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LLC v. Marco's Coal Fired Pizza, Inc.

United States District Court, D. Colorado

September 23, 2019

MARCO’S FRANCHISING LLC, and MP MARKS LLC, Plaintiffs,
v.
MARCO’S COAL FIRED PIZZA INC., MARCO’S COAL FIRED PIZZA GOLDEN LLC, MARCO’S COAL FIRED PIZZA CASPER LLC, MARCO’S VALLAGIO LLC, RACCA’S PIZZERIA NAPOLETANA INC., MARK DYM, KRISTY LATORRACA-DYM, and MARCO’S COAL FIRED PIZZERIA COLFAX LLC, Defendants.

          OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT

          Marcia S. Krieger Senior United States District Judge.

         THIS MATTER comes before the Court on the Defendants’ Motion for Summary Judgment (# 109), the Plaintiffs’ Response (# 116), and the Defendants’ Reply (# 118). For the reasons that follow, the Motion is granted, in part.

         I. JURISDICTION

         The Court exercises jurisdiction under 28 U.S.C. § 1331.

         II. BACKGROUND [1]

         This case involves a trademark dispute between a national pizza chain and local pizza restaurants, both using the name Marco. The Plaintiffs (collectively “Marco’s”) operate a national network of franchised pizza restaurants under the brand name Marco’s Pizza. Marco’s holds six federally registered trademarks that it uses in conjunction with its business, but only two are primarily at issue for purposes of the instant Motion:

• A word mark consisting of the word MARCO’S, first used on July 31, 1978, and registered on December 4, 2012.
• A design mark consisting of the words MARCO’S PIZZA in a stylized font with a cartoon of a slice of pizza used in place of the apostrophe, first used on December 31, 1985, and registered on November 19, 2013 (the “design mark”).[2]

         For many years after its founding in the early 1980s, Marco’s operated primarily in Ohio and Michigan. By 2007, it had added operations in Indiana, Arizona, Nevada, North Carolina, and Wisconsin, and in September 2007, it announced plans to expand to Georgia and Florida. The business did not arrive in Colorado until February 2008, when it entered into a franchise agreement with Rodman Schley, providing Mr. Schley rights to establish Marco’s franchises anywhere in Colorado. It does not appear from the record that Mr. Schley began actually operating franchises until approximately 2009.

         The Defendants are restaurants owned and operated by Defendants Mark and Kristy Latorraca-Dym (the Dyms). They created Defendant Marco’s Coal Fired Pizza Inc. (“MCF”)[3] in June 2008, opening a restaurant under the name Marco’s Coal-Fired Pizza at a location in the Ballpark neighborhood of Denver. At that time, MCF used a roughly triangular design mark that consisted of three stacked rows of text (“Marco’s / Coal-Fired / Pizzeria”) above a drawing of a puff of smoke. On December 18, 2008, Marco’s sent a letter to MCF, advising MCF of Marco’s trademark registration of the MARCO’S PIZZA mark and requesting that MCF “provide us with copies or other evidence of your First use of the name ‘Marco’s’ so that we might determine if you are legally entitled to some use of the same”.[4] (# 109-8 at 2.) MCF responded, acknowledging “your client’s ownership of the registered trademark MARCO’S PIZZA, ” but noted that, because the mark incorporated a name, it was not likely to be considered distinctive and lead to a likelihood of confusion with MCF’s use of the MARCO’S COAL-FIRED PIZZA mark. (# 109-9 at 1.) It also noted that Marco’s had yet to open any locations in Colorado, and thus, due to its prior use, MCF “would be deemed the senior user of the mark in Colorado, particularly in Denver.” (# 109-9 at 2.) Marco’s chose not to take any further action at the time.

         In or about 2010, MCF opened a second location in the Denver Tech Center operated by Defendant Marco’s Vallagio LLC. (The Court understands that, notwithstanding its name, the Tech Center location continued to use the same MARCO’S COAL-FIRED PIZZA mark as the Ballpark location.) In 2015, MCF opened two additional locations, Defendants Marco’s Coal Fired Pizza Casper LLC in Casper, Wyoming, and Marco’s Coal Fired Pizza Golden LLC, in Golden, Colorado.[5] However, these two locations opened under the name Racca’s Pizzeria Napoletana instead. Also in 2015, MCF rebranded the existing Ballpark and Tech Center locations to use the Racca’s name, ceasing to use the MARCO’S COAL-FIRED PIZZA mark entirely. There is some dispute in the record as to why MCF undertook the name change, and there is at least some evidence that customer confusion between MCF and Marco’s locations was a contributing factor. By mid-July 2017, the Dyms concluded that the rebranding of the Ballpark and Tech Center locations as Racca’s was a mistake, and they resumed use of the MARCO’S COAL-FIRED PIZZA mark at those locations. Shortly thereafter, Marco’s commenced this lawsuit.

         Marco’s Amended Complaint (# 88) asserts eight claims: (1) trademark infringement under the Lanham Act (15 U.S.C. § 1114) against each of the entity defendants; (2) contributory infringement against the Dyms; (3) unfair competition under the Lanham Act (15 U.S.C. § 1125) against the entity defendants; (4) contributory unfair competition against the Dyms; (5) trademark dilution (15 U.S.C. § 1125) against all Defendants; (6) unfair competition under Colorado law against all Defendants; and (7) deceptive business practices (C.R.S. § 6-1-105) against all Defendants; and (8) a claim for an accounting against all Defendants.

         In response, the Defendants assert three counterclaims: (1) a claim pursuant to 15 U.S.C. § 1064(3), seeking to cancel Marco’s registration of the MARCO’S word mark as having been fraudulently obtained, due to Marco’s principals falsely attesting in their 2012 and 2013 registration applications that they were aware of no other entity having the right to use the MARCO’S mark in commerce despite being aware of MCF’s use of a MARCO’S mark since 2008; (2) a claim pursuant to 15 U.S.C. § 1064(3) to cancel Marco’s registration of the MARCO’S word mark was being merely descriptive and lacking in any secondary meaning associating it with Marco’s; and (3) a claim by the entity Defendants for a declaration that their use of the MARCO’S COAL-FIRED PIZZA mark does not infringe any of Marco’s marks.

         The Defendants now move for summary judgment on certain claims and counterclaims (# 109). Specifically, they argue that: (1) the Golden, Casper, Colfax, and Racca’s Defendants are entitled to summary judgment on all claims asserted against them insofar as Marco’s cannot demonstrate that any of these Defendants used any of the Marco’s marks; (2) they are entitled to summary judgment on their counterclaim seeking cancellation of the MARCO’S word mark due to fraud; (3) they are entitled to judgment on their counterclaim contending that the MARCO’S word mark is not inherently distinctive and lacked secondary meaning in the market as of 2008; (4) all Defendants are entitled to judgment in their favor on their affirmative defenses of laches or acquiescence, given that Marco’s made no efforts to enforce its marks between 2008 and 2017; (5) Marco’s cannot establish its claim for trademark dilution because it cannot show that MCF began using any of Marco’s marks after they had become famous; and (6) Marco’s cannot establish its claim for an accounting because it cannot show that the Dyms acted in bad faith when selecting the MARCO’S COAL-FIRED PIZZA mark.

         III. LEGAL STANDARD

         Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Int’l Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary adjudication is authorized when there is no genuine dispute as to any material fact and a party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Substantive law governs what facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof, and identifies the party with the burden of proof. See Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986); Kaiser-Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565 (10th Cir. 1989). A factual dispute is “genuine” and summary judgment is precluded if the evidence presented in support of and opposition to the motion is so contradictory that, if presented at trial, a judgment could enter for either party. See Anderson, 477 U.S. at 248. When considering a summary judgment motion, a court views all evidence in the light most favorable to the non-moving party, thereby favoring the right to a trial. See Garrett v. Hewlett Packard Co., 305 F.3d 1210, 1213 (10th Cir. 2002).

         If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed.R.Civ.P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus. Inc. v. Arvin Indus. Inc., 939 F.2d 887, 891 (10th Cir. 1991); Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir. 1999). If there is a genuine dispute as to a material fact, a trial is required. If there is no genuine dispute as to any material fact, no trial is required. The court then applies the law to the undisputed facts and enters judgment.

         If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, then the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

         IV. DISCUSSION

         This case presents multiple claims against multiple defendants based on multiple trademarks. Practically, each claim is comprised of six sub-claims, one for each trademark. It is helpful to group the Defendants’ arguments in their Motion for Summary Judgment according to the claims to which each applies.

• As to all claims on all six marks, the Golden, Casper, Colfax, and RPN Defendants claim that they are entitled to judgment because the Plaintiffs cannot establish that they have ever used the marks.
• As to the claims for trademark infringement and unfair competition based only on the MARCO’S word and design marks, all the Defendants assert fraudulent registration and seek cancellation of the MARCO’S word mark.
• As to the claims for trademark infringement and unfair competition based only on the MARCO’S word and design marks, all the Defendants assert invalidity (no secondary meaning) and seek judgment for cancellation of the MARCO’S word mark.
• As to all claims based on all six marks, all the Defendants argue that they are entitled to judgment on the affirmative defenses of laches and acquiescence.
• As to the dilution claim based on all six marks, all the Defendants assert a defense that the Marco’s marks are not famous. . As to the claim for accounting, all the Defendants contend Marco’s cannot show they acted in bad faith.

         A. Claims Against the Casper, Golden, Colfax, and RPN Defendants

         MCF argues that Marco’s cannot establish any of its claims against the Golden, Casper, Colfax, and RPN Defendants because it cannot show that any of these Defendants made any use of Marco’s marks. Indeed, the Defendants have come forward with evidence, in the form of Mr. Dym’s affidavit, that Defendant Colfax was formed speculatively and has never actually conducted any business of any kind beyond acquiring a parcel of real property, and that Defendant RPN was formed for unknown reasons but has never conducted business operations of any kind. (# 109-2 ¶ 19.) As to the two remaining entities, Golden and Casper, Mr. Dym’s affidavit establishes that these businesses have always operated under the Racca’s name and have never used any variation of any Marco’s mark. (# 109-2 ¶ 18.)

         Curiously, Marco’s Response does not address the fact that the Colfax and RPN Defendants have never had any operations at all. Rather, Marco’s simply lumps all four Defendants together and argues that: (1) those businesses routinely used “Powered by Marco’s Coal Fired Pizza” in their advertising; (2) that three of the four Defendants have the phrase “Marco’s Coal Fired Pizza” in their name; and (3) that the Dyms act as the agents of each of the four Defendants such that the Dyms’ use of Marco’s marks in other businesses somehow operate to bind the four Defendants here. The Court summarily rejects the second and third arguments, as Marco’s cites no authority for the proposition that a business’ selection of a particular legal name that is otherwise never used in advertising or otherwise displayed to consumers can constitute trademark infringement or any other violations asserted herein. See, e.g., Kelly-Brown v. Winfrey,717 F.3d 295, 306 (2d Cir. 2013) (essential to all Lanham Act claims is the use of a mark “in commerce, ” which inquires “whether the ...


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