Insomnia features a cookie in a half-moon configuration, with three stars, all surrounded by a circle; whereas Always Baked includes a caricature of a cookie with a pair of eyes, in which the cookie, in the form of a “G”, is depicted saying “Get Baked.” Second, Always Baked alleges that Insomnia's trademark “insomnia cookies” should not have been registered as it is merely descriptive of the goods, i.e. cookies delivered to insomniacs. Always Baked asks the Court for a declaratory judgment that they have not infringed on any trademark of Insomnia, and further that Insomnia’s trademark registration be cancelled.

The case is Triple Play Foundation, LLC v. Insomnia Cookies, Inc., Case No. 1:13-cv-02152-TWT, United States District Court for the Northern District of Georgia, Atlanta Division, and is assigned to Judge Thomas W. Thrash, Jr.

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Emily Scheible