A registered trademark is a valuable corporate asset and can be a significant part of a company's worth. A franchisor has an affirmative legal duty to police use of its mark by licensed franchisees and also third-party infringers. For instance, a federal court in Louisville permanently enjoined a competitor from using "La Bamba" in its name, holding that use by La Bamba Authentic Mexican Cuisine (LBAMC) was likely to cause confusion with the La Bamba Mexican restaurant chain operated by franchisor and restaurant owner La Bamba Licensing (LBL).
Both parties served casual, Mexican food. The court found the marks were similar enough that consumers could mistakenly think the restaurants were related.
LBL owns the registration of La Bamba for restaurant services, and operates eight La Bamba Mexican restaurants in Kentucky and the Midwest. LBAMC opened a casual, Mexican restaurant named "La Bamba" 65 miles from Louisville. LBL sued after LBAMC refused to comply with LBL's demands to cease and desist and change the name of its restaurant.
LBL argued and the court agreed that the La Bamba mark is distinctive, despite some ordinary language usage, because the phrase "La Bamba," a famous Mexican folk song, is unrelated to LBL's restaurant services. LBL provided evidence that its mark acquired distinctiveness for Mexican cuisine, based on its continuous use of the mark for nearly 30 years, particularly in Kentucky. LBAMC argued that the mark was weak due to un-policed third-party use. But LBAMC failed to point to evidence of similar marks, let alone the number, location, or types of goods and services offered by allegedly numerous undisclosed third-party users.
The court found a likelihood of confusion and permanently enjoined LBAMC from using the La Bamba name. In balancing hardship of an injunction, the court noted that LBAMC operated only a single restaurant, only since 2015, while LBL operated several restaurants in multiple states for an extended time period.
A franchisor that tolerates infringers will find its trademark asset has "eroded" and "shrunken" because the strength of its mark as a distinctive symbol is diminished by the presence of similar marks. Vigilance in policing marks helps build a stronger, reputable brand, avoid loss of trademark rights, and minimize the risk of an infringer operating with impunity.
La Bamba Licensing, LLC v. La Bamba Authentic Mexican Cuisine, Inc.
