this regard, because, Jake’s claims, Ms. Kaiser did not
always answer the phone and the statement represents her
reliance on employee feedback. Once again, this issue is
too close to clearly favor either party.

5. Strength of Plaintiff's Marks

The Lanham Act provides that trademarks registered on

the principal federal register are prima facie evidence of

ownership of the trademarks and right to exclusive use. 15
U.S.C. §1115(a) (1997). Trademark law recognizes five
categories of trademarks, in ascending order of
distinctiveness and strength: generic, descriptive,

suggestive, arbitrary, and fanciful. CAE, Inc., 267 F.3d at
684. Additionally, the Court may look to the duration of
the trademark’s use, promotional expenditures, and annual
sales. Id. at 685.

The four trademarks at issue were properly registered
by Jake’s predecessor, Jake’s Pizza International, in 1994
and 1995, and acquired by Jake’s on November 25, 1997
through a bankruptcy sale. Defendants do not dispute that
Jake's owns the trademarks.*°

The marks show “Jake’s Pizza” or “Jake’s Pizza & Pub”

in typeface alone or within an emblem or border, depending

1 No evidence was put forth showing that Jake’s maintained or did
not maintain its trademarks. The Trademark Office requires that an
affidavit be filed six years following federal registration to keep
the trademarks in force on the federal register. See 15 USC §1058
(1997). Assuming, arguendo, that Jake’s did so, the trademarks at

the time of the Complaint were still in force.

19



not shown that Defendants benefitted to Jake’s detriment.
Therefore, the Court denies both parties’ Motions for Summary
Judgment on Count VI.
IX. Violation of the Non-Compete Provision of the 1976 Agreement
It is well established in contract law that a party, who
substantially breaches a contract with another party, cannot then
hold the other party to the terms of the contract. Maksym v.
Loesch, 937 F.2d 1237, 1245 (7th. Cir. 1991). As the Court
previously found, Jake’s breached the 1976 License Agreement via
the December 5, 2000 letter demanding disassociation. Therefore,
Jake's is estopped from enforcing the non-compete provisions of
that contract against Defendants. Thus, Count VII is moot and
the Court grants summary judgment in favor of Defendants on Count
VII of the Complaint.
CONCLUSION
The Court has evaluated independently both parties’ Motions
for Summary Judgment, which encompassed Counts I-VII of the
Complaint, and Counts I and II of Defendants’ Counter-Complaint.
The Court grants summary judgment in favor of Defendants on Count
V (Illinois Anti-Dilution Act claim), and Count VII (Violation of
the 1976 Agreement’s Non-Compete Provision claim) of the
Complaint. The Court also grants summary judgment in favor of
Defendants on Count I (Breach of Contract claim) of the Counter-
Complaint, but only with respect to liability, not damages.

Finally, the Court grants summary judgment in favor of Plaintiff

36



the registration of the mark, of the registrant's

ownership of the mark, and of the registrant's

exclusive right to use the registered mark in commerce
on or in connection with the goods or services
specified in the registration subject to any conditions
or limitations stated therein, but shall not preclude
another person from proving any legal or equitable
defense or defect, including those set forth in
subsection (b) of this section, which might have been
asserted if such mark had not been registered.

15 U.S.C.A. §1115 (1997).

Trademark infringement cannot be established without
proving that consumers are likely to be confused about the
source. Libman Co. v. Vining Indus., Inc., 69 F.3d 1360,
1361 (7th Cir. 1995). There is no impairment of the
trademark’s protection if the alleged infringer’s conduct is
not likely to confuse consumers. Id. The likelihood of
confusion can be proven without any evidence of actual
confusion, but if such evidence is available, it is entitled
to substantial weight. Int.’l Kennel Club of Chicago, Inc.
v. Mighty Star, Inc., 846 F.2d 1079, 1090 (7th Cir. 1988).

In the Seventh Circuit, courts evaluate the following

factors to determine whether a likelihood of consumer

confusion exists: (1) the similarity of the marks in

appearance and = suggestion; (2) the similarity of the
products; (3) the area and manner of current use; (4) the
degree of care likely to be used by consumers; (5) the
strength of the plaintiff’s mark; (6) whether any actual

confusion exists; and (7) the defendant’s intent to palm off

13



a conclusion on this factor cannot be reached at the summary
judgment stage.

Summarizing, given the procedural posture of this case,
the Court is unable to reach a conclusion on the following
factors, which are determinative in a likelihood of
confusion analysis: (3) Area and Manner of Concurrent Use;
(4) Degree of Care Likely to be Exercised by Consumers; (5)
Strength of Plaintiff’s Mark; (6) Evidence of Actual
Confusion; and (7) Defendants’ Intent to Palm Off Its Goods
as Plaintiff's. Therefore, because a likelihood of
confusion cannot be determined, trademark infringement
cannot be concluded. Thus, both parties’ Motions for
Summary Judgment are denied as to Count I of the Complaint,
alleging trademark infringement.

II. Federal Unfair Competition

Count II of Jake's Complaint alleges unfair
competition, in violation of Section 43{a) of the Lanham
Act. This section provides:

(1) Any person who, on or in connection with any goods or
services, or any container for goods, uses in commerce
any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin,
false or misleading description of fact, or false or
misleading representation of fact, which~-

(A) is likely to cause confusion, or to cause mistake, or

to deceive as to the affiliation, connection, or
association of such person with another person, or as to
the origin, sponsorship, or approval of his or her goods,
services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents

the nature, characteristics, qualities, or geographic
origin of his or her or another person’s goods, services,

23


not materially different. (Id. @ 12.) Additionally, Jake’s
believes that the addendum attached to the New Agreement made the
economic terms of both agreements the same. (Id.)

However, Jake’s admits that the New Agreement differed from
the 1976 License Agreement in that it: (1) provided for Jake’s
approval of the terms of any lease or sub-lease; (2) provided for
a service charge of 1.5% per month for late payments; (3) allowed
Jake’s an advertising fund of up to 2% of Defendants’ gross sales
(although Jake’s orally indicated he would not collect the fee);
and (4) constituted the entire agreement of the parties with no
other oral or written understandings. (Id. 9 15, 20-22.)
Defendants refused to sign the New Agreement, contending that the
1976 License Agreement was still in effect. (Id. J 23.)

The parties met on October 9, 2000, wherein John Flowers,
the president of Jake’s, admitted that he asked Defendant Ms.
Kaiser to sign the New Agreement. (Pl.’s 56.1 Resp. Opp. @ 43.)
When Ms. Kaiser informed Mr. Flowers that it was unlikely that
she and her husband would agree to sign the New Agreement, Mr.
Flowers allegedly threatened to terminate Defendants’ franchise.
(Id. § 42.) Mr. Flowers denies making such a threat.

On October 16, 2000, Mr. Flowers sent a letter to Defendants
reiterating that he would like to renew the 1976 License
Agreement. (Pl.’s 56.1 Resp., Ex. I.) Jake’s admits that the
letter indicated its belief that Defendants would have to sign

the New Agreement, because Section 14.C of their 1976 License



in effect at that time.” However, “Illinois law instructs that,
absent clear language to the contrary, statutes apply
prospectively only.” Id. The court held that prior law governed
and applied the earlier statute - not the latter.'® Id. The To-Am
court noted that the contract between the parties “appears to
eschew annual renewals in favor of a continuing contract.” Id.

Defendants also cite to Reinders Bros., Inc. v. Rain Bird E.
Sales Corp., 627 F.2d 44, 50 (7th Cir. 1980) for the proposition
that contract renewal may take place, based upon the year to year
conduct of the parties, bringing their contract under the
authority of a more recent statute. This case, however, was
decided under Wisconsin law, refers to the intent of the
Wisconsin legislature, pre-dates the Act in question in this
case, and discusses contracts that were signed by both parties on
an annual basis. See id. at 49-50.

The Court concludes that the 1976 License Agreement was a
continuing agreement, not one that was seriously reviewed on an
annual or five-year basis, and re-signed by the parties. It was
an effective contract, but not subject to the 1987 Illinois
Franchise Disclosure Act. Therefore, the Court grants summary
judgment in favor of Jake’s on Counterclaim Count II. The Court

now returns to the final two Courts of Jake’s’ Complaint.

1% “Consistent with this presumption of prospectivity, the Act of
1987 expressly provides that "[p]rior law exclusively governs all
suits, actions, prosecutions, or proceedings which are pending or
may be initiated on the basis of facts occurring before the
effective date of this Act [January 1, 1988].” 815 Ill. Comp. Stat.
705/28 (emphasis added).” fTo-Am, 913 F. Supp. at 1152 n.6.

34



on which trademark registration is examined. The word
“pizza” alone would be a generic term, but by adding the
source indicator “Jake’s”, the term becomes a descriptive
trademark, on the lower end of the trademark spectrum of
strength, as discussed in CAE, Inc. See also Abercrombie &
Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-11 (2d Cir.
1976) .1)

Jake’s presented no evidence as to the amount of money
it spent on advertising its trademark, and Defendants do not
discuss the strength of Jake’s trademarks. No evidence was
presented on Jake’s annual sales. Therefore, on the
evidence presented in the record, the Court cannot make a
reasoned conclusion as to the strength of Jake’s trademarks.

6. Evidence of Actual Confusion

Evidence of actual customer confusion is entitled to
substantial weight if present in the facts. Int.’1 Kennel
Club, 846 F.2d at 1090. While hearsay reports originating
with employees of the plaintiff are not afforded much weight
as evidence, multiple unsolicited letters or telephone calls
can be afforded such evidentiary weight in determining

actual customer confusion. Id. at 1090-91.

u A generic term is one that refers, or has come to be understood
as referring, to the genus of which the particular product is a
species, whereas a suggestive or fanciful term (such as aspirin,
cellophane, and thermos) that was strong can become generic through

use. Abercrombie, 537 F.2d at 9-10.

20


IV. Violation of the Illinois Uniform Deceptive Trade Practices
Acti‘

Essential to a claim under the Illinois Uniform Deceptive
Trade Practices Act are well-pled allegations indicating a
likelihood of confusion. Door Systems, Inc. v. Overhead Door
Systems, Inc., 905 F. Supp. 492, 498 (N.D. Ill. Oct. 30, 1995).
Again, because a likelihood of confusion may or may not exist
based on fact conclusions, the Court denies summary judgment to
both parties on Count IV.

Vv. Violation of the Illinois Anti-Dilution Act*

The Illinois Courts have consistently held that the

protections of the Illinois Anti-Dilution Statute are unavailable

to competitors. Door Systems, 905 F. Supp. at 498. In this

16

case, the parties are clearly competitors and, therefore,

TM A person engages in a deceptive trade practice when, in the
course of his business, vocation, or occupation, he:

1) passes off goods or services as those of another;

2) causes likelihood of confusion or misunderstanding as to the
source, sponsorship, approval or certification of goods or
services;
causes likelihood of confusion or misunderstanding as to
affiliation, connection or association with or certification
by another ..

w

815 Inn. Comp. Star. 510/2 (2001).

»% The Complaint cites to 765 Ini. Comp. Star. 1035/15 but that
Illinois statute was repealed by P.A. 90-231, § 905 effective
January 1, 1998. The correct citation for the Illinois Anti-
Dilution Act is 765 Inu. Comp. Star. 1036/15.

% In the analysis of the likelihood of confusion under the
trademark infringement analysis, the Court did not make a
determination as to whether or not the Jake’s in Rolling Meadows
competed with Defendants’ restaurant for customers in the same
geographic area. From the tenor of the pleadings, however, it is
clear that the parties view one another as competitors in the
broader fast food marketplace.

26



This background is important because it bears heavily
on any claim that Defendants sought to intentionally “palm
off” their products as Jake’s products. Mr. Flowers set the
timetable in motion. When the December 5, 2000 letter
arrived from Jake’s attorney, Defendants immediately began
“de-investing” themselves of the various shirts, menus,
boxes, and other restaurant tangibles containing the Jake’s
trademarks. Jake’s admits this.

What Defendants did not de-invest was their telephone
number, in use since 1973. The printing and distribution of
the telephone book advertisement that contained the
telephone number and Jake’s trademarks, was arguably beyond
their control, except for disconnecting their telephone
number referenced in the ad.

Whether or not Defendants intended to use the telephone
number, and thus palm off their food products as Jake’s, is
a question of material fact. Jake’s claims that Defendants
intent is evidenced by Defendants’ failure to disconnect the
phone number. Whether they disconnected the phone number is
irrelevant, Defendants argue, because, when answering the
telephone, Defendants did not identify themselves as Jake’s.
However, Jake’s points to at least two occasions when
affiliation to Jake’s was represented, at least ambiguously.

These material facts are in dispute between the parties and

22


VIII. Unjust Enrichment

An unjust enrichment claim presents mixed questions of law
and fact. See In re Teranis, 128 F.3d 469, 471 (7th Cir. 1997).
To withstand summary judgment on an unjust enrichment charge, a
plaintiff must create a genuine issue as to whether: (1) the
defendants have unjustly retained a benefit to the plaintiff’s
detriment; and (2) the defendant’s retention of the benefit
violates fundamental principles of justice, equity, and good
conscience. HPI Health Care Serv., Inc. v. Mt. Vernon Hosp.,
Inc., 545 N.E.2d 672, 679 (T1ll. 1989). In Illinois, unjust
enrichment is based on an implied contract in law. Brown v.
Sears Roebuck & Co., No. 02-C-3939, slip copy, 2002 WL 31433395
at *2 (N.D. Ill. Oct. 29, 2002).

Because the Court has determined that Jake’s breached the
1976 License Agreement, as of December 2000, there was no express
contract between the parties. Therefore, unjust enrichment,
which is based on an implied contract in law, is a valid cause of
action for Jake’s. However, Jake’s must first create a genuine
issue as to whether Defendants have unjustly retained a benefit
to Jake’s detriment, and whether such retention violates
fundamental principles of justice, equity and good conscience.
HPI Health Care, 545 N.E.2d at 679. Jake’s claim of unjust
enrichment is based on Defendants’ unauthorized use of Jake’s
trademarks. Because a genuine issue of material fact exists as to

whether Defendants have infringed Jake’s trademarks, Jake’s has

35



examined should include (1) the relative areas of
distribution; (2) evidence of direct competition between the
products; (3) whether the products are sold in the same type
of store; and (4) whether the products are sold through the
same channels. Ty, Inc., 237 F.3d at 900.

While Defendants continue to operate their restaurant
in Palatine, Illinois,® the relative area of distribution
would have to be compared to a Jake’s restaurant located in
Rolling Meadows, Illinois; Jake’s has no other outlet in
Palatine, and the Jake’s restaurant in Rolling Meadows is
the closest authorized Jake’s franchise. Jake’s has
proffered no evidence showing that Defendants’ Palatine
restaurant directly competes with Jake’s franchise in
Rolling Meadows.

The relative areas of distribution may overlap, but
again, the record contains little evidence on this matter.
Likewise, the record does not show that there was direct
competition between Defendants’ restaurant and the Jake’s in
Rolling Meadows. Notably, the Rolling Meadows franchise
coexisted with Defendants’ franchise in Palatine during the
time that Defendants operated as a Jake’s franchise, under
the 1976 License Agreement. It is unlikely that Jake’s, in

its best business interests, would have authorized two

* Because Defendants operate the same type of restaurant, sub-
factors (3) type of store and (4) distribution channel would be
virtually the same.

17



the “evidence is such that a reasonable jury could return a
verdict for the mnonmoving party.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 590 (1992) citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Initially, the moving
party bears the burden of showing that the record contains no
genuine issue of material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). Governing substantive law identifies
material facts, and only disputes over facts that might affect
the outcome will properly preclude summary judgment. Anderson,
477 U.S. at 248,

When the moving party has carried its burden, the non-moving
party must present more than a “metaphysical doubt as to the
material facts” to survive summary judgment. Matsushita Elec
Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
Additionally, presenting only a “scintilla of evidence” or “mere
conclusory allegations” will not defeat summary judgment.
Koshinski v. Decatur Foundry, Inc., 177 F.3d 599, 602 (7th Cir.
1999).

At the summary judgment stage, courts do not make
credibility determinations or weigh evidence. Ritchie v. Glidden
Co., 242 F.3d 713, 723 (7th Cir. 2001). The court must view the
facts in the light most favorable to the non-moving party.
Anderson, 477 U.S. at 255. Additionally, pursuant to Northern
District of Illinois Local Rule 56.1, the parties must support

all disputed facts with specific references to the parts of the


Damages must be proved with reasonable certainty. R.E.
Davis Chem., 924 F.2d at 712. Jake’s contends that Defendants
have not supported their damage claim and that Ms. Kaiser could
not testify to any degree of certainty that a $70,000 sales
decline was attributable to Jake’s conduct. Jake’s claims that
Ms. Kaiser did not know how much of the business loss was from
product changes and how much was from business changes. In her
deposition testimony, Ms. Kaiser conceded that blaming Mr.
Flowers for the $70,000 would be “ridiculous” and she further
stated that it was “part of doing business when you're kicked out
of a franchise after 30 years.” She also stated that some of the
loss could have been attributable to a general decline in
restaurant sales after September 11, 2001.

The Court finds that Defendants have not proven damages to a
reasonable certainty. Although the Kaiser’s business suffered a
13.3% decline in sales from 2000 to 2001, the Court concludes
that Defendants have not shown with reasonable certainty that the
decline was the result of Jake’s contract breach. Such damages
if any, must be proven at trial.

VII. Defendants’ Counterclaim Count II, Violation of the 1987
Illinois Franchise Disclosure Act

Defendants argue that the 1976 License Agreement renewed
every five years according to its terms. Thus, Defendants claim
that the 1976 License Agreement renewed after the Franchise
Disclosure Act was passed by the Illinois legislature and is

applicable. The Act states in part:

32



@

franchise fee from 5% to 3% of gross sales to match the 1976
License Agreement.

1. New Agreement vs. 1976 License Agreement’’

The Court need not cover all the differences between the two
contracts, but will highlight a few of the terms in order to show
the material differences. In Section 8.B, the New Agreement sets
the ongoing franchise fee at 5% of gross sales, although the
addendum modifies this to 3% to match the 1976 License Agreement.
Certainly, a franchisee’s interest is piqued in reading the rest
of the contract when the franchisor raises the monthly fee 66.6%
from 3% to 5% of gross sales.

Section 8.C of the New Agreement allows Jake’s to implement
an advertising fund, at its sole discretion, of up to 2% of gross
sales. Section 10.B allows Jake’s, at its discretion, to require
up to an additional 2% for local advertising. The 1976 License
Agreement has no such provision. Jake’s maintains that he orally
informed Defendants that he was not going to enforce the
advertising clause. However, because the New Agreement, at
Section 16.H, purports to be the entire agreement and can only be
modified by the written agreement of the parties, Jake’s oral

assurances are in conflict with these written terms.

TM See Exhibit C of the Complaint for the 1976 License Agreement and
Exhibit H of the appendix to Plaintiff’s Motion for Summary
Judgment for the New Agreement, including the addendum modifying
the franchise fee.

29


that they had used this telephone number since 1973. Conversely,
the telephone book advertisement, which referenced Jake’s, and
the telephone number, had been submitted in August 2000. (Id. 4%
29, 46.) Defendants claim that no changes were allowed after the
August advertisement submission date, and that the Ameritech
Yellow Pages telephone books were printed before December 5,
2000. (Defs.’ 56.1 Opp. G9 40-41.) As such, Defendant’s claim
that they were powerless to change the advertisement.

Another telephone book advertisement, listing Defendants’
telephone number as a Jake’s franchise, appeared in the May
2002/2003 “Planet Pages,” a telephone book published by
McLeodUSA. (Defs.’ Resp. to Pl.’s State. 4 26.) Defendants
maintain that they did not solicit this advertisement; the
affidavit supplied by Nancy Rosendahl of McLeodUSA corroborates
that McLeodUSA was responsible for the ad and not Defendants.
(Defs.’ 56.1 Opp. { 51) Ms. Rosendahl states that, “the listing
was complimentary and was not solicited by the 150 South Pizza
Pie Company, Herb Kaiser or Linda Kaiser.” (Rosendahl Aff. 4 4.)

Furthermore, Defendants assert that, on September 10, 2001,
Jake’s web page still listed Defendants’ Palatine restaurant
location and telephone number as part of the Jake’s franchise
system and was still listed on Jake’s web page as of March 19
2002. (id. 9 52.)

Jake’s concedes that Defendants renewed and paid for their

Ameritech Yellow Page advertisement, which showed the Jake’s



Agreement empowered Jake’s to compel compliance. (Pl.’s 56.1
Resp. @ 24.) However, Mr. Flowers acknowledged in his deposition
that Section 14.C is not actually a part of the 1976 License
Agreement. (Id. @ 25.)

Defendants refused to execute the New Agreement. In
response, Jake’s counsel issued a letter to Defendants on Dec. 5,
2000, demanding that they cease and desist using Jake’s
trademarks, and that they cancel their current telephone number,
as Jake’s claims that their telephone number was associated with
Jake’s trademarks in a telephone book advertisement. (Id. WI 8,
26, Ex. A, D.) The letter admonished Defendants to discontinue
representing themselves as a Jake’s franchise, and to discontinue
their use of Jake’s trademarks, proprietary information, and
trade secrets. (Id.)}

Defendants made, at the very least, nominal efforts to
comply with the demands set forth in Jake’s Dec. 5S, 2000 letter.
Jake’s acknowledges that Defendants changed their pizza
ingredients in December 2000 and de-identified with Jake’s by
removing identifying signs, and returning pamphlets, recipes,
boxes, and shirts that contained the “Jake’s” trademarks. (Id.
qi 27-28, 30-35.) Jake’s contends, however, that Defendants
continued using the telephone number associated with Jake's
trademarks. (Id. (9 28-29.

Defendants admit that they did not change the telephone

number in December 2000. (Defs.’ 56.1 7 29.) Defendants assert


franchises to be located in the same competitive geographic
market.

However, to reach a conclusion on this factor, the
Court must draw factual inferences from the statements made
by the parties. In light of the fact that the Court is
considering cross-motions for summary judgment, the
inferences favor both of the parties, but only in their
capacities as the nonmoving party.

4. Degree of Care Likely to be Exercised by Consumers

Generally speaking, the more a consumer has to pay for
the product, the greater the degree of care he is likely to
exercise in purchasing that product. CAE, Inc. v. Clean Air
Eng’g, Inc., 267 F.3d 660, 683 (7th Cir. 2001). Conversely,
a consumer is likely to exercise less care on lower priced
goods that are widely available. Id. Thus, a greater
chance of consumer confusion exists when a consumer is
purchasing a less expensive, widely available product. Id.

Ms. Kaiser stated that, approximately ten percent of
calling customers “hung up” when notified that their
restaurant was no longer a Jake’s franchise. Conversely,
ninety percent of the callers arguably did not seem to care
whether their pizza was Jake’s or some other brand or
origin, because they did not hang up when notified.

Jake’s disputes whether Defendants have established a

sufficient foundation to support Ms. Kaiser’s testimony in

18



Ms. Kaiser testified that, following the December 2000
“deidentification,”ten percent of their potential customers hung
up after being advised that their restaurant was no longer a
Jake’s franchise®. In August 2001, when the new Ameritech Yellow
Pages was issued, Defendants officially changed their
restaurant’s telephone number, a number the restaurant had used
since 1973’. (Defs.’ 56.1 Opp. @ 20.)

Defendants claim that they incurred damages as a result of
Jake’s demand that they cease using Jake’s trademarks in December
2000. (Defs.’ 56.2 Opp. @F 18-19, 45-47.) Damages consisted of
$679.00 for reprinting of new menus, (id. 49 45-47.) and a
$70,000 loss in sales revenue. (Defs.’ Resp. to Pl.’s State.
94124.) Ms. Kaiser concedes that some of the loss in sales revenue
could have been attributable to a general decline in restaurant
sales after September 11, 2001. (Id.)

STANDARD OF REVIEW

Summary judgment is appropriate when the evidence shows that
“there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Feb.

R. Civ. PB. 56(c). A genuine issue of material fact exists when

Jake’s disputes this, stating that Defendants used a referral
number and that Ms. Kaiser’s comment with regard to ten percent
of the callers hanging up is without foundation, since she did
not always answer the telephone. (P1l.’s 56.1 Resp. Opp. @ 38.)

Jake’s claims that the former telephone number, when dialed,
referred the caller to Defendants’ new telephone number.
(Sabella Dep. at 97.)



or commercial activities, shall be liable in a civil
action by any person who believes that he or she is or is
likely to be damaged by such act

(3) In a civil action for trade dress infringement under
this chapter for trade dress not registered on the
principal register, the person who asserts trade dress
protection has the burden of proving that the matter
sought to be protected is not functional.

15 U.S.C. § 1125 (a)

Claims alleging unfair competition can be made in cases
where there are no registered trademarks, but defendant’s conduct
nevertheless constitutes an unfair trade practice in using
another party’s image. See Two Pesos, Inc. v. Taco Cabana, Inc.,
505 U.S. 763 (1992). Plaintiff claims that Defendants unfairly
copied its trade dress, which constitutes unfair competition
under the Act. Id. at 765-66.'% To prevail on an unfair
competition claim under 15 U.S.C. § 1125(a), Plaintiff must show
that: (1) its trade dress is either inherently distinctive or has
acquired secondary meaning; and (2) the similarity of Defendants’
trade dress causes a likelihood of confusion on the part of
consumers as to the source of the products. Syndicate Sales,
Inc. v. Hampshire Paper Corp., 192 F.3d 633, 636 (7th Cir. 1999).
Likelihood of confusion regarding trade dress is determined using

the same seven factor criteria as applied in the analysis of

trademark infringement. Id.

3 In Two Pesos, the Supreme Court, also examining a claim under 15
U.S.C. § 1125(a), deemed identifying signs, the interior kitchen
floor plan, the decor, the menu, the equipment used to serve food,
the servers' uniforms and other features reflecting on the total
image of the restaurant as comprising trade dress. Two Pesos, 505
U.S. at 765.

24



Minute Order Forin (06/97)

United States District Court, Northern District of Illinois

Name of Assi Sitting Judge i
vor Magistrate Judge Arlander Keys than Assigned Judge
CASE NUMBER 01 C 4247 DATE 12/30/2002
CASE Jake Flowers, Inc. vs. Herb Kaiser & Linda Kaiser
TITLE

of the motion being presented.]

[In the following box (a) indicate the party filing the motion, ¢.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION:

DOCKET ENTRY:

(1) a Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motion due

@) oO Answer brief to motion due_ . Reply to answer briefdue___-

(4) oO Ruling/Hearingon set for at

(5) a Status hearing[held/continued to} [set for/re-set for]on__setfor___at.

(6) im} Pretrial conference[held/continued to] [set for/re-set forlon__—setfor_— ss at_—

(7) im Trial[set for/re-set for]on__—sat__—

(8) 0 (Bench/Jury trial] [Hearing] held/continued to at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) ClLocal Rule 41.1 OO FRCP41(a)(1) OO FRCP41(a)(2).

ao of [Other docket entry] | Memorandum Opinion and Order entered. For the reasons set forth in the

(il) ff (For further detail see order attached to the original minute order.]

decision attached, Plaintiff's Motion for Summary Judgment [#27] is granted in part and den
part; Defendants’ Motion for Summary Judgment [#28] is granted in part and denied in part.

No notices required, advised in open court.

2

No notices required.
lo notices require umber of notices

V | Notices mailed by judge’s staff.

22 Pnge

Notified counsel by telephone. date docketed

Docketing to mail notices.

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support of their argument that franchise agreements must be
legally terminated before there can be an action for trademark
infringement. See No. 94 C $866, 1997 WL 158316, at *11 (N.D.
Til. Mar. 31, 1997).

The Court is not persuaded. First, the Seventh Circuit has
held that legal termination of a franchise agreement is not a
condition precedent to an action for infringement. Gorenstein
Enter., Inc. v. Quality Care-USA, Inc., 874 F.2d 431, 435 (7th
Cir. 1989) (“once a franchise has been terminated, the franchisee
cannot be allowed to keep on using the trademark.”). In
addition, a close review of Servpro reveals that the district
court relied upon authority from other circuits, making the
holding less persuasive -- particularly to the extent that these
holdings conflict with Seventh Circuit precedent. . Finally, the
holding in Servpro should be understood only to mean that the use
of the trademarks without the lawful owner’s permission violates
The Lanham Act. No. 94 C 5866, 1997 WL 158316, at *11 (N.D.

Ill. Mar. 31, 1997).

Once a franchise is terminated, per its terms or otherwise,
the franchisee has no right to continue using the marks. The
franchisee may seek other remedies for damages it may suffer from
a franchisor’s unlawful action, but continued use of the
trademarks is not such a remedy. See The Great American
Chocolate Chip Cookie Co., Inc. v. River Valley Cookies, Ltd.,

970 F.2d 273, 282 (7th Cir. 1992). (Stating that defendant

1]



record, affidavits, and other supporting material relative to the
facts in dispute. The Seventh Circuit has directed that the
court need not “scour the record in search of factual or legal
support” to locate relevant information supporting the claims.
Bennington v. Caterpillar, 275 F.3d 654, 661 (7th Cir. 2001).

When reviewing cross-motions for summary judgment, the Court
must consider each motion independently, and draw factual
inferences according. As such, the Court need not grant either
party’s motion. To the contrary, competing factual inferences --
ie., the Court may infer material facts in favor of a defendant
when reviewing a plaintiff’s motion for summary judgment, and may
infer the same material facts in favor of the plaintiff when
considering the defendant’s motion for summary judgment --
frequently warrant denying both parties’ motions.

ANALYSIS

I. Federal Trademark Infringement

Count I of Jake’s Complaint charges Defendants with
infringing Jake’s trademarks under 15 U.S.C. §1114 of the Lanham
Act. Before analyzing the merits of Plaintiff’s Lanham Act
claim, the Court addresses Defendants’ argument that the claim is
not valid.

In their reply brief, Defendants maintain that Plaintiff’s
trademark infringement claim must fail, because the 1976 License
Agreement was not legally terminated prior to the alleged

infringement. Defendants cite to Servpro Indus. v. Schmidt, in

10



Having determined that the agreements are materially
different, the Court must determine whether Jake’s breached the
1976 License Agreement by demanding that Defendants sign the New
Agreement. The parties were operating under the 1976 License
Agreement until it was terminated by the December 5, 2000 letter
signed by Jake’s counsel. The letter plainly declares that the
reason for the “Demand To Cease Infringement And Disassociate,”
was because Defendants would not sign the New Agreement. There
are no reasonable allegations in the record that Defendants
failed to comply with the 1976 License Agreement prior to receipt
of this letter. Mr. Flowers ultimately acknowledged that the
1976 License Agreement did not empower Jake’s to compel
Defendants to sign a New Agreement. Therefore, in sending this
letter, Jake’s breached the 1976 License Agreement, because the
demand and termination were not in accord with any provisions in
the 1976 License Agreement.

2. Damages for Breach of Contract

Defendants provided sales and income data from the operation

of their business, as shown below (Defs.’ 56.1 Opp. § 45, Ex. F

q8.):
Year Sales Income
1998 $416,475.54 $7,980.00
1999 $409,242.07 $4,112.00
2000 $392,424.62 $3,866.00
2001 $340,409.89 ($16,596.00

31


Section 3 of the New Agreement requires Jake’s approval of
any lease or sublease. Although Jake’s maintains that Defendants
own the building and that, therefore, this section has no effect,
(Pl.’s 56.1 Resp. @ 15.), it would have effect if Defendants
wanted to sell the building in the future and lease it back --
not an uncommon occurrence in the business world. The 1976
License Agreement had no such restriction.

The New Agreement also: (1) imposes more restrictive renewal
procedures (Sec. 2.D); (2) imposes training (Sec. 4); (3) levies
a service charge on late payments of 1.5%/month (Sec. 8.E); (4
allows Jake’s to dictate replacement equipment or expenditures
related to general state of repair (Section 9.B); (5) allows
Jake’s to control the hours of operation (Sec. 9.E); (6) requires
CPA review of financial documents (Sec. 11.B); and (7) waives
Defendants’ rights to punitive damages claims and trial by jury
in actions against Jake’s (Jake's, however, would maintain its
right to a jury trial and punitive damages against the franchisee
for specified claims it may have against Defendants). (Sec.
16.K).

From this overview of the two agreements, the Court
concludes that the 1976 License Agreement was substantially less
restrictive than the New Agreement. Jake’s’ ciaim that the terms
of the New Agreement are not materially different from the 1976

License Agreement lacks support in the record.

30



trademarks, in August 2000 -- at least three months before Jake’s

demanded that Defendants de-identify their restaurant from the

Jake’s system -- but asserts that Defendants could have,
nevertheless, stopped using the telephone number. (Pl.’s 56.1
Resp. § 46.) Jake’s waffles on whether Defendants could have

later changed the listing; at one point, Jake’s concedes that
Defendants were powerless to do so, but later, Jake’s disputes
Ms. Kaiser’s assertion that no changes could be made after Sept.
2000. (Pl.’s 56.1 Resp. Opp. @ 40.) Jake’s claims the inability
to change the advertisement is without foundation and only
represents Ms. Kaiser’s understanding. (Id. 91 40-41.)

Jakes further alleges that Defendants were representing
themselves as a Jake’s franchise after December, 2000. On two
occasions in approximately January, 2001, Mr. Flowers’ secretary,
Jackie Sabella, called Defendants’ telephone number and inquired
as to whether their restaurant was a Jake’s restaurant. Ms.
Sabella claims that, on both occasions, she was told that
Defendant’s restaurant was “the same thing” as a Jake's
restaurant.” (Id.) However, Ms. Sabella admits that the person
initially answering the telephone identified the restaurant as
“150 North.” (P1l.’s 56.1 Resp. Opp. 4 36, Ex. G, Sabella Dep.

at 95-97)

®* After de-identifying from Jake’s, Defendants re-named the
restaurant 150 South Pizza Pie Company and maintained its Palatine,
Illinois location. (Defs.’ Resp. to Pli.’s State. GI 8, 14-15.)



Jake’s acknowledged that, when Ms. Sabella made two
telephone calls to Defendants’ restaurant, the person
answering Defendants’ phone did not identify the restaurant
as a “Jake’s, but said, “150 North.” (Sabella Dep. at 95-
97) Ms. Sabella also stated that, when she said, “I thought
this was Jake’s” the person answering said, “it’s the same
thing.” (Id.).

Whether the phrase “the same thing” was meant to be
comparative in nature and or was intended as a proclamation
to confuse consumers, is a question of fact. And this
dispute appears to be a material issue in this case.
Given the procedural posture of this case, this material
dispute necessitates denying both parties’ Motions for
Summary Judgment.

7. Defendants’ Intent to Palm Off Its Goods
As Plaintiff’s Goods.

Despite Jake’s’ claim of good intentions, when Mr.
Flowers approached Defendants in September 2000, he set in
motion the beginning of the end of a 24-year business
relationship. A side-by-side comparison of the 1976 License
Agreement and the proposed New Agreement reveals significant
differences that would have substantially altered the

twenty-four year business relationship.

2 ~The Court concedes that, whether this dispute is material to the
outcome depends upon the resolution of the other factors in this
likelihood of confusion analysis.

21


Jake’s is not entitled to relief under this statute. Therefore,
the Court enters judgment in favor of Defendants on Count V.

Counts VI and VII of the Complaint respectively allege
unjust enrichment and violation of the non-compete clause of the
1976 License Agreement. Because Defendants’ two remaining
Counterclaims, which allege a breach of contract and a violation
of the Illinois Franchise Disclosure Act, bear upon the
resolution of Plaintiff’s Counts VI and VII, the Court will
address Defendants’ remaining Counterclaims first, and then
return to Counts VI and VII of Jake’s’ Complaint.
VI. Defendants’ Counterclaim Count I, Breach of Contract

The elements of a breach of contract claim are: (1)
existence of a valid and enforceable contract; (2) performance by
the plaintiff; (3) breach by the defendant; and (4) resultant
injury to the plaintiff. Higher Gear Group, Inc. v. Rockenbach

Chevrolet Sales, Inc., 223 F. Supp.2d 953, 957-58 (N.D. Ill.

2002). The party asserting such a claim must also establish
damages with reasonable certainty. R.E. Davis Chem. Corp. v.
Diasonics, Inc., 924 F.2d 709, 712 (7th Cir. 1991). Neither

party disputes that Jake’s International and the Kaisers duly
executed the 1976 License Agreement. Neither party disputes that
the 1976 License Agreement passed to Jake’s as successor in
bankruptcy in November 1997. And both parties agree that the
1976 License Agreement defined and governed their relationship as

franchisor and franchisee.

27



filed Motions for Summary Judgment, which are the subject of this
Opinion.
FACTUAL BACKGROUND

Jake’s is an Illinois corporation that sells pizza through

authorized franchisees. (Pl.’s State. of Mat. Uncontested Facts
qi 1, 3.) Jake’s owns four federal trademarks, which were
registered in 1994 and 1995. (V. Answer 7 7.) Defendants

signed a license agreement with Jake’s International, Inc.? on
December 8, 1976 (“1976 License Agreement”). (Pl.’s 56.1 Resp.,
Ex. B.)

The 1976 License Agreement provided for renewal at five-year
intervals, but Jake’s alleges that it did not renew automatically
for an indefinite period because it contained termination
provisions. (Id. § 7.) Defendants maintain that the License
Agreement renewed according to its terms on December 8, 1996 for
an additional five years and that the agreement was in full force
as of December 5, 2000. (Defs.’ 56.1 Opp. @ 2.)

The present dispute began when Jake’s requested that
Defendants execute a newly proposed franchise agreement’ (“New
Agreement”) on or about September 5, 2000, to replace the 1976
License Agreement. (Pl.’s 56.1 Resp. @ 9.) Jake’s claims that

the terms of the New Agreement and the 1976 License Agreement are

> Plaintiff, Jake Flowers, Inc., acquired the assets, including the
trademark rights and goodwill associated therewith, of Jake’s
International, Inc. on Dec. 4, 1997 pursuant to an order of the
United States Bankruptcy Court. (Compl., Ex. B.)

"See Pl.’s 56.1 Resp., Ex. F.


its goods as those of the plaintiffs. Ty, Inc. v. Jones
Group, 237 F.3d 891, 897 (7th Cir. 2001).

None of the factors, standing alone, is dispositive of
the likelihood of confusion question. Different factors will
weigh more heavily from case to case, depending on the
particular facts and circumstances. Id. at 898.
Nevertheless, the similarity of the marks, intent of the
defendant, and actual confusion are considered to be the
most important factors in evaluating consumer confusion.
Id.

With regard to most of these seven factors, factual
disputes exist as to whether the factor clearly favors one
party or the other. Given the procedural posture of this
case, therefore, these disputes prevent the Court from
granting either Plaintiff's or Defendants’ Motions for
Summary Judgment. The Court will, nevertheless, discuss
each factor in turn.

1. Similarity of Marks

Shortly after Defendants received the December 2000
letter from Jake’s’ attorney, which terminated Defendants
franchise rights, Defendants ceased using the Jake’s
trademarks that they had previously used on shirts, pizza
boxes, menus, outdoor signage, cups, and other restaurant

objects.

14



website, as an authorized franchisee. The Court cannot help
but question why, if Jake’s was so concerned about
protecting its trademark rights, it didn’t simply “mouse
click erase” Defendants’ identity from Jake’s website?

Despite the extenuating circumstances, the Court finds
that it is obvious that the trademarks shown in the
telephone book advertisements identify Defendants’
restaurant as a Jake’s franchise. Therefore, the Court
finds that the similarity of the marks factor weighs in
favor of a finding of infringement.

2. Similarity of Products

The products sold by Jake’s and Defendants are clearly
similar, although the recipes and ingredients appear to
differ. Admittedly, Defendants continued selling pizzas and
sandwiches after being notified by Jake’s to stop using all
Jake’s trademarks.

However, although the products are similar, Defendants’
pizzas are no longer delivered in boxes sporting the Jake’s
logo. Drinks are not being served in cups showing the
Jake’s logo. And the sign in front of the store, as well as
the menus, no longer identify the food products or
restaurant as a Jake’s franchise.

3. Area and Manner of Concurrent Use

In determining whether the area and manner of

concurrent use is likely to cause confusion, factors

16



§ 1114 (1997); (2) unfair competition, violating Section 43(a) of
the Lanham Act, 15 U.S.C. §1125(a) (1997); (3) common law
trademark infringement; (4) deceptive trade practice, violating
Section 2 of the Illinois Uniform Deceptive Trade Practices Act,
815 ILL. Comp. Star. 510/2 (1999); (5) dilution, causing injury to
Jake’s business reputation, violating the Illinois Anti-Dilution
Act, 765 Inu. Comp. Star. 1035/15 (1994); (6) common law unjust
enrichment; and (7) violation of the non-compete provisions in
Defendants’ 1976 License Agreement. On June 27, 2001, this
matter was referred to the Court for pre-trial motions and
discovery.

On July 17, 2001, Defendants filed a verified answer and
Counter-Complaint, alleging that Jake’s breached its 1976 License
Agreement and violated the Illinois Franchise Disclosure Act, 815
Ibn. Comp. Stat. 705/1-44 (1999) .!

On Nov. 16, 2001, the Court, sua sponte, initiated a
settlement conference, but the parties were unable to reach an
accord. Following completion of discovery, the parties consented

to the jurisdiction of this Court.* On May 3, 2002, both parties

1 The Counter-Complaint (Counts III and IV) also alleged that Jake’s
breached the 1976 License Agreement with respect to product
supplies and violated the Illinois Consumer Fraud and Deceptive
Business Practices Act, 815 Iuu. Comp. Svar. 505/1-12 (1999).
Defendants subsequently agreed to dismiss Counts III and IV.
(Defs.’ 56.1 9 6.)

? The parties consented to proceed before a magistrate judge on Feb.
12, 2002, and Judge Manning reassigned the case to this Court on
Feb. 15, 2002.



on Count II (Violation of the 1987 Ill. Pranchise Disclosure Act
claim) of the Counter-Complaint.

The case will proceed to trial with respect to Counts I, II,
III, IV, and VI of the Complaint, and with respect to the breach
of contract damages that Defendants incurred, pursuant to Count I
of the Counter-Complaint.

ORDER

For the aforementioned reasons, IT IS THEREFORE ORDERED that
Plaintiff’s Motion for Summary Judgment be, and the same hereby
is, GRANTED on Defendants’ Counter-Complaint Count II, and DENIED
on Plaintiff’s Counts I through VII and Defendants’ Counter-
Complaint Count I. IT IS FURTHER ORDERED that Defendants’
Motion for Summary Judgment be, and the same hereby is, GRANTED
on Counts V and VII of the Complaint and Count I of the Counter-
Complaint, and DENIED on Counts I, II, III, IV, and VI of the

Complaint, and Count II of the Counter-Complaint.

DATED: December 30, 2002 ENTER:

Odanso,

ARLANDER KEYS
United States Magistrate Judge

37



Jake’s Complaint broadly cites to 15 USC § 1125(a), but does
not claim an infringement of trade dress nor that its stores have
acquired a secondary meaning among consumers. To show
misrepresentation, misleading conduct or customer confusion as to
source, one must show customer confusion using the same test as
applied under the analysis of trademark infringement. Syndicate
Sales, 192 F.3d at 636. Because Jake’s did not plead additional
facts materially different from those pled in the trademark
infringement count, the Court concludes, once again, that the
material issue of likelihood of customer confusion remains in
dispute. Therefore, the Court denies summary judgment to both
parties on Count If
III. Common Law Trade Name and Trademark Infringement

The Seventh Circuit has concluded that, “the linchpin of
both common law and federal statutory trademark infringement
claims is whether consumers in the relevant market confuse the
alleged infringer’s mark with the complainant’s mark.” AHP.
Subsidiary Holding Co. v. Stuart Hale Co., 1 F.3d 611, 615 (7th
Cir. 1993). Because the Court cannot properly conclude that
confusion exists and that, therefore, a valid trademark
infringement claim exists, the Court denies both parties’ Motions

for Summary Judgment on Count III of the Complaint.

25



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS i) 2
EASTERN DIVISION Me ae

JAKE FLOWERS, INC.,

Plaintiff, No. 01 C 4247
v.
Magistrate Judge

HERB KAISER and LINDA KAISER, Arlander Keys

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff, Jake Flowers, Inc., moves this Court for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil
Procedure. Defendants, Herb and Linda Kaiser, have filed a cross
motion for summary judgment. For the reasons set forth below,
the Court grants Plaintiff’s motion on Defendants’ Counter-
Complaint Count II and grants Defendants’ motion, on Counts V and
VII of the Complaint and Count I of Defendants’ Counter-
Complaint. Summary judgment is denied both parties on Counts I
through IV, and Count VI of the Complaint.

PROCEDURAL HISTORY

On June 6, 2001, Plaintiff, Jake Flowers, Inc. (“Jake’s”)
filed suit against Defendants, Herb and Linda Kaiser, for
injunctive relief. The seven count complaint alleged that
Defendants’ unauthorized use of Jake’s trademarks constitutes (1)

trademark infringement, in violation of the Lanham Act, 15 U.S.C.



Sec. 19. Termination of a Franchise. (a) It shall be a
violation of this Act for a franchisor to terminate a
franchise of a franchised business located in this State
prior to the expiration of its term except for "good
cause" as provided in subsection (b) or (c) of this
Section.

(b) "Good cause" shall include, but not be limited to,
the failure of the franchisee to comply with any lawful
provisions of the franchise or other agreement and to
cure such default after being given notice thereof and a
reasonable opportunity to cure such default, which in no
event need be more than 30 days.

815 Ill. Comp. Stat. 705/19 (1999)

Sec. 26. Private civil actions. Any person who offers,
sells, terminates, or fails to renew a franchise in
violation of this Act shall be liable to the franchisee
who may sue for damages caused thereby. This amendatory
Act of 1992 is intended to clarify the existence of a
private right of action under existing law with respect
to the termination or nonrenewal of a franchise in
violation of this Act. In the case of a violation of
Section 5, 6, 10, 11, or 15 of the Act, the franchisee
may also sue for rescission.

815 Ill. Comp. Stat. 705/26 (1999

A general presumption in Illinois law is that legislation is
prospective in nature unless there is an express provision in the
statute that the legislation is intended to have a retroactive
effect. Mech. Rubber & Supply Co. v. Am. Saw and Mfg. Co., 810
F. Supp. 986, 991 (C.D. Ill. Nov. 14, 1990). Illinois courts
have uniformly refused to apply Franchise Acts retroactively.
Id. at 992. To support their position, Defendants cite to To-Am
Equip. Co., Inc. v. Mitsubishi Caterpillar Forklift, 913 F. Supp.
1148, 1152 n.6 (N.D. Ill. 1995), for the proposition that
“renewal of a franchise agreement constitutes the making of a new

contract, and that new contract would be governed by the statute

33



The issue then becomes whether Jake’s breached the 1976
License Agreement by forcing Defendants to choose between signing
the New Agreement or losing their franchise. Jake’s claims that,
because the 1976 License Agreement and the New Agreement were
substantially similar, it did not breach the parties’ 1976
contract when it presented the New Agreement to Defendants.
Defendants counter that the two Agreements are materially
different, and that Jake’s, therefore, breached the 1976 License
Agreement.

The Court can readily compare the two contracts, side by
side, and determine that they are materially different. The
December 5, 2000 letter mailed by Jake’s counsel, demanding that
Defendants cease infringement and disassociate from Jake’s,
clearly states that the reason for Jake’s action was Defendants
refusal to sign the New Agreement. The record contains no
evidence that Defendants breached the 1976 License Agreement
prior to Jake’s taking this action. Defendants had been a Jake’s
franchisee from December 8, 1976 until receipt of this letter in
December 2000, which, Jake’s admits, terminated the 1976 License
Agreement.

The 1976 License Agreement consists of 15 typed pages,
double-spaced. The New Agreement incorporates a table of
contents and contains 46 single-spaced, typed pages, including

the Guaranty attachment and Addendum, which modified the

28



franchisee should not have infringed trademarks, but should have
sued for breach of contract). Therefore, assuming, arguendo,
that Defendants’ conduct constituted use of Jake’s trademarks
without permission, Defendants cannot claim that Jake’s breach of
the 1976 License Agreement gave them legal impunity from

trademark infringement.

Having rejected the Defendants’ “lack of termination”
challenge, the Court turns to the merits of Plaintiff’s Lanham
Act claim. Section 1114 of the Lanham Act prohibits trademark

infringement, and provides that:

(1) Any person who shall, without the consent of the
registrant--

(a) use in commerce any reproduction, counterfeit,

copy, or colorable imitation of a registered mark in

connection with the sale, offering for sale,
distribution, or advertising of any goods or services
en or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive.

shall be liable in a civil action by the

registrant for the remedies hereinafter provided.

15 U.S.C.A. §1114 (1997).

A federally registered trademark is prima facie evidence of
the validity of the registered trademark, and of the registrant’s
exclusive right to use the registered trademark in commerce:

§ 1115. Registration on principal register as evidence
of exclusive right to use mark; defenses

(a) Evidentiary value; Defenses

Any registration issued under the Act of March 3,
1881, or the Act of February 20, 1905, or of a mark
registered on the principal register provided by this
chapter and owned by a party to an action shall be
admissible in evidence and shall be prima facie
evidence of the validity of the registered mark and of

12



However, Defendants continued using a telephone number
that they had been using while they operated as a Jake’s
franchisee. The Ameritech Yellow pages listed their
restaurant as a Jake’s restaurant, carried an advertisement
for Defendants’ establishment as a Jake’s restaurant, and
ran the phone number that Defendants had used for years.*
Although the advertisement was placed with Ameritech in
August or September, 2000 -- while Defendants were still an
authorized franchisee under the 1976 License Agreement --
the advertisement remained in the Ameritech Yellow Pages
until the following year’s Yellow Pages was released in
August, 2001 - several months after the demand for
deidentification, in December, 2000. A similar ad was
featured in the McLeod Planet Pages, more than one year
after the deidentification demand.

The essence of Jake's’ argument is that the
advertisements in the Ameritech Yellow Pages and the McLeod
Planet Pages constituted infringement, because Defendants
did not “disconnect” the telephone number shown in the ads.
As such, Jake’s argues, its trademarks were used without
permission.

From the time that Jake’s demanded deidentification
through March 19, 2002, Jake’s continued to advertise

Defendants’ restaurant and telephone number on its corporate

® Defendants admit that they did not disconnect this telephone
number.

15