Tuesday, November 29, 2011

Dear Trademark Owners, Don't Wait 4 Years to Assert Your Unfair Competition Claims

Franchisor Western Sizzlin had a franchisee in Kissimmee from 1995 through 2004.  The location was taken over by Pinnacle Business Partners ("PBP").  While PBP did make royalty payments to Western Sizzlin in 2005, the parties were unable to come to an agreement, and PBP declined to sign a franchise agreement.  Western Sizzlin demanded PBP remove its "Sizzlin Grill" signs at that time due to their similarity to Western Sizzlin's "Western Sizzlin" trademarks.  

Four years later, in November 2009, Western Sizzlin visited the Kissimmee location and saw the signs and decor were the same.  Western Sizzlin demanded royalties and that PBP cease its usage.  Western Sizzlin then sued for trademark infringement as well as unfair competition, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act.  PBP sought summary judgment of the unfair competition, unjust enrichment, and FDUTPA claims as time barred.  Specifically, each of those claims has a four-year statute of limitations, and Western Sizzlin did not sue until 2010 -- five years after it knew of the alleged violations.  Western Sizzlin responded by arguing that there was a dispute as to how much knowledge Western Sizzlin had as to PBP's alleged violations in 2006.  But Western Sizzlin did not offer evidence to support this argument.

As its second argument, Western Sizzlin explained that a PBP representative previously assured Western Sizzlin that PBP would change the signage, but Western Sizzlin did not discover until November 2009 that PBP hadn't.  Thus, PBP should be equitably estopped from asserting the statute of limitations.  The Court did not agree:
Under Florida law, equitable estoppel arises when one party lulls another party into a disadvantageous legal position.  Major League Baseball v. Morsani, 790 So. 2d 1071, 1076 (Fla.2001).  “Equitable estoppel presupposes a legal shortcoming in a party’s case that is directly attributable to the opposing party’s misconduct. The doctrine bars the wrongdoer from asserting that shortcoming and profiting from his or her own misconduct. Equitable estoppel thus functions as a shield, not a sword, and operates against the wrongdoer, not the victim.”  Id.

In this case, the “shortcoming” is that the Plaintiff waited more than four years after learning of the alleged violations before filing suit.  A simple assurance that the sign would be changed could in theory “lull” a party into delaying the filing of suit for the length of time needed to change – or at least remove – the sign, perhaps a few weeks in this scenario.  It would not be enough to lull a party into delaying for more than forty-eight months.  And there is no suggestion that the Defendant somehow prevented the Plaintiff from visiting the restaurant, or even just driving by it, to see if the sign had been changed.  WSC has failed to establish any grounds for the application of equitable estoppel here.
Motion for Summary Judgment granted.
Western Sizzlin Corp. v. Pinnacle Business Partners, LLC, slip op., Case No. 6:10-cv-1452 (M.D. Fla. Nov. 23, 2011) (J. Presnell)

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