Intellectual Property Fights Move Into The Restaurant Business

from the ugh dept

Thu, Jun 28th 2007 6:48am — Mike Masnick

When trying to explain the problems of today's intellectual property system, it's often useful to use pizza shops as an example. Competition is natural. No one, the idea goes, should feel that a competitor opening up a pizza shop down the street somehow "infringes" on another pizza shop. It's just basic competition -- the same type that has helped grow and benefit society for ages. However, in our over-lawyered age where suddenly everyone is looking for ways to apply the monopoly powers of intellectual property law to their own business, this may be changing. Just like there's a push underway to introduce new monopoly rights into the fashion industry in spite of (or, in fact, because of) a thriving competitive market, it appears that lawyers are now looking to do the same in the restaurant business. The NY Times writes about a restaurant owner who is suing the owner of a competing restaurant. It is true that the second owner used to work for the first, but saying he then cannot open a competing restaurant is ridiculous (and, is pretty clearly allowed by the law).

There are some amazingly ridiculous statements in the article. For example, the owner of the first restaurant, Rebecca Charles, is most upset by the fact that the owner of the second, Ed McFarland, offers a Caesar salad that Charles insists McFarland copied from her recipe. Of course, even she admits that her mother got that recipe from another restaurant, but doesn't seem to note the irony of then claiming ownership of it herself. Also, Charles admits that she based the idea for her restaurant on another restaurant. Looking at the menu for Charles' restaurant shows that she sells New England Clam Chowder... clearly invented by others. Is she paying up for that intellectual property? Of course not. The law is pretty clear on this one that she has no case -- and that's for a good reason. Imagine if there could be only one pizza shop in all of New York. Or only one oyster bar. That's ridiculous and would harm just about everyone. However, in this age where monopoly rights are bizarrely considered a good thing, it's no surprise that we're seeing a push to go in that direction.

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22 Comments

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dorpus, 28 Jun 2007 @ 7:20am

Should there be patents for foreign students?
Japan has outlawed athletic competition by foreign students, because they are "too strong" and put Japanese athletes to shame. The changes occurred after Kenyan runners left Japanese runners in the dust, and Chinese table tennis players beat the crap out of Japanese. Viewers were infuriated by images of non-Japanese athletes winning contests on TV.

http://www.asahi.com/komimi/TKY200706280139.html
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Overcast, 28 Jun 2007 @ 7:25am

You know what the real issues with 'Intellectual Property' seem to be?

Business lacks 'intellect' anymore. Did they outsource that too?
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Nick, 28 Jun 2007 @ 7:48am

Maybe a case after all
Actually, the competing restaurant may have run afoul of the law. I haven't seen the complaint only anywhere, but a restaurant's trade dress is certainly protectable and not a new concept either. Check out Two Pesos v Taco Cabana (1992) where the court found a competing Tex Mex restaurant copied another's look and feel too closely so as to confuse consumers under the Lanham Act. There's not really enough in the article to tell whether Two Pesos applies, but it wouldn't be totally outrageous if it did.

You can, of course, disagree about whether this is really about protecting consumers or preventing competition (I can guess Techdirt's stance on this), but I'm not sure this is much of a change or a sign of the times, given Two Pesos is 15 years old and used not infrequently by businesses.

My favorite part of the article:

Charles Valauskas, a lawyer in Chicago who represents a number of restaurants and chefs in intellectual property matters, called their discovery of intellectual property law “long overdue” and attributed it to greater competition as well as the high cost of opening a restaurant.

“Now the stakes are so high,” he said. “The average restaurant can be millions of dollars. If I were an investor I’d want to do something to make sure my investment is protected.”

What appears to be "long overdue" is the lawyers convincing the restaurants to sue eachother.
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lar3ry, 28 Jun 2007 @ 7:59am

This is not new
The previous poster mentioned Two Pesos case. There have also been a number of cases where restaurants and just about any other business that doesn't want competition have sued another business.

Thinking of opening up a sub shop? Well, I hope you don't try to open one too close to a chain, or you will find yourself with a microscope up your butt when your competitor gleefully touts all the (non-existant) zoning laws you are violating, etc.

While intellectual property may only be getting into the act, it's easy to see that this has been going on for a long, long time, and allowing people to abuse the system like this only allows people to come up with more unique ways to interpret existing laws...
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Shohat, 28 Jun 2007 @ 8:38am

Ahem... This is quite normal everywhere....
In the food business, when a restaurant changes hands, it's very common to sign a non-competition agreement that defines the exact radius in miles and time in years that the previous owner is forbidden from starting a similar business in.
It's common practice, and it has been for ages all around the the world. While I haven't read the contract between the two parties nor see any logic in suing people over salad recipes, a very similar kind of behavior is usually specifically stated in agreements in order to protect restaurant owners from certain kinds of competition.
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Andrew, 28 Jun 2007 @ 8:41am

Re: Ahem... This is quite normal everywhere....
Well, non-compete clauses may be common (they certainly are/were in the software industry), they have almost universally been held unenforceable. Competition isn't copying; opening another seafood restaurant is competition. Compare and contrast with the fast food place in "Coming to America" called "McDowell's" that had the "Golden Arcs"....
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Steve R. (profile), 28 Jun 2007 @ 8:57am

One logical extreme of teaching/student relationship in so-called "intellectual property". The teacher will be entitled to any revenue the student makes once the student is out on his/her own.
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Lil Caesar, 28 Jun 2007 @ 9:17am

On the Pizza front (2002)

"Dan Holland, who was president of Papa John's... purchased Pizza Magia less than two years ago when it had only three stores."

"Papa John's accused Pizza Magia of imitating Papa John's methods of business, including use of a commissary system, a pizza crust with a highly recognizable raised border, toppings placed under the cheese and free garlic sauce given to customers."

http://209.85.165.104/search?q=cache:sUpkomDjwiQJ:findarticles.com/p/articles/mi_m319 0/is_4_36/ai_82334297+papa+johns+pizza+magia&hl=en&ct=clnk&cd=4&gl=us
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Matthew, 28 Jun 2007 @ 10:20am

Sour Grapes
She's just ticked because this ex-sous chef has some similarities regarding her restaurant. She also had to sue her former partner over the name of the business when the relationship soured.

The crux of her argument is marble counter tops and a Cesar Salad dressing? Yeah, the courts have nothing better to do that hear this one. /sarcasm
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gman, 28 Jun 2007 @ 10:28am

Heard this before
Sounds to me like what Jobs said about Gates in Triumph of the Nerds, Part II, re: mac and windows.
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Sanguine Dream, 28 Jun 2007 @ 12:07pm

Oh great...
just what we need, patented recipes.
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Luci, 28 Jun 2007 @ 12:28pm

Re: Maybe a case after all
Actually, having read the article in question, I have to agree that there may very well be a case. This is not an argument over menu, alone. From the referenced article:
The suit, which seeks unspecified financial damages from Mr. McFarland and the restaurant itself, charges that Ed’s Lobster Bar copies “each and every element” of Pearl Oyster Bar, including the white marble bar, the gray paint on the wainscoting, the chairs and bar stools with their wheat-straw backs, the packets of oyster crackers placed at each table setting and the dressing on the Caesar salad.
Without actually seeing a copy of the complaint, itself, it is difficult to ascertain the actual merit of the complaint, however. If this is only on the merit of copying the distinct features of the original store, then it will probably show some success, however small. The most unfortunate thing about all of this, though, is that it will stifle competition if the trend continues. It's hard to argue otherwise.
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ehrichweiss, 28 Jun 2007 @ 12:43pm

Re: Oh great...
Well fortunately it is clearly stated that you cannot patent nor copyright a recipe.
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Steve R. (profile), 28 Jun 2007 @ 1:04pm

Re: Re: Oh great...
Unfortunately laws change. You couldn't patent business plans, now you can. Corporations also make "law" by suing those they believe infringe into oblivion.
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Christopher Peterson, 28 Jun 2007 @ 3:10pm

Trademarks
Pete quotes David Burke as stating he owned trademarks
for "swordfish chop" and "salmon pastrami".

Not true. He abandoned his salmon pastrami trademark
applications and cancelled his swordfish chop
application.

The trademark database can be search here: uspto.gov

and interestingly, "pearl's oyster bar" as a
restaurant name is actually owned by someone in
Oklahoma!!

http://www.funfresh.com/pearls.htm

so perhaps it is Rebecca charles who is violating the
trademark rights of the Oklahoma Pearl's!!

best,
chris peterson
860-307-1380

Word Mark PEARL'S OYSTER BAR
Goods and Services IC 043. US 100 101. G & S:
restaurant services. FIRST USE: 19841001. FIRST USE IN
COMMERCE: 19841001
Mark Drawing Code (1) TYPED DRAWING
Design Search Code
Serial Number 78302896
Filing Date September 19, 2003
Current Filing Basis 1A
Original Filing Basis 1A
Published for Opposition June 22, 2004
Registration Number 2884384
Registration Date September 14, 2004
Owner (REGISTRANT) Pearl's Oyster Bar, Inc.
CORPORATION OKLAHOMA 827 Northwest 63rd Street, Suite
102 Oklahoma City OKLAHOMA 73116
Attorney of Record Anthony L. Rahhal
Prior Registrations 2506685;2672937
Disclaimer NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO
USE "OYSTER BAR" APART FROM THE MARK AS SHOWN
Type of Mark SERVICE MARK
Register PRINCIPAL
Live/Dead Indicator LIVE

Word Mark PASTRAMI SALMON
Goods and Services (ABANDONED) IC 029. US 046. G & S:
MEAT; FISH FOR FOOD PURPOSES, SHELLFISH, NAMELY SHRIMP
CLAMS AND LOBSTER; SEAFOOD; PROCESSED SEAFOOD. FIRST
USE: 19940101. FIRST USE IN COMMERCE: 19940101
Mark Drawing Code (1) TYPED DRAWING
Design Search Code
Serial Number 76335934
Filing Date November 9, 2001
Current Filing Basis 1A
Original Filing Basis 1A
Owner (APPLICANT) BURKE, DAVID INDIVIDUAL UNITED
STATES 100 EAST 63 ST NEW YORK NEW YORK 10021
Type of Mark TRADEMARK
Register PRINCIPAL
Live/Dead Indicator DEAD
Abandonment Date August 5, 2002

======================

Word Mark PASTRAMI SALMON
Goods and Services (ABANDONED) IC 029. US 046. G & S:
fish. FIRST USE: 19860100. FIRST USE IN COMMERCE:
19860100
Mark Drawing Code (1) TYPED DRAWING
Design Search Code
Serial Number 74503022
Filing Date March 21, 1994
Current Filing Basis 1A
Original Filing Basis 1A
Owner (APPLICANT) Burke, David L. INDIVIDUAL UNITED
STATES 28 Old Fulton Street, THG Brooklyn NEW YORK
10021
Attorney of Record Robert W. Beattie
Type of Mark TRADEMARK
Register PRINCIPAL
Live/Dead Indicator DEAD
Abandonment Date October 4, 1995

==========================

Word Mark SWORDFISH CHOP
Goods and Services (CANCELLED) IC 029. US 046. G & S:
prepared fish for consumption on or off the premises.
FIRST USE: 19920100. FIRST USE IN COMMERCE: 19920100
Mark Drawing Code (1) TYPED DRAWING
Design Search Code
Serial Number 74321106
Filing Date October 8, 1992
Current Filing Basis 1A
Original Filing Basis 1B
Published for Opposition October 26, 1993
Registration Number 1870697
Registration Date December 27, 1994
Owner (REGISTRANT) Atlantic & Pacific Grill
Associates L.P. DBA Park Avenue Cafe composed of White
& Witkowski Inc., a New York corporation LIMITED
PARTNERSHIP NEW YORK c/o The New York Restaurant
Group, Inc. 1114 First Avenue New York NEW YORK 10021
Assignment Recorded ASSIGNMENT RECORDED
Attorney of Record Scott Greenberg
Disclaimer NO CLAIM IS MADE TO THE EXCLUSIVE RIGHT TO
USE "SWORDFISH" APART FROM THE MARK AS SHOWN
Type of Mark TRADEMARK
Register PRINCIPAL
Live/Dead Indicator DEAD
Cancellation Date January 5, 2002
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AnyMouse, 28 Jun 2007 @ 4:21pm

Re: Overcast
You know what the real issues with 'Intellectual Property' seem to be?

Business lacks 'intellect' anymore. Did they outsource that too?

Isn't it obvious?

No they didn't outsource 'business intelligence', someone who is no longer in business has patented the concept of 'business intelligence' and is not licensing the concept to any of the current companies. The patent holder is not licensing the patent, they are just sitting on it waiting to see some sign of intelligence in current businesses, so that they can sue the crap out of them. Why work when you can just sue those who do?

Got handbasket? check
Got Hell? check
Going to Hell in a handbasket.... priceless
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GoblinJuice, 29 Jun 2007 @ 12:33pm

Translation.
PROTECT US FROM COMPETITION!!!
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Don, 29 Jun 2007 @ 1:47pm

This whole trend is not just incredibly stupid, it is very dangerous for the future of this country. I very highly suggest anyone who want to understand many of the issues facing our country today read The First American: The Life and Times of Benjamin Franklin by H.W. Brands. Not only does it give a good overview of the political climate (one merely has to replace the large landholders/property onwers of the time with modern large corporations/"IP" holders)that caused one of the most loyal of British citizens for decades (and many others)to go "rogue", but it gives a very good overview of the challenges of someone who WAS a consummate businessman and "IP" property holder and how he faced the challenges of the time (for example, being a small apprentice publisher to become one of the major publishing forces in the nation and world to an "inventor" of such products as the Franklin stove) most of which are still faced by businesses today. (I think Mike, especially - assuming he hasn't already read it - would find a lot of value out of this book).
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Don, 29 Jun 2007 @ 2:04pm

Re:
Oops, I forgot the second part - it's also dangerous because it ignore competition and the global marketplace. If this country continues to make it too difficult to do business, those innovators of today will simply move their efforts to markets that are more conducive to their efforts. India, for example, will have something like 400 million people moving into adulthood (and the consumer and workforce markets) over the next 20 years. That's an emerging market that's a good 30% greater than the entire population of the US. As the gap between technological and industrial levels between the two nations continues to shrink with each passing week, month, year, that market will become harder and harder to ignore (same goes for China to some extent, except China isn't a democracy like India or the US are, although the are becoming increasing capitalistic despite their form of government). Eventually a company will comes along and leverage a Microsoft (to use a classic example) the way Microsoft did IBM to achieve market dominance. However, if America continues down the path it's treading now, that company is increasingly likely to be a foreign one.

Then there are companies like Sony (not an American company) which is a perfect example of how a company can "game" the capitalist system, even though when you really look at their philosophy and the way the conduct business they aren't really a firm believer in capitalism (it's clear they have more of a "feudal" philosophy, except instead of the "landholders" of old, they're "IP" holders who "rightfully" own all the product you just "lease"/use with their permission), they just use it to their advantage until they have enough muscle to try to enforce their ideological standards.

It's not very hard to extrapolate these current trends to see that if they continue, America stands a very good chance to be a second rate country in about 50 years from now.
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Felix the Cat, 29 Jun 2007 @ 8:42pm

Restaurant intellectual property
So she claims her Caesar Salad is protected intellectual property. Is she not aware that Caesar Salad was invented by Cesar Cardenas, who ran a restaurant in Tijuana, Mexico, said restaurant still operating to this day. The name has nothing to do with Julius Caesar. The whole story is told on the label of Cardenas Cesar Dressing, available at many US supermarkets, complete with photo of the founder. Is she paying Cardenas or his heirs for modifying his basic recipe and using his trade name. I doubt it.

Can you spell hypocrite? I knew you could.
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Felix the Cat, 29 Jun 2007 @ 8:58pm

Restaurant intellectual property
And another thing. I am not an attorney and this is not legal advice, but given the background and the history of Caesar Salad, it would not surprise me to learn that the defendant is advised by his attorneys that he has an excellent counter-suit for damages and legal fees on grounds of frivolous and malicious prosecution in restraint of trade. It would not surprise me further to learn that once such a countersuit is filed (not very costly) she withdraws her lawsuit, so does he, and they go on about their separate businesses.

A good attorney, who has his clients' interests and not his fees at heart, is always worthy of his hire.
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Mellissa, 12 Nov 2007 @ 9:00pm

restaurant owner
Many restaurants use the same name. My question is, if father and son put together a restaurant menu and use there late grandfathders restaurants name. Then the son splits off and opens another restaurant by that same name, is it still legal for the son not to get suied by the father for using it, even though there family?
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