New trademark flaps: Joe's v. Landry's, Darden v. IHOP

Nation's Restaurant News,  March 8, 2004  by Jack Hayes

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MIAMI -- Houston-based Landry's Seafood Restaurants has until mid-March to answer allegations of trademark wrongdoing filed in federal court here by Joe's Stone Crab Inc., which operates the 91-year-old namesake restaurant landmark and sister operation Joe's Take Away in Miami Beach.

The lawsuit over Landry's purported violation of an agreement not to open Joe's Crab Shack restaurants in southern Florida is among the latest flare ups in the industry's chronic rash of trademark infringement litigation. In another such showdown Olive Garden parent Darden Restaurants recently sued the IHOP chain over its use of a "Never Ending ..." marketing slogan.

Privately held Joe's Stone Crab accused the Landry's chain conglomerate of breaching a January 1996 settlement agreement that prohibited Landry's from operating under the Joe's Crab Shack name in four Florida counties.

The same settlement pact--signed by Joe's Stone Crab chief operating officer Stephen Sawitz and Landry's executive vice president and general counsel Steven Scheinthal--permits Landry's to operate units of its nationwide Joe's Crab Shack chain elsewhere in Florida.

Robert Hertzberg, attorney for Joe's Stone Crab, said the 1996 agreement was the condition under which Joe's agreed to withdraw its opposition to Landry's efforts in the mid-1990s to trade-mark the now-150-unit Joe's Crab Shack brand.

"The intent of the settlement was to avoid confusion in the public arena, but Landry's has deliberately broken the promise made in that agreement," Hertzberg asserted. He said Joe's owners became angry upon learning that two Joe's Crab Shacks have been operating in the restricted territory, one for five years and the other for two years.

Hertzberg and Landry's Scheinthal offered conflicting views concerning the current status of the case. Scheinthal intimated that Landry's and Joe's were close to an out-of-court settlement, but he would not elaborate.

"We're talking, and we agree on things," said Scheinthal, whose company's nearly 286 restaurants generated $1.1 billion in sales last year.

But Hertzberg said he'd had no direct communication with Scheinthal since the complaint's filing early last month, though the lawyer noted that Scheinthal had "spoken with one of the attorneys in our group."

Scheinthal said Landry's believes it no longer is bound by the agreement owing to the occurrence of certain unspecified events. He would not elaborate, however.

"We think we have a right to exist in those four counties," Schienthal said.

The lawsuit's principal breach-of-contract claim calls for preliminary and permanent injunctions aimed at stopping Landry's from using the Joe's Crab Shack name at the two operating sites--in the Collier County city of Naples and in the city of Lauderhill, in Broward County. The other two counties that Joe's Stone Crab asserts are restricted are Dade and Monroe.

"The contract is clear--it's black and white--and both parties had agreed," Hertzberg said. "But because of the breach, confusion now exists."

The lawsuit also asks for damages in the form of any profits earned by Landry's from operation of the two Joe's Crab Shack units.

"We're asking for monetary damages because the contract breach was willful," Hertzberg said.

According to terms of the 1996 settlement document, which was made part of the current lawsuit, both Joe's Stone Crab and defendant Landry's had agreed that no confusion existed between the two brands at the time of the accord. Joe's Stone Crab and Landry's also agreed that by forbidding development of the Joe's Crab Shack brand in the four counties, future confusion likely would continue to be avoided.

The agreement references a major food quality and price distinction between Joe's Stone Crab and Joe's Crab Shack--the former an upscale, fine-dining operation and the latter a casual-theme chain.

Aside from being principal stone crab fishing grounds, the four forbidden counties comprise Florida's southern tip from Deerfield Beach and Coral Springs on the Atlantic Coast to North Naples on the Gulf of Mexico.

The area also takes in Coral Gables, Fort Lauderdale, Hollywood, Homestead, Marco Island and Miami.

Meanwhile, Orlando, Fla.-based Darden Restaurants Inc., which owns the Red Lobster, Bahama Breeze and Smokey Bones chains in addition to Olive Garden, filed a lawsuit in U.S. District Court in Orlando against Glendale, Calif.-based IHOP Corp., seeking damages for that chain's use of the "Never Ending...." advertising slogan.

Darden vice president Jim DeSimone said his company had trademarked the phrase "Never Ending Pasta Bowl" in 1995 for an Olive Garden promotion. The complaint against IHOP stems from its "Never Ending Pancake" campaign, begun Dec. 29, and from the chain's "Never Ending Popcorn Shrimp" promotion, which IHOP is testing in Florida restaurants.

"Confusion is the main issue in the IHOP case," DiSimone said, while also asserting that IHOP's apparent effort to position itself more as a casual-dining concept had further confused customers of Darden chains.