IP Law Daily, TRADEMARK—N.D. Cal.: Chicken restaurant franchisor wins default judgment over California copycat, (Jun 12, 2024)

By E. Darius Sturmer, J.D.

While Angry Chickz, Inc., established its entitlement to default judgment on the merits of Lanham Act and common law claims, its requested injunctive relief was denied and additional briefing ordered.

Nashville-style fried chicken restaurant franchisor Angry Chickz, Inc., is entitled to default judgment on the merits of its Lanham Act trademark and trade dress infringement claims against the owner and operator of a Nashville hot chicken restaurant in San Jose, California, that copied many distinctive features of an Angry Chicks franchise, the federal district court in San Jose has ruled. The court further held that Angry Chickz is also entitled to injunctive relief, but because the franchisors’ proposed injunction was “overbroad and insufficiently specific” and did not comply with Federal Rule of Civil Procedure 54(c) or 65(d), the court denied Angry Chickz judgment incorporating its requested injunctive relief and instead ordered the franchisor to file a supplemental memorandum and supporting papers to address the deficiencies it identified (Angry Chickz, Inc. v. Bosphorus Trade, Inc., No. 5:23-cv-03569-VKD (N.D. Cal. June 10, 2024)).

Angry Chickz owns, operates, and franchises Angry Chickz restaurants, of which there are approximately 25 locations across the West Coast of the United States, including two in San Jose, California. Defendant Bosphorus Trade, Inc., operates a restaurant in San Jose called “The Angry Hot Chicken” that also serves Nashville hot chicken. Bosphorus’ chief executive officer is also named as a co-defendant.

In a complaint filed last July, Angry Chickz contends that the defendants engaged in trademark and trade dress infringement that violated Section 43(a) of the Lanham Act and California common law by copying distinctive features of Angry Chickz restaurants and branding, ranging from menu items and physical restaurant design to promotional materials on social media platforms and their website, www.theangryhotchicken.com.

Neither defendant filed a timely response to the complaint, and the court clerk entered default against both defendants on November 2, 2023. In January 2024, Angry Chickz moved for entry of default judgment. The court thereafter deemed the matter suitable for resolution without oral argument.

Default judgment. The court found that all seven factors enumerated in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) weighed in favor of its entering default judgment on both of Angry Chickz’ claims.

First, the possibility of prejudice to Angry Chickz in the absence of such entry was plain, as Angry Chickz would likely be left without recourse against the defendants on its claims if the court did not enter default judgment.

Second and third, the merits of Angry Chickz’ claims and the sufficiency of the complaint favored granting a default judgment, because the franchisor’s allegations of likelihood of confusion were sufficient to support claims for false designation of origin as to its name, marks, and trade dress and its common law trademark infringement claim was adequately pleaded too.

Fourth, the “sum of money at stake” factor favored default judgment as well, in light of the plaintiff’s seeking of injunctive relief to protect intellectual property rights accompanied by a request for attorney fees.

Fifth, the possibility of a dispute concerning material facts was unlikely, the court decided, since the plaintiff had filed a well-pleaded complaint alleging the elements necessary to establish its claims and the clerk had entered default upon the defendants’ failure to answer.

Sixth, the lack of any possibility of excusable neglect also favored granting default judgment, the court said, noting that the individual defendant had known of the lawsuit since it was filed, and been aware of the claims underlying it for over a year—even repeatedly asking Angry Chickz for additional time to make changes or to obtain counsel—but had taken no other action to address the franchisor’s complaint.

Seventh and lastly, the “strong policy favoring decisions on the merits” embodied in the federal rules weighed in favor of default judgment. It was Angry Chickz’ only recourse, the court observed.

Remedies. Angry Chickz’ request for a permanent injunction barring the defendants from infringing on its trademarks and trade dress was more problematic, in the court’s view. Although the franchisor sufficiently showed its entitlement to injunctive relief under the Lanham Act, the scope of its requested relief suffered from several defects. To begin with, a requested provision ordering the defendants to “[refrain from the] use of the trade dress associated with Angry Chickz’ in-store restaurant locations and online ordering platforms, as alleged in the complaint” violates Rule 65(d)(1)(C)’s specific requirement that injunctions describe their requirements without reference to the complaint or other documents. Additionally, the proposed injunction does not “clearly identify and describe” the elements of the trade dress that will be protected by the injunction, it is not “tailored to eliminate only the specific harm alleged,” and the portion of it requiring the defendants to transfer the www.theangryhotchicken.com domain to Angry Chickz violates Rule 54(c), as that relief was not requested in the complaint. Therefore, the court concluded, Angry Chickz is not entitled to a judgment incorporating that specific injunctive relief.

Attorney fees. The court also decided that Angry Chickz’ allegations and supporting evidence of the defendants’ objectively unreasonable conduct showed that the case was “exceptional” within the meaning of the Lanham Act and that Angry Chickz could recover reasonable attorney fees for the defendants. It invited the plaintiff to submit an appropriate post-judgment motion.

Joint and several liability. Finally, because the evidence adduced by Angry Chickz plausibly established that the executive defendant directed and participated in Bhosporus’s infringing conduct and thus may be held personally liable, the court ruled that both defendants would be jointly and severally liable for any relief that is ultimately ordered.

The Case is No. 5:23-cv-03569-VKD.

Judge: Demarchi, V.

Attorneys: Shane Garrett Smith (McCormick Barstow LLP) for Angry Chickz, Inc. Salih Inci, pro se.

Companies: Angry Chickz, Inc.; Bosphorus Trade, Inc. d/b/a The Angry Hot Chicken

Cases: Trademark CaliforniaNews