MISTER SOFTEE, INC. et al v. AMANOLLAHI

Filing 29

OPINION. Signed by Judge Kevin McNulty on 7/1/14. (jd, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

MISTER SOFTEE, INC., MISTER SOFTEE
SALES AND MANUFACTURING, LLC, and
SPABO ICE CREAM CORP.,
Plaintiffs,

Civ. No. 2:14-CV01687(KM)(MCA)

OPINION

V.

REZA AMANOLLAHI,
Defendant.

MCNULTY, U.S.D.J.:
This matter comes before the Court on the motion (Docket No. 9) of the
Plaintiffs, Mister Softee, Inc. (“MSI”), Mister Softee Sales and Manufacturing,
LLC, (“MSSM”) and SPABO Ice Cream Corp. (“SPABO”) (collectively referred to as
“Mister Softee” or the “Mister Softee Plaintiffs”), pursuant to Fed. R. Civ. P. 65,
for a preliminary injunction against Defendant, Reza Amanollahi (“Amano”).l
Plaintiffs request that the Court enjoin Amano from using Mister Softee’s
federally registered trademarks and from competing with Mister Softee, in
violation of the non-compete clause in the Franchise Agreements entered into
between Mister Softee and Amano.
I have reviewed the parties’ submissions and heard oral argument on this
matter on June 12, 2014. The parties agreed that an evidentiary hearing was not
required. For the reasons set forth below, the Court is persuaded that Plaintiffs
have met their burden of showing that an injunction is warranted. Plaintiffs
motion for a preliminary injunction will therefore be granted.

No disrespect is intended or should be inferred. Throughout the papers and at
oral argument, both parties referred to the Defendant as “Ray Amano,” and apparently
Defendant himself finds it convenient to use this shortened version of his name.

I. BACKGROUND
As acknowledged by the parties during oral argument, the material facts
are largely undisputed. Those facts, as outlined below, are gleaned from the
parties’ submissions as well as from oral argument.
A. The Parties
MSI is a New Jersey Corporation and the franchisor of Mister Softee mobile
ice cream trucks. Those trucks are set up to sell soft-serve and hard ice cream
as well as frozen desserts, novelties, stick items, and other products. Docket No.
9-1 (“P1. Br.”) at 1; Docket No. 1 (“Compi.”) ¶ 9. MSSM is a New Jersey limited
liability company that customizes and sells Mister Softee trucks for use by
licensees and franchisees of Mister Softee, Inc. Compi. ¶ 3. SPABO is a New York
corporation and a sub-franchisor of MSI. SPABO has the exclusive right to sell
Mister Softee franchises in certain areas, including the Bronx, New York. Compi.
¶ 4.
Mister Softee owns the trademarks “Mister Softee,” related logos, and a
musical jingle, all registered on the Principal Register of the United States Patent
and Trademark Office (Registration Nos. 2128918, 0667335, 0663456, and
2218017). P1. Br. at 2; Compi. ¶ 11. Mister Softee also owns a federal trademark
registration for the overall design of the Mister Softee ice cream truck (No.
2906357). Mister Softee franchisees are licensed to use Mister Softee’s
trademarks and trade dress and to operate under the Mister Softee business
system.
The Defendant, Mr. Amano, is a New Jersey resident, Compi. ¶ 5, and a
2
franchisee of Mister Softee. On June 20, 2007, Amano entered into eight
Franchise Agreements with SPABO. P1. Br. at 3; Compi. ¶ 19. On January 1,
2012, he entered into fourteen more Franchise Agreements with SPABO. See
Compl., Exhibit B (“Franchise Agreements”). All Franchise Agreements are
substantially similar and the parties do not cite any material differences between
As will be explained more fully below, the parties have a dispute over the ultimate
legal issue of who currently owns the franchises. Amano’s position is that he sold his
franchises to four other individuals who currently operate the Mister Softee trucks and
that he is no longer a Mister Softee franchisee. During oral argument, however, Amano’s
counsel conceded that, “on paper,” Amano is still the franchisee. He nonetheless
submits that he is not the “de facto” franchisee. It is undisputed that his name appears
on each of the twenty-two Franchise Agreements.

2

2

them. In total, Amano was granted the right to operate twenty-two Mister Softee
franchises (each representing one truck) in Bronx County, New York. P1. Br. at
3; Compi. ¶ 19, Exhibit B. Under the terms of the Franchise Agreements, Amano
was authorized to park his trucks only at 337 Manida Street, Bronx, New York
(“Manida Street Depot”).
Amano also entered into two Truck and Equipment Sale Agreements with
MSSM. Amano, as purchaser of the trucks, signed a promissory note requiring
installment payments until the purchase price was paid in full. Compi. ¶ 21,
Exhibit C.
Amano maintains that he was not given a prospectus at the time that he
signed the various Franchise Agreements “with one possible exception.” Def. Br.
at 1; Docket No. 12 (“Amano Affidavit”) ¶ 14 (“Of all the trucks I operated, I may
have received one prospectus.”); Amano Transcript at 46:17—47:5. Mister Softee
submits that Peter Bouziotis, Secretary and Treasurer of SPABO Ice Cream
Corp., offered Amano a Franchise Disclosure Document before Amano signed
the Franchise Agreements, but that Amano refused to accept it “because he
claimed he was a franchisee for approximately 10 years, and knew everything he
needed to know about the Mister Softee system.” Docket No. 18 (P1. Reply”) at 9—
10; Docket No. 18-2 (“Bouziotis Affidavit”) ¶ 2.
B. The Franchise Agreement Provisions, Proposed Transfer, and
Termination
The Franchise Agreements contain various provisions that Plaintiffs
maintain that Amano violated, resulting in termination of the agreements.
Plaintiffs also submit that Amano voluntarily abandoned the agreements.
Pursuant to Section 6.15 of the Franchise Agreements, Amano was required to
park and store his Mister Softee trucks at a Mister Softee-sanctioned depot or
storage yard. This requirement ensures that franchisees can store their trucks
in a place that has electricity and running water so that franchisees can clean
the trucks and ensure the safe storage of the ice cream products. Amano was
assigned the Manida St. Depot in the Bronx. P1. Br. at 4.
The Franchise Agreement also contains a non-compete provision. It
provides that Amano cannot, for a two-year period, “directly or indirectly own,
maintain, engage in, be employed by, lend money to, extend credit to, or have
any interest in any other business which operates or licenses business featuring
primarily the sale or ice cream or other frozen confections with the former
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3
Territory or within any System franchisee’s territory.” Franchise Agreement
16.2.

§

Pursuant to Section 18.2, the Franchise Agreements can be terminated
immediately upon delivery of notice of termination if Amano breaches an
agreement with Mister Softee. Pursuant to Section 18.2.11, the Agreements can
be terminated if Amano voluntarily abandons his franchises or if he does not
park his trucks in the designated depot. P1. Br. 4—5.
According to Plaintiffs, Amano clearly manifested his intent to abandon
the Franchise Agreements and operate his trucks independent of Mister Softee.
For instance, he has ceased making payments and has moved his trucks from
the designated Manida Street Depot, in contravention of Section 6.15 of the
Franchise Agreements. P1. Br. at 5; Compi. ¶J 33—33.
Amano does not deny that he abandoned his Mister Softee franchises and
maintains that he is out of the retail ice cream business. He states that he
participates in the ice cream industry only at the wholesale level, and as manager
of the Tsirkos depot. Amano does not deny moving his trucks from the designated
Manida Depot. He submits that he moved his trucks to the Tsirkos depot in Long
Island City in response to a dispute with Mister Softee owner James Conway.
Docket No. 17 (“Def. Br.”) at 1—2.
In 2009, Amano decided to sell his franchises to four men (the “four
transferees”)—Anthony Tsaros, Thomas Fotinakopoulos, Michael Vasiardis, and

3

The non-compete provision reads in its entirety as follows:
For a two (2) year period following the expiration or termination of your
interest in this Agreement, neither you nor your immediate family
members, nor your partners, shareholders or members, nor their
immediate family members, as applicable, shall directly or indirectly, for
themselves or through, on behalf of or in conjunction with any other
person, partnership, corporation, limited liability company; or other entity,
own, maintain, engage in, be employed by, lend money to, extend credit
to, or have any interest in any other business which operates or licenses
business featuring primarily the sale or ice cream or other frozen
confections with the former Territory or within any System franchisee’s
territory.

Franchise Agreement

§ 16.2.
4

—who
4
Tommy Dalageorges operated out of the Tsirkos depot. Amano and the
four transferees met with James Conway of SPABO in New Jersey and Conway
5
agreed to the transfer proposals. Amano submits that, though the Franchise
Agreements are still in his name, he is the franchisee only “on paper,” not in
reality. Amano contends that Mister Softee never wanted to put these transfer
agreements in writing, but that all parties have operated under these agreements
cZe facto for the last five years. Thus, Amano says, he has been collecting royalties
from the four transferees. He also collects note payments in cash from the men.
Conway sends someone (oftentimes Conway’s son) to Amano’s place of business
to pick up the cash. Id. at 2—3. Amano says that he performs these functions,
not in his role as franchisee, but in his role as manager of the Tsirkos depot.
Mister Softee, for its part, does not deny that it knew Amano intended to
transfer his franchises to the four transferees. Mister Softee submits, however,
that Amano is still in the process of an installment sale of his trucks, and
continues to be the responsible franchisee. To secure the buyers’ payment
obligations, Amano retained title to the franchises until the final tenth annual
payment was made in 2019. Docket No. 18 (“P1. Reply”) at 1. Once the final
payments were made, Amano would transfer the franchises pursuant to Section
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17 of the Franchise Agreements.
On February 18, 2014, Mister Softee sent Amano a Notice of Termination,
which he received on February 19, 2014. Compi. ¶ 35, Exhibit E. The Notice of
Termination advised Amano that the Agreements were terminated because he:
(1) moved his trucks to an unapproved depot; (2) failed to make payments under
the various promissory notes; and (3) abandoned his franchises. P1. Br. 5. The
Notice of Termination and receipt thereof terminated the Franchise Agreements.

To be clear, these are the individuals referred to in the parties’ papers as “Tommy,
Tommy, Mike and Tony.”
4

Amano maintains that these four transferees were the real parties in interest to
the fourteen Franchise Agreements that were signed in 2012. He concedes that the
“agreements were in Amano’s name,” but maintains that “he is not the actual
franchisee.” Def. Br. at 2.

5

Pursuant to Section 17, SPABO had the right to approve any proposed
assignment of the Franchise Agreements by Amano to third parties.

6

5

Under the Franchise Agreements, upon termination of an agreement,
Amano is required to:
19.1. Cease using the Proprietary Marks, Copyrights and
Confidential Information.

Return to SPABO the music box in [Amano’s] Mister
19.3.
Softee vehicle, to SPABO, and return the Operations Manual
and all other materials containing Confidential Information or
reflecting the Proprietary Marks and Copyrights.
19.4. Remove from your vehicle all Proprietary Marks and
Copyrights and provide SPABO satisfactory evidence that
these items have been removed; or, in the alternative, [Amanol
may return the vehicle to SPABO’s headquarters for removal
of these items.
Plaintiffs submit that, because the franchises are now terminated, Amano
the
is infringing the Mister Softee trademark by operating ice cream trucks using
ents
Mister Softee Mark without permission. He has allegedly violated the Agreem
the
by failing to de-identify his trucks (i.e., remove words and insignia identifring
trucks as Mister Softee trucks). He has also allegedly failed to return certain
19.4.
Mister Softee copyrighted material. See Franchise Agreement § 19.1, 19.3,
of
Plaintiffs also allege that Amano has violated the post-termination provisions
the Franchise Agreements because his trucks continue to operate in his former
his
territory and in the territory of other Mister Softee franchisees, in violation of
non-complete obligations. Finally, Amano allegedly owes certain amounts under
the Agreements.
On March 14, 2014, Plaintiffs filed a Complaint in this Court. In their
:
Complaint, Plaintiffs assert several claims against Amano, which include
ctTrademark Infringement and Unfair Competition (Count 1); Breach of Contra
ies
Post Termination Non-Compete (Count II); Breach of Contract-Future Royalt
(Count III); Breach of Contract-Truck Notes (Count IV); and Unjust Enrichment
ffs’
(Count V). In his Answer, Docket No. 19, Amano denies all of Plainti
of
allegations and alleges counterclaims against Plaintiffs, including breach
contract and rescission of the Franchise Agreements. Docket No. 19.
On April 14, 2014, Plaintiffs filed this motion for a preliminary injunction.
Plaintiffs seek an order restraining Amano from unlawfully using Mister Softee’s
trademarks and violating the non-compete agreements contained in the
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Franchise Agreements. Docket No. 9. On June 12, 2014, I heard oral argument
on the motion. At oral argument, Plaintiffs provided the Court with supplemental
the
briefing on the issue of rescission of a franchise agreement based on
franchisor’s failure to provide a prospectus under New York law. Docket No. 24.
The Court granted Amano a week in which to file a responding brief, and Amano
did so on June 18, 2013. Docket No. 28.
II. DISCUSSION

Now before the Court is Plaintiffs’ motion for preliminary injunctive relief.
“A plaintiff seeking a preliminary injunction must establish [1] that he is likely
to succeed on the merits, [2] that he is likely to suffer irreparable harm in the
absence of preliminary relief, [3] that the balance of equities tips in his favor, and
[4] that an injunction is in the public interest.” Winter v. Natural Res. Def
s
Council, Inc., 555 U.S. 7, 20 (2008) (numbering added); accord American Expres
Travel Related Servs., Inc. v. Sidamon-Eristoff 669 F.3d 359, 366 (3d Cir. 2012).
Plaintiffs argue that the four preliminary injunction factors weigh in their favor
and that this Court should enjoin Amano from continuing to use Mister Softee
trademarks and from violating the non-compete provision of the Franchise
Agreements. As explained below, I find that the Mister Softee plaintiffs are
entitled to injunctive relief.
Before doing so, I point out that this action bears a close relationship to a
case decided just a few weeks ago by District Judge Laura Taylor Swain. Mister
*7 (S.D.N.Y. June
Softee, Inc. v. Tsirkos, No. 14-CIV-1975, 2014 WL 2535114, at
5, 2014). That case, like this one, involved Mister Softee’s application for a
preliminary injunction. The franchise agreement at issue was substantially
identical to the one at issue here, and the territory, like the one here, was in New
York City. The defendant franchisee, like Amano here, at some point stopped
paying royalties and stopped parking the trucks at the designated depot. In what
may be a remarkable coincidence, and may be more, the franchisee in that case
was one Dmitrios Tsirkos. Tsirkos is the very landlord who owns the depot of
which Amano is now manager, where the trucks in this case are now parked and
stored, contrary to the Franchise Agreements. In the Tsirkos case (unlike this
e
one) there was at least a colorable defense to trademark infringement, becaus
Tsirkos altered the trucks slightly (for example, they were marked “Soft King” or
“Master Softee,” and they no longer used the musical jingle).

Plaintiffs have also filed an amended proposed order and a letter in support of
the order. Docket Nos. 25, 26.

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7

Judge Swain found a likelihood of confusion, and a likelihood of success
on the claim of trademark infringement. As in many commercial trademark
infringement cases, the court had no trouble finding irreparable harm to
plaintiffs’ business good will, and found that there was a public interest in
preventing consumer confusion. As to the non-compete clause, she applied New
York law. She denied a claim for rescission, very similar to the one made here,
because there was evidence that a prospectus was offered, and that any failure
to provide one had not been shown to be material and willful. As to the
reasonableness of the covenant, she noted that the territory covered some 100
miles, containing a population of millions, and that it broadly barred the former
franchisee from any aspect of the ice cream business. She credited testimony
that, in light of the short selling season, two years was not an unreasonable time
of
to establish a replacement franchisee. Consequently, she narrowed the scope
the restrictive covenant. The franchisee was prohibited from competing in the
retail ice cream business, within a five mile radius of his former territories in the
Bronx, for a period of two years. That holding was well supported by citations to
*9
New York case law. 2014 WL 2535114 at
Judge Swain entered her decision after a full evidentiary hearing and a
more complete presentation than the same counsel proffered here. It was
perhaps because of that recent experience that counsel agreed that no
evidentiary hearing would be necessary in this case.
A. Likelihood of Success on the Merits

The first preliminary injunction factor requires the applicant to show that
it is likely to prevail at the ultimate trial on the merits. Opticians Ass’n of Am. v.
Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990); see also Wright &
Miller, Federal Practice and Procedure, § 2948 (while “courts use a bewildering
variety of formulations of the need for showing some likelihood of success
[ajil courts agree that plaintiff must present a prima facie case but need not show
that he is certain to win.”) Failure to establish a likelihood of success on the
merits, even standing alone, is fatal to an application for a preliminary
injunction. American Express, 669 F.3d at 366, 374.
.

Amano does not deny that the Mister Softee trademarks and trade dress
deserve protection under federal law. But since he is the franchisee “only on
paper,” he argues, any injunctive relief would be futile and unnecessary because
he is not the person who now operates the Mister Softee trucks. In regard to the
non-compete provision, Amano makes two distinct arguments. First, he submits
that Mister Softee’s failure to provide him with the prospectuses associated with
8

each agreement is grounds for rescission. He adds in the alternative that the
non-compete provision is unreasonable in terms of duration and scope and is
not reasonably necessary to protect Mister Softee’s business interests.
1. Trademark Infringement
To state a claim for trademark infringement, 15 U.S.C. § 1114, and unfair
competition, 15 U.S.C. § 1 125(a)(1), under the Lanham Act, a plaintiff must show
three elements: “(1) it has a valid and legally protectable mark; (2) it owns the
mark; and (3) the defendant’s use of the mark to identify goods or services causes
a likelihood of confusion.” A & H Sportswear:, Inc. v. Victoria’s Secret Stores, Inc.,
237 F.3d 198, 210 (3d Cir. 2000).
There is little or no doubt that somebody is infringing a valid trademark
owned by Mister Softee. First, the marks are valid and legally protectable
because they have been registered in accordance with Section 1051 of the
Lanham Act, 15 U.S.C. § 1051. Second, Mister Softee owns these marks. See
Coach, Inc. v. Cosmetic House, No. 10 Civ. 2794, 2011 WL 1211390, *2 (D.N.J.
Mar. 29, 2011) (citing 15 U.S.C. § 1057(b), 1115(a)) (A “certificate of registration
issued by the United States Patent and Trademark Office constitutes prima facie
evidence of the validity and ownership of a disputed mark” and is therefore
sufficient to establish the first and second elements of trademark infringement
and unfair competition claims.) Third, the trucks are using Mister Softee’s exact
marks, leading to inevitable confusion. S & R Corp. v. Jiffy Lube Int’l, Inc., 968
F.2d 371 (3d Cir. 1992).8
Amano does not deny that the Franchise Agreements were terminated, nor
does he deny that the Mister Softee trademarks are entitled to protection under
federal law. He does not dispute that the trucks are currently being operated,
despite the termination of the Franchise Agreements, without any effort to
remove the Mister Softee identifiers and marks. He has also failed to return the
copyrighted materials to Mister Softee.

In S & R Corp., a franchisor brought an action seeking to enjoin a franchisee’s
continued use of the franchisor’s trademark following the termination of the franchise
agreement. The Third Circuit reversed and remanded the district court’s denial of
preliminary injunctive relief. The Court held that there was a great likelihood of
confusion when an infringer uses the same legally protectable trademark. Id. at 375.
The Court also found that the franchisee’s use was unauthorized because Jiffy Lube
had formally terminated the franchisee’s License Agreement. Id. at 376.

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9

Amano nonetheless maintains that Mister Softee is unlikely to succeed
on the merits because the four transferees, not Amano, are the ones actually
operating the trucks and using the proprietary materials. An injunction against
Amano, according to him, would therefore be “superfluous and unwarranted.”
Def. Br. at 4. He argues that, if Mister Softee wants to stop the infringement in
the territories alleged in the Complaint, it will have to sue the four transferees.
Amano, however, is still the owner of the franchises; he is the signer of
the twenty-two Franchise Agreements on which Mister Softee bases its claims.
He says he is the franchisee only “on paper,” but the “paper” in question is a
binding contract. Under the Agreements, Amano is the person obligated to de
identify the trucks, return all copyrighted and trademarked materials, and
cease using them. No one denies that these trucks are still in use and are still
selling Mister Softee products under the Mister Softee trademark.
Amano has outsourced the operation of the infringing trucks, but he is
still the responsible party. The four transferees have not taken over the
franchises; even if the franchises had not been cancelled, the actual transfer
would not have taken place earlier than 2019, when the last instalment
payment was made on the notes. Having maintained title to the trucks, and
stayed on the Agreements as franchisee to secure that debt, Amano cannot
walk away from that status for purposes of these claims only.
Even on the generous assumption that Amano no longer exercises any
control over the Mister Softee trucks, I am nevertheless persuaded that
Plaintiffs are likely to succeed on a claim for contributory infringement. An
individual can be liable under the Lanham Act even where the individual did
not “actually mislabel goods with the mark of another.” Inwood Labs., Inc. v.
Ives Labs., Inc., 456 U.S. 844, 853-54, 102 S. Ct. 2182, 2188, 72 L. Ed. 2d 606
(1982). An individual may be secondarily liable if “a manufacturer or
distributor intentionally induces another to infringe a trademark, or if it
continues to supply its product to one whom it knows or has reason to know is
engaging in trademark infringement, the manufacturer or distributor is
contributorially responsible for any harm done as a result of the deceit.” Id. at
854. “The theory of contributory infringement, as it came to be known, requires
proof of either an intent to induce another to infringe a trademark or continued
supply of goods or services to one whom the supplier (contributory infringer)
knows or has reason to know is engaging in trademark infringement.” 800-JR
Cigar, Inc. v. GoTo.com, Inc., 437 F. Supp. 2d 273, 280 (D.N.J. 2006) (citing Id.)
While a person who knowingly and significantly participates in another’s act of
10

infringement may be liable, “there does not appear to be any aider and abetter
liability under the Lanham Act.” Katiroll Co. Inc. v. Kati Roll & Platters Inc., No.
10-CIV-3620, 2012 WL 3061152, at *4 (D.N.J. July 26, 2012) (quoting Parker
v. Google, Inc., 422 F.Supp.2d 492, 503 (E.D. Pa. 2006), affd 242 Fed. Appx.
833 (3d Cir. 2007)).
The Third Circuit has recognized that the contributory infringement
doctrine need not be confined to manufacturers and that “other courts have
expanded it beyond that particular origin.” Am. Tel. & Tel. Co. v. Winback &
Conserve Program, Inc., 42 F.3d 1421, 1432 (3d Cir. 1994) (citing Mini Maid
Serus. Co. v. Maid Brigade Sys., Inc., 967 F.2d 1516, 1522 (11th Cir. 1992)
(doctrine could hold franchisor liable for infringing actions of its franchisee
when “franchisor explicitly or implicitly encouraged the trademark violations”);
Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1149
(7th Cir. 1992) (landlord of flea market could be liable for its tenants sale of an
infringing product where the landlord is found to have been “wilfully blind” to
the infringing acts)).
Some courts have applied the doctrine to landlords who are aware of
their tenants’ infringing behavior and to parties providing services to those the
parties know to be committing infringement. See L & L Wings, Inc. v. Marco
Destin, Inc., 676 F. Supp. 2d 179, 19 1-92 (S.D.N.Y. 2009) (applying
contributory infringement liability to defendants who “did not provide a
concrete product” but “provided a service”); Polo Ralph Lauren Corp. v.
Chinatown Gift Shop, 855 F. Supp. 648, 650 (S.D.N.Y. 1994) (sustaining claim
for contributory liability for landlords who allowed trademark infringers to use
their property); Habeeba’s Dance of the Arts, Ltd. v. Knoblauch, 430 F.Supp.2d
709, 714—15 (S.D. Ohio 2006) (sustaining claim for contributory liability for
landlords who allowed trademark infringers to use their property).
Amano is currently supplying ice cream products to the four transferees
currently operating the Mister Softee trucks. He was collecting their royalty
payments and (at least for a time) forwarding them to Mister Softee. (Amano
Dep. Tr. at 42:3-43:23). Their infringing sales are certainly the source of the
four transferees’ payments to Amano on the promissory notes. He is profiting
from their infringement, and he is indisputably aware of it.
Amano admits to providing assistance to the infringers in the form of
depot services, including overnight parking and storage, in return for rental
payments. P1. Reply at 7 (citing Amano Dep. Tr. 38:7—21, 42:3-43:23). The
depot in question is an unauthorized site under the Agreements Amano signed.
11

And the court is not blind to the fact that Amano is managing the depot as an
employee of Tsirkos, another defaulting franchisee who has continued to use
Mr. Softee’s trademarks on his trucks. Amano does not really deny any of this.
What Amano is saying is that an order against him would be futile. He
denies the ability to stop what admittedly constitutes infringement by the four
transferees. One is tempted to observe that a padlock on the Tsirkos Depot
might do the trick. Amano complains that he cannot take action against the
four transferees without exposing himself to liability. Without making a finding
on the matter, I observe that it is a fair inference that Amano in effect took the
transferees’ money in return for permitting them vicariously to enjoy his rights
as a franchisee, and then abandoned the franchise. At the very least, it can be
said that it is Amano’s own twilight, instalment semi-transfer of his franchise
that has created the situation of which he complains. And in any event Amano
may be ordered, as requested, to cease his own acts of infringement and
contributory infringement.
This Court has the ability, pursuant to Fed. R. Civ. P. 65(d)(2)(C), to bind
“other persons who are in active concert or participation with” the parties of an
action and those parties’ agents or officers so long as the “other persons” have
actual notice of an injunctive order. See Marshak v. Treadwell, 595 F.3d 478,
488 (3d Cir. 2009) (reasoning that persons “in active concert or participation”
with an enjoined party are also bound by the injunction, and may not aid or
abet the violation of the injunction”). If relief turns out to be incomplete,
Plaintiffs may have to pursue other remedies against other persons. But I can
order, as requested, that Amano comply with his post-termination duties under
the Agreements and discontinue his acts of trademark infringement.
Plaintiffs have demonstrated that they are likely to succeed on the merits
of their trademark infringement claim against Amano.
2. Enforcement of the Non-Compete Provision
Plaintiffs also seek to enjoin Amano from competing in his former
territories and those of any other Mister Softee franchisee for two years. That
application is based on the Franchise Agreements’ non-compete provision:
For a two (2) year period following the expiration or
termination of your interest in this Agreement, neither you nor
your immediate family members, nor your partners, shareholders
or members, nor their immediate family members, as applicable,
shall directly or indirectly, for themselves or through, on behalf of,
or in conjunction with any other person, partnership, corporation,
12

limited liability company; or other entity, own, maintain, engage in,
be employed by, lend money to, extend credit to, or have any
interest in any other business which operates or licenses business
featuring primarily the sale or ice cream or other frozen confections
with the former Territory or within any System franchisee’s
territory.
Franchise Agreement

§ 16.2.

Amano argues that the non-compete provision is unenforceable and that
injunctive relief should be denied because he is entitled to rescission of the
Franchise Agreements pursuant to the New York Franchise Act, New York
General Business Law Section 691.’° Plaintiffs, he says, failed to provide
Amano with a prospectus as required by Section 683(8) of the Act. He also
submits that the non-competition provision is unreasonable in scope.
a. Rescission under the NY Franchise Sales Act
The New York Franchise Sales Act governs the sale of franchises. New
York General Business Law Section 691 provides as follows:
A person who offers or sells a franchise in violation of section six
hundred eighty-three
of this article is liable to the person
purchasing the franchise for damages and, if such violation as
willful and material, for rescission, with interest at six percent per
.

.

.

Plaintiffs seek to enforce the non-compete provision in the following New York
Boroughs and Counties: Brooklyn, Bronx, Queens, Manhattan, Suffolk County, and
Nassau County (the “Closed Territories”). Docket No. 21. Plaintiffs submit that Mister
Softee franchisees are currently assigned to territories that collectively encompass all
of these Closed Territories.
Pursuant to Section 22.1, New York law governs all disputes arising out of the
Franchise Agreements, which would include disputes arising out of the enforcement of
the non-compete provision.
10

Additionally, this section contains a forum selection clause, designating the
state court in Bronx, New York, or the U.S. District Court for the Southern District of
New York as the forums for any litigation arising out of the Franchise Agreements.
Here, neither party has raised the issue of the forum selection clause and Amano has
filed counterclaims to Plaintiffs’ Complaint. Taking into account the parties’ conduct in
this matter, they appear to have waived the forum selection provision. See Wachovia
Bank Nat. Ass’n v. EnCap Gof Holdings, LLC, 690 F. Supp. 2d 311, 328 (S.D.N.Y.
2010) (citations omitted) (explaining that a forum selection clause can be deemed
waived “where the party invoking it has taken actions inconsistent with it, or delayed
its enforcement, and other parties would be prejudiced”).
13

year from the date of purchase, and reasonable attorney fees and
court costs.
N.Y. Gen. Bus. Law § 691 (McKinney). Section 683(8) requires that a franchisor
provide a prospective franchisee with a copy of the offering prospectus, together
with a copy of all proposed agreements relating to the sale of the franchise
Id. § 683(8). “The legislature’s stated intention in enacting the Franchise Sales
Act provisions of the General Business Law was to ‘to prohibit the sale of
franchises where such sale would lead to fraud or a likelihood that the
franchisor’s promises would not be fulfilled.”’ Mister Softee, Inc. v. Tsirkos, No.
14-CIV-1975, 2014 WL 2535114, at *7 (S.D.N.Y. June 5, 2014) (quoting N.Y.
Gen. Bus. Law § 680 (McKinney 2012)).
.

Amano submits that he was not provided a prospectus for each
Franchise Agreement and that Plaintiffs’ failure to provide it was material and
willful. He therefore “elects to rescind all such franchise agreements made
within the period of the applicable statute of limitations.” Def. Br. at 5. As to
these rescinded agreements, he says, there can be no effective restrictive
covenant against competition.
There is a threshold problem with this argument. Section 691(4) of the
Franchise Sales Act limits the right of a franchisee to seek rescission to three
years from the date of the establishment of the franchise. United Magazine Co.
v. Murdoch Magazines Distribution, Inc., 146 F. Supp. 2d 385, 407 (S.D.N.Y.
2001), affd, 279 F. App’x 14 (2d Cir. 2008). “Courts applying this provision
have ruled that the limitations period begins to run when the franchise
contract is entered into, and that continuous violations do not toll the statute
of limitations.” Id. (citing cases).
Here, it is undisputed that Amano signed eight Franchise Agreements in
June 2007. He did not move for rescission until 2014, well outside of the threeyear statute of limitations. Therefore, pursuant to Section 69 1(4), these eight
Franchise Agreements are not subject to rescission under Section 691 of the
Franchise Act. Because each Agreement contains an identical non-compete
provision, the effect of enforcing the non-compete provision would be similar
even if only one Franchise Agreement—let alone eight—were enforceable. The
rescission argument, then, is ineffectual.
There is also a question of whether or not SPABO failed to provide him
with a prospectus. In addition, Amano has not provided any evidence of
willfulness or materiality. Thus, even as to timely claims for rescission,
Plaintiffs have demonstrated that they are likely to succeed.
14

The statute does not define “provide.” As articulated by Judge Swain in
Mister Softee v. Tsirkos, however, the common, plain-English meaning of
“provide” is “to supply or make available.” 2014 WL 2535114, at *7 (quoting
Merriam-Webster’s Collegiate Dictionary 940 (10th ed. 1999)).
Amano acknowledges, for example, that he “may” have received one
prospectus. Def. Br. at 1; Docket No. 12 (“Amano Affidavit”) ¶ 14 (“Of all the
trucks I operated, I may have received one prospectus.”). Mister Softee submits
that Peter Bouziotis, Secretary and Treasurer of SPABO Ice Cream Corp.,
offered Amano a Franchise Disclosure Document before Amano signed each
Franchise Agreement, but that Amano refused to accept them “because he
claimed he was a franchisee for approximately 10 years, and knew everything
he needed to know about the Mister Softee system.” P1. Reply at 9—10;
Bouziotis Affidavit ¶ 2. Amano also does “remember seeing the prospectus in
Southern Boulevard Depot’s office,” but denies ever declining one. Amano Dep.
Tr. 47:2—10. Certainly Bouziotis has submitted that he made a prospectus
available, and Amano has failed to maintain a consistent position as to whether
he received a prospectus.
At any rate, there is no evidence that any failure to provide a prospectus
was willful or material. N.Y. Gen. Bus. Law Section 691 specifically requires a
showing of materiality and willfulness in order for a franchisee to successfully
rescind a franchise agreement. N.Y. Gen. Bus. Law § 691 (providing that “if
such violation as willful and material,” a franchisee may utilize the civil remedy
of rescission).
Willfulness requires a showing that a plaintiff “intentionally violated the
act.” Mister Softee, Inc. v. Tsirkos, 2014 WL 2535114, at *7 (quoting Reed v.
Oakley, 172 Misc. 2d 655, 658 (Sup. Ct. 1996), aff ‘d, 240 A.D.2d 991 (1997);
Vysovsky v. Glassman, 01 Civ. 2531, 2007 WL 3130562, at * 12 (S.D.N.Y. Oct.
23, 2007)). The record before me indicates that Bouziotis tried to supply Amano
with a prospectus and that Amano admits he “may” have actually received one.
He also remembers seeing a prospectus in the Southern Boulevard Depot’s
office. Amano submits no evidence that Plaintiff intentionally failed to provide
him with a prospectus and Bouziotis states that he did attempt to fulfill the
disclosure requirement. Accordingly, there is no sufficient indication that
Plaintiffs’ alleged violation was willful. See Mister Softee v. Tsirkos, 2014 WL
2535114, at *7 (finding, under similar circumstances, that nothing “in the
current record indicates that such violation was willful” and instead reasoning
15

that plaintiffs’ evidence indicates “that they intended to comply with the
prospectus delivery requirement”).
Furthermore, I do not find any evidence to indicate that the alleged
violation was material to either damages sustained by Amano or to his decision
to enter into the Franchise Agreements. Amano summarily argues that it was,
but his contentions are generic. Thus he argues that all information in a
prospectus is, by its very nature, material. To find that a prospectus is always
’
1
and everywhere material would render the materiality requirement
meaningless, or at least superfluous. Instead, Courts have required a showing
that the non-disclosure was material to the franchisee’s decision to invest or
that it caused some ascertainable damage. See BMW Co., Inc. v. Workbench,
Inc., No. 86-CIV-4200, 1988 WL 45594, at *2 (S.D.N.Y. Apr. 29, 1988)
(“Moreover, since I do not find that defendants’ violation of the Franchise Act
was material to plaintiffs’ investment decisions, rescission of the franchise
agreement under § 69 1(1) is denied.”); Burgers Bar Five Towns, LLC v. Burger
Holdings Corp., 71 A.D.3d 939, 941, 897 N.Y.S.2d 502, 504 (2010) (“Moreover,
even if the defendants violated the Franchise Sales Act by failing to register an
offering prospectus, the plaintiff must still prove that it sustained damages as a
result of the violation, and must further prove that the violation was “willful
and material” in order to be entitled to an award of an attorney’s fee.”); Baker
Boys of Glendale, Inc. v. 35-63 82nd St. Corp., 166 A.D.2d 397, 398-99, 560
N.Y.S.2d 465, 467 (1990) (reversing lower court’s granting of summary
judgment in favor of franchisee and granting summary judgment in favor of
franchisor “where defendants did not submit anything of an evidentiary nature
to support the conclusory allegation in their attorney’s affirmation that the
plaintiffs alleged nondisclosure was willful, nor did the defendants even allege
that the purported nondisclosure was material”).

Like the defendant in Mister Softee v. Tsirkos, Amano relies on Pagham Chicken
Inc. v. Loghar, 1986 N.Y. Misc., LEXIS 3164. In Pagham, the franchisor failed to
register with New York state, as required under the Franchise Act, failed to create a
prospectus, and failed to offer a prospectus to the franchisee. Id. at 17—18. The court
held that the franchisor failed to comply with the Act. Amano contends that this case
stands for the proposition that Amano’s prior experience is of no consequence when
considering a violation under the Franchise Act. Id. at 20 (“Both the astute business
person and the credulous are entitled to protection, and compliance with the act
cannot be determined by how much the franchise actually knew absent financial
disclosure.” Pagham does not, however, stand for the proposition that a franchisor is
liable per se for a violation of the disclosure requirement. A showing of willfulness and
materiality is still required. Amano appears to recognize this in his supplemental
briefing. Docket No. 28 at 2.
11

16

The underlying purpose of the Franchise Act is to prohibit “the sale of
franchises where such sale would lead to fraud or a likelihood that the
franchisors promises would not be fulfilled.” Mister Softee v. Tsirkos, 2014 WL
2535114, at *7 There is no evidence of materiality or wilfullness—i.e., no
evidence that any alleged non-disclosure in this case is connected to any
unfulfilled promise or to fraud by SPABO. The Franchise Act’s rescission
provision was not intended to shield a franchisee from complying with terms
and obligations he willingly agreed to undertake.
In light of the foregoing, I am persuaded that Plaintiffs are likely to defeat
Amano’s claim for rescission of the Franchise Agreements, and that they are
therefore likely to succeed in establishing that the non-compete provisions are
binding on Amano.
b. Reasonableness of the Non-Compete Provision
I now turn to Amano’s secondary argument—that the non-compete
provisions are unreasonable in scope. I find that the provision as written is
overly broad to the extent that it prohibits both retail and wholesale sales of ice
cream products. I will also limit the geographic scope of the provision to a five
mile radius. I will leave intact the two-year noncompetition period. In doing so,
I find the reasoning of Judge Swain in Tsirkos to be persuasive. I also think
that there is an independent value in consistent application of the same
franchise agreements in the same territories.
“New York has adopted the common-law standard of reasonableness for
the evaluation of restrictive covenants.” Mister Softee v. Tsirkos, 2014 WL
2535114, at *8. Under this reasonableness standard, a non-compete provision
is reasonable only “if it is (1) no greater than is required for the protection of
the legitimate interest of the [beneficiary], (2) does not impose undue hardship
on the [restricted party, and (3) is not injurious to the public.” IcL (quoting
BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388 (1999)). “In this context a
restrictive covenant will only be subject to specific enforcement to the extent
that it is reasonable in time and area, necessary to protect the [beneficiary’s]
legitimate interests, not harmful to the general public and not unreasonably
burdensome to the [restricted party].” Id. (citation and internal quotation
marks omitted). Thus a restrictive covenant is enforceable when it is
reasonable in terms of “time, space or scope” and is not oppressive in its
operation. Am. Inst. of Chem. Engineers v. Reber-Friel Co., 682 F.2d 382, 386
(2d Cir. 1982).

17

This restrictive covenant would bar Amano from competing in both the
retail and wholesale ice cream business for a period of two years in Brooklyn,
Bronx, Queens, and Manhattan as well as Suffolk and Nassau Counties (i.e., all
of New York City, excepting Staten Island, and all of Long Island). Amano
contends that the provision is not reasonably necessary for the protection of
the Mister Softee business. He points out that Mister Softee franchisees already
compete with each other, that Mister Softee has no product control and
therefore presumably no goodwill to protect, and that there is nothing unique
about “selling ice cream out of a truck.” Def. Br. at 5; Amano Affidavit ¶J 22—
27. Amano complains that the provision is designed to put him out of business.
He argues that the provision is geographically overbroad, and that its subject
matter is overbroad in that it applies to both the retail and wholesale supply
business.
In general, New York courts have upheld similar, although certainly not
identical, covenants that are related to the protection of a franchisor’s knowhow and its ability to place new franchisees in the same territories. See Carve!
Corp. v. Eisenberg, 692 F. Supp. 182 (S.D.N.Y. 1988) (“[R]estrictive covenant,
which prohibited franchisees from operating ice cream store within two miles of
their present location for three years after franchise was terminated, was
reasonably related to plaintiffs interest in protecting its know-how, so as to be
enforceable.”); Carvel Corp. v. Rait, 117 A.D.2d 485, 503 N.Y.S.2d 406 (N.Y.
App. Div. 1986) (same); DAR & Associates, Inc. v. Unforce Serus., Inc., 37 F.
Supp. 2d 192, 200 (E.D.N.Y. 1999) (upholding provision restricting former
licensee, a professional staffing business, from competing within a fifty mile
radius of former place of business for one year); TKO Fleet Enterprises, Inc. v.
Elite Limousine Plus, Inc., 184 Misc. 2d 460, 464, 708 N.Y.S.2d 593, 596 (N.Y.
Sup. Ct. 2000) affd, 286 A.D.2d 436, 729 N.Y.S.2d 193 (2001) (upholding
restrictive covenant that restricted former limousine franchisee from competing
within fifty miles of Times Square for one year). But see Reed, Roberts
Associates, Inc. v. Strauman, 40 N.Y.2d 303, 306, 353 N.E.2d 590 (1976)
(affirming denial of injunction seeking enforcement of covenant prohibiting
former employee “from engaging in the business of unemployment tax control
within the metropolitan area for a period of three years” because employee did
not have any trade secrets and because his work was not “so unique or
extraordinary” as to necessitate the restriction).
Plaintiffs have made a sufficient showing that the non-compete provision
is reasonable to the extent it protects Mister Softee’s brand name and business
goodwill, and its ability to replace terminated franchisees. Mister Softee’s
18

distinctive trademarked trucks and music are indicative of business goodwill
that is protectable, and authorized, non-terminated franchisees should have
their investment protected to that extent.
The durational component—two years—is not overly long. As Judge
Swain found, it is also appears reasonable in light of the short selling season
(April to October, typically). Two six-month selling cycles are not an
unreasonable span for Plaintiffs’ efforts to replace terminated franchisees and
get new ones on their feet. See Mister Softee v. Tsirkos, 2014 WL 2535114, at
*9
The subject matter of the ban is appropriate insofar as it applies to the
retail sale (mobile and fixed) of ice cream, the very business in which Amano
was engaged as a franchisee. I do not, however, find that Plaintiffs have
established the reasonableness of the covenant to the extent it covers wholesale
activity. (Of course, I do not mean to authorize wholesale activity that
contributes to the infringement of Mister Softee’s marks. See supra.) A ban on
wholesale supply does not tend to protect the legitimate investment-backed
expectations of Mister Softee’s other retail franchisees.
I also find that Plaintiffs have not demonstrated a likelihood of success in
showing that the vast geographic scope of the restriction is reasonably
necessary. Like Judge Swain, I will revise this covenant so that it applies only
in a five-mile radius of Amano’s former Manhattan and Bronx territories. See
Tsirkos, supra; cf Singas Famous Pizza Brands Corp. v. New York Adver. LLC,
468 F. App’x 43, 46 (2d Cir. 2012) (finding a “ten-mile geographic scope of the
Franchise Agreements post-termination non-compete clause” to be reasonable,
rejecting the defendants’ argument that it was unreasonable because “[p]izza
restaurants are inherently local.”)
Amano contends that the overbroad scope of the non-compete clause
renders it wholly unenforceable. I do not agree. Under New York law, a court
has the power to partially enforce an overly broad non-compete provision if the
plaintiff seeks “to protect a legitimate business interest.” Mister Softee v.
Tsirkos, 2014 WL 2535114, at *9 (citing BDO Seidman v. Hirshberg, 93 N.Y.2d
382, 394, 712 N.E.2d 1220, 1226 (1999)).
Where “the unenforceable portion is not an essential part of the
agreed exchange, a court should conduct a case specific analysis,
focusing on the conduct of the [beneficiary] in imposing the terms
19

of the agreement.” BDO Seidman, 93 N.Y.2d at 394. New York has
rejected the strict divisibility, or “blue pencil,” requirement, instead
embracing flexible partial enforcement of restrictive covenants.
BDO Seidman, 93 N.Y.2d at 395. However, “[a] court should not
attempt to partially enforce a non-compete provision where its
infirmities are so numerous that the court would be required to
rewrite the entire provision.” Leon M. Reimer & Co. v. Cipolla, 929
F.Supp. 154, 160 (S.D.N.Y. 1996).
Id. That is what I have done; I have enforced the non-compete provision to a
great extent, but disallowed the portions that were unreasonably broad.
My restrictions on the scope of the non-compete provision do not destroy
or undermine its overall purpose. Indeed, it would be perverse to allow Amano
to nullify the non-compete clause on that basis. Both parties agreed to a broad
non-compete clause; if any party is prejudiced by the court’s decision to
restrict its scope, it is Mister Softee, not Amano.
Accordingly, I will limit the scope of the non-compete provision to retail
ice cream activity (both mobile and fixed), with a five-mile radius of Amano’s
former territories, for a period of two years.
B. Irreparable Harm
Plaintiffs have established harm to their businesses if Amano continues
to use (or contributorily infringe) Mister Softee marks. They also have
established harm to their business goodwill and client relationships if the noncompete clause is not enforced. Amano does not make any argument specific to
this prong of the preliminary injunction analysis.
Harm is considered “irreparable” if it is not redressable by money
damages at a later date, in the ordinary course of litigation. Instant Air Freight
Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989) (citing Sampson v.
Murray, 415 U.S. 61, 90 (1964)). As discussed above, see Section III.A.1, supra,
Mister Softee has demonstrated a likelihood of confusion. This Circuit has
recognized that “[g]rounds for irreparable injury include loss of control of
reputation, loss of trade, and loss of good will.” Kos Pharm., Inc. v. Andrx Corp.,
369 F.3d 700, 726 (3d Cir. 2004) (quoting Pappan Enters., Inc. v. Hardee’s Food
Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998)). An inference of irreparable injury
is almost mandatory; “trademark infringement amounts to irreparable injury as
a matter of law.” Id. (quoting S & R Corp., 968 F.2d at 378).
I also find that an injunction is appropriate here because monetary
20

damages are inadequate to compensate Plaintiffs for trademark infringement
that is ongoing. See Opticians Ass’n of Am., 920 F.2d at 195 (reasoning, in the
context of a preliminary injunction, that “[g]rounds for finding irreparable
injury include loss of control of reputation, loss of trade, and loss of good will”).
Amano’s continued infringing activity threatens Mister Softee’s reputation and
goodwill. The remedy of injunctive relief will protect Plaintiffs against the threat
of future infringement, a threat that cannot be averted by compensatory relief
alone. See Coach, Inc. v. Bags & Accessories, CIV.A. 10-2555 JBS-J, 2011 WL
1882403, at *9 (D.N.J. May 17, 2011) (citation omitted) (concluding that while
“a remedy at law would provide a degree of monetary relief,” it would “not
compensate for the injury” to plaintiff’s “reputation or necessarily prevent
future trademark infringement”).’
2
I have no difficulty, then, in finding irreparable harm.

12
As to loss of client relationships and good will, I am handicapped somewhat by
the lack of a fully developed evidentiary record. It is not implausible that customers
may have a brand loyalty to a particular ice cream. Counsel for Plaintiffs also argued
that a Mister Softee franchise would have less value, and Mister Softee would have
greater difficulty finding replacement franchisees, if the non-compete provisions were
not enforced. It is certainly the case that damage to customer relations and loss of
business good will can cause damage that is very difficult to quantify in dollars. See
generally Johnson Controls Inc. v. A.P.T. Critical Sys. Inc., 323 F. Supp. 2d 525, 532
(S.D.N.Y. 2004) (“Generally, when a party violates a non-compete clause, the resulting
loss of client relationships and customer good will built up over the years constitutes
irreparable harm”) (quoting Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69—70 (2d Cir.
1999)); Singas Famous Pizza Brands Corp. v. New York Adver. LLC, 468 F. Appx 43,
46 (2d Cir. 2012) (“Courts applying New York law have recognized that restrictive
covenants in franchise agreements are also necessary to neutralize the ‘danger that
former franchisees will use the knowledge they have gained from the franchisor to
serve its former customers, and that continued operation under a different name may
confuse customers and thereby damage the good will of the franchisor. “) (quoting
ServiceMaster Residential/Commercial Serus., L.P. v. Westchester Cleaning Servs., Inc.,
No. 0l—CV—2229, 2001 WL 396520, at *3 (S.D.N.Y. Apr. 19, 2001); MarbleLife, Inc. v.
Stone Res., Inc., 759 F. Supp. 2d 552, 563 (E.D. Pa. 2010) (irreparable harm prong
satisfied where defendant’s “actions of operating a stone care and restoration business
nearly identical to the one it operated for ten (10) years as a MarbleLife franchise,
servicing the same territory, using the customer list from the franchise, and using
nearly identical advertisements, reaps the good will that MarbleLife baLd] established”).
As to the product loyalty of the ice-cream buying, juvenile public, I am not so certain,
although the Court has observed a certain Pavlovian response to the Mister Softee
musical jingle.

21

C. Balancing the Equities and the Public Interest
The final two prongs, balancing of the harms and the interest of the
public, also weigh in favor of granting injunctive relief.
Amano will not be unduly burdened by an injunction. The only
“hardship” imposed upon Defendant is that he refrain from engaging in
unlawful infringement and abide by the terms (some of them rendered less
onerous by the Court) of the contracts that he freely entered into. It has been
held that, where a defendant fails to perform his obligations under a franchise
agreement, that “self-inflicted harm is far outweighed by the immeasurable
damage done” to the franchisor by the infringement of its trademark. S & R
Corp., 968 F.2d at 379. I agree and find that the harm posed to Mister Softee
outweighs the harm to Amano. See Opticians Ass’n of Am., 920 F.2d at 197
(infringing defendant can “hardly claim to be harmed, since it brought any and
all difficulties occasioned by the issuance of the injunction upon itself’).
Finally, the public interest would not be disserved by issuing an
injunction. To the contrary, injunctive relief will prevent consumer confusion
and enforce reasonable contractual obligations. See Pappan Enterprises, Inc.,
143 F.3d at 807 (quoting Opticians, 920 F.2d at 197) (“Public interest can be
defined a number of ways, but in a trademark case, it is most often a synonym
for the right of the public not to be deceived or confused.”). As to the noncompete provisions, I have already taken the public interest into account in
restricting their scope.
D. Security
Pursuant to the Federal Rules, this Court “may issue a preliminary
injunction . . . only if the movant gives security in an amount that the court
considers proper to pay the costs and damages sustained by any party found to
have been wrongfully enjoined . . .“ Fed. R. Civ. P. 65(c). Plaintiffs submit that
they should be required to post a bond in the amount of $1,000.00. Amano
makes no response, but that dollar amount seems very low. Weighing the
potential harm to an already-terminated franchisee against the likelihood that
the injunction is incorrect, I will require that security be posted in the amount
of $50,000.
.

E. Injunctive Relief
In light of the foregoing, I will grant Mister Softee the following injunctive
relief:
22

Mister Softee’s Motion for Preliminary Injunction is GRANTED, on the
following terms:
1. Reza Amanollahi and his agents, employees and any persons acting in
concert with him who have actual knowledge of this injunction are
hereby enjoined from:
a. unlawfully using Mister Softee’s trademarks or trade dress or
any colorable imitation thereof;
b. knowingly contributing to the infringement of Mister Softee’s
trademarks or trade dress in any manner whatsoever including,
but not limited to:
i. renting or otherwise providing space to park or store ice
cream trucks at a commissary or depot to entities or
individuals unlawfully using Mister Softee’s trademarks or
trade dress or any colorable imitation thereof; and
ii. selling or otherwise providing ice cream products, ice cream
mix, other frozen confections, and the supplies and
equipment necessary to operate an ice cream truck business
to individuals or entities that unlawfully use Mister Softee’s
trademarks or trade dress or any colorable imitation thereof;
2. In accordance with the relief granted above, Reza Amanollahi must
immediately eject Thomas Fotinakopoulos, Anthony Tsaros, Michael
Vasiardis and Tommy Dalageorgos and any entities or individuals in
active concert or participation with them from any depot or commissary
he owns, operates or manages. Furthermore, Reza Amanollahi is
enjoined from renting, selling or supplying space at a depot or
commissary to Thomas Fotinakopoulos, Anthony Tsaros, Michael
Vasiardis and/or Tommy Dalageorgos and/or any entities or individuals
in active concert or participation with them. Reza Amanollahi is enjoined
from selling or otherwise providing ice cream products, ice cream mix,
other frozen confections, and the supplies and equipment necessary to
operate an ice cream truck business to Thomas Fotinakopoulos, Anthony
Tsaros, Michael Vasiardis, Tommy Dalageorgos and any entities or
individuals in active concert or participation with them;

23

3. Reza Amanollahi, his officers, agents, servants, employees, and
attorneys, and other persons who are in active concert or participation
with Reza Amanollahi who receive actual notice of this injunction, shall
return to Mister Softee all labels, signs, prints, packages, wrappers,
receptacles, and advertisements bearing the word and/or symbol that is
the subject of Mister Softee’s trademarks, trade dress, or trade name
violation or reproduction, counterfeit, copy, or colorable imitation
thereof, and all plates, molds, matrices, and other means of making the
same pursuant to 15 U.S.C. § 1118, including all Mister Softee decal
packages, music boxes that play the Mister Softee jingle, and Mister
Softee menu boards;
4. Reza Amanollahi, his officers, agents, servants, employees, and
attorneys, and other persons who are in active concert or participation
with Reza Amanollahi who receive actual notice of this injunction are
further enjoined from, directly or indirectly, owning, maintaining,
engaging in, being employed by, lending money to, extending credit to, or
having any interest in any other business which operates or licenses
businesses featuring primarily the retail sale of ice cream or other frozen
confections within a five-mile radius of Defendant’s former territories,
which are:
57th Street, Southern
a. Manhattan: Northern boundary
boundary 54th Street, Western boundary 6th Avenue, Eastern
boundary the East River;
—

-

—

—

65th
b. Manhattan: Northern boundary
60th Street, Western boundary
boundary
Eastern boundary the East River;
-

-

-

Street, Southern
5th Avenue and

—

45th Street, Southern
c. Manhattan: Northern boundary
the East River and
42nd Street, Eastern boundary
boundary
Western boundary 8th Avenue;
-

—

—

—

54th
d. Manhattan: Northern boundary
51st Street, Western boundary
boundary
Eastern boundary the East River;
-

—

—

Street, Southern
6th Avenue and

—

42nd Street, Southern
e. Manhattan: Northern boundary
boundary 40th Street, Western boundary the Hudson River and
—

-

-

24

Eastern Boundary

—

the East River;

51st
f. Manhattan: Northern boundary
45th Street, Eastern boundary
boundary
Western boundary the East River;
—

-

Street, Southern
8th Avenue and

—

40th Street, Southern
g. Manhattan: Northern boundary
boundary 37th Street, Western boundary the Hudson River and
Eastern boundary the East River;
-

—

-

—

60th
h. Manhattan: Northern boundary
57th Street, Western boundary
boundary
Eastern boundary the East River;
-

—

—

Street, Southern
6th Avenue and

—

40th
i. Manhattan: Northern boundary
37th Street, Western boundary
boundary
Eastern boundary 3rd Avenue;
-

-

—

Street, Southern
5th Avenue and

—

j.

Bronx Park South,
Bronx: Northern boundary
East 178th Street, Western boundary
boundary
Avenue and Eastern boundary Boston Road;
—

—

—

Southern
Crotona

—

43rd
k. Manhattan: Northern boundary
40th Street, Western boundary
boundary
Eastern boundary _3n1 Avenue;
-

-

46th
1. Manhattan: Northern boundary
43th Street, Western boundary
boundary
Eastern boundary 3rd Avenue;

—

-

—

—

Street, Southern
5th Avenue and

Street, Southern
5th Avenue and

—

Rhinelander Avenue, Southern
m. Bronx: Northern boundary
White
East Tremont Avenue, Western boundary
boundary
from East Tremont Avenue
Plains Road and Eastern boundary
north on Bronxdale Road to north on Mulier Avenue for all of
Muller Avenue;
—

—

—

—

44th
n. Manhattan: Northern boundary
40th Street, Western boundary
boundary
Eastern boundary FDR Drive;
-

—

-

25

—

Street, Southern
3rd Avenue and

37th
o. Manhattan: Northern boundary
34th Street, Western boundary
boundary
Eastern boundary FDR Drive;
—

—

—

Street, Southern
3rd Avenue and

-

40th
p. Manhattan: Northern boundary
37th Street, Western boundary
boundary
Eastern boundary FDR Drive;
—

—

—

Street, Southern
3rd Avenue and

-

52nd
q. Manhattan: Northern boundary
48th Street, Western boundary
boundary
Eastern boundary FDR Drive;
-

—

—

Street, Southern
3rd Avenue and

-

48th
r. Manhattan: Northern boundary
44th Street, Western boundary
boundary
Eastern boundary 3rd Avenue;
-

-

—

Street, Southern
5th Avenue and

—

37th
s. Manhattan: Northern boundary
34th Street, Western boundary
boundary
Eastern boundary 3rd Avenue;
-

—

—

Street, Southern
5th Avenue and

—

t. Bronx: Northern boundary 178th Street, Southern boundary
Cross Bronx Expressway, Western boundary Crotona Avenue and
Eastern boundary Boston Road;

—

-

—

—

52nd
u. Manhattan: Northern boundary
48th Street, Western boundary
boundary
Eastern boundary 3rd;
—

—

—

Street, Southern
5th Avenue and

-

48th
v. Manhattan: Northern boundary
44th Street, Western boundary
boundary
Eastern boundary FDR Drive;
-

—

—

Street, Southern
3rd Avenue and

—

5. Reza Amanollahi is further enjoined from directly or indirectly, owning,
maintaining, engaging in, being employed by, lending money to,
extending credit to, or having any interest in any other business which
operates or licenses businesses featuring primarily the retail sale of ice
cream or other frozen confections in Mister Softee franchisee territories
that are within five miles of Reza Amanollahi’s former franchise
territories listed above in Paragraph 5 a through v, with the exception
that he may continue to collect amounts due and owing on credit
26

extended prior to the date of this order;
6. This preliminary injunction shall remain in effect until a determination
on the merits is reached in this Court or for a period of two years from
the date of this Order, whichever occurs first.
7. As a condition of the foregoing relief, Mister Softee shall post a bond in
the amount of Fifty thousand dollars ($50,000.00) pursuant to Federal
Rule of Civil Procedure 65(c).

IV. CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for a preliminary injunction,
Docket No. 9, is GRANTED. An appropriate Order follows.

KEVIN MCN LTY
United States District Ju

DATED: July 1, 2014

27