Property, intangible

a blog about ownership of intellectual property rights and its licensing

The Name Didn’t Stay With the Building

Ownership of the trademark for a location-based business, like a restaurant, a theater, or a hotel, is always interesting. I don’t think there is any consistent outcome; it depends on the very specific facts of the given situation.

Today’s installment is about a little bakery called The Long Grove Apple Haus. The original business owner, non-party LGC, was a tenant at the building (the “Building”), operating the store from 1977 through 2011. LGC had two other stores (apparently not called Apple Haus), a wholesale business for Apple Haus products, and sold the product at festivals, both before the store closed and after. After the store closed in 2011, the premises were vacant.

In June 2013 the defendant, Baldi Candy Co., purchased the assets relating to the Apple Haus business and continued to use the Apple Haus mark on products.1 In February 2017, Baldi Candy purchased property near the Building and later that year opened two stores at the new property. The business was called Long Grove Confectionery Company but it sells Apple Haus products.

In September 2014 the plaintiff, Long Grove Investments, acquired the Building. In August 2017, it leased the Building to a person named Steve Sintetas, who was obliged by his lease to open a business named “Long Grove Apple Haus.” The plaintiff claimed that when it purchased the building it acquired rights in the Apple Haus name. Long Grove Investments sued Baldi Candy Co. for trademark infringement and deceptive trade practices under Illinois law.

The plaintiff’s theory was that the trademark associated with the premises runs with the premises. But the court wasn’t buying it:

Plaintiff attempts to overcome summary judgment by contending that it demonstrates ownership by purchasing “the building with which [the mark] is associated.” Plaintiff cites Plitt Theatres, Incorporated v. American National Bank & Trust Company of Chicago, 697 F. Supp. 1031 (N.D. Ill. 1988), where the court observed that trademark ownership “passes impliedly with ownership of the pertinent building or business with which the mark is associated, absent express provision to the contrary.” Relying upon this proposition, the court in Plitt Theatres held that each successive owner to the historic Esquire Theatre—beginning with the original owners who established the “Esquire” mark—passed its ownership rights to that mark when it sold the building to the next buyer. Critically, the court noted that the building’s original construction included a marquee and vertical sign containing the name “Esquire,” which has remained on the façade throughout time.

Plaintiff also cites Helpful Hound, L.L.C. v. New Orleans Building Corporation, 331 F. Supp. 3d 581 (E.D. La. 2018), where the court held that the City of New Orleans established continuous and prior use over the trademark “St. Roch Market” even though the City never actually operated a market, or any other type of food service, in the building housing the St. Roch Market. The court reasoned that the City owned the building housing the market (which had been known as the “St. Roch Market” since the late 1800s), designed and built the market, chose its lessees, and significantly restored it after Hurricane Katrina. The court thus rejected a food hall tenant’s argument that it held priority over the City as to the “St. Roch Market” mark.

But Plaintiff’s reliance upon these cases is misplaced, because the circumstances here vastly differ from those in either Plitt Theatres or Helpful Hound. In both of those cases, the original property owners: (1) actually established first use of the marks; and (2) demonstrated that they or their successive owners continuously used the marks at the properties. …

Here, in contrast to Hungry Hound, Plaintiff did not originally own the Building, but rather acquired it in 2014. Moreover, unlike both Hungry Hound and Plitt Theatres, the original owner of the Building did not create, or have any involvement with establishing, the Apple Haus Mark. Rather, the record remains clear that LGC, a tenant of the Building, did so by, among other things, selling products bearing the Apple Haus Mark. And finally, unlike in Hungry Hound and Plitt Theatres, where the owners demonstrated continuous use of the marks at the properties, the record here shows that: (1) the Building has remained vacant since 2011; and (2) Plaintiff has never used the Apple Haus Mark since it acquired the Building in 2014.…

Plaintiff merely purchased the Building. There remains no evidence that Plaintiff also acquired LGC’s business or any of its intellectual property. And, neither Plaintiff nor this Court has located any authority suggesting that the mere purchase of real property that was once associated with a trademark in the past can confer ownership.

Plaintiff’s theory was a bit too much of a blunt instrument. If it was correct, no business could ever move locations without risking someone opening a business with the same name at the old locale.

Long Grove Investments, LLC v. Baldi Candy Co., No. 18-cv-5237 (N.D. Ill. Aug. 7, 2019)

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  1. It doesn’t seem to be an issue that the Apple Haus mark wasn’t listed as an asset in the Asset Purchase Agreement. 
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One response to “The Name Didn’t Stay With the Building”

  1. This is an interesting case whereby the court stated clearly that ownership of building does not necessarily mean ownership of trademark by a business. The focus ought to be on whether successive owners of the building created the mark and used it.
    Bashar H. Malkawi

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