8th Circuit allows franchisor to register trademark that was first used by licensee

In  Pinnacle Pizza Inc. v. Little Caesars Enterprises (8th Cir. Mar. 22, 2010), the U.S. Court of Appeals was faced with a dispute filed by Pinnacle Pizza, a South Dakota-based Little Caesars Pizza franchisee, agains Little Caesars Enterprises (LCE).  

Among other things, Pinnacle asserted that in 1997 it began using the phrase HOT-N-READY in ads.  Later that year, LCE began using the phrase in other stores, and LCE obtained federal trademark registration for the phrase.  In its trademark application, LCE identified May 6, 1997 as the date of first use of the mark.  However, that date was actually the date that Pinnacle began using the mark.  LCE itself did not begin using the phrase until some time after that date.

Pinnacle sought to cancel LCE’s trademark registration for HOT-N-READY, arguing that LCE fraudulently obtained the registration by identifying Pinnacle’s date of first use in its application.  The District Court disagreed, and the 8th Circuit affirmed, on the basis that the franchise agreement awarded LCE all goodwill in marks used by the franchisee. 

Thus, even though LCE itself did not use the mark as of May 8, 1997, the court gave LCE the benefit of that date because of the goodwill that LCE acquired under the franchise agreement.

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