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Wednesday
Oct042017

Accidental Franchise = Potential Lawsuits, Fines + Other Penalties

CalBar Certified Franchise & Distribution Law Specialist

 

by Barry Kurtz

818-907-3006

 

Business owners looking to expand may leave themselves vulnerable to several obvious losses, including those related to finance, brand identity, and customer loyalty. Resources, including exemplary human resources, are sometimes spread too thin.

But there is another risk that should be considered, one that is not quite so obvious – that of accidentally franchising the business. This pitfall could lead to potential litigation, not to mention years of scrutiny and torment by government regulating agencies.

But how does a business owner inadvertently franchise a company, without specifically setting out to do so? It helps to first understand what a franchise is, and where the business operates.

For example, under California law a business relationship is a “franchise” if: 

  1. The business will be substantially associated with the franchisor’s trademark;

  2. The franchisee will directly or indirectly pay a fee to the franchisor for the right to engage in the business and use the franchisor’s trademark; and,

  3. The franchisee will operate the business under a marketing plan or system prescribed in substantial part by the franchisor.

The Federal Trade Commission and several other states use similar characteristics to determine the difference between franchises and other business opportunities.

Then there are states that incorporate different elements in their franchise definitions. In Hawaii for example, the three elements that constitute a franchise are trademark license, required fee, and “community of interest”, or the mutual interest of the franchise company and the purchasing business to market goods and services.

Franchise Trademarks

If a business uses another company’s trademark to identify itself, or uses it in its advertising, the business may likely be found to be “substantially associated” with the enterprise company’s, or franchisor’s, trademark.

Licensing agreements may be a bit challenging when trying to avoid becoming a franchise, as they usually grant rights to the purchaser to use intellectual property, and payments or royalties are definitely made in return. Pay particular attention to state and federal regulations to walk the line between franchising and licensing.

Franchise Fees

Just about any payment can be interpreted as satisfying the “fee” element, regardless of whether the parties call it something else. And fees are generally involved no matter which path to expansion a business owner chooses, because the goal of growth is profit.

Franchise Controls & Marketing

The third element, sometimes referred to as the “control” element, requires the franchisee to operate the business under a specific method or system – it’s the “recipe for success” so to speak

  • A franchisor will typically provide its franchisees with an operations manual containing a system of operations and closely monitor its franchisees for compliance to protect the integrity of its system.

  • Franchisors usually mandate the use of specific suppliers, and in some cases, act as the exclusive supplier of certain products or services sold by their franchisees.

  • Franchisees rely on their franchisors for advice, training, advertising, increased purchasing power and marketing assistance.

Differences Between Franchise, License and Distribution Agreements

Under a typical licensing arrangement, one company permits another to sell its products or services in exchange for a percentage of the proceeds without any other involvement on the part of the licensor.

In dealership and distributorship arrangements, independent businesses operate under their own trade names. The dealers or distributors usually buy products or services from the other party at wholesale prices and then resell them to the public. Neither party is substantially involved in the business affairs of the other. 

Franchises have many advantages for both franchisors and franchisees. Creating a franchise system allows franchisors to expand already successful business concepts, achieve greater brand recognition and diversify risk through the investments of its franchisees. Franchisees generally enjoy access to a proven business system and a wider customer base, greater brand name recognition, a stronger market presence, group purchasing discounts, professional marketing, research and development benefits, and continuing education and training. However, business owners and their advisors must be able to spot the telltale signs of a franchise to avoid unwittingly becoming or contracting with accidental franchisors.

Keeping with the California example, true licensing, distributorship and dealership arrangements lack at least one of the three elements of a franchise defined under state law.

But they also lack the level of scrutiny and regulation of a franchise. Business owners should decide if they’re ready for that level of commitment. The rewards are great, but franchising requires a certain “upping of the game”, if you will.

Business owners who suspect they may have inadvertently sold franchises when they really wanted to just expand operations, should seek legal counsel immediately.

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jun262017

Disparaging, Degrading, Derogatory Trademarks: They're Now Enforceable Says Supreme Court

 

Franchise and Trademark LawyerIntellectual Property Lawyer

 

 

by Tal Grinblat

(818) 907-3284

 

You may remember that several national sports franchises are under fire for trademarks and branding that is seen to be racially disparaging. The Washington Redskins are the first team to come to mind, and it wasn’t too long ago that we all thought they had an uphill, and probably losing legal battle to keep their name registered.

Trademark Law

That battle is likely over now that the U.S. Supreme Court weighed in on a trademark dispute for a rock band.

At issue? First Amendment rights. And the Court decided definitively and unanimously to uphold those rights, though the individual justices cited different reasons for doing so.

The Slants Challenge USPTO

Simon Tam is the lead singer for The Slants – a name the all Asian-American, Portland group was unable to register with the U.S. Patent and Trademark Office (USPTO) because the agency found the moniker to be disparaging, if not outright racist. In reaching its decision, the USPTO found that the word “slants” is a derogatory term for persons of Asian descent and that a substantial composite of persons would find the mark to be offensive.

It therefore refused registration relying on the Trademark Act provision, which allows for trademark registration refusals if a mark:

Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; . . .

Tam appealed the refusal to the Trademark Trial and Appeal Board. When the Board sided with the Examining Attorney at the agency, Tam filed a lawsuit, which took him on a seven year trek through the justice system, and ultimately to the Supreme Court. “This journey has always been much bigger than our band: it’s been about the rights of all marginalized communities to determine what’s best for ourselves,” Tam said.

Why did the Supreme Court Side with The Slants?

Band members contend that though “Slants” is a racially-charged term to describe persons of Asian descent, using the term for the name of their band would dilute the denigrating aspects of the word. The Court Opinion said the band hoped to “reclaim” and “take ownership” of stereotypes about people of Asian ethnicity.

In delivering their opinion, Justices Samuel Alito, Clarence Thomas and Stephen Breyer sided with the Band and against the government, ruling:

We now hold that this provision violates the Free Speech Clause of the First Amendment. It offends a bedrock First Amendment prin­ciple: Speech may not be banned on the ground that it expresses ideas that offend. . .

Procedurally, trademark examiners were required to use a two part test to determine if a mark is disparaging. They considered the likely meaning of the mark, including dictionary definitions, relationship of the matter to other elements in the mark, nature of the goods and services and manner in which the mark is used in connection with the goods and services.

If the mark refers to specific persons, institutions, beliefs or national symbols, the examiner then was required to consider whether or not the mark is disparaging to a substantial composite of persons given contemporary attitudes. If that proves to be true, the trademark applicant must prove the mark is not disparaging to continue with registration, generally an uphill battle.

In defending the claim that the USPTO’s decision did not violate the Band’s First Amendment free speech rights, the Government contended that:  

  1. Trademarks are government speech, not private speech;

  2. Trademarks are a form of government subsidy; and

  3. The constitutionality of the disparagement clause should be tested under a new ‘government-program” doctrine. 

The Supreme Court rejected all three USPTO arguments.

Regarding the first argument, the Supreme Court explained that “[t]rademarks have not traditionally been used to convey a Government message” and that trademarks are private (coined by individuals to name their products and services) and not government speech. They explained:  

Holding that the registration of a trademark converts the mark into government speech would constitute a huge and dangerous extension of the government-speech doctrine. For if the registration of trademarks constituted govern­ment speech, other systems of government registration could easily be characterized in the same way. . .

As to the USPTO’s second argument, the Court found that trademarks are not a form of government subsidy, as the USPTO is not paying trademark applicants to register their marks, but rather it is the applicant who must pay a filing fee as well as renewal fees to keep the trademark on the Register.

As to the USPTO’s third argument, Justice Alito stated the U.S. Supreme Court has already ruled repeatedly that “the public expression of ideas may not be prohibited merely because the ideas are themselves offensive to some of their hearers,” and that “government may not prohibit the expression of an idea simply because society find the idea itself offensive or disagreeable”.

Therefore, the disparagement clause in the Trademark Act could not be saved by viewing it as a type of government program in which some content and speaker-based restrictions are permitted.

Disparagement Clause Found Overbroad and Unenforceable

free-speech-trademark-lawThe next matter the court considered was under what standard the band’s free speech rights should be viewed – specifically, whether trademarks should be viewed under the more relaxed scrutiny of commercial speech (whereby speech may be more easily restricted) or expressive speech which warrants a higher level of scrutiny.  

The Court found that it did not need to resolve this debate because the “disparagement clause” could not withstand either level of scrutiny. For commercial speech to be curtailed, it must serve a “substantial interest” and must be “narrowly drawn”.

Here the Supreme Court found that the disparagement clause failed this requirement as the “clause reaches any trademark that disparages any person, group or institution.”  In other words, the Clause goes further than necessary to serve the interest asserted. If the government could curtail any speech by labeling it a commercial speech, free speech would be endangered.

Accordingly, the Court held that the disparagement clause violated the Free Speech clause of the First Amendment resulting in the band finally being able to register their mark.  

Practical Implications for Brands Like The Slants

This seminal Supreme Court decision changes trademark law in a significant way.

The Disparagement Clause was part of the original Trademark Act passed by Congress in 1870, nearly 150 years ago. It has been used by the USPTO to block what the agency deemed offensive marks for over a century.

The Supreme Court’s decision now will allow both individuals and companies to register expressive brands regardless of whether the message is offensive, hateful or inappropriate. But that is a little price to pay to protect our freedom of expression. As the Court indicated, “the proudest boast of our free speech jurisprudence is that we protect the freedom to express ‘the thought that we hate’”. 

 

Tal Grinblat is an Intellectual Property Attorney and a Certified Franchise & Distribution Law Specialist.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jun192017

Trademark Law & Genericide: Google's Not Dead Yet

 

Intellectual Property and Franchise Agreement LawyerTrademark Attorney

by Tal Grinblat

(818) 907-3284

 

Domain name registration is usually a good first step to cement trade name and mark ownership. In a previous blog we reminded readers that possession, even in Intellectual Property matters, is nine-tenths of the law (read Why Register a Domain Name? for more info).

Trademark logo designerSo when Chris Gillespie registered over 700 web domain names, we would normally applaud his ambition as well as his efforts.

Except for one problem: Gillespie registered various domain names that included the word “google”. For example, Gillespie registered: “googlenewtvs.com”, “googledisney.com”, and “googlebarackobama.net” without Google’s permission. The REAL Google, who is the registered owner of the mark, filed a complaint with the National Arbitration Forum (NAF), which decides domain name disputes.

Google complained Gillespie: 

  1. Violated the Uniform Domain Name Dispute Resolution Policy (via trademark infringement, also known as cybersquatting); and

  2. Registered names that were confusingly similar to Google’s trademark, in bad faith. 

The agency agreed – NAF transferred the domain names to the web service company in 2012.

Not long after the NAF decision, David Elliott filed a petition in an Arizona Court to cancel the Google trademark registration under the Lanham Act, arguing “google” is now a generic verb for internet searching. Gillespie joined in the action. In September, 2013, the parties filed cross motions for summary judgment. Google prevailed and plaintiffs appealed.

But before we can deconstruct the respective parties' positions and the courts' decisions in Elliott v. Google, Inc., we must first understand the basics of genericide.

What is Trademark Genericide?

Trademark Infringement AttorneyGenericide is a term used when a trademark begins with strong trademark significance, but over time becomes generic and no longer identifies the source of products or services. Some examples of marks that started out as strong trademarks but later lost their significance include Aspirin and Escalator.  

These marks at one point were protectable as arbitrary or fanciful marks because they were primarily understood by the public to refer to specific products—a brand of headache reliever and a specific brand of moving stairs, respectively. But over time, these words became generic and the public now understands these words to describe the actual goods rather than the source of the goods.

Failing the Trademark Genericide Test

On June 14, 2017 the Ninth Circuit Court of Appeals upheld the lower court’s decision and found that appellants’ arguments regarding the genericizing of “google” had two flaws: 

  1. “A claim of genericide must always relate to a particular good or service.”

  2. Appellants “erroneously assumed that verb use automatically constituted generic use.” 

The Appellate Court noted:

If there were no requirement that a claim of genericide relate to a particular type of good, then a mark like IVORY, which is “arbitrary as applied to soap,” could be cancelled outright because it is “generic when used to describe a product made from the tusks of elephants.” Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 n.6 (2d Cir. 1976).

As to the Appellants’ second argument, the Court decided it contradicted fundamental trademark protection principles, in reference to source identification.

Elliott contended that trademarks perform source-identifying functions only when used as adjectives. The court disagreed and upheld the lower court’s ruling that the relevant inquiry is not whether the public used “google” as a verb indiscriminately, but rather whether the primary significance of the word “google” to the public was a generic name for internet search engines (in which case the word became generic) or as a mark identifying Google’s search engine in particular (in which case was still protectable as a trademark). 

In other words, the court held that a word could be used as a verb, yet retain trademark significance.

Citing the terms “indiscriminate” and “discriminate” coined by the District Court in this case, the 9th Circuit said:

We have already acknowledged that a customer might use the noun “coke” in an indiscriminate sense, with no particular cola beverage in mind {in which case the mark was likely generic}; or in a discriminate sense, with a Coca-Cola beverage in mind. In the same way, we now recognize that an internet user might use the verb “google” in an indiscriminate sense, with no particular search engine in mind; or in a discriminate sense, with the Google search engine in mind.

The relevant question to ask is how the relevant public primarily understands the word itself. The court therefore denied appellants’ claims, holding that based on the evidence presented, even though some members of the public used “google” in a generic manner, the relevant public still primarily understood the word to refer to the Google search engine in particular.

Generic Lessons Learned

Intellectual Property Litigation

So what can budding business owners establishing trademarks learn from this case?

The evidence to prove a mark is generic must be overwhelming. Elliott provided three consumer surveys to bolster his claim that “googling” simply means performing internet searches, but some were not conducted by qualified companies or individuals, and two were rejected by both courts out of hand.

Additionally, both Google and Elliott provided competing evidence as to the public’s use of the word “google” and “Google” as generic terms and trademarks. Since there were enough examples of trademarked use, Elliot lost this argument as well.

Last, Elliot failed to show “google” was used to describe internet search engines generally, such as Bing and Yahoo. This demonstrated to the Court that the death of Google as a trademark was greatly exaggerated.

Tal Grinblat is an Intellectual Property Attorney, Certified Franchise & Distribution Law Specialist, and a Shareholder at our firm. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jun082017

There's an App for That: Franchisors Fight Slumping Sales, Millenials

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

How has the gourmet burger gone awry? According to Fox, the better burger business dropped five percent in foot traffic at quick-serve restaurants last year, primarily because consumers are opting to “DIY” their food at home.

But why would customers go through the hassle of firing up the grill when it’s so much easier to belly-up to a counter and place an order? For many, double-digit burgers just cost too much.

Franchisors are taking notice, and making adjustments.

Some are offering premium toppings to compete with the fancier restaurant chains. Others like McDonald’s plan to try using non-frozen beef or offer more “Signature Crafted” items alongside the menu mainstays. Franchises like Wendy’s are sticking to lower price point items, knowing the average consumer just can’t spend $6.00 per day on lunch, according to the article.

Chains in fast food (Burger King), quick-serve (Habit) and full service, sit-down style restaurants (Red Robin) are offering rewards programs to encourage brand loyalty through discounts and freebies. These strategies may help bring back those customers wanting to save money.

But there’s another reason diners are cutting back on eating out: Physically going to restaurants just costs too much in time and stress. Some even characterize it as a “dying tradition” that eats up too much of the work day. Just consider the coordination of schedules, the drive to the restaurant, a hunt for parking, the wait for a table, the wait for service…all of that time adds up. It’s daunting.

And some blame the millennials, who, believe it or not, prefer to cook at home more than their parents did. They also rely more on fast, cheaper meals provided by grocery stores, grocery delivery services, and a new wave of hi-tech, time-saving web based applications for curbside pickup or delivery.

Speed seems to be key here. Denny’s just launched Denny’s on Demand, allowing customers to place orders for pickup or delivery, and pay for those orders. Forget 30 minute pizza delivery. In the land "Down Under", Dominos is working on making and delivering pizzas in 10 minutes or less.

Jack in the Box recently teamed up with DoorDash to deliver curly fries and tacos to home addresses. McDonald’s hopes to drive up profits through UberEats, now available in 100 test markets across the country. Eat24 and Yelp will help web visitors find fast food delivery services within their zip codes.

All in all, apps seem to be the way of the future for restaurants craving more business. Some eateries in the Los Angeles area are claiming anywhere from a 2 to 35 percent increases in sales due to expanded digital assets. But what should franchisors know about the legal ramifications of going hi-tech?

A Franchisor’s Mobilization Plan

Some recent litigation in the dawn of digital gastronomy points the way. Franchisors should ensure they hire the right developers to reduce the risk of litigation. Important aspects to consider include:

Accessibility: This is a big issue, as ADA (Americans with Disabilities Act) suits are on the rise. Sweetgreen, Inc., a Washington D.C. based salad chain faced a class action lawsuit filed on behalf of visually-impaired plaintiffs. The app Sweetgreen had developed to allow customers to order online for faster pickup worked great for those who could see. But those customers who were impaired or blind weren’t able to customize their orders as easily, and spent extra time refining their choices at the restaurant. For this group, the app wasn’t time-saving at all.

Intellectual Property Rights: It’s common for developers to borrow code already written, rather than reinvent the wheel every time they build a new site or app. The same applies to graphics and text. However, developers are being targeted more and more often for trademark, copyright or patent infringement. Franchisors should ensure the developers own all elements used in the project, have the licensed rights to use all elements, or that the developers assume all responsibility should IP litigation be initiated.

Privacy: This one’s always an issue, as anything that connects to the internet can be hacked. Just ask Starbucks, which attributes a third of its sales to purchases made through its app. The franchise also claims that less than one percent of its app users have actually been hacked, and that the fault lies with users employing simplistic passwords. Whether those claims are true or not, the hacking is turning out to be a bit of a social media challenge for the coffee franchise.

Third Party Partnerships: Customers are generally unaware when they place an order online through their favorite restaurant’s website that the food will actually be delivered through a third party delivery service. Zoomer is one example, and plaintiffs allege the company violated the federal Telephone Consumer Protection Act and other laws when the delivery service sent customers unauthorized texts after placing food orders with partner restaurants. Granted, it’s the delivery service that is facing the lawsuit – but franchisors should be wary of using any third party service that will annoy customers. Or break the law.

As for the non-digital logistics, remember the practicalities: People who order online generally don’t want to communicate with the restaurant – they want to get in and out quickly, or just have food delivered without fuss. Consider more short-term parking or curb service for pickups; counter space, windows or staff dedicated just to online orders; and whether or not it’s better to employ your own delivery staff or contract out.

Most importantly, make sure the app works, and that it works well – there’s no point in developing an app that doesn’t allow customers to order, customize selections, and pay. Useless apps without these features tend to get slammed in reviews. And the critics are harsh, as seen in the example to the right.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jun052017

Franchisors, Got Claims? Don't Let Them Spoil Like Bad Cheese

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

This is the tale of two restaurants, each facing trademark infringement claims under the Lanham Act brought by two, separate franchisors. The franchisees’ restaurants had three things in common: First, cheese is a key ingredient in their respective menus (which detail is only critical to cheese-lovers, but we like lists of three). Second and more importantly, time was a key ingredient in their respective defenses.

The third common element is that both defendants won. Here's why:

Both restaurateurs employed a laches defense. The Laches Doctrine is an old but often used defense employed when an unreasonable amount of time has passed between a supposed transgression by the defendant and a legal complaint is made by the plaintiff. Here are the details:

Delays May Cause Grouchy-ness

In Groucho's Franchise Systems, LLC v. Grouchy's Deli, Inc. (d/b/a  Grouchy's New York Deli and Bagels and referred to as "Deli" to avoid confusion), an 11th Circuit Court of Appeal upheld the trial court's ruling that the franchisor's (Groucho's) claim was barred by laches.

To sum up, Groucho's has been doing business in South Carolina since 1941, opened 20 additional locations over time, and finally registered its trade name in 1997. The Deli opened its restaurant in 2000 in Georgia.

In 2004, Groucho's sent the Deli a letter alleging the Deli was infringing on the franchisor’s registered mark. The letter further stated the franchisor planned to open a location in Atlanta sometime in the future, and that upon that occasion, would take legal action to stop the Deli's infringement. The Deli registered its own mark in 2005 and opened a second location. Thereafter, both concepts expanded their operations.

In 2013, Groucho's sent the Deli another letter, asking the Deli to change its name because of the risk of confusion between Groucho's and Grouchy's.  The Deli did not respond, and Groucho's franchisor followed up with a warning about a lawsuit. This time the Deli replied that there was no likelihood of confusion. Groucho's finally filed a lawsuit in 2014.

Among other allegations, Groucho's claimed trademark and service mark infringement in violation of the Lanham Act, unfair competition, unjust enrichment, and that the Deli's name would cause market confusion. The district court granted summary judgment for the Deli.

The 11th Circuit Court stated that a laches defense requires proof of three elements:

1. There must be a delay in asserting a claim;

2. The delay must not be excusable; and

3. The delay must cause the defendant undue prejudice.

The Court further opined that during the decade in which Groucho's waited to challenge the Deli's service mark; the Deli built business value around its own mark; registered its mark without opposition; and opened another restaurant which it later sold, licensing the buyer at the time to use the Deli's recipes and proprietary property. In short, the Deli "rel[ied] to its detriment" on Groucho's silence. The Court also characterized Groucho's behavior as "tortoise-like", and upheld the district court's decision.

If Groucho's wanted a successful shot at protecting its name, the franchisor should have taken legal action in 2004.

Franchisor Cheesed Off…Eventually

In Noble Roman's Inc. v. Hattenhauer Distributing Company, time plays a role again.

Noble Roman's of Indiana franchises pizza outlets and submarine sandwiches. Hattenhauer owns convenience stores and gas stations in Washington and Oregon. In 2006, the parties entered into franchise agreements to sell pizza and sandwiches at Hattenhauer locations – Hattenhauer agreed to only use ingredients that conform to the franchisor's specifications.

During an audit in 2014, Noble Roman's discovered Hattenhauer underreported sales. The franchisee disputed the claims and refused to pay royalty fees. Noble Roman's also claimed the franchisee was using inferior cheese rather than the franchisor's proprietary cheese, since 2011. In its 2014 lawsuit, Noble Roman's added unfair competition and breach of contract to its other claims.

Let's allow the cheese claim to stand alone:

Noble Roman's alleged the franchisee's use of subpar cheese violated the Lanham Act "because it deceived customers into paying full price" for a product that was not, in essence, a Noble Roman's product. The franchisor also claimed injury because it lost control of products sold under its trademark.

Hattenhauer on the other hand, claimed the franchisor knew about the cheese switch since 2010, because the franchisor received monthly reports from the approved supply distributor indicating that Hattenhauer was not buying its cheese.

In considering the facts, the court determined that the harm was not to customers who ate bad cheese, but to the franchisor, who may have been perceived by those customers to be serving bad cheese, which the court characterized as a claim for injury to personal property.

That being the case, the court then pointed out that the statute of limitations for personal property was two years in Indiana and found that Noble Roman's four year delay on its cheese claim was unreasonable, and that Hattenhauer was prejudiced by this delay. The court granted summary judgment for Hattenhauer regarding the trademark infringement claim.

Both cases reveal the harm caused to a plaintiff by sitting on its claims.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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