IP Law Daily, TRADEMARK—W.D.N.Y.: Infringement and dilution claims dismissed against defaulted restaurant, (Nov 4, 2022)

By Donielle Tigay Stutland, J.D.

Despite default, the case was dismissed because the name of restaurant in New York state is not likely to confuse customers or dilute the mark of a restaurant with locations in other states.

Despite an entry of default judgment against the owner of a single restaurant called the Broken Yolk located in New York, BYC, Inc.—the owner and operator of a national chain of 34 Broken Yolk Cafe restaurants, none of which was located in New York—failed to prove trademark infringement and dilution, according to the federal district court in Rochester. After analyzing the likelihood of confusion, the court concluded that given the geographic distance between the parties’ restaurants and the consumer markets, BYC had not sufficiently plead that there was likely to be confusion among customers. Nor did BYC sufficiently plead the fame of its marks to qualify for dilution protection. The court denied an entry of default judgment and instead dismissed the case (BYC, Inc. v. Broken Yolk, November 3, 2022, Geraci, F.).

Background. BYC is the owner and operator of a group of restaurants located in various states named the Broken Yolk Cafe. BYC owns various registered trademarks associated with the terms Broken Yolk Cafe, Broken Yolk and BYC. BYC does not have a location in the state of New York.

Broken Yolk operates a single restaurant in upstate New York, and BYC alleges that it has a menu that is “nearly identical” to the Broken Yolk Cafe. BYC had contacted Broken Yolk to inform the restaurant of trademark infringement, and Broken Yolk acquiesced to changing its name. However, when the name change did not happen, BYC sent cease and desist letters to Broken Yolk. Following the cease and desist letters, BYC brought suit against Broken Yolk with claims alleging: (1) trademark infringement, (2) false designation of origin, (3) statutory unfair competition, (4) common law unfair competition, and (5) trademark dilution.

It was reported that Broken Yolk changed its name to “The Yolk,” during the course of the litigation. However, BYC alleges that various social media pages and consumer websites (such as Yelp and TripAdvisor) still refer to the “Broken Yolk” name. A default judgment was entered against Broken Yolk in 2021 for it not responding to BYC’s complaint, however, the court dismissed the complaint without prejudice having determined that BYC had not sufficient plead the claims. BYC then amended its complaint. Broken Yolk again did not respond to the amended complaint, and following a request for default judgment by BYC, the court reviewed the amended complaint.

Likelihood of confusion. Looking at claim alleging trademark infringement, the court analyzed whether the Broken Yolk’s use of the mark was likely to cause confusion with BYC’s marks. The court applied the Polaroid factors in order to determine whether there was a likelihood of confusion, including: (1) strength of the trademark; (2) similarity of the marks; (3) proximity of the products and their competitiveness with one another; (4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer’s product; (5) evidence of actual consumer confusion; (6) evidence that the imitative mark was adopted in bad faith; (7) respective quality of the products; and (8) sophistication of consumers in the relevant market. The court noted that previously BYC had not sufficiently alleged that factor three—the proximity of the products and their competitiveness with one another —would cause any confusion between the marks. The court previously relied on Brennan’s v. Brennan’s Restaurant in which the Second Circuit found the “geographic remoteness” between the restaurants “critical” to its analysis when concluding that there was no likelihood of confusion between a New Orleans restaurant named “Brennan’s,” which held the trademark, and a New York City restaurant named “Terrance Brennan’s Seafood & Chop House.”

In reviewing BYC’s amended complaint, the court concluded that BYC did not cure its insufficient allegations regarding the third Polaroid factor from its initial complaint. The court noted that while BYC vaguely alleges that it intends to open new restaurants, “it does not allege that it ever intends to expand its market presence into Rochester, New York State, or the Northeastern United States more broadly.” Moreover, taking that alongside the first Polaroid factor—the strength of the marks—the court determined that BYC had not presented any evidence to show that BYC’s marks “ha[ve] achieved distinctiveness” in the relevant market, i.e., Rochester or New York State. The court concluded that the third Polaroid factor still weighs against BYC.

The court also reasoned that the “omission of any allegation that Plaintiff provides, markets, or advertises its goods or services in Rochester, or ever intends to do so, bears on other Polaroid factors.” This can be carried over to show that there was no evidence that BYC’s marks “ha[ve] achieved distinctiveness” in the relevant market, i.e., Rochester or New York State.”

BYC’s amended complaint argues that Broken Yolk’s failure to make good on certain pre-litigation representations that they would remove infringing content from the restaurant’s social media pages is sufficient evidence to prove Polaroid factor six — evidence that the imitative mark was adopted in bad faith. However, the court found that even if it found the actions were “evasive and deceitful,” BYC has still failed to allege that Broken Yolk “acted in bad faith in the sense of deceiving consumers about the relationship” between their restaurant and BYC’s restaurants.

The amended complaint did offer more evidence regarding the sophistication of the customers. BYC asserted that “[c]ustomers at breakfast restaurants are typically impulse buyers” who “make decisions on where to eat quickly,” so they are not “as discerning or sophisticated as a consumer of an automobile or similar products.” While the court noted that this factor did weigh in favor of BYC, looking at all of the Polaroid factors as a whole, BYC had failed to sufficiently plead a likelihood of confusion and the trademark infringement failed.

Dilution. In analyzing whether BYC had adequately plead dilution of its mark, the court first looked at whether the BYC marks possess a “significant degree of inherent distinctiveness” and, to qualify as famous, “a high degree of . . . acquired distinctiveness.” The element of fame bears heavily, and “[A] mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” While BYC plead that its restaurants are famous and that they have appeared on national television shows on the Food Network, the court ultimately concluded the “mere allegation that Plaintiff has engaged in ‘extensive’ marketing efforts and that its marks are 'widely recognized’ is insufficient to state a claim.”

The Case is No. 6:21-cv-06203-FPG.

Attorneys: John Joseph Pelligra (Barclay Damon LLP) for BYC, Inc.

Companies: BYC, Inc.; Broken Yolk

Cases: Trademark NewYorkNews