Denver, Colorado — Intellectual property lawyers for Steak n Shake Enterprises, Inc. and Steak n Shake, LLC of Indianapolis, Indiana (collectively “Steak n Shake”) sued in the United States District Court for the District of Colorado alleging that Globex Company, LLC; Springfield Downs, LLC; Christopher Baerns; Larry Baerns; Kathryn Baerns and Control, LLC, all of Colorado, are infringing the “Steak n Shake” marks, which have been registered by the U.S. Trademark Office.
Non-party Steak n Shake Operations, Inc., Steak n Shake Enterprises’ parent company, has continuously operated Steak n Shake restaurants specializing in burgers and milkshakes since 1934. There are currently 415 company-owned Steak n Shake restaurants in 15 states across the country. In addition, Steak n Shake Enterprises grants franchises to establish and operate Steak n Shake restaurants pursuant to written franchise agreements with Steak n Shake Enterprises, and written license agreements with Steak n Shake, LLC. There are currently 100 franchised Steak n Shake restaurants operating in 23 states, including Colorado. Steak n Shake asserts that the Steak n Shake trademarks, and the products and services offered in association with those marks, have been extensively promoted throughout the United States for many years.
This action against Defendants arose subsequent to the termination of franchise and license agreements between Plaintiffs Steak n Shake Enterprises, Inc., as franchisor, and Steak n Shake, LLC, as licensor, and Defendants as franchisees, licensees and/or guarantors. Steak n Shake contends that Defendants materially breached their obligations under the franchise and license agreements and failed to cure such breaches. As a result, Steak n Shake terminated the agreements.
Steak n Shake alleges that, notwithstanding the termination of the franchise and license agreements, Defendants continue to use the Steak n Shake name and marks in connection with the operation of competitive restaurants at the same locations as their former franchised Steak n Shake restaurants, and to hold their restaurants out to the public as authentic Steak n Shake restaurants.
In the complaint, trademark attorneys for Steak n Shake assert the following:
· Count I – Trademark Infringement
· Count II – Unfair Competition
· Count III – Breach of Contract – Specific Performance
· Count IV – Breach of Contract – Damages
· Count V – Breach of Guaranty – Damages
Steak n Shake seeks the following relief against Defendants, jointly and severally: preliminary and permanent injunctive relief enjoining Defendants’ trademark infringement and unfair competition, and ordering Defendants to perform their post-termination obligations under their franchise and license agreements and area development agreement, including their noncompetition covenants; recovery of the amounts owed to them by Defendants, including the damages each has sustained by reason of Defendants’ breaches and the resulting termination of the franchise and license agreements and area development agreement; and an award of the attorneys’ fees and costs incurred by Steak n Shake.
Practice Tip: Franchise agreements typically require the franchisee to cease using all of the franchise marks, as well as return all items bearing the franchise marks, in the event the franchise agreement is terminated. Failure to comply promptly with these provisions can lead to liability for trademark infringement, among other claims.