On November 26, 2012, Mr. Michael Chow and other plaintiffs affiliated with the MR CHOW restaurants doing business in New York, London, Miami, and Beverly Hills (and soon in Las Vegas) filed an appeal with the U.S. Court of Appeals for the Eleventh Circuit of a judgment rendered in a trademark and false advertising lawsuit.
Plaintiffs appeal because they are dissatisfied with having prevailed on only false advertising and related unfair competition counts.
As aptly stated by the U.S. District Court for the Southern District of Florida, from which Plaintiffs took their appeal: “This case involves a relatively straightforward dispute which was aggressively litigated, between two sets of restaurant companies and their principals, regarding allegedly unfair business practices.”
Discussed in greater detail below, the case presents interesting insights by the district court regarding blog posts and alleged in-person customer statements as proffered evidence of actual confusion, which it deemed insufficient to grant a new trial on the trademark and trade name infringement claims rejected by the jury.
The facts discussed here are those: (1) treated as facts by the Southern District of Florida in an order resolving post-trial motions, entered on October 24, 2012 (“the October 24 Order”); and (2) apparent from on-line records hyperlinked below.
California-based plaintiff Mr. Chow Enterprises, Ltd. (“MCEL”) is the owner of record of, among other registrations, U.S. Trademark Registration No. 1,160,402 (the ‘402 Registration”) for the mark MR. CHOW®, for “restaurant services and carry out restaurant services.” The ‘402 Registration issued on July 7, 1981, claiming a first use date of January 1973. The mark as presently used appears as MR CHOW, without the period at the end of “MR,” but MCEL is not listed to own any federal registration or application for that mark, for restaurant services. Plaintiffs only asserted the mark of the ‘402 Registration in this litigation, however, and in any event the district court deemed the difference between those marks as “of no significance.”
Plaintiff Michael Chow “testified that the Plaintiffs’ restaurants are known throughout the world and that he also is a well known figure in the United States.”
The first-named defendant, Chak Yam Chau, changed his name to Philippe Chow Chau in 2006.
“Plaintiff Michael Chow conceded that from ‘day one’ he bonded with and liked Defendant Chau, as they shared the same last name/character, a symbol pronounced ‘Zhou,’ from their country of origin.” Over the 25-year span in which Mr. Chau worked for Mr. Chow, however, that relationship changed: “The jury heard impassioned testimony from Defendant Chau that he left his long-time employer, whom he liked, because ‘Michael Chow didn’t give me the chance, so . . . I believe I need to go out and have my own business.’” Defendant Chau left Mr. Chow’s employ in late 2005.
In early 2006, therefore, Defendant Chau launched his first competing restaurant. “Defendants have consistently used ‘Philippe by Philippe Chow’ or ‘Philippe Chow’ or ‘Philippe’ in association with their restaurants, including use of these names in signs, menus, plates, etc.” “The jury heard from several witnesses that Plaintiffs did nothing to protect their trademark or trade name use by Defendants for several years, despite being aware of Defendants’ competing restaurants even before the first of such restaurants opened in early 2006.”
To illustrate the extent to which relations between the parties had deteriorated, Defendant Chau heard from Ms. Michelle Chun, an employee of the plaintiffs’ restaurants. In a phone call, according to Chau’s testimony, “Ms. Chun told him to not bother her chef and to not walk on 57th Street,” where one of the New York MR CHOW restaurants are located. “[H]e was very upset about being told to avoid walking on the street.” For further example, Plaintiffs brought suit in late 2009, asserting a myriad of legal theories against numerous defendants over the course of an original and three amended complaints. The first amended complaint included claims, dismissed in November 2009, “for civil trespass and corporate espionage, alleging that ‘an Asian male disguised in a chef’s jacket entered the premises of the Mr. Chow restaurant [in Miami Beach] without authorization and proceeded into the Mr Chow kitchen.’” “Plaintiffs alleged that the person was sent there for the ‘sole purpose of spying on behalf of the Defendants’ Miami Beach restaurant.’”
District Court Proceedings
Despite a larger number of claims having been asserted in the pleadings against a larger number of defendants, the jury wound up deliberating upon 11 counts against 7 defendants. Plaintiffs presented a twelfth count, dilution under § 43(c) of the Lanham Act (Count V), for resolution by the district court only. Defendants counterclaimed for defamation and for cancellation of the ‘402 Registration, but prevailed on neither at trial.
Among the 11 counts considered by the jury were claims for trademark infringement (Count I), trade name infringement (Count II), trade dress infringement (Count III), false advertising under § 43(a) of the Lanham Act (Count IV), and “unfair competition by deceptive conduct” (Counts VII and IX). After a trial spanning a 5-week period in January and February 2012, the jury found in Plaintiffs’ favor only as to Counts IV, VII, and IX, assessing monetary awards as follows:
- $520,451.00 for plaintiff TC Ventures, Inc. (owner of Mr. Chow Restaurant in New York City), to be paid by defendant Davé 60 NYC, Inc.; and
- $500,000.00 for plaintiff Michael Chow, to be paid by defendant Stratis Morfogen.
The parties then filed the following post-trial motions:
- Plaintiffs’ motion for new trial as to Counts I and II;
- Defendants’ motion for a judgment as a matter of law (“JMOL”) as to Counts IV, VII, and IX;
- Plaintiffs’ motion for injunctive relief as to Counts IV, VII, and IX;
- Plaintiffs’ motion for injunctive relief as to Count V;
- Plaintiffs’ motion to increase damages;
- Both parties’ motions for attorneys’ fees; and
- Both parties’ motions for costs.
In the October 24 Order, the U.S. District Court for Southern District of Florida resolved those motions as follows:
- Granted in part, but only to extent that award of $500,000 to Michael Chow would be set aside.
- Granted in part. All defendants other than Davé 60 NYC, Inc. may recover costs of defending against Plaintiffs’ claims. Plaintiff TC Ventures entitled to costs of prosecuting its false advertising and “unfair competition by deceptive conduct” claims. All Plaintiffs entitled to recover costs of defending against Defendants’ unsuccessful counterclaims.
The court then entered a Final Judgment consistent with its post-trial rulings in the October 24 Order.
District Court’s Rationale in Resolving New Trial, JMOL, and Injunction Motions
The only motions discussed in further detail here, beyond the comments stated above, are the first four listed.
Plaintiffs’ Motion for New Trial on Trademark & Trade Name Counts
The court considered these claims together, as the parties “agree[d] that in this case the relevant factors for considering whether Plaintiffs established a likelihood of confusion as to the alleged infringement of the trademark and the trade name are identical.”
In its course of citing Eleventh Circuit precedent on standards for analyzing motions for a new trial, the court stated that it “properly defers to the jury unless their verdict is against the great weight of the evidence.” In light of these standards, the court upheld the jury’s verdict.
The court proceeded to weigh the evidence associated with each likelihood-of-confusion factor asserted by the Plaintiffs, beginning with evidence of actual confusion. In the Eleventh Circuit, “evidence of actual confusion is the best evidence of a likelihood of confusion.” The court remarked that plaintiffs only submitted the following evidence in support of this factor, and made the assessments of that evidence quoted here:
- Newspapers that allegedly told readers that Philippe Chow restaurants were “Mr. Chow”. The court assessed the exhibits and determined that the newspapers cited by Plaintiffs did not equate the restaurants as argued. A blog post on a New York Post website described Defendants’ New York restaurant as “Mr. Chow’s famous Chinese restaurant, Philippe.” The court did not find that evidence significant because “the author herself did not go to the restaurant,” instead sending two people there on a blind date. A New York Times blog post referring to a press release by Defendants in a survey of New York restaurants met with similar treatment: “The author is not identified as a customer of the restaurants, and this brief mention may have been insufficient to convince the jury that this was evidence of actual confusion by relevant customers.”
- Other website (blog) postings.
- “Of the other exhibits offered by Plaintiffs,” stated the court, “all appeared on websites . . . with an unknown readership, or on an open website to which the public can post a comment . . . and, as such, may have been viewed by the jury as of little persuasive value in determining that actual consumers were confused.”
- The court further reasoned: “Plaintiffs did not establish that the persons writing these blog postings or comments were actual consumers of the Plaintiffs’ restaurants, with the possible exception of the ‘Lisa M.’ who posted a comment on yelp.com, nor did they establish that the reading audience, which might include actual customers of Plaintiffs’ restaurants – was confused.”
- Summarizing its views of this evidence, as well as the newspaper evidence mentioned above, the court concluded: “The jury simply may not have viewed these exhibits as evidence of actual confusion by the relevant consuming public, or may not have found that any confusion indicated in these exhibits had been caused by Defendants’ use of ‘Philippe by Philippe Chow.’”
- Alleged in-person statements by customers expressing confusion. “The evidence offered through Plaintiffs’ employees suggested that some diners at Plaintiffs’ restaurants apparently had desired originally to dine at Defendants’ restaurants but arrived at Plaintiffs’ restaurants, diners ordered dishes which were not served at Plaintiffs’ restaurants but claimed that they had ordered the dish on a prior visit (obviously, at Defendants’ restaurants), etc.”
- “Without specifics as to the consumers’ basis for confusion, e.g., the record is silent as to what caused these customers’ confusion, the jury might have found that the confusion was not based on Defendants’ allegedly infringing use of ‘Philippe by Philippe Chow.’”
- The court questioned whether it was correct in even admitting this testimony at trial in the first place, “since it generally was introduced without specific information as to when the statements by customers were made, or which customers made such statements.”
- Alleged statements made by Defendants’ employees. As examples, the court mentioned: (i) a statement in which a defendant employee answered “yes” when asked over the phone whether that restaurant was “Mr. Chow”; and (ii) a statement by a reservations agent to a private investigator that “people make that mistake all the time.” The court remarked: “the jury reasonably could have found this evidence to be unpersuasive.”
- The court viewed statement (i) as “not exactly misleading, nor is it relevant evidence of any confusion by customers.”
- Statement (ii), indicated the court, “may have been viewed by the jury as an offhand or isolated remark” and “not direct evidence of actual confusion by customers of either Plaintiffs’ or Defendants’ restaurants.” Here again did the court question its prior evidentiary ruling in admitting a statement over a hearsay objection: “I probably should have excluded this evidence at the time, as a reservations agent is not an agent of the party to the extent that they do not have the authority to bind the party on a critical issue in this litigation . . . .”
“As to the similarity of the marks,” said the court, “there was little or no evidence that the Defendants ever used the specific mark ‘Mr. Chow.’” The court viewed the evidence at trial as having “clearly established that the prominent term in the Defendants’ restaurants’ trade name is Philippe by Philippe Chow.” Furthermore, added the court, since the Plaintiffs did not take action until almost 4 years after the opening of Defendants’ restaurants, “the jury may have determined that Plaintiffs themselves did not find much similarity between [the parties’ marks].”
The court’s assessment other likelihood-of-confusion factors did not lead to any finding that the jury’s verdict was against the weight of evidence presented on any of those factors. Nor did the Plaintiffs prevail on their alternative ground for a new trial on Counts I and II, namely, alleged misconduct by Defendants and their counsel. As a result, the Court denied Plaintiffs’ motion for a new trial on those counts.
Defendants’ JMOL Motion on False Advertising and Related Unfair Competition Counts
“At trial, Plaintiffs offered evidence of two categories of allegedly false advertising: (1) statements by (or at the direction of) Defendant Morfogen to restaurant critics/reviewers in December 2005 that Defendant Chau was the mastermind of the dishes and the architect of the menu at the Mr Chow restaurants and that Defendant Chau was a chef acclaimed by top critics, and (2) the purchase of search terms on internet search engines which resulted in the Philippe restaurants appearing in searches for ‘Mr Chow’ restaurants.”
Defendants’ JMOL motion argued that Plaintiffs presented no evidence of actual damages required to sustain a false advertising claim, and also asserted that the jury’s damage awards to TC Ventures, Inc. and to Michael Chow, individually, were duplicative.
The court devoted little space regarding asserted false advertising category (1), holding that “[t]here was sufficient evidence that certain statements reported in the media were without basis in fact,” and observing that “Defendant Morfogen appears inclined toward exaggeration,” pointing to inaccurate public statements by Mr. Morfogen about court rulings.
Regarding category (2), the court acknowledged: “The Eleventh Circuit ‘has not determined whether the purchase of Google AdWords can be considered a use in commerce for purposes of 15 U.S.C. § 1125(a).’” According to the court, Plaintiffs offered no testimony “as to whether such sponsored links had resulted in consumers going to Defendants’ restaurants as a result of confusion when their original intention was to dine at a Mr Chow restaurant.” Nevertheless, the court observed that the law in this area is unsettled, and that although one Eleventh Circuit decision hinted that the use of another’s mark as a “meta tag” might not always be actionable by itself, “the jury had a legally sufficient basis for its verdict as to this claim.”
The court was more sympathetic to Defendants’ duplicative damages argument, finding that the jury had mistakenly awarded damages to Mr. Chow individually because the verdict form was confusing and did not correspond to the jury instructions. Thus the court set aside the $500,000 award to Mr. Chow.
In sum, the court only granted the part of Defendants’ JMOL motion directed to the duplicative damages; it denied that motion in all other respects.
Plaintiffs’ Motion for Injunctive Relief as to False Advertising and Related Unfair Competition Counts
Though Plaintiffs successfully resisted Defendants’ JMOL motion as to these counts, they did not obtain the injunctive relief they sought. The court observed that the most recent conduct alleged as false advertising was Defendants’ purchase of internet search terms, which occurred “two or more years before the trial of this case.” Consequently, characterizing injunctive relief as an “extraordinary remedy” that was unnecessary in that case, the court denied Plaintiffs’ motion.
Plaintiffs’ Motion for Injunctive Relief as to Dilution Count
As mentioned previously, Plaintiffs elected have Count V decided by the court only, not by the jury (see Note 21, supra). The court dispensed with that count in less than a page, holding that the insufficiency of evidence to sustain Plaintiffs’ trademark and trade name claims, coupled with consideration of separately-applicable standards for dilution, rendered the court unable to find for Plaintiffs. As a result, the court denied Plaintiffs’ motion.
The pending appeal in the Eleventh Circuit is Michael Chow et al. v. Chak Yam Chau et al., No. 12-15994-E (docketed 11/28/12).
Labels: actual confusion, Eleventh Circuit, false advertising, Lanham Act, likelihood of confusion, Southern District of Florida, trademark