21-2136-cv

Colony Grill Dev. LLC v. Colony Grill Inc.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order 

filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate 

Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a 

document filed with this court, a party must cite either the Federal Appendix or an 

electronic database (with the notation “summary order”). A party citing a summary order 

must serve a copy of it on any party not represented by counsel.

At a stated term of the United States Court of Appeals for the Second Circuit, 

held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 

City of New York, on the 30th day of March, two thousand twenty-two.

PRESENT: John M. Walker, Jr.,

Steven J. Menashi,

Eunice C. Lee,

Circuit Judges.

_____________________________________

COLONY GRILL DEVELOPMENT, LLC, FAIRFIELD 

COLONY, LLC, 

Plaintiffs-Counter-Defendants-Appellees,

CODY L. LEE, CHRISTOPHER DRURY, PAUL CONIGLIO, 

KENNETH M. MARTIN,

Counter-Defendants-Third-Party-Defendants-Appellees,

v. No. 21-2136

COLONY GRILL, INC.,

Defendant-Counter-Claimant-Third-Party-
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Plaintiff-Appellant,

COLONY GRILL OF STAMFORD, LLC,

Defendant-Counter-Claimant-Third-Party-Plaintiff.

____________________________________

For Plaintiffs-Counter-Defendant-Appellees

and Counter-Defendants-Third-PartyDefendants-Appellees:

DAVID J. WOLFSOHN (Tyler R. 

Marandola, Brianna M. Vinci, on the 

brief), Duane Morris LLP, 

Philadelphia, PA.

For Defendant-Counter-ClaimantThird-Party-Plaintiff-Appellant: JOHN R. HORVACK, JR. (Damian K. 

Gunningsmith, Fatima Lahnin, on the 

brief), Carmody Torrance Sandak & 

Hennessey LLP, New Haven, CT.

Appeal from a judgment of the United States District Court for the District 

of Connecticut (Thompson, J.).

Upon due consideration, it is hereby ORDERED, ADJUDGED, and

DECREED that the judgment of the district court is AFFIRMED IN PART,

VACATED IN PART, and REMANDED for further consideration consistent with 

this order. 
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Appellant Colony Grill, Inc. (“CGI”) appeals from the denial of its motions

for a preliminary injunction by the U.S. District Court for the District of 

Connecticut (Thompson, J.). CGI sought a preliminary injunction based on its 

claims that the counter-defendants breached a licensing agreement and therefore 

were improperly utilizing CGI’s trademark, trade secrets, and licensed “knowhow” and were in violation of a covenant not to compete with CGI. We assume 

the parties’ familiarity with the underlying facts, procedural history, and issues on 

appeal.

I

Since 1989, CGI has owned Colony Grill, a pizza restaurant in Stamford, 

Connecticut. In 2010, CGI licensed its Colony Grill trademark and “know-how” 

for use in opening one additional location to Colony Grill of Stamford (“CGS”), 

which sublicensed the trademark to Fairfield Colony LLC (“FCLLC”). In 2012, CGI 

licensed the trademark and certain “know-how” to CGS for broader use, and CGS 

sublicensed the same to Colony Grill Development (“CGD”). CGD subsequently 

opened multiple other Colony Grill locations. In 2019, FCLLC and CGD ceased 

paying royalties to CGI under the licensing agreements. FCLLC and CGD filed a 
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lawsuit asserting that CGI and CGS had abandoned the trademark through naked 

licensing. CGI and CGS terminated the licenses in April 2020 and subsequently 

filed counterclaims for trademark infringement, trade secret violations, and breach 

of contract. 

In October 2020, CGI and CGS moved for a preliminary injunction to 

prevent FCLLC and CGD from opening a new Colony Grill restaurant in Virginia 

using the Colony Grill trademark and from using or disclosing the Colony Grill 

trade secrets. In April 2021, CGD and FCLLC’s attorneys sent letters to CGI and 

CGS detailing a plan to transition from the Colony Grill trademark to a new brand 

name. In May 2021, CGI and CGS filed a second motion for a preliminary 

injunction to restrain CGD and FCLLC from using the Colony Grill trademark,

operating any pizza business within 15 miles of any existing or future Colony Grill 

Restaurant, using or disclosing confidential information, misappropriating trade 

secrets relating to recipes, and using or disclosing recipes and cooking techniques 

needed to make and sell Colony Grill pizza.

The district court denied both motions for a preliminary injunction. The 

district court concluded that the mandatory injunction standard applied, and it 
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held that there was no substantial likelihood of success on the merits or serious 

questions going to the merits and the balance of hardships tipping decidedly in 

favor of the moving parties, no irreparable harm, and that the public interest and 

the balance of the hardships weighed against the moving parties. 

II

We review the denial of a preliminary injunction for “abuse of discretion.” 

Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206, 215 

(2d Cir. 2012). A district court has abused its discretion if it “(1) based its ruling on 

an erroneous view of the law, (2) made a clearly erroneous assessment of the 

evidence, or (3) rendered a decision that cannot be located within the range of 

permissible decisions.” Oneida Nation of N.Y. v. Cuomo, 645 F.3d 154, 164 (2d Cir. 

2011) (quoting Lynch v. City of New York, 589 F.3d 94, 99 (2d Cir. 2009)). We review 

factual findings under a standard of clear error, and legal conclusions de novo. Id.

On appeal, CGI argues only that the district court erred in failing to grant a 

preliminary injunction based on its trademark infringement claim and does not 

argue that the district court erred with respect to its other requests for relief. Thus, 

CGI has waived those arguments. Graves v. Finch Pruyn & Co., 457 F.3d 181, 184 
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(2d Cir. 2006) (“[The plaintiff] does not press [this argument] on appeal. The 

argument is therefore waived, and we will not consider it.”) (citing Norton v. Sam’s 

Club, 145 F.3d 114, 117 (2d Cir. 1998)). We therefore confine our review to the 

request for a preliminary injunction to restrain the use of CGI’s trademark and the

district court similarly will be confined to that request on remand. We conclude 

that the district court made two errors that require remand.

First, the district court reviewed the request for a preliminary injunction 

under the standard applicable to a mandatory rather than a prohibitory injunction. 

An injunction to restrain the use of a trademark is prohibitory. Louis Vuitton 

Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 114 (2d Cir. 2006) (“A prohibitory 

injunction is one that forbids or restrains an act. For example, in the typical 

trademark case a prohibitory injunction seeks to stop alleged infringement.”)

(internal quotation marks and citation omitted). The district court concluded that 

the injunction was mandatory because, based on CGI’s interpretation of a 

covenant not to compete into which the parties entered, an injunction enforcing 

that covenant would require existing restaurants not only to rebrand but also to 

cease serving pizza, which would require the restaurants to close. The district 
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court rejected that interpretation of the covenant, suggesting that “the plain 

meaning of the language in the non-competition clauses” would not require the 

closure of restaurants. Special App’x 8. Nevertheless, when evaluating the balance 

of harms and the public interest the district court stated that “if the motions are 

granted” then CGD and FCLLC “would have to close restaurants.” Id. at 6. That is 

inconsistent with the district court’s own determination about what the covenant 

requires. In any event, no party argues that a preliminary injunction enjoining the 

use of the Colony Grill trademark would require restaurants to close rather than 

simply to rebrand. On remand, therefore, the district court must consider the 

balance of harms and the public interest associated with CGI’s request for a 

preliminary injunction based on its trademark infringement claim, apart from the 

assumption that granting such relief would require the closure of restaurants.

Second, in evaluating the likelihood of success on the merits, the district 

court took insufficient account of the licensing agreements to which the parties 

agreed. In the agreements, CGD and FCLLC agreed not to “challenge the validity 

or Licensor’s ownership of the Licensed Marks and Logo and the Licensed KnowHow.” App’x 530; id. at 481. The lawsuit filed by CGD and FCLLC, however, does 
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challenge that validity and ownership. The district court did not explain why CGI 

would not be able to enforce this term of the agreements and thereby prevail on 

the merits of its trademark infringement claim.

At oral argument, CGD and FCLLC acknowledged that the standard 

principles applicable to licensees would bar the naked licensing lawsuit. See Idaho 

Potato Comm’n v. M & M Produce Farm & Sales, 335 F.3d 130, 135 (2d Cir. 2003) (“The 

general rule of licensee estoppel provides that when a licensee enters into an 

agreement to use the intellectual property of a licensor, the licensee effectively 

recognizes the validity of that property and is estopped from contesting its validity 

in future disputes.”); HSW Enters., Inc. v. Woo Lae Oak, Inc., No. 08-CV-8476, 2009 

WL 4823920, at *2 (S.D.N.Y. Dec. 15, 2009) (“Licensee estoppel is an equitable 

doctrine that bars a licensee from disputing the validity of the licensor’s trademark 

on the theory that in entering the agreement, the licensee has assented to the 

validity of the mark.”). CGD and FCLLC argued, however, that an exception to 

licensee estoppel should apply because “it’s a factual analysis that considers the 

public interest and whether there is going to be misleading of the public and in 

this case there can be no misleading.” Oral Argument Audio Recording at 31:52. 
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The district court should consider whether such a showing would be 

sufficient to overcome licensee estoppel. Generally, a licensee bears the burden of 

showing that enforcement of the licensing agreement would cause an injury to the 

public through confusion. See HSW Enterprises, 2009 WL 4823920, at *3 (“When 

weighing the public interest at stake in the challenge to the license, the party

seeking rescission of the contract must show more than mere likelihood of

confusion. A party entering into an agreement with respect to a trademark will be

held to his contract unless enforcement of the contract would result in injury to the

public through confusion.”) (internal quotation marks and alterations omitted).

We need not resolve that issue on appeal because the district court did not address 

it in evaluating CGI’s motion. We remand for the district court to decide in the first 

instance what effect, if any, the licensing agreements, which provide that CGD and 

FCLLC agreed not to “challenge the validity or Licensor’s ownership of the 

Licensed Marks and Logo and the Licensed Know-How,” App’x 530, has on CGI’s 

likelihood of success on the merits of its trademark infringement claim and 
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whether CGD and FCLLC are barred by licensee estoppel from challenging the 

validity and ownership of the trademark.1

If CGI has a likelihood of success, it gives rise to a presumption that CGI 

would suffer irreparable harm in the absence of an injunction, 15 U.S.C. § 1116(a), 

and the district court would need to determine whether that presumption has been 

rebutted. In evaluating the issue of irreparable harm, the district court suggested 

that such a presumption would be rebutted because CGD and FCLLC “have only 

enhanced the value of the brand” and “there is no evidence of any plan on the part 

of [CGI] to actually compete in the restaurant business in the near future.” Special

App’x 4-5. We note, however, that a trademark holder’s loss of control of the 

trademark may cause harm even if an alleged infringer is running a successful 

business with use of the mark. See Church of Scientology Int’l v. Elmira Mission, 794 

F.2d 38, 44 (2d Cir. 1986) (“Denying a preliminary injunction in this case—where 

the district court found a likelihood of confusion—puts the Church’s reputation 

beyond its own control. And, it is that loss of control which is the very thing that 

1 We express no view on the merits of the argument that CGD and FCLLC made before 

the district court and repeated at oral argument that CGI’s federal trademark is not within 

the scope of the licensing agreements.
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constitutes irreparable harm in the licensing context.”); see also Zino Davidoff SA v. 

CVS Corp., 571 F.3d 238, 243 (2d Cir. 2009) (“One of the most valuable and 

important protections afforded by the Lanham Act is the right to control the 

quality of the goods manufactured and sold under the holder’s trademark.”)

(quoting El Greco Leather Prod. Co. v. Shoe World, Inc., 806 F.2d 392, 395 (2d Cir. 

1986)). Moreover, a trademark holder may compete in the marketplace as a 

licensor rather than an operator. Church of Scientology, 794 F.2d at 45 (“Once a

licensor authorizes a licensee to use the mark in a particular area, he has 

demonstrated his desire to expand into that area, and when his licensee loses that 

authorization, he should not have to prove its intention to re-erect a new presence 

in the area.”).

The district court should address these considerations when determining 

whether CGI has demonstrated irreparable harm, in addition to analyzing 

whether monetary damages would be an adequate remedy. We remand for the 

district court to consider the request for a preliminary injunction to restrain use of 

the trademark.

We have considered all the remaining arguments, which we conclude are 
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without merit. Accordingly, we VACATE and REMAND the judgment of the 

district court with respect to the request for injunctive relief on the trademark 

claim and AFFIRM the judgment of the district court with respect to the remaining 

claims.

FOR THE COURT: 

Catherine O’Hagan Wolfe, Clerk of Court