Groucho's Franchise Systems, LLC v. Grouchy's Deli, Inc.
683 F. App'x 826
| 11th Cir. | 2017Background
- Groucho’s (restaurant chain; mark GROUCHO’S registered 1997; GROUCHO’S FAMOUS service mark 2003) operates in the Southeast since 1941 and expanded intermittently into Georgia.
- Grouchy’s New York Deli and Bagels began in Alpharetta, GA in 2000 using the name GROUCHY’S and registered its own service mark in 2005; logo and trade dress differ from Groucho’s.
- Groucho’s sent an initial letter in 2004 requesting Grouchy’s change its name before Groucho’s expanded to Atlanta; Groucho’s later renewed demands in 2013 but filed suit only in 2014.
- Grouchy’s expanded: registered its mark, opened a second restaurant (Norcross), sold that location to S&F Deli (2010), licensed recipes/marks to S&F, and invested materially (advertising and operations) over the years.
- Groucho’s sued in 2014 alleging Lanham Act infringement, false designation, Georgia UDTPA, common-law trademark/unfair competition, and unjust enrichment; district court granted summary judgment for Grouchy’s based on laches.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether laches bars Groucho’s claim | Delay excused (progressive encroachment); suit timely after renewed expansion | Plaintiff unreasonably delayed; defendant prejudiced by reliance and investments | Laches applies; suit barred |
| When delay accrues for progressive encroachment | Delay may be tolled until defendant’s conduct places it in direct competition | Delay accrues when plaintiff knows or should know of a provable claim | Delay measured from when plaintiff knew/should have known; Groucho’s gave no excuse |
| Whether defendant suffered undue prejudice from delay | Plaintiff: no undue prejudice because defendant granted a naked license (arguing abandonment) | Defendant: suffered reliance prejudice (investment, registrations, licensing) | Defendant suffered undue prejudice from plaintiff’s long delay |
| Effect of alleged naked licensing on plaintiff’s claim | Naked licensing argument undermines defendant’s prejudice; plaintiff claims defendant’s 2010 license was naked | Defendant says allegation of naked license would imply abandonment, inconsistent with plaintiff’s infringement claim | Court rejects naked-license defense as aiding plaintiff; naked license would imply abandonment and contradict plaintiff’s position |
Key Cases Cited
- Tana v. Dantanna’s, 611 F.3d 767 (11th Cir. 2010) (standard for reviewing summary judgment)
- Angel Flight of Ga., Inc. v. Angel Flight Am., Inc., 522 F.3d 1200 (11th Cir. 2008) (review of laches for abuse of discretion; accrual principles)
- Conagra, Inc. v. Singleton, 743 F.2d 1508 (11th Cir. 1984) (elements of laches and prejudice requirement)
- Citibank, N.A. v. Citibank Group, Inc., 724 F.2d 1540 (11th Cir. 1984) (distinguishing prompt enforcement from acquiescence; no laches where plaintiff consistently objected)
- Kason Indus., Inc. v. Component Hardware Grp., Inc., 120 F.3d 1199 (11th Cir. 1997) (progressive encroachment doctrine and when delay begins)
- Kentucky Fried Chicken Corp. v. Diversified Packaging Corp., 549 F.2d 368 (5th Cir. 1977) (discussion of naked licensing and abandonment of mark)
Disposition: Affirmed summary judgment for Grouchy’s on laches grounds.