Eat BBQ LLC et al v. Walters

Filing 52

MEMORANDUM OPINION & ORDER: 1. Plaintiffs' Partial Motion for Summary Judgment [R. 31] is GRANTED as to the claims for trademark infringement and false designation under the Lanham Act, 15 U.S.C. § 1051, et seq., § 1125(a), unfair competition under Kentucky's common-law, and conversion and DENIED as to the claim for Tortious Interference with Prospective Business Relations; 2. Pursuant to the finding of Infringement, Defendant Walters is permanently enjoined and prohibi ted from using the STAXX and STAXX BBQ trademarks in any capacity; 3. Walters' Motion to Join Necessary Parties [R. 45] is DENIED at this time although the Parties are ORDERED to provide supplemental briefing within fourteen (14) days of the issuance of this order on whether Knoll and Koch are necessary and indispensable parties in resolving the remaining claims and counterclaims; and, 4. This matter will remain on the Court's active docket pending resolution of the remaining issues, and thus the dates for the Final Pretrial Conference and the Jury Trial will remain scheduled. Signed by Judge Gregory F. VanTatenhove on 9/18/2014.(AKR)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
FRANKFORT
EAT BBQ LLC, et al.,
Plaintiff,
V.
THOMAS C. WALTERS,
Defendant.

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Civil No. 12-71-GFVT

MEMORANDUM OPINION
&
ORDER

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Daniel Liebman and Tommie Walters had an idea and began implementing that
idea as, at least in the most fundamental sense of the word, partners. Sadly, their
collaboration ceased and disputes relating to its disbanding are now before the Court.
More specifically, Liebman obtained trademarks that he now claims Walters infringed
upon and Walters argues that he is owed a percentage of the value of the enterprise they
created.
I
In November 2010, Daniel Liebman and Tommie Walters opened their first
restaurant together in Louisville, Kentucky. The financial support came, with the help of
a few investors, from Liebman. Walters contributed his experience in the restaurant
industry and the idea for the STAXX name. Before partnering with Liebman, Walters
had used the STAXX moniker in limited circumstances, but had not registered it with the
United States Patent and Trademark Office (Trademark Office). The restaurant in
1

Louisville, STAXX Roadhouse, was short-lived, closing by August of 2011. Prior to its
closing, however, Liebman and Walters opened a second restaurant, STAXX BBQ in
Frankfort, Kentucky. This location is still open.
After adopting STAXX as the identifying mark of the restaurants, Liebman
applied for protected use of the moniker in two forms, STAXX and STAXX BBQ.
Walters knew of the applications to the Trademark Office but did not file an objection as
he did not want to “rock the boat.” [R. 37 at 3.] Instead, he emailed Liebman and Susan
Knoll, an investor, and encouraged them to add him as an owner of the trademarks. [R.
37-2, at 26 (Email dated 8/24/2011).] Knoll explained to Walters that he was “not an
owner of the marks as defined by the U.S. Trademark Statute.” [Id. at 27 (Email dated
8/24/2011).] The marks were subsequently approved by, and registered with, the
Trademark Office. As of September 4, 2012, Liebman has been the owner of U.S.
Registration No. 4,201,038 which protects his service mark “STAXX BBQ” and, as of
October 2, 2012, Liebman has owned U.S. Registration No. 4,216,466 which protects the
“STAXX” mark. [R. 31-2; R. 31-3.] Plaintiffs use these marks to advertise and promote
STAXX BBQ.
Liebman and Walters severed ties in May 2012. [R. 31-4 at 10-11.] After parting
ways with Liebman, Walters continued to cater and provide food services and used the
marks registered in Liebman’s name to promote and advertise his business. [R. 4-7; R.
31-7.] Plaintiffs became aware of the alleged infringement which led to the present
litigation.
Plaintiffs filed a motion for injunctive relief contemporaneously with the
2

Complaint. After holding an evidentiary hearing and receiving briefing on the issue, this
Court granted a preliminary injunction on November 16, 2011, that prohibited Walters
from using the disputed marks pending ultimate resolution of this dispute. [R. 4.] On
November 1, 2012, along with his answer, Walters asserted counterclaims seeking (1)
declaratory relief, (2) cancellation of the STAXX mark, (3) cancellation of the STAXX
BBQ mark and also alleging (4) contempt. [R. 13.] In their first amended complaint,
Plaintiffs assert claims for trademark infringement and false designation under the
Lanham Act, 15 U.S.C. § 1051, et seq., § 1125(a), unfair competition under Kentucky’s
common-law, conversion and tortious interference with prospective business relations.
[R. 29.] Walters’ first amended answer denies liability and alleges a single counterclaim
for declaratory relief on the question of his partnership interest. [R. 32.] Currently
pending before the Court are Plaintiffs’ partial motion for summary judgment [R. 31] and
Walters’ late-filed motion seeking to join indispensable parties.1 For the reasons set forth
below, Plaintiffs’ motion for partial summary judgment will be GRANTED in part and
DENIED in part. [R. 31.]
II
Summary judgment is appropriate where “the pleadings, discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material

1

Walters seeks to join investors Knoll and Koch as indispensable parties, arguing that they have a
potential claim “to the same extent and of the same type as to the existing plaintiffs.” [R. 45-2.] Contrary
to his argument, Knoll and Koch’s “potential claims” are not of the same type as those plead by Liebman
and Eat BBQ as Plaintiffs’ claims primarily relate to the infringement of trademarks that are registered in
the sole name of Dan Liebman. As the Court does not believe either Knoll or Koch to be necessary parties
for the resolution of these claims, the Court will proceed to rule on Plaintiffs summary judgment motion at
this time. However, the Court does consider, infra Section III, Walters’ request to join these parties as
necessary for purposes of resolving his counterclaims.

3

fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). “A genuine dispute
exists on a material fact, and thus summary judgment is improper, if the evidence shows
‘that a reasonable jury could return a verdict for the nonmoving party.’ ” Olinger v.
Corp. of the President of the Church, 521 F. Supp. 2d 577, 582 (E.D. Ky. 2007) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).
In deciding a motion for summary judgment, the Court must review the facts and
draw all reasonable inferences in favor of the non-moving party. Logan v. Denny’s, Inc.,
259 F.3d 558, 566 (6th Cir. 2001) (citing Liberty Lobby, 477 U.S. at 255). In terms of
burden shifting, the moving party has the initial burden of demonstrating the basis for its
motion and identifying those parts of the record that establish the absence of a genuine
issue of material fact. Chao v. Hall Holding Co., Inc., 285 F.3d 415, 424 (6th Cir. 2002).
The movant may satisfy its burden by showing “that there is an absence of evidence to
support the non-moving party’s case.” Celotex., 477 U.S. at 325. Once the movant has
satisfied this burden, the non-moving party must go beyond the pleadings and come
forward with specific facts to demonstrate there is a genuine issue. Hall Holding, 285
F.3d at 424 (citing Celotex, 477 U.S. at 324.) Moreover, “the nonmoving party must do
more than show there is some metaphysical doubt as to the material fact. It must present
significant probative evidence in support of its opposition to the motion for summary
judgment.” Id. (internal citations omitted).
The trial court is under no duty to “search the entire record to establish that it is
bereft of a genuine issue of material fact.” In re Morris, 260 F.3d 654, 655 (6th Cir.
4

2001) (citing Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479-80 (6th Cir. 1989)).
Instead, “the nonmoving party has an affirmative duty to direct the court’s attention to
those specific portions of the record upon which it seeks to rely to create a genuine issue
of material fact.” In re Morris, 260 F.3d at 655. Particularly relevant here, “to avoid
summary judgment in a Lanham Act case alleging violations of § 32 (15 U.S.C. § 1114),
and § 43 (15 U.S.C. § 1125), the nonmoving party must establish that genuine factual
disputes exist concerning those factors that are material to whether confusion is likely in
the marketplace as a result of the alleged infringement.” Holiday Inns, Inc. v. 800
Reservation, Inc., 86 F.3d 619, 622-23 (6th Cir. 1996) (citing Homeowners Group, Inc. v.
Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir. 1991)); see also ThermaScan, Inc. v. Thermoscan, Inc., 295 F.3d 623, 630 (6th Cir. 2002).
A
The Lanham Act, codified at 15 U.S.C. § 1051 et seq., protects the trademark
rights of businesses and individuals. See 15 U.S.C. § 1114. “The purpose of the
trademark statutes is to protect the trademark holder's quasi-property interest in the mark
and prevent consumer confusion about the actual source of goods using the mark.”
Maker's Mark Distillery, Inc. v. Diageo N. Am., Inc., 703 F. Supp. 2d 671, 687 (W.D. Ky.
2010) aff'd, 679 F.3d 410 (6th Cir. 2012) (citing Ameritech, Inc. v. American Information
Technologies Corp., 811 F.2d 960, 964 (6th Cir. 1987)).
Section 32 of the Lanham Act provides that a person is liable for trademark
infringement when he, without consent of the registrant, does “use in commerce any …
copy, or colorable imitation of a registered mark in connection with the sale, offering for
5

sale, distribution, or advertising of any goods or services on or in connection with which
such use is likely to cause confusion…” 15 U.S.C.A. § 1114(1)(a). Thus, to succeed, a
Plaintiff must show (1) they had a registered trademark, (2) it was used without consent
and (3) its use was likely to cause confusion. Id.
Section 43(a) of the Lanham Act creates a federal cause of action for trademark
infringement claims. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992)
(citing 1 J. Gilson, Trademark Protection and Practice § 2.13, p. 2–178 (1991)). That
Section provides that:
Any person who, on or in connection with any goods or services, or any
container for goods, uses in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation of fact,
which--(A) is likely to cause confusion, or to cause mistake, or to deceive as to
the affiliation, connection, or association of such person with another person,
or as to the origin, sponsorship, or approval of his or her goods…or
commercial activities by another person…. shall be liable in a civil action by
any person who believes that he or she is or is likely to be damaged by such act.
15 U.S.C.A. § 1125(1)(a) (emphasis added).
Assuming the Plaintiffs have a valid, registered trademark and the use is nonconsensual, the test is the same under both Section 32 and 43(a); “Whether we call the
violation infringement, unfair competition or false designation of origin, the test is
identical—is there a ‘likelihood of confusion?’ ” Two Pesos, Inc., 505 U.S. at 780
(quoting New West Corp. v. NYM Co. of California, Inc., 595 F.2d 1194, 1201 (CA9
1979) (footnote omitted)). Furthermore, federal trademark infringement analysis is
identical to Kentucky’s common law unfair competition analysis. See Maker's Mark
Distillery, Inc., 703 F. Supp. 2d at FN 17 (citing Winchester Federal Savings Bank v.
6

Winchester Bank, Inc., 359 F.Supp.2d 561, 564 (E.D. Ky. 2004) (“Once the plaintiffs
establish that the marks are valid and protectable, they must establish that the defendant's
service mark is likely to cause confusion among consumers in the marketplace in order to
prevail on all of the state and federal claims.”)(additional citations omitted). Thus, to
prove trademark infringement, false designation and unfair competition, Plaintiffs must
show that (1) they held the trademarks, (2) they did not consent to Walters’ use of those
marks and (3) Walters’ use of the marks was likely to cause confusion among relevant
consumers.
1
The Court must first confront the question of whether Liebman’s trademark rights
are superior to the rights of Walters. As discussed earlier, Liebman has registered both
the “STAXX” and “STAXX BBQ” marks with the Trademark Office. [R. 31-2; R. 31-3.]
Walters argues, although not all that forcibly, that his use of the STAXX marks preceded
Plaintiffs’ use and that, as a result, he has superior rights. [R. 37 at 2.]
“One of the bedrock principles of trademark law is that trademark or ‘service
mark ownership is not acquired by federal or state registration. Rather, ownership rights
flow only from prior appropriation and actual use in the market.’” Allard Enterprises,
Inc. v. Advanced Programming Res., Inc., 146 F.3d 350, 356 (6th Cir. 1998) (Allard I)
(quoting Homeowners Group, Inc., 931 F.2d at 1105.) Put another way, registering a
trademark with the Trademark Office does not “create rights and priority over others who
have previously used the mark in commerce,” 15 U.S.C. § 1057(b), because “[t]he
territorial rights of a holder of a federally registered trademark are always subject to any
7

superior common law rights acquired by another party through actual use prior to the
registrant's constructive use.” Allard Enterprises, Inc. v. Advanced Programming Res.,
Inc., 249 F.3d 564, 572 (6th Cir. 2001) (Allard II). Registration does, however, serve as
prima facie evidence of the validity of that mark. 15 U.S.C. § 1115(a). “The effect of the
statutory presumption contained in § 1115(a) is to shift the burden of proof to the alleged
infringer.” Leelanau Wine Cellars, Ltd. v. Black & Red, Inc., 502 F.3d 504, 514 (6th Cir.
2007); see also Allard I, 146 F.3d at 356.
Generally, “[t]he first to use a mark in the sale of goods or services is the ‘senior
user’ of the mark and gains common law rights to the mark in the geographic area in
which the mark is used.” Allard II, 249 F.3d at 572. In the context of trademarks,
however, the word “use” retains a special meaning. Any use will not do. Rather, “[a]
party establishes a common law right to a trademark only by demonstrating that its use of
the mark was ‘deliberate and continuous, not sporadic, casual or transitory.’” Circuit
City Stores, Inc. v. CarMax, Inc., 165 F.3d 1047, 1054-55 (6th Cir. 1999) (quoting La
Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1272 (2d
Cir.1974)). Put another way, “[c]ommon law trademark rights develop when goods
bearing the mark are placed in the market and followed by continuous commercial
utilization.” McDonald's Corp. v. Burger King Corp., 107 F. Supp. 2d 787, 790 (E.D.
Mich. 2000) (citing Cullman Ventures, Inc. v. Columbian Art Works, Inc., 717 F.Supp.
96, 113 (S.D.N.Y. 1989) (emphasis added). Furthermore, “[u]se sufficient to establish
common law trademark rights must be ‘sufficiently public to identify or distinguish the
marked goods in an appropriate segment of the public mind as those of the adopter of the
8

mark.’ * * * The activities ‘must have substantial impact on the purchasing public.’”
Burger King Corp., 107 F. Supp. 2d at 790 (quoting Lucent Info. Mgmt., Inc. v. Lucent
Technologies, Inc., 986 F. Supp. 253, 259 (D. Del. 1997) aff'd, 186 F.3d 311 (3d Cir.
1999)).
The question of whether prior use of a service mark qualifies a defendant for
trademark rights is a “mixed question of law and fact.” Allard I, 146 F.3d at 355. First,
the Court must consider what facts exist to support the defendant’s claim to prior use.
Second, the Court must decide, as a matter of law, whether the “defendants' prior use was
sufficient to establish ownership of the service mark.” Id. Because Liebman holds
registered trademarks for the disputed marks, the burden is on Walters to prove he
possesses superior common law rights. Allard II., 249 F.3d at 573.
To show that he possesses common-law trademark rights, Walters presents the
following examples of his prior use of the “STAXX” and “STAXX BBQ” marks:


“STAXX Ribs [were] on menus at Furlongs, Steakhouse Express, and
Riptide at the River” since the early 2000’s. [R. 37 at 2; R. 37-4 (copies
of menus).]



On August 12, 2009, a menu prepared by Walters and emailed to Liebman
referred to “Staxx Blackberry Baby Back Ribs.” [R. 37-2 at 2.]



On September 27, 2010, Walters created a “Furlongs Catering and Staxx
Catering” page on Facebook. [R. 18 at 3; R. 37-3 (Facebook Pages); R.
37-4 at 12 (Facebook Pages).]

9



On September 27, 2010, Walters procured estimates for STAXX signs for
STAXX Roadhouse in Louisville [R. 37-2 at 10.]



Walters used a “[e-mail]” email account before EAT,
LLC and EAT BBQ LLC were even formed. [R. 18 at 3.]

Even when the Court assumes that all of the above propositions are true, as the Court
must do at this stage of the litigation, the facts and examples supplied by Walters do not
present a genuine issue of material fact on the legal question of whether his past use of
the marks is sufficient to earn him common law trademark rights.
Walters has not presented sufficient evidence to show that his prior use was
“deliberate and continuous” as opposed to “sporadic, casual or transitory.’” Circuit City
Stores, Inc. v. CarMax, Inc., 165 F.3d 1047, 1054-55 (6th Cir. 1999). Furthermore,
Walters has not shown that “the use was sufficiently public to identify or distinguish the
marked goods” or that potential customers did connect the marks with his services. See
McDonald’s Corp. v. Burger King Corp., 107 F.Supp.2d 787, 790 (E.D. Mich. 2000).
Liebman, therefore, holds senior trademark rights to the marks and there is no
question that Walters did not have Liebman’s consent. The question now becomes
whether Walters’ use of the marks is likely to cause confusion.
2
“Whether there is a likelihood of confusion is a mixed question of fact and law.”
Champions Golf Club, Inc. v. The Champions Golf Club, Inc., 78 F.3d 1111, 1116 (6th
Cir. 1996) (citing Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186 (6th Cir. 1988)). First,
the Court must consider the “fact[s] supporting the likelihood of confusion factors” and
10

then, secondly, answer the legal question of “whether those foundational facts constitute
a ‘likelihood of confusion.’” Id. (citing Wynn, 839 F.2d at 1186 (additional citations
omitted)). In determining whether Walters’ use of the marks likely caused consumer
confusion, the Court is to consider eight factors: 1) strength of the plaintiff's mark; 2)
relatedness of the goods; 3) similarity of the marks; 4) evidence of actual confusion; 5)
marketing channels used; 6) likely degree of purchaser care; 7) defendant's intent in
selecting the mark; and 8) likelihood of expansion of the product lines. Maker's Mark
Distillery, Inc., 679 F.3d at 419 (citing Frisch's Rests., Inc. v. Elby's Big Boy of
Steubenville, Inc., 670 F.2d 642, 648 (6th Cir.), cert. denied, 459 U.S. 916 (1982));
Tumblebus Inc. v. Cranmer, 399 F.3d 754 (6th Cir. 2005); Daddy’s Junky Music Stores,
Inc. v. Big Daddy’s Family Music Ctr., 109 F.3d 275, 280 (6th Cir. 1997). Finally,
confusion is to be evaluated “with respect to the relevant consumer market” which are
defined as “potential buyers of the ‘junior’ product.’” Maker's Mark Distillery, Inc., 679
F.3d at 419 (citing Leelanau Wine Cellars, Ltd., 502 F.3d at 518).
In this case, the marks used by Walters are identical to the marks that Liebman
trademarked. In situations where the marks are identical, there is almost never a dispute
regarding confusion.
Obviously, since both marks use absolutely identical language to sell a nearly
identical service,[] the likelihood of confusion must be considered great. As
Professor McCarthy wrote, “[c]ases where a defendant uses an identical mark on
competitive goods hardly ever find their way into the appellate reports. Such
cases are ‘open and shut’ and do not involve protracted litigation to determine
liability for trademark infringement.”
Wynn, 839 F.2d at 1190-91 (quoting 4 McCarthy on Trademarks and Unfair Competition
§ 23:20 (4th ed.)). Nevertheless, and despite the fact that Walters does not even address
11

the issue of confusion in his response [See R. 37], the Court again briefly considers the
above factors.
a
“A mark is strong if it is highly distinctive, i.e., if the public readily accepts it as
the hallmark of a particular source; it can become so because it is unique, because it has
been the subject of wide and intensive advertisement, or because of a combination of
both.” Frisch’s Restaurant, Inc., 670 F.3d at 647. Plaintiffs argue that their marks are
arbitrary and, therefore, inherently distinctive. [R. 31-1 at 8.] Walters has offered
nothing to refute this assertion, and the Court can find nothing in the record to suggest
otherwise.
b
Where “the parties compete directly by offering their goods or services, confusion
is likely if the marks are sufficiently similar.” Daddy's, 109 F.3d at 282 (citing
Champions Golf Club, 78 F.3d at 1118). In this case, both Liebman and Walters, through
his catering service, sell barbeque. They have nearly identical, if not identical, menu
items. They compete directly against each other and, as this Court has past concluded,
Walters solicited business directly from Plaintiffs’ customers. [See R. 19 at 5.]
c
The similarity of the marks is “a factor of considerable weight.” AutoZone, Inc. v.
Tandy Corp., 373 F.3d 786, 795 (6th Cir. 2004) (quoting Daddy's, 109 F.3d at 283.)
When considering how similar the marks are:
courts must determine whether a given mark would confuse the public when
viewed alone, in order to account for the possibility that sufficiently similar marks
12

may confuse consumers who do not have both marks before them but who may
have a general, vague, or even hazy, impression or recollection of the other party's
mark.
Maker's Mark Distillery, Inc., 679 F.3d at 421 (quoting Daddy's,109 F.3d at 283 (internal
quotation marks omitted)). In this case, the marks are identical.
d
When it exists, evidence of actual confusion “is undoubtedly the best evidence of
likelihood of confusion.” AutoZone, Inc., 373 F.3d at 798 (quoting Wynn Oil I, 839 F.2d
at 1188). As the Court explained in its past order:
During the hearing, Liebman recounted hearing from a lady, an existing customer,
who had received an email with promotional materials from Walters. The email
included the “STAXX BBQ” trademark, and the “staxxbbq@gmail” email
address. The lady was confused, however, about the source of the email because
Liebman’s name and business contact information were absent from the materials.
Memorandum Opinion & Order [R. 19, at 6.] Again, Walters has not rebutted this
testimony.
e
The Court must “consider the similarities or differences between the predominant
customers of the parties' respective goods or services.” Daddy's, 109 F.3d at 285 (citing
Homeowners Group, 931 F.2d at 1110). This further requires Courts to consider whether
“the marketing approaches employed by each party resemble each other.” Id. (citing
Homeowners Group, 931 F.2d at 1110. Again, Walters has provided no evidence to rebut
the Court’s past conclusion:
Walters is indeed using the same marketing channels used by STAXX BBQ. [R.
4-7.] He is intentionally placing the “staxxbbq” email address on his promotional
materials impliedly suggesting that he is an agent of STAXX BBQ. [R. 4-7.]
Further, he is advertising and competing for the same customers and events as
13

Plaintiffs. [Id.; R. 4-2, at 2.] Such occurrences show that Walters has used the
same marketing channels to promote his services.
Memorandum Opinion & Order [R. 19, at 5.] With no additional evidenced presented,
the Court has no reason to alter its earlier position.
f
“[C]onfusingly similar marks may lead a purchaser who is extremely careful and
knowledgeable ... to assume nonetheless that the seller is affiliated with or identical to the
other party.” Maker's Mark Distillery, Inc., 679 F.3d at 423 (quoting Daddy's, 109 F.3d at
286). Where the product at issue is relatively cheap, it may be assumed that consumers
are less likely to employ significant care in making the purchase. See Daddy's, 109 F.3d
at 285 (“[H]ome buyers will display a high degree of care when selecting their real estate
brokers, [] whereas consumers of fast-food are unlikely to employ much care during their
purchases.” (internal citations omitted). “[W]hen services are expensive or unusual, the
buyer can be expected to exercise greater care in her purchases.” Id. (quoting
Homeowners Group, 931 F.2d at 1111.) In this case, the food at issue is not expensive
and so consumers cannot be expected to exercise a high degree of care or be overly
critical. This weights in favor of a finding of likely confusion.
g
When it can be shown that the defendant’s intention in using a mark was to
benefit from the reputation of that mark then “that fact alone ‘may be sufficient to justify
the inference that there is confusing similarity.’” Wynn Oil Co., 839 F.2d at 1189
(quoting Amstar Corp. v. Domino's Pizza, Inc., 615 F.2d 252, 263 (5th Cir.), cert. denied,
449 U.S. 899 (1980) (quoting Restatement of Torts § 729 comment f (1938)). Neither
14

party has provided the Court with any new evidence that might change the Court’s
position on this point. As the Court stated in its earlier order:
Whether [Walters] is purposefully attempting to avail himself of the goodwill
built by Plaintiffs is unclear, but the case can be argued quite persuasively that by
using the STAXX marks to promote his services, he impliedly concedes that he
stands a better chance of generating business. Of course, having developed the
concept, it is conceivable that Walters feels entitled to use the name along with its
marks. Given the realistic possibility that his only intent is to use that which he
believes is rightfully his, this factor does not weigh in favor of Plaintiffs.
Memorandum Opinion & Order [R. 19, at 5.] Either way, “‘intent is largely irrelevant in
determining if consumers likely will be confused as to source.’” Wynn, 839 F.2d at 1189
(quoting Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir.
1986)).
h
“[A] ‘strong possibility’ that either party will expand his business to compete with
the other or be marketed to the same consumers will weigh in favor of finding that the
present use is infringing.” Daddy's, 109 F.3d at 287 (quoting Homeowners Group, 931
F.2d at 1112 (citing Restatement of Torts § 731(b) & comment c (1938)).
Plaintiffs provide no evidence of plans for future expansion. Nevertheless, as has
been explained Walters is already competing with the same consumers and using the
same channels of commerce as Plaintiffs.
3
After considering these factors, it is clear that Walters’ use of the marks is “likely
to cause confusion” among customers. Walters has provided no evidence to rebut
Plaintiffs’ assertion about the strength of the mark. The foods being promoted by
15

Plaintiffs and Walters are virtually identical. The marks are not only “similar”—they are
identical. Walters has done nothing to rebut evidence produced at the evidentiary hearing
regarding actual confusion and evidence has been presented that shows Walters used the
same marketing channels as Plaintiffs. Because the goods are inexpensive, there is a
presumption that purchasers will not be overly critical so as to ensure they know which
product they are buying. The only factor which does not weigh strongly in Plaintiffs’
favor relates to Walters’ intent and, as was explained, “‘intent is largely irrelevant in
determining if consumers likely will be confused as to source.’” Wynn, 839 F.2d at 1189
(quoting Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 875 (2d Cir.
1986)).
There is no question that Walters wanted to be included as a partial owner of the
trademark name “STAXX.” He explicitly requested that Knoll include him on the
trademark application in 2010. [See R. 37 at 2; R. 37-2 at 24 (Aug. 10, 2010 Email from
Walters to Knoll).] Nevertheless, Walters’ desire to own this trademark can only carry
him so far. As has been demonstrated, it is hard to imagine a case where customer
confusion is more likely. For all the aforementioned reasons, there is no genuine issue of
material fact and summary judgment is proper on all Plaintiff’s trademark infringement
claims.
C
“[C]onversion is the wrongful exercise of dominion and control over property of
another.” State Auto. Mut. Ins. Co. v. Chrysler Credit Corp., 792 S.W.2d 626, 627 (Ky.
Ct. App. 1990) (citing Illinois Central R. Co. v. Fontaine, 217 Ky. 211, 289 S.W. 263
16

(1926)). When considering whether conversion occurred, “neither motive, intent, nor
good faith is material.” Id.
Plaintiffs asserts that Walters catered an event for Old Friends, Inc., while an
employee of EAT BBQ, and that instead of remitting half of the proceeds to EAT BBQ
and Dan Liebman, he kept the full payment for himself. [R. 31-1 at 11.] To support this
claim, Plaintiffs direct the Court to a portion of Walters’ deposition testimony where he
admits that he used $200 worth of food from EAT BBQ, catered the event for Old
Friends, Inc., cashed the check for $1,875 and then kept the cash. [See R. 31-4 at 86.]
Plaintiffs argue that Walters owes them half of the $1,875 catering fee plus the $200 in
expenses, totaling $1,037.50. [R. 31-1 at 11.]
Walters fails to provide any explanation or defense to this charge. [See R. 37.]
Plaintiffs presented evidence that demonstrated “an absence of evidence to support
[Walters’] case,” Celotex., 477 U.S. at 325, and so the burden shifted to Walters to “go
beyond the pleadings and come forward with specific facts to demonstrate there is a
genuine issue.” Hall Holding, 285 F.3d at 424 (citing Celotex, 477 U.S. at 324.) Walters
did not meet this burden and, therefore, summary judgment is appropriate as to this
claim.
D
In the Commonwealth of Kentucky, the law on the Tortious Interference with
Prospective Contractual Relations is as outlined by Sections 766B, 767, and 773 of the
Restatement (Second) of Torts. Randy's Body Shop, Inc. v. Kentucky Farm Bureau Mut.
Ins. Co, 2002-CA-001614-MR, 2004 WL 405742 (Ky. Ct. App. Mar. 5, 2004) (citing
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Nat'l Collegiate Athletic Ass'n By & Through Bellarmine Coll. v. Hornung, 754 S.W.2d
855, 857 (Ky. 1988)).
Our law is clear that a party may not recover under the theory presented in the
absence of proof that the opposing party “improperly” interfered with his
prospective contractual relation. To determine whether the interference is
improper, Section 767 sets forth seven factors to be considered by the court in
ruling on the motion for directed verdict and, if the case is submitted, considered
by the jury. Unless there is evidence of improper interference, after due
consideration of the factors provided for determining such, the case should not be
presented to the jury.
Id. (citing Hornung, 754 S.W.2d at 858. The seven factors listed in Section 767 of the
restatement are:
(a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the
other with which the actor's conduct interferes, (d) the interests sought to be
advanced by the actor, (e) the social interests in protecting the freedom of action
of the actor and the contractual interests of the other, (f) the proximity or
remoteness of the actor's conduct to the interference and (g) the relations between
the parties.
Restatement (Second) of Torts § 767 (1979). “[T]o prevail a party seeking recovery must
show malice or some significantly wrongful conduct. Hornung, 754 S.W.2d at 859
(citing Prosser and Keeton on Torts § 130 (W.P. Keeton ed. 5th ed. 1984.))
Walters contends that he did not intentionally interfere. [R. 37 at 5.] He further
notes that there is no cause of action for negligent interference. [Id.] Furthermore, if
there is an overarching theme to be found in Walters’ response, it is that he genuinely
believes that he owns an interest in the Eat BBQ partnership. Consequently, Walters’
belief that he has a legitimate partnership interest prevents the Court from concluding at
this stage in the litigation, when the facts must be considered in the light most favorable
to Walters, that he acted with “malice” or engaged in “significantly wrongful conduct.”
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Therefore, with a genuine issue of material fact existing on the question of whether
Walters acted with the requisite malice, summary judgment is not appropriate on this
charge, at this time.
E
Walters also asks this Court to join Susan Knoll and Steven Koch as necessary
parties to this action. [R. 45.] As explained supra, his stated argument that Knoll and
Koch have a potential claim “to the same extent and of the same type as to the existing
plaintiffs” is unconvincing because Plaintiffs’ claims primarily relate to the infringement
of trademarks that are registered solely to Dan Liebman. Contrary to the above
statement, Walters’ memorandum is dedicated not to arguing that the Knoll and Kochs’
potential claims are similar to Plaintiffs’ but that Liebman, Knoll, Koch and Walters are
all partners in Staxx BBQ and that Walters is owed a twenty-five percent share of that
partnership. He argues that Knoll and Koch need to be joined to afford him full relief.
Plaintiffs argue the joinder should be denied because it is late and because neither Knoll
nor Koch are necessary for purposes of resolving the trademark claims. [R. 46.]
Plaintiffs are silent, however, on whether Knoll and Koch are necessary for purposes of
resolving the counterclaims that relate to Walters’ partnership interest.
Federal Rule of Civil Procedure 16 establishes that the Court will issue a
scheduling Order that, amongst many other things, will “limit the time to join other
parties.” Fed. R. Civ. P. 16 (b)(3)(A). This rule ensures that “at some point both the
parties and the pleadings will be fixed.” Fed. R. Civ. P. 16, 1983 advisory committee’s
notes. Rule 16 further states that “[a] schedule may be modified only for good cause and
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with the judge's consent.” Fed. R. Civ. P. 16. Considerations underlying the Court’s
“good cause” determination are both the “moving party’s diligence in attempting to meet
the case management order’s requirements” and “possible prejudice to the party opposing
the modification.” Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002) (additional
citations omitted.)
The parties’ planning meeting report, agreed to by both parties on February 1,
2013, states that “the deadline for the Defendant to move to amend pleadings or to join
parties [should] be set at May 1, 2013.” [R. 26 at 2.] On October 28, this Court
discussed scheduling with the parties [R. 40] and, based on the representations made both
in the Parties’ Planning Meeting Report and at the status conference, this Court entered a
scheduling order establishing:
Plaintiff and Defendant both had until May 1, 2013, by which to seek leave to file
any motions to join additional parties or to amend pleadings. This date has passed
and, based on the representation of parties, will present no issue.
[R. 41 at 3.] It was not until March 20, 2014 that Walters asked this Court to join Knoll
and Koch as indispensable parties. [R. 45.] Walters’ motion is clearly late. It was filed
ten months after the date agreed to by the parties, five months after the Court entered that
Scheduling Order and seventeen months from the date the Complaint was filed. [R. 41,
44, 1.] The Court does note that Walters refers in both his originally filed answer and in
his amended answer that Knoll and Koch should be added as parties under Rule 19. [R.
13 at 9; R. 32 at 6.] While not a motion, the original reference in his answer did,
obviously, predate the deadlines.
Second, Federal Rule of Civil Procedure 19 addresses the Required Joinder of
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Parties and is reproduced, in relevant part, below:
A person…must be joined as a party if: (A) in that person's absence, the court
cannot accord complete relief among existing parties; or (B) that person claims an
interest relating to the subject of the action and is so situated that disposing of the
action in the person's absence may: (i) as a practical matter impair or impede the
person's ability to protect the interest; or (ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or otherwise inconsistent
obligations because of the interest.
Fed. R. Civ. P. 19. For purpose of determining whether Knoll and Koch are required
parties, “the allegations of the amended counterclaim should be taken as true.” Markus v.
Dillinger, 191 F. Supp. 732, FN 5 (E.D. Pa. 1961) (citations omitted). Walters alleges
that Knoll, Koch, Liebman and Walters are all equal-owners in a partnership owning Eat
BBQ and related holdings. [See R. 32.] He further argues that he is an obligee to Koch,
one of the investors, who wanted to be paid back by Liebman and Walters before they
took any profits from the Staxx enterprise. As relief, Walters asks the Court to find that
he is a twenty-five percent owner in that partnership. [R. 32 at 10.]
While the Court is troubled by Walters’ unexplained lack of diligence in filing his
motion, the Court also considers Rule 19’s mandate that a person must be joined when
that person’s interest could be impaired in their absence. The Court notes that Plaintiffs
have not yet provided a response as to whether Knoll and Koch are necessary parties for
purposes of resolving the remaining non-trademark and counter claims. For all these
reasons, the Court will reserve judgment on this issue.

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III
Summary Judgment is proper on Plaintiffs’ claims for trademark infringement and
false designation under the Lanham Act, unfair competition under Kentucky’s commonlaw, and conversion. Other claims survive this Order and the Court intends to maintain
the current schedule going forward. Before advancing too far, however, the Court must
confirm that all parties necessary to the resolution of the remaining claims are before the
Court.
Accordingly, and the Court being otherwise sufficiently advised, it is hereby
ORDERED as follows:
1.

Plaintiffs’ Partial Motion for Summary Judgment [R. 31] is GRANTED

as to the claims for trademark infringement and false designation under the Lanham Act,
15 U.S.C. § 1051, et seq., § 1125(a), unfair competition under Kentucky’s common-law,
and conversion and DENIED as to the claim for Tortious Interference with Prospective
Business Relations;
2.

Pursuant to the finding of Infringement, Defendant Walters is permanently

enjoined and prohibited from using the STAXX and STAXX BBQ trademarks in any
capacity;
3.

Walters’ Motion to Join Necessary Parties [R. 45] is DENIED at this time

although the Parties are ORDERED to provide supplemental briefing within fourteen
(14) days of the issuance of this order on whether Knoll and Koch are necessary and
indispensable parties in resolving the remaining claims and counterclaims; and,
4.

This matter will remain on the Court’s active docket pending resolution of
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the remaining issues, and thus the dates for the Final Pretrial Conference and the Jury
Trial will remain scheduled.

This 18th day of September, 2014.

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