Scurmont LLC v. Firehouse Restaurant Group Inc

Filing 164

ORDER granting in part and denying in part 77 Motion to Strike; granting in part and denying in part 79 Motion in Limine; denying 80 Motion in Limine; denying 81 Motion for Summary Judgment; granting in part and denying in part 135 Motion for Summary Judgment. Signed by Honorable R Bryan Harwell on 7/8/2011. (hcic)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Scurmont LLC, d/b/a Calli Baker’s
Firehouse Bar & Grill, and Heath W.
Scurfield, an individual,

)
)
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Plaintiffs,
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)
v.
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Firehouse Restaurant Group, Inc., a Florida )
corporation, Three Alarm Subs, Inc., a
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South Carolina corporation, and Fireside
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Restaurant Company, Inc., a South Carolina )
corporation,
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Defendants.
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____________________________________)

C/A No. 4:09-cv-00618-RBH

ORDER

This is a trademark dispute between competing restaurants. Defendant Firehouse Restaurant Group,
Inc. (“FRG”) is the franchiser of the FIREHOUSE SUBS® restaurant franchise that operates more than
350 locations throughout various parts of the United States, including Myrtle Beach, South Carolina. The
core menu item offered by FIREHOUSE SUBS® is submarine-style sandwiches. Defendants Three Alarm
Subs, Inc. (“Three Alarm”) and Fireside Restaurant Company, Inc. (“Fireside”) are franchisees who own
and operate FIREHOUSE SUBS® restaurants in the Myrtle Beach area. Plaintiff Scurmont, LLC
(“Scurmont”) also operates a restaurant in Myrtle Beach, South Carolina under the name CALLI BAKER’S
FIREHOUSE BAR & GRILL (“CALLI BAKER’S”). CALLI BAKER’S is a full-service restaurant that
offers a variety of menu items and incorporates a firehouse theme in its décor and menu. Plaintiff Heath
Scurfield (“Scurfield”) is the sole member of Scurmont and is an active-duty firefighter with Horry County
Fire Rescue.

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FRG has filed for and obtained more than 60 federal trademark and service mark registrations for
its marks from the United States Patent and Trademark Office (“USPTO”). Of the 60 or more registered
marks obtained by FRG, one mark is the term “FIREHOUSE” for use in restaurant services: Registration
Number 3,173,030 (“FIREHOUSE word mark”). This mark appears to be the subject matter of the
Plaintiffs’ Complaint, specifically their Third Cause of Action for Trademark Cancellation due to Fraud.
In their Counterclaim, the Defendants assert against the Plaintiffs, 34 of FRG’s United States federal
registrations (the “Registrations”), which include various forms of FIREHOUSE® and FIREHOUSE
SUBS® marks used by the Defendants in connection with their business. The Registrations cover use of
FRG’s marks in connection with a broad scope of goods and services that include restaurant services, food
products, sandwich platters, sandwiches, drinks, soups, salads, cookies, brownies, catering services, and
restaurant franchising.
Statement of Undisputed Facts
I:

Parties and Marks
FRG operates the FIREHOUSE SUBS® restaurant franchise. (Sorensen Decl. ¶2, Docket # 135-2).

FIREHOUSE SUBS® restaurants offer a menu of submarine style sandwiches, drinks, salads, chili, dessert
items, and related food products using a firefighter theme. (Id. ¶8; Defs.[‘s] Exs. A-1 & A-2, Docket #s
135-3 to -5). The first FIREHOUSE SUBS® restaurant opened in Jacksonville, Florida in October 1994.
(Sorensen Decl. ¶3). Since that time, the chain has grown to more than 375 restaurants in 21 states.
(Sorensen Dep., pp.34-37, Docket # 138-13). FRG operates more than 35 FIREHOUSE SUBS®
restaurants throughout South Carolina. (Sorensen Decl. ¶10). The first FIREHOUSE SUBS® restaurant
in South Carolina opened in 1998 in Georgetown, and a second restaurant opened two years later in Myrtle
Beach. Both of those stores are now closed. (Sorensen Dep., pp.39-40). Nonetheless, the FIREHOUSE

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SUBS® restaurant franchise has been very successful. Since its inception in 1994, its annual gross revenues
have increased exponentially. In 1999, following 6 years of operation, sales exceeded $10 million. Six
years later, in 2005, sales exceeded $100 million, and sales have doubled since then. (Sorensen Decl. ¶20).
FRG is the owner of the Registrations listed below:

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(Sorensen Decl. ¶15; see Defs.[‘s] Ex. A-4, Docket # 135-13). FRG incorporates its marks into its food
products and services. (Sorensen Decl. ¶12). For example, a FIREHOUSE SUBS® menu includes
sandwiches named FIREHOUSE MEATBALL®, FIREHOUSE STEAK AND CHEESE®, and
FIREHOUSE HERO®. (Id.; Defs.[‘s] Exs. A-1 & A-2). The marks appear on displays placed on restaurant
tables, carry-out bags, stickers, sandwich paper, cups, free sub cards, and other materials. (Sorensen Decl.
¶12; Defs.[‘s] Ex. A-3, Docket #s 135-6 to -12). Additionally, since the opening of the first FIREHOUSE
SUBS® store, the term “Firehouse” has been used verbally by FIREHOUSE SUBS® employees. (Sorensen
Decl. ¶13). Specifically, employees greet restaurant visitors by saying, “Welcome to Firehouse!” (Id.).
Defendant Three Alarm is owned by Bryan and Mary Paquin. (Bryan Paquin Dep., p.15,
Docket # 138-16). Three Alarm owns and operates one FIREHOUSE SUBS® restaurant, which is located

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at 560 Highway 17 North, North Myrtle Beach, also known as the “Gator Hole” location. (Id. at 7). The
FIREHOUSE SUBS® restaurant at Gator Hole is approximately five miles north of CALLI BAKER’S.
(See id. at 73). It has been in business since 2006. (Id. at 13). Defendant Fireside is owned by Deborah and
Steve Duncan. (Deborah Duncan Dep., p.12, Docket # 138-17). Fireside owns and operates three
FIREHOUSE SUBS® restaurants, which are located in Socastee, Surfside, and Myrtle Beach. The one in
Myrtle Beach is located at 38th Avenue North, in the Bi-Lo Center at Plantation Point, and has been open
since November 2000. (Id. at 13, 52). The Myrtle Beach restaurant is about five miles south of CALLI
BAKER’S. (Id. at 76). The Surfside and Socastee locations are about 10 to 15 miles further south. (Id.).
FIREHOUSE SUBS® franchisees such as Three Alarm and Fireside execute franchise agreements granting
them certain rights that include the exclusive right to operate their FIREHOUSE SUBS® restaurants within
defined territories. (Sorensen Decl. ¶¶21-25; Defs.[‘s] Exs. BB, BB-1 & BB-2, Docket #s 141-3 to -4)
Further, franchisees pay a franchise fee, royalties, and advertising percentages in return for the exclusive
use of the FIREHOUSE SUBS® marks, brand and reputation, and FRG’s business assistance. (Id.).
Plaintiff Scurfield is an active-duty captain with the Horry County Fire Rescue. (Scurfield Dep.,
p.10, Docket # 138-11). In 2005, Scurfield and his friend, Jack Montgomery, decided to acquire an existing
restaurant that they frequented called “Calli Baker’s Roadhouse Bar & Grill.” (Id. at 43-44). Scurfield
admits that he had dined at a FIREHOUSE SUBS® restaurant several years prior to acquiring “Calli
Baker’s Roadhouse Bar & Grill.” (Scurfield Resp. to Req. for Admis. ¶¶39-40, Docket # 137-2). Scurmont
was formed as part of the partnership between Scurfield and Mr. Montgomery. Attorney Marshall Biddle
represented Scurmont in the acquisition of “Calli Baker’s Roadhouse Bar & Grill.” (Scurfield Dep., p.58).
At the closing, Mr. Montgomery asked Attorney Biddle whether there would be any problem if they
changed the name of the restaurant to “Calli Baker’s Firehouse Bar & Grill.” (Id. at 234-36). Following

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the acquisition, they renamed the restaurant to “Calli Baker’s Firehouse Bar & Grill” and renovated the
interior with a firefighter theme. (Id. at 119-21). Scurfield subsequently acquired Mr. Montgomery’s
interest in Scurmont, and he is now its sole member. (Id. at 62-63). Both before and after the name change,
the restaurant has been commonly referred to by the local community as “CALLI BAKER’S.” (Debbie
Breyare Aff. ¶¶ 8-9, Docket # 83-1). CALLI BAKER’S is a full-service restaurant that serves lunch and
dinner and offers a full menu of appetizers, soups, salads, sandwiches, steaks, hamburgers, seafood, and
desserts. (See Scurfield Dep., pp.149-55; Pls.[‘s] Attach. to Ex. O, Docket # 105-1). CALLI BAKER’S
operates using the following logo on its menu and printed material:

(Scurfield Resp. to Req. for Admis. ¶43; Defs.[‘s] Exs. F-1, F-2, & F-5, Docket #s 136-11, -12, -15, & -16).
Additionally, CALLI BAKER’S uses the following signage at its restaurant:

(Scurfield Resp. to Req. for Admis. ¶¶44-47; Defs.[‘s] Ex. F-2).

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II:

Services and Facilities
CALLI BAKER’S is a full-service, sit down dining restaurant that offers lunch and dinner. It offers

a full menu of appetizers, soup, salads, sandwiches, steaks, hamburgers, seafood, and desserts. (See
Scurfield Dep., pp.149-55; Defs.[‘s] Exs. F-1 & F-5). It has a full bar, serves alcohol, and offers “happy
hour” and karaoke nights. (Defs.[‘s] Exs. F-1 & F-5). Customers are seated by a host or hostess. (See
Scurmont’s Answers to Defs. First Set of Interrogs., p.6). Orders are taken at the customer’s table, and
food and drinks are delivered to the table by wait staff. (Id.). CALLI BAKER’S also offers take-out and
catering services to customers of all ages, and offers entrees for less than $10.00. (Scurfield Resp. to Req.
for Admis. ¶¶35-37, 52, 61-71). Additionally, the restaurant is located in a free-standing building. (See id.
¶¶44-47; Defs.[‘s] Ex. F-2). In the parking lot, a fire truck is parked right beside the restaurant. (Id.). The
inside of the restaurant is decorated with memorabilia from firefighters and policemen from all over the
country. (See Defs.[‘s] Ex. F-2; Scurfield Dep., pp.119-21; Scurfield Resp. to Req. for Admis. ¶72).
FIREHOUSE SUBS® restaurants offer a menu of submarine style sandwiches, drinks, salads, chili,
dessert items, and related food products using a firefighter theme. (Sorensen Decl. ¶8; Defs.[‘s] Exs. A-1
& A-2). Sub sandwiches are the “core” item on the FIREHOUSE SUBS® menu, which does not include
many of the items offered by full-service restaurants, such as appetizers, hamburgers, and grilled seafood
and shrimp. (See Sorensen Dep., pp.120, 194). FIREHOUSE SUBS® restaurants do not offer alcohol,
“happy hour,” or karaoke. (Id. at 194). Customers order at the counter, and drinks and potato chips are
self-service. (Id. at 193-96). The food is brought to the customer’s table, but it is “self-seating” and
customers typically clear their own tables. (Id. at 194-95). FIREHOUSE SUBS® restaurants offer lunch
and dinner, either dine-in or take-out, and catering services to customers of all ages. (Id. at 195-96;
Sorensen Decl. ¶9; see Defs.[‘s] Ex. A-1). Almost all entrees cost less than $10.00. (See Defs.[‘s] Exs. A-1

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& A-2). Additionally, FIREHOUSE SUBS® restaurants are mostly located in strip malls and are typically
between 1750 and 1800 square feet. (Id. at 196-97).
III:

Methods of Advertising
CALLI BAKER’S has engaged in limited advertising since it has been owned by Scurmont. (See

Scurfield Dep., pp.89-104). CALLI BAKER’S promotes its business by distributing flyers and promotional
materials. (Scurfield Resp. to Req. for Admis. ¶26). Its paid advertising has been limited to print
advertising, such as coupon books, and a website. (Scurfield Dep., pp.113-14; Scurfield Resp. to Req. for
Admis. ¶28; Scurmont’s Answers to Defs. First Set of Interrogs., pp.4-5). The restaurant has never paid
to advertise on television, radio, or a billboard. (Scurfield Dep., pp.107-15).
FIREHOUSE SUBS® employs outside marketing firms to conduct advertising campaigns on behalf
of the entire FIREHOUSE SUBS® “system.” (Sorensen Dep., pp.128, 200-201). The types of advertising
employed by FIREHOUSE SUBS® include radio, television, billboard, merchandise, and print advertising,
such as flyers, promotional materials, and coupon magazines. (See id. at 128; Don Fox Dep., pp.43-45,
Docket # 84-1; see also Defs.[‘s] Ex. A-3; Deborah Duncan Dep., p.52; Doug Reifschneider Decl. ¶¶32-34,
Docket # 138-2). Additionally, FIREHOUSE SUBS® franchisees are required to spend 2%-3% of gross
sales on local radio and print advertising. (Sorensen Dep., p.129; Doug Reifschneider Decl. ¶31). Systemwide, FIREHOUSE SUBS® has spent tens of millions of dollars on advertising over the past ten years. (See
Defs.[‘s] Ex. A-7, Docket # 138-1).
Moreover, over the past six years, FIREHOUSE SUBS® has engaged advertising agencies to
conduct marketing and research studies designed to measure consumer brand and advertising awareness
(Doug Reifschneider Decl. ¶¶9-10). Between 2005 and 2008, four “wave” marketing studies were
conducted to measure the consuming public’s awareness of the FIREHOUSE SUBS® brand and its

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competitive position in relation to other major submarine sandwich chains in the following eleven markets:
Jacksonville, Florida; Tallahassee, Florida; Pensacola, Florida/Mobile, Alabama; Orlando, Florida;
Birmingham, Alabama; Little Rock, Arkansas; Greenville, South Carolina; Charlotte, North Carolina;
Austin, Texas; Dallas, Texas; and Atlanta, Georgia. (Id. ¶¶9-19; see Defs.[‘s] Ex. C-1, Docket #s 138-3 to 5). In 2009, a “Firehouse Hijacks” research study was conducted to better understand the consuming
public’s barriers and motivations to visit a FIREHOUSE SUBS® restaurant; Myrtle Beach, South Carolina,
was one of the markets in which this study was conducted. (Doug Reifschneider Decl. ¶¶9, 21-24; see
Defs.[‘s] Ex. C-2, Docket # 138-6). All of these studies confirmed that FIREHOUSE SUBS® advertising
has had a positive customer impact, as the majority of the consuming public is aware of the FIREHOUSE
SUBS® brand and views FIREHOUSE SUBS® positively compared to competing submarine sandwich
chains. (See Doug Reifschneider Decl. ¶¶17, 19-23). This conclusion is also evident by the many industry
awards, both local and national, that FIREHOUSE SUBS® has received over the years. (See id. ¶¶25-29;
Defs.[‘s] Exs. C-3 & C-4, Docket #s 136-7 to -8).
IV:

Customer Inquiries
In 2005, when Scurmont acquired CALLI BAKER’S, the restaurant was located at 511 Lake

Arrowhead Road, in Myrtle Beach. (Scurfield Dep., p.49). CALLI BAKER’S moved to 10131 North
King’s Highway in June 2008. (Scurmont’s Answers to Defs. First Set of Interrogs., p.5). Prior to June
2008, CALLI BAKER’S never received any inquiries, complaints, or notices of there being any confusion
with FIREHOUSE SUBS®. (Scurfield Dep., p.227). Shortly after CALLI BAKER’S relocated to its
current location, a few customers began to inquire about the affiliation between CALLI BAKER’S and
FIREHOUSE SUBS®. (See Defs.[‘s] Ex. F-4, Docket # 136-14). In fact, Plaintiffs admit that customers
at CALLI BAKER’S have asked a CALLI BAKER’S employee whether CALLI BAKER’S is a

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FIREHOUSE SUBS® restaurant on at least three occasions. (Scurfield Resp. to Req. for Admis. ¶18).
CALLI BAKER’S employees recorded no more than 10 instances of possible consumer confusion.
(Scurfield Dep., p.228). However, employees of Three Alarm allege a substantially larger number of
customer inquiries regarding the affiliation between its restaurant and CALLI BAKER’S. In June 2008,
just before CALLI BAKER’S opened for business at its new location, Scurfield received a “cease and
desist” letter from counsel for the Defendants insisting that CALLI BAKER’S change its name to
something other than “Firehouse.” (Pls.[‘s] Ex. V, Docket # 89-1).
V:

Other “Firehouse” Restaurants and Users
The word “Firehouse” is, and has in the past, been used by restaurants and other businesses in the

food service industry. FRG admits that one or more restaurants, besides CALLI BAKER’S and
FIREHOUSE SUBS®, have in the past used the word “Firehouse” in their names. (FRG Resp. to First Req.
for Admis. ¶5, Docket # 81-7). FRG also admits that one or more other restaurants currently use the word
“Firehouse” in their names. (Id. ¶4). Before the first FIREHOUSE SUBS® opened for business in Florida,
there were other “Firehouse” restaurants in business, which are still in business today. For example, there
is a “Frankie’s Firehouse Restaurant” in Somersville, Connecticut. (See Pls.[‘s] Ex. M, Docket # 83-3).
Frankie’s Firehouse Restaurant has been in existence since 1980. (Id. ¶3). There is also a “Firehouse
Tavern” in Parkville, Maryland, that has been in business since 1986. (See Pls.[‘s] Ex. L, Docket # 83-2).
In Johnson City, Tennessee, there is “The Firehouse” restaurant, which has been in business since the early
1980s. (Sorensen Dep., pp.89-91 & Ex. 9 thereto). There is also a “Firehouse Grill & Pub” in Tampa,
Florida, that started doing business under the “Firehouse” name long before the first FIREHOUSE SUBS®
opened for business. (Id. at 45 & Ex. 6 thereto).

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The Plaintiffs claim that over 100 restaurants and/or cafes are using the word “Firehouse” in their
names. (See Pls.[‘s] Exs. C & D, Docket #s 81-5 to -6). A simple internet search reveals dozens of other
“Firehouse” restaurant locations or food related businesses, which appear to have no affiliation with
FIREHOUSE SUBS®. (See Pls.[‘s] Exs. N & EEE, Docket #s 102-1 & 147-1 to -2). There are also
numerous web addresses that include the word “Firehouse” and that will lead the searcher to a website not
owned by FRG. (See FRG Resp. to First Req. for Admis. ¶¶7-8; FRG Resp. to Second Req. for Admis. ¶¶971, Docket # 81-8). Furthermore, an internet search of state-level government records for registered
trademarks and corporations incorporating the “Firehouse” name reveals dozens, if not hundreds, of past
and present users of the word “Firehouse”- both within and outside the food and beverage industry. (See
Pls.[‘s] Ex. FFF, Docket #s 147-3 to -5).
The USPTO has issued registrations to other “Firehouse” users in the food and hospitality industry:
(a) Reg. No. 3,311,648, issued for “Fifth Alarm Firehouse Pub” in Byron, Illinois, on October 16, 2007
(Pls.[‘s] Ex. Y, Docket # 91-1);
(b) Reg. No. 3,272,304, issued for “Frankie’s Firehouse Restaurant” on July 31, 2007
(Pls.[‘s] Ex. BB, Docket # 92-2);
(c) Reg. No. 3,210,279, issued for “Danny’s Firehouse Chili Recipe” on February 20, 2007
(Pls.[‘s] Ex. AA, Docket # 92-1);
(d) Reg. No. 3,389,782, issued for “Firehouse Java” on February 26, 2008
(Pls.[‘s] Ex. Z, Docket # 91-2);
(e) Reg. No. 3,500,729, issued for “Firehouse Cooking” on September 16, 2008
(Pls.[‘s] Ex. CC, Docket # 93-1);
(f) Reg. No. 3,591,991, issued for “Firehouse Cooking” on March 17, 2009
(Pls.[‘s] Ex. DD, Docket # 93-2); and
(g) Reg. No. 2,806,118, issued for “Firehouse” on January 20, 2004
(Pls.[‘s] Ex. EE, Docket # 93-3).
The USPTO has also issued a number of registrations to “Firehouse” users in connection with other goods
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and services, such as moving services, financial services, veterinary services, real estate services, and the
publishing and entertainment industries. (See Pls.[‘s] Exs. FF to YY, Docket #s 94-1 to 100-1). In addition,
the USPTO has issued registration certificates to users of the word “Firehouse” in connection with
emergency response services. (See Pls.[‘s] Exs. ZZ, AAA, & BBB, Docket #s 100-2 to -4).
Nonetheless, FRG argues that its registered marks are protectable, as it has actively policed its
marks by diligently asserting its rights in the FRG marks in more than twenty proceedings in federal court
and before the USPTO, seeking to cancel third-party registrations or to oppose pending applications
containing the word “Firehouse,” and by issuing more than fifteen cease and desist letters to other
restaurants using the term “Firehouse” in their names. (Sorensen Decl. ¶28). FRG claims that it has
asserted and defended its registered marks in federal lawsuits filed in Arkansas, Virginia, North Carolina,
South Carolina, and Puerto Rico, and that each of those lawsuits resulted in the accused infringer changing
its name. (Id.). Moreover, FRG claims that in each case where it sent a cease and desist letter, the accused
infringer either changed its business name or went out of business. (Id.; see Defs.[‘s] Ex. A-12, Docket #
135-24).
Procedural History
In June 2008, counsel for the Defendants issued a cease and desist letter to Scurfield stating that
CALLI BAKER’S use of the word “Firehouse” was infringing on FRG’s trademarks. In March 2009, the
Plaintiffs filed an action for declaratory judgment of non-infringement and also asserted various other
claims. The Defendants filed a separate lawsuit alleging trademark infringement under the Lanham Act
and common law. The cases were consolidated in January 2010. On June 2, 2010, the Plaintiffs filed their
[46] Second Amended Complaint. The Second Amended Complaint asserts three causes of action against
the Defendants: (1) Declaratory Judgment for Non-Infringement of Trademarks, (2) South Carolina Unfair

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Trade Practices Act, and (3) Trademark Cancellation Due to Fraud. On July 6, 2010, the Defendants filed
their [49] Answer and Affirmative and Additional Defenses to Plaintiffs’ Second Amended Complaint,
Counterclaim, and Demand for Attorneys’ Fees and Jury Trial. Accordingly, the Defendants allege the
following counterclaims against the Plaintiffs: (1) Federal Trademark Infringement (15 U.S.C. § 1114), (2)
False Designation of Origin (15 U.S.C. § 1125(a)), (3) Common Law Trademark Infringement and Unfair
Competition, and (4) Unjust Enrichment.1
In December 2010, the Defendants filed a [77] Motion to Strike Expert Witness Report of William
O. Bearden and to Exclude the Testimony of William O. Bearden at Trial. Subsequently, the Plaintiffs filed
a [79] Motion in Limine to Exclude Testimony of George M. Thomas, [80] Motion in Limine to Exclude
Testimony and Rebuttal Report of Peter Sealey, and [81] Motion for Partial Summary Judgment.2 In
February 2011, the Defendants filed a [135] Motion for Summary Judgment or, in the alternative, Partial
Summary Judgment on all counts asserted in the Second Amended Complaint and all remaining
counterclaims. Thus, pending before the Court are three motions to exclude expert testimony/reports and
two cross-motions for partial summary judgment. On June 30, 2011, the Court held a hearing on these
motions (the “motions hearing”), and the issues are ripe for review.

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The Defendants also alleged the Plaintiffs violated South Carolina’s Unfair Trade
Practices Act. However, this counterclaim was withdrawn with the Plaintiffs’ consent. See
Text Order, Docket # 64 (denying as moot the Plaintiffs’ Motion to Strike Counterclaim)
2

The Plaintiffs move for summary judgment on: (1) Plaintiff’s First Cause of Action for
Declaratory Judgment of Non-Infringement, (2) Defendants’ First Counterclaim for
Trademark Infringement pursuant to 15 U.S.C. § 1114, (3) Defendants’ Second
Counterclaim for False Designation of Origin pursuant to 15 U.S.C. § 1125(a), and (4)
Defendants’ Third Counterclaim for Common Law Trademark Infringement and Unfair
Competition.
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Discussion
I:

Defendants’ Motion to Strike Expert Witness Report of William O. Bearden and to Exclude

the Testimony of William O. Bearden at Trial.
At issue are five pages in Dr. Bearden’s expert report under the heading “opinions to be expressed
and their bases and reasons.” (See Bearden Report, pp.4-9, Docket # 77-2). FRG requests that the Court
strike Dr. Bearden’s expert report and exclude his expert testimony at trial on several grounds including
the following: (1) Dr. Bearden’s opinions are not based on any methodology, specialized knowledge, or
reliable technique or theory; (2) Dr. Bearden’s opinions would not be helpful to the jury; and (3) Dr.
Bearden’s proposed testimony usurps the role of the fact-finder because it proffers legal opinions and
conclusions and unfairly casts the Plaintiffs’ legal arguments as expert testimony.
“[Q]uestions of fact that are committed to the jury are the proper subject of opinion testimony.”
United States v. McIver, 470 F.3d 550, 561 (4th Cir. 2006) (citing Fed. R. Evid. 704(a)); see generally
Anheuser-Busch, Inc. v. L. & L. Wings, Inc., 962 F.2d 316, 318 (4th Cir. 1992) (Likelihood of confusion
is an “inherently factual” determination which is “particularly amenable to resolution by a jury.”).
“However, opinion testimony that states a legal standard and draws a legal conclusion by applying law to
the facts is generally inadmissible.” McIver, 470 F.3d at 561-62 (citing United States v. Barile, 286 F.3d
749, 760 (4th Cir. 2002)). The district court’s task “is to distinguish [helpful] opinion testimony that
embraces an ultimate issue of fact from [unhelpful] opinion testimony that states a legal conclusion.”
Barile, 286 F.3d at 760. Rule 702 of the Federal Rules of Evidence contemplates that the court will
evaluate whether the testimony is reliable and can aid the ultimate trier of fact. Morehouse v. Louisville
Ladder Group, LLC, No. 3:03-887-22, 2004 WL 2431796, at *3 (D.S.C. June 28, 2004). Pursuant to Rule
702, expert testimony is admissible if it will assist the trier of fact and is (1)”based upon sufficient facts

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or data,” (2) “the product of reliable principles and methods,” and (3) “the principles and methods [have
been applied] reliably to the facts of the case.” PBM Prods., LLC v. Mead Johnson & Co., 639 F.3d 111,
123 (4th Cir. 2011) (citing Fed. R. Evid. 702). As the Supreme Court has explained, evidence is admissible
under Rule 702 if “it rests on a reliable foundation and is relevant.” Daubert v. Merrell Dow Pharm., 509
U.S. 579, 597 (1993). The Fourth Circuit has noted that “[a] reliable expert opinion must be based on
scientific, technical, or other specialized knowledge and not on belief or speculation, and inferences must
be derived using scientific or other valid methods.” Oglesby v. General Motors Corp., 190 F.3d 244, 250
(4th Cir. 1999). Accordingly, a two-part test is relevant in cases such as this one: (1) whether the expert
witness is qualified, and (2) if qualified, whether his opinion is reliable, in that it is based on sufficient facts
and sound methodology. Morehouse, 2004 WL 2431796 at *4.
FRG does not challenge Dr. Bearden’s qualifications at this time; therefore, the Court immediately
turns to the reliability of Dr. Bearden’s expert testimony. As an initial matter, counsel for the Plaintiffs
conceded at the motions hearing that Dr. Bearden may not present expert testimony as to “6. Alleged
Infringer’s Intent,” and such would be improper. Additionally, Dr. Bearden may not present expert
testimony as to “7. Actual Confusion.” As counsel for the Plaintiffs acknowledged at the motions hearing,
Dr. Bearden’s proffered opinion as to this factor appears to be based solely on evidence in the record
without conducting any independent consumer surveys or polls, which are usually performed in cases of
this type. His opinion as to this factor would not aid the jury, as it is simply based on what other
employees/witnesses will testify to. Nonetheless, the Court finds that Dr. Bearden’s remaining proffered
expert opinions and corresponding portions of his expert report are admissible.
Dr. Bearden is an expert in consumer marketing and brand awareness. He has conducted extensive
research on the development of brand attitudes and consumer perceptions of brands. In addition to his

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scholarly and teaching endeavors, he serves on the editorial review boards of several prestigious marketing
journals. In his expert report, Dr. Bearden identified the data and information he considered in forming
his expert opinions and his methodology, which included a review of various documents in the case, as well
as in-person inspections of both the Defendants’ and Plaintiffs’ restaurants, and independent research of
other users of the FIREHOUSE word mark in the restaurant industry. Dr. Bearden visited the parties’
respective restaurants; compared their respective signage, physical amenities, services, and menus; and
examined their respective marks in terms of color, size, font, and other aspects of appearance. Using the
seven likelihood of confusion factors announced by the Fourth Circuit in Pizzeria Uno Corp. v. Temple,
747 F.2d 1522, 1529 (4th Cir. 1984) to organize his expert report, Dr. Bearden then analyzed the data and
information that he gathered through his independent study and analysis to opine as to whether a likelihood
of confusion exists. His proffered opinions as to factors One through Five are based on his specialized
knowledge as a marketing and brand awareness expert and, therefore, are sufficiently reliable enough to
warrant their admission.
Moreover, the Court finds that his proffered expert opinions as to these factors are both relevant and
helpful to the jury. As demonstrated by his expert report, Dr. Bearden conducted a detailed examination
of the parties’ respective businesses and the marks used by each. He has conducted an independent
investigation into the FIREHOUSE word mark as it is used in the restaurant industry and opined on the
weakness of the FIREHOUSE SUBS®

brand.

His in-depth analysis of the relative strength,

distinctiveness, and similarity of the parties’ marks will assist the jury in reaching its own conclusion as
to likelihood of confusion. Finally, Dr. Bearden’s proffered expert opinions as to factors One through Five
do not usurp the role of the jury by stating the ultimate legal conclusion the jury should reach as to
trademark infringement. Dr. Bearden’s proffered expert testimony merely states why he believes there is

17

not a likelihood of confusion between CALLI BAKER’S use of the word “Firehouse” and FRG’s registered
marks. As such, the Defendants’ Motion to Strike Expert Witness Report of William O. Bearden and to
Exclude the Testimony of William O. Bearden at Trial is granted in part, denied in part. Specifically, Dr.
Bearden is precluded from testifying as to “6. Alleged Infringer’s Intent” and “7. Actual Confusion.”
Otherwise, he is qualified, and the remainder of his proffered testimony is relevant and sufficiently
reliable.3
II:

Plaintiffs’ Motion in Limine to Exclude Testimony and Rebuttal Report of Peter Sealey, Ph.D.
The Plaintiffs have filed a motion in limine for an order excluding the testimony and rebuttal report

of expert witness Peter Sealey, Ph.D. The Plaintiffs argue that “Dr. Sealey’s rebuttal report is nothing more
than an indictment on the credentials and qualifications of Plaintiffs’ marketing expert, William O.
Bearden, Ph.D. . . . [and] submit that Dr. Bearden’s credentials and qualifications are not the proper subject
of an expert rebuttal report and/or expert opinion.” (Pls.[‘s] Mot. in Limine to Exclude Test. & Rebuttal
Report of Peter Sealey, Ph.D, pp.1-2) (citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999)).
In response, FRG argues that the Plaintiffs’ motion should be denied because “courts regularly permit
experts to testify at trial about the reliability of an opposing expert’s opinions.” (Defs.[‘s] Resp. to Pls.[‘s]
Mot. in Limine, p.3).
The Plaintiffs argue that Dr. Sealey’s report is basically an attack on the qualifications of Dr.
Bearden to testify as an expert witness. However, the Defendants have never challenged Dr. Bearden’s

3

The Defendants argue that “[t]he Court should also exclude Dr. Bearden’s report
because it is not verified,” as “[u]nsworn testimony is not admissible in the consideration of
summary judgment motions.” (Defs.[‘s] Mem. in Opp’n to Pls.[‘s] Mot. for Partial Summ.
J., p.18, Docket # 141). This argument is moot, as the Defendants filed a motion to file Dr.
Bearden’s deposition transcript, which incorporated his expert report, and the motion was
granted without objection. (See Docket #s 159 & 160).
18

qualifications. It is for the Court to determine whether Dr. Bearden is qualified to give expert testimony.
Notwithstanding, Dr. Sealey may opine as to why he believes that Dr. Bearden’s conclusions are unreliable,
even if the basis for his opinion is that Dr. Bearden’s lack of practical experience in the discipline of
marketing led Dr. Bearden to an erroneous conclusion. Dr. Sealey’s report rebuts the substance and
reliability of Dr. Bearden’s expert opinions. Dr. Sealey questions the reliability of Dr. Bearden’s marketing
opinions and likelihood of confusion conclusion given the fact that Dr. Bearden “has no professional or
managerial experience in the practical or real world of marketing.” (Rebuttal Report of Dr. Sealey, p.5,
Docket # 80-1). Specifically, Dr. Sealey opines that Dr. Bearden’s “lack of practical experience in the
discipline of marketing has led Dr. Bearden to disregard vitally important elements in the marketing of
brands that has, as an end result, led him to arrive at a fundamentally incorrect conclusion.” (Id.). Further,
Dr. Sealey cites four critical components of a brand’s identity that Dr. Bearden omits from his report,
presumably as a result of his lack of experience, and this is proper rebuttal testimony. Cf. United States v.
Stitt, 250 F.3d 878, 897 (4th Cir. 2001) (defining rebuttal evidence as “[e]vidence given to explain, repel,
counteract, or disprove evidence offered by the adverse party.”). As such, the Plaintiffs’ Motion in Limine
to Exclude Testimony and Rebuttal Report of Dr. Sealey is denied.
III:

Plaintiffs’ Motion in Limine to Exclude Testimony and Report of George M. Thomas
The Defendants seek to “introduce expert testimony on limited topics that relate to Mr. Thomas’s

experience as an intellectual property attorney.” (Defs.[‘s] Resp. To Pls.[‘s] Mot. in Limine to Exclude
Testimony & Report of George M. Thomas, p.4, Docket # 119). The Defendants intend to present, and the
Plaintiffs have moved to exclude, the opinions and testimony of Mr. Thomas as follows:
(1) Testimony regarding the application and registration process of trademarks and service marks
before the USPTO as well as the general practice and procedures of the USPTO;
(2) Whether FRG’s conduct before the USPTO demonstrates conduct which is fraudulent;
19

(3) Testimony regarding whether a trademark holder is obligated to pursue all potential infringers
in order to pursue an action against Plaintiffs and testimony regarding the circumstances under
which a trademark holder may choose not to take action against an infringer;
(4) Testimony regarding the meaning and significance of third-party trademark registrations,
whether registrations constitute a verification that the marks are placed in commercial use by thirdparties, the duty of registrants to provide proof of use during the term of the registration, and an
opinion on how those registrations affect the enforceability of a registered mark; and
(5) Testimony as to the connection between the names of the parties’ respective businesses due to
the use of the word “Firehouse.”4
A:

Testimony as to whether FRG’s conduct before the USPTO demonstrates fraudulent conduct (#2)
The Plaintiffs seek cancellation of one of FRG’s registered marks based on allegations of fraud by

FRG before the USPTO. As the Fourth Circuit has noted, “[a] number of courts have held that procurement
of a trademark registration through the use of false or misleading statements does not constitute fraud
within the meaning of 15 U.S.C. § 1115(b)(1) unless the statements were both material to the decision to
grant the registration and made with a deliberate intent to defraud.” Brittingham v. Jenkins, 914 F.2d 447,
453-54 (4th Cir. 1990) (emphasis added). According to the Defendants, “Mr. Thomas’s testimony will
relate directly to the issues of whether any statements or actions taken by FRG were misleading and
material and whether they manifest a deliberate intent.” (Defs.[‘s] Resp. To Pls.[‘s] Mot. in Limine to
Exclude Testimony & Report of George M. Thomas, p.6). At the motions hearing, however, counsel for
the Defendants clarified that Mr. Thomas will not offer testimony concerning FRG’s intent. Additionally,
Defendants state that Mr. Thomas “will also offer testimony as to whether FRG has engaged in any conduct

4

Because some issues have become moot, the Defendants submitted a highlighted version
of Mr. Thomas’s report which delineates the specific opinions that the Defendants intend
to offer at trial. See Docket # 119-1.
20

that would constitute fraud on the [US]PTO.”5 (Id. at 6). The Plaintiffs have moved to exclude Mr.
Thomas’s proffered expert testimony as impermissible legal conclusions and opinion testimony as to the
ultimate issue of whether FRG committed fraud before the USPTO.
“[T]estimony by a witness in the form of a legal conclusion is clearly inadmissible.” Hermitage
Indus. v. Schwerman Trucking Co., 814 F. Supp. 484, 486-87 (D.S.C. 1993). Moreover, testimony on
ultimate issues
“must be otherwise admissible under the Rules of Evidence.” Weinstein’s Federal
Evidence § 704.03[1] (2d ed. 2002). This means that the testimony must be helpful
to the trier of fact, in accordance with Rules 701 and 702, and must not waste time,
in accordance with Rule 403. “These provisions afford ample assurances against
the admission of opinions which would merely tell the jury what result to reach . .
. .” United States v. Barile, 286 F.3d 749, 759-60 (4th Cir. 2002) (quoting Fed. R.
Evid. 704 advisory committee’s notes). The touchstone of admissibility of
testimony that goes to the ultimate issue, then, is helpfulness to the jury. Kopf, 993
F.2d at 377-78 (stating that while “[a]n opinion is not objectionable simply because
it embraces an ultimate issue to be decided by the trier of fact, . . . such an opinion
may be excluded if it is not helpful to the trier of fact”) (internal quotation marks
omitted); Weinstein’s Federal Evidence § 704.04[2][a] (“The most common reason
for excluding opinion testimony that gives a legal conclusion is lack of
helpfulness . . . .”). Thus, the district court’s task “is to distinguish [helpful] opinion
testimony that embraces an ultimate fact from [unhelpful] opinion testimony that
states a legal conclusion,” . . . Barile, 286 F.3d at 760.
United States v. Perkins, 470 F.3d 150, 157-58 (4th Cir. 2006). Whether a misrepresentation made to the
USPTO is “material” encompasses a legal conclusion that is for the jury to decide. See J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 31:67 (West 2010) (In the context of fraud
relating to a trademark application, the standard for materiality is exclusively defined: a material
representation to the USPTO exists where, “but for the misrepresentation, the federal registration either

5

The Defendants have represented to the Court that “[a]lthough the opinion on page 10 of
the Thomas Expert Report utilizes the term ‘fraud,’ his testimony at trial will not utilize this
term but will focus on the conduct and representations to the [US]PTO by Defendant [FRG],
the reasonableness of such conduct.” Id. at 9 n.4.
21

would not or should not have issued.”); cf. United States v. David, 83 F.3d 638, 640 n.2 (4th Cir. 1996)
(stating that materiality has a specialized legal meaning and defining materiality as having “a natural
tendency to influence agency action or [capability] of influencing agency action.”) Thus, Mr. Thomas’s
proffered testimony relating to the materiality of FRG’s statements and actions before the USPTO would
be unhelpful to the jury and is excluded. Similarly, Mr. Thomas may not testify as to whether FRG acted
with deliberate intent. FRG’s “intent with respect to [its trademark applications] is a question for the trier
of fact to decide and does not require the admission of expert testimony.” See BorgWarner, Inc. v.
Honeywell Int’l, Inc., 750 F. Supp. 2d 596, 611 (W.D.N.C. 2010) (citation omitted). Additionally, such
testimony would be speculative at best and is excluded. Mr. Thomas may testify, however, as to the
reasonableness of FRG’s actions before the USPTO. See United States v. Barile, 286 F.3d 749, 759-60 (4th
Cir. 2002) (“Opinion testimony on whether the data submitted in a 510(k) submission were reasonable
would not merely state a legal conclusion and therefore is not excludable on the ground that it invades the
province of the jury . . . . [A]n expert opinion on whether various aspects of the 510(k) submissions . . .
were reasonable is precisely the type of expert testimony that could assist the trier of fact in its
determination.”) (citing Fed. R. Evid. 702).
B:

Testimony on the parties’ “connection” due to their respective uses of the word “Firehouse” (#5)
Defendants seek to offer Mr. Thomas’s opinions and testimony on the alleged “connection” between

the parties’ businesses due to the use of the word “Firehouse.” Rule 702 of the Federal Rules of Evidence
provides in relevant part that expert testimony must be “based upon sufficient facts or data.” Fed. R. Evid.
702. “A reliable expert opinion must be based on scientific, technical, or other specialized knowledge and
not on belief or speculation, and inferences must be derived using scientific or other valid methods.”
Oglesby v. General Motors Corp., 190 F.3d 244, 250 (4th Cir. 1999) (citation omitted). Additionally,

22

“[t]he Fourth Circuit has also held that where lay jurors are fully able to understand and appreciate the
implications of the evidence admitted, proffered expert testimony will not assist the jury in determining
a factual issue; and is therefore inappropriate.” Minnesota Lawyers Mut. Ins. Co. v. Batzli, No. 3:09cv432,
2010 WL 670109, at *2 (E.D. Va. Feb. 10, 2010) (citing United States v. Portsmouth Paving Corp., 694
F.2d 312, 324 (4th Cir. 1982)).
Mr. Thomas’s expert report contains only a one paragraph explanation of his speculative opinion
that the “viewer of the Scurfields mark and the surroundings might assume that the restaurant happens to
be a FRG restaurant managed by or franchised to a person named Calli Baker. Thus, there is a direct and
obvious connection between [the parties’ marks].” (Expert Report of George M. Thomas, p.15, Docket #
119-1). Mr. Thomas appears to base this opinion solely on the pictures included in the Second Amended
Complaint. (Id.) Unlike Dr. Bearden, Mr. Thomas has engaged in no independent research and, based
solely on his analysis of pictures of the signage outside each parties’ restaurants, reaches the conclusion
that there is a “connection” between the parties’ respective restaurants. This proffered opinion testimony
will not assist the jury in determining a factual issue, as lay jurors are fully able to recognize that both
parties utilize the word Firehouse in their marks and signage. Additionally, this proffered opinion
testimony is unreliable, as it is not based on sufficient data or specialized knowledge. Thus, Mr. Thomas’s
proffered expert testimony on the similarity of the parties’ marks and any perceived connection between
their respective restaurants is excluded.
C:

Other proffered testimony (#s 1, 3, & 4)
At the motions hearing, counsel for the parties agreed that Mr. Thomas may offer testimony

regarding the application and registration process of trademarks and service marks before the USPTO as
well as the general practices and procedures of the USPTO. Mr. Thomas also intends to testify as to

28

whether a trademark holder is obligated to pursue all potential infringers, the meaning and significance of
third-party trademark registrations, and the enforceability of registered trademarks. The Court finds that
Mr. Thomas’s opinions as to these issues are relevant, helpful to the jury, and do not constitute
impermissible legal conclusions. As such, the Plaintiffs’ Motion in Limine to Exclude Testimony and
Report of George M. Thomas is granted in part, denied in part. Specifically, Mr. Thomas is precluded from
presenting expert testimony as to the materiality of FRG’s actions before the USPTO, whether FRG acted
with deliberate intent before the USPTO, whether FRG’s conduct before the USPTO was fraudulent, and
the similarity of the parties’ marks and any perceived connection between the parties’ respective
restaurants.
IV:

Plaintiffs’ Motion for Partial Summary Judgment
In their Motion for Partial Summary Judgment, the Plaintiffs move for summary judgment on: (1)

Plaintiff’s First Cause of Action for Declaratory Judgment of Non-Infringement, (2) Defendants’ First
Counterclaim for Trademark Infringement pursuant to 15 U.S.C. § 1114, (3) Defendants’ Second
Counterclaim for False Designation of Origin pursuant to 15 U.S.C. § 1125(a), and (4) Defendants’ Third
Counterclaim for Common Law Trademark Infringement and Unfair Competition. While each cause of
action has its own elements, they each require two common elements as explained below. In order for
Defendants to prevail on their claims for Trademark Infringement under the Lanham Act pursuant to 15
U.S.C. § 1114, False Designation of Origin pursuant to 15 U.S.C. § 1125(a), and common law trademark
infringement and common law unfair competition, FRG must show that (1) it has a valid, protectable
trademark and (2) that CALLI BAKER’S use of a reproduction or colorable imitation of the trademark is

29

likely to cause confusion among consumers.6 Specifically, the Plaintiffs move for summary judgment on
all of these claims on the ground that FRG cannot show a likelihood of confusion between CALLI
BAKER’S use of the word “Firehouse” and FRG’s Registrations, which include various forms of
FIREHOUSE® and FIREHOUSE SUBS® marks used by the Defendants.7
A:

A genuine issue of material fact exists as to whether there is a likelihood of confusion between

CALLI BAKER’S use of the word “Firehouse” and FRG’s registered marks
A trademark includes any word, name, symbol, or device used by an individual to identify and
distinguish his goods “from those manufactured or sold by others and . . . [to] indicate the source of the
goods.” 15 U.S.C. § 1127 (2009). As the Fourth Circuit has explained,

6

See George & Co., LLC, v. Imagination Entm’t Ltd., 575 F.3d 383, 393 (4th Cir. 2009)
(“To establish trademark infringement, a plaintiff must prove that it owns a valid and
protectable mark, and that the defendant’s use of a ‘reproduction, counterfeit, copy, or
colorable imitation’ of that mark creates a likelihood of confusion.” (citing 15 U.S.C. §
1114(1)(a))); Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 804 (4th Cir. 2001)
(“A plaintiff asserting an infringement claim under the Lanham Act must prove that it has
a valid, protectable trademark and that the defendant is infringing its mark by creating
confusion, or a likelihood thereof, by causing mistake, or by deceiving as to the attributes
of its mark.”); see also People for the Ethical Treatment of Animals v. Doughney, 263 F.3d
359, 364 (4th Cir. 2001) (To state a claim for False Designation of Origin pursuant to §
1125(a), a party must allege facts establishing “(1) that it possesses a mark; . . . and (5) that
the defendant used the mark in a manner likely to confuse consumers.”); Shakespeare Co.
v. Silstar Corp. of Am., Inc., 802 F. Supp. 1386, 1399 (D.S.C. 1992), rev’d on other grounds,
9 F.3d 1091 (4th Cir. 1993) (noting that the elements of common law unfair competition and
trademark infringement under South Carolina law are identical to the elements for proving
a Lanham Act claim); cf. Long Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43
F.3d 922, 930 n.10 (4th Cir. 1995) (“The test for trademark infringement and unfair
competition under the Lanham Act is essentially the same as that for common law unfair
competition . . .”).
7

FRG has asserted 34 trademarks and service marks registered on the Principal Register
of the USPTO. At the motions hearing, counsel for both parties agreed that 33 of the 34
marks are valid and protectable. The Plaintiffs challenge the validity of the FIREHOUSE
word mark only.
30

A trademark puts the purchasing public on notice that all goods bearing the
trademark: (1) originated from the same source; and (2) are of equal quality.
Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 538 (4th Cir. 2004).
Thus, a trademark not only “protects the goodwill represented by particular
marks,” but also allows “consumers readily to recognize products and their
source,” preventing “consumer confusion between products and between
sources of products.” OBX-Stock, Inc. v. Bicast, Inc., 558 F.3d 334, 339 (4th
Cir. 2009).
George & Co., LLC, v. Imagination Entm’t Ltd., 575 F.3d 383, 392-93 (4th Cir. 2009) (citation omitted).
Whether CALLI BAKER’S use of the word “Firehouse” is likely to cause confusion to the
“ordinary consumer” such that FRG has rights which prevail over CALLI BAKER’S is an “inherently
factual” determination which is “particularly amenable to resolution by a jury.” Anheuser-Busch, Inc. v.
L. & L. Wings, Inc., 962 F.2d 316, 318 (4th Cir. 1992). Likelihood of confusion is “frequently a fairly
disputed issue of fact on which reasonable minds may differ, and has long been recognized to be a matter
of varying human reactions to situations incapable of exact appraisement.” Id. (internal citation and
quotation marks omitted).
A likelihood of confusion exists if “the defendant’s actual practice is likely to produce confusion
in the minds of consumers about the origin of the goods or services in question.” CareFirst of Md., Inc. v.
First Care, P.C., 434 F.3d 263, 267 (4th Cir. 2006) (citation omitted). In assessing whether such confusion
exists, the court looks “to how the two parties actually use their marks in the marketplace to determine
whether the defendant’s use is likely to cause confusion.” Id. Specifically, to determine if a likelihood of
confusion exists, the court looks to
(1) the strength or distinctiveness of the plaintiff’s mark as actually used in
the marketplace; (2) the similarity of the two marks to consumers; (3) the
similarity of the goods or services that the marks identify; (4) the similarity
of the facilities used by the markholders; (5) the similarity of advertising
used by the markholders; (6) the defendant’s intent; (7) actual confusion; (8)
the quality of the defendant’s product; and (9) the sophistication of the
consuming public.
31

George & Co., 575 F.3d at 393 (citing Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984)).
“Not all of these factors are of equal importance, nor are they always relevant in any given case.” Id. The
actual confusion factor is the most significant. Resorts of Pinehurst, Inc. v. Pinehurst Nat’l Corp., 148 F.3d
417, 423 (4th Cir. 1998) (noting that “the best evidence of likely confusion is actual confusion.”); see also
Lyons P’ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 804 (4th Cir. 2001) (stating evidence of actual
confusion is “often paramount” in the likelihood of confusion analysis).
1. Strength of the Mark
The first likelihood of confusion factor focuses on the strength of the mark. “The strength of a mark
is the degree to which a consumer in the relevant population, upon encountering the mark, would associate
the mark with a unique source.” CareFirst, 434 F.3d at 269. Generally, the stronger the mark, the greater
the likelihood that consumers will be confused by competing uses of the mark. The strength of a trademark
is evaluated in terms of both conceptual strength and commercial strength. Id.
a. Conceptual Strength
A mark’s conceptual strength is determined in part by its placement into one of four categories of
distinctiveness: (1) arbitrary or fanciful; (2) suggestive; (3) descriptive; and (4) generic. George & Co., 575
F.3d at 393-94 (citation omitted). Arbitrary marks, which are inherently distinctive
typically involve common words that have no connection with the actual
product, as “they do not suggest or describe any quality, ingredient, or
characteristic,” so the mark can be viewed as “arbitrarily assigned.” Id.; see
also id. (noting that “Camel® cigarettes” and “Apple® computers” are
arbitrary marks).
Suggestive marks, which are also inherently distinctive, do not describe a
product’s features but merely suggests them. Retail Servs., 364 F.3d at 538.
In other words, the exercise of some imagination is required to associate a
suggestive mark with the product. Id. Examples of suggestive marks are
“Coppertone®, Orange Crush®, and Playboy®.” Sara Lee, 81 F.3d 464.

32

Id. at 394. The Defendants argue that their use of the FIREHOUSE® and FIREHOUSE SUBS® marks
is at least suggestive when used in connection with restaurant services and food and drink items.8 However,
this categorization does not end a court’s evaluation of a mark’s conceptual strength. A court should
measure a mark’s conceptual strength by focusing on the “linguistic or graphical ‘peculiarity’ of the
mark . . . considered in relation to the product, service, or collective organization to which the mark
attaches.” CareFirst, 434 F.3d at 269 (internal citation omitted). “A court must also consider other
registrations of the mark, because ‘the strength of a commonly-used mark decreases as the number of thirdparty registrations increases.’” Renaissance Greeting Cards, Inc. v. Dollar Tree Stores, Inc., 227 F. App’x
239 (4th Cir. 2007) (citing Pizzeria Uno, 747 F.2d at 1531). “‘[T]he frequency of prior use of [a mark’s
text] in other marks, particularly in the same field of merchandise or service,’ illustrates the mark’s lack
of conceptual strength.” CareFirst, 434 F.3d at 270 (quoting Pizzeria Uno, 747 F.2d at 1530-31). “A
strong trademark is one that is rarely used by parties other than the owner of the trademark, while a weak
trademark is one that is often used by other parties.” Id. (concluding that CareFirst’s mark, used in
connection with HMO health care organization, was weak because many health care businesses used some
variation of the words “care” and “first” in their marks); see Petro Stopping Ctrs., 130 F.3d at 93-94
(recognizing that word “Petro” is commonly used in marks dealing with fuel stations; therefore, mark using

8

Additionally, the USPTO requires applicants with marks found to be descriptive to
prove that the marks have secondary meaning before granting registration. 15 U.S.C.
§ 1052(f). The fact that the USPTO did not require such proof with respect to the
FIREHOUSE word mark constitutes prima facie evidence that the FIREHOUSE word mark
is at least suggestive and therefore would be inherently distinctive. See Petro Stopping Ctrs.
L.P. v. James River Petroleum, Inc., 130 F.3d 88, 92-93 (4th Cir. 1997) (“Because the PTO
did not require such proof with respect to Petro Stopping’s applications for registration, it
can safely be assumed that the PTO believed the marks were at least suggestive.”); see
Resorts of Pinehurst, 148 F.3d at 422 (stating fact that the USPTO registers a mark without
requiring proof that the mark has acquired secondary meaning is given significant weight).
Here, the Plaintiffs have not rebutted this presumption.
33

“Petro” within fuel service industry is weak). However, a mark weakened by third-party use may be
rehabilitated by evidence of successful policing of the mark demonstrated by actual name changes in the
marketplace, which lessens the diluting effect of third-party use. Renaissance Greeting Cards, Inc. v.
Dollar Tree Stores, Inc., 405 F. Supp. 2d 680, 692 n.15 (E.D. Va. 2005).
Here, although the Defendants argue that their registered marks are at least suggestive and therefore
inherently distinctive, the Plaintiffs have submitted evidence that suggests the FIREHOUSE word mark
is conceptually weak. Specifically, the Plaintiffs argue that multiple other federal registrations imply that
the term “Firehouse,” standing alone, has no significant presence with the contemporary public.9 (See
Pls.[‘s] Exs. Y to BBB). Furthermore, an internet search of state-level government records for registered
trademarks and corporations incorporating the “Firehouse” name reveals dozens, if not hundreds, of past
and present users of the word “Firehouse”- both within and outside the food and beverage industry.5 (See
Pls.[‘s] Exs. EEE & FFF).6 According to the Plaintiffs, if the FIREHOUSE word mark was truly a
distinctive term, it is unlikely that so many other businesses in the food and beverage industry would
independently think of using the term “Firehouse” in their marks or a mark similar to the FIREHOUSE

9

4 Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 11:88 (Thirdparty use within an industry is evidence that “customers have become so conditioned by a
plethora of such similar marks that customers have been educated to distinguish between
different [such] marks on the basis of minute distinctions.”)
10

See id. § 11:90 (Evidence of third-party registrations incorporating a common term are
“relevant to prove that some segment of the composite marks which both contesting parties
use has a normally understood and well recognized descriptive or suggestive meaning,
leading to the conclusion that the segment is relatively weak.”)
11

Records from government websites are generally considered admissible and selfauthenticating. Courts have also taken judicial notice, pursuant to Fed. R. Evid. 201, of
information taken from government and media websites. See generally Renaissance
Greeting Cards, Inc. v. Dollar Tree Stores, Inc., 405 F. Supp. 2d 680, 684 n.9 (E.D. Va.
2005) (taking judicial notice of website information in trademark infringement action).
34

word mark. See CareFirst, 434 F.3d at 270 (“That so many health care businesses have denominated
themselves CareFirst or First Care indicates that ‘CareFirst’ is not a distinctive or unusual term in the
industry, and hence not conceptually strong.”). However, the Defendants contend that the Plaintiffs’
evidence demonstrates only de minimis third-party use of the term “Firehouse” in the restaurant industry
and state that there is no evidence that consumers are aware of these third-party users. The Defendants also
claim that FRG has established a successful record of policing the FIREHOUSE® and FIREHOUSE
SUBS® marks , which lessens the diluting effect of third-party use. (Sorensen Decl. ¶28; see Defs.[‘s] Ex.
DD, Docket # 141-6).
b. Commercial Strength
The second step in the “strength of the mark” analysis is to consider the mark’s commercial
strength, a concept similar to the “secondary meaning” inquiry considered in evaluating a mark’s validity.
CareFirst, 434 F.3d at 269 n.3. Accordingly, the court “looks at the marketplace and asks if, in fact, a
substantial number of present or prospective customers understand the designation when used in connection
with a business to refer to a particular person or business enterprise.” Id. at 269. While third-party use of
a mark is relevant at this stage, as well, the court also considers a number of other factors, such as “(1)
advertising expenditures; (2) consumer studies linking the mark to a source; (3) sales success; (4)
unsolicited media coverage of the product; [and] (5) attempts to plagiarize the mark . . . .” Perini Corp. v.
Perini Constr., Inc., 915 F.2d 121, 125 (4th Cir. 1990); Petro Stopping Ctrs. L.P. v. James River Petroleum,
Inc., 130 F.3d 88, 93 (4th Cir. 1997).
As evidenced by the Defendants’ use of the FIREHOUSE® and FIREHOUSE SUBS® marks and
activities over the last sixteen years- tens of millions of dollars in advertising expenditures, over one billion
dollars in sales, national and local recognition of awards, and aided and unaided consumer brand awareness

35

studies confirming significant consumer recognition in the marketplace- the FIREHOUSE SUBS® brand
and marks appear commercially strong. However, the Plaintiffs contend that the FIREHOUSE SUBS®
brand and marketing surveys are not particularly helpful in the likelihood of confusion analysis of the
FIREHOUSE word mark because (1) none of the surveys included participants from Myrtle Beach and,
instead, appeared to have been taken in areas where FIREHOUSE SUBS® already has a significant
presence; (2) the surveys did not compare FIREHOUSE SUBS® to other “Firehouse” restaurants and,
instead, were limited to FRG’s direct competitors (other sub shops); and (3) the results of the surveys do
not indicate significant consumer association between the word “Firehouse” and the FIREHOUSE SUBS®
brand. Additionally, it appears that little, if any, of FRG’s advertising expenditures are spent on the
FIREHOUSE word mark, as there is little evidence that FRG uses the FIREHOUSE word mark alone in
any of its marketing materials. (See Sorensen Dep., pp.126-27). While the word “Firehouse” may be used
in connection with another FRG registered mark, it appears that FRG exclusively uses a variation of one
of its many FIREHOUSE SUBS® marks in all of its marketing material. In assessing the Perini factors
under the summary judgment standard, the record does not disclose that a substantial number of present
or prospective customers, when hearing or reading the word “Firehouse,” would associate the word
specifically with the FIREHOUSE SUBS® brand. See Petro Stopping Ctrs., 130 F.3d at 93 (“[S]trength
of a mark ultimately depends on the degree to which the designation is associated by prospective purchasers
with a particular source.”). As such, genuine issues of material fact remain in dispute concerning the
strength of the FIREHOUSE word mark.
2. Similarity Between the Parties’ Marks
In determining similarity of the marks under the second likelihood of confusion factor, the “focus
[is] on whether there exists a similarity in sight, sound, and meaning which would result in confusion.”

36

George & Co., 575 F.3d at 396 (citing Pizzeria Uno, 747 F.2d at 1534-35). Moreover, courts generally
focus on the dominant portions of the parties’ marks. Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va.,
Inc., 43 F.3d 922, 936 (4th Cir. 1995). The fact that the marks might share a common element alone is
insufficient to establish a likelihood of confusion. Petro Stopping Ctrs., 130 F.3d at 93-94. If one of the
two similar marks is commonly paired with other material, that pairing will serve to lessen any confusion
that might otherwise be caused by the textual similarity between the marks. CareFirst, 434 F.3d at 271
(citing AutoZone, Inc. v. Tandy Corp., 373 F.3d 786, 797 (6th Cir. 2004)).
The marks at issue in this case share the common term “Firehouse.” It appears that many of the
marks also employ the same red, yellow, and white color schemes. However, the Plaintiffs argue that the
dominant portion of the Plaintiffs’ mark is “CALLI BAKER’S.” For the ten years prior to Scurmont’s
purchase, the restaurant had operated under the name “Calli Baker’s Roadhouse Bar & Grill.” After the
restaurant was purchased by Scurmont, it was renamed “Calli Baker’s Firehouse Bar & Grill” to convey
the new “firehouse” theme while retaining the value of the “CALLI BAKER’S” name. Therefore, the
Plaintiffs argue that “CALLI BAKER’S” continues to be the dominant, source-identifying portion of the
mark, while the “Firehouse Bar & Grill” portion is merely descriptive of a firehouse theme and the services
provided. Both before and after the name change, the restaurant has, and continues to be, commonly
referred to by the shortened name “CALLI BAKER’S.” (Debbie Breyare Aff. ¶¶ 4-10). The Court refrains
from determining whether the use of the words “CALLI BAKER’S” and the slight variations in styling
sufficiently differentiates the Plaintiffs’ marks from FRG’s registered marks; however, these differences
lessen the possibility that the marks are so similar as to cause confusion. See Wonder Works v. Cranium,
Inc., 455 F. Supp. 2d 453, 459 (D.S.C. 2006). Additionally, the manner in which the marks are used and
viewed by the public may mitigate any possible confusion. The Defendants’ representatives testified that

37

use of the FIREHOUSE word mark is limited to the verbal greeting offered to customers as they enter a
FIREHOUSE SUBS® restaurant. (See Sorensen Dep., p.193; Deborah Duncan Dep., pp.35-37; Bryan
Paquin Dep., pp.33-35). Further, the Defendants have failed to indicate any instance in which the
advertising or marketing for FIREHOUSE SUBS® utilized the FIREHOUSE word mark to identify the
restaurant. (See Sorensen Dep., pp.126-27). Thus, “the substantial differences in the public presentations
of these marks [may] significantly reduce the likelihood of confusion, notwithstanding their textual
similarity.” CareFirst, 434 F.3d at 271 (stating a proper analysis must focus on the actual use of the
competing marks, and a comparison which takes only the texts of the marks is insufficient if the marks have
different appearances in the marketplace).
3. Similarities in the Parties’ Goods or Services
As with the similarity of the marks, courts must measure the similarity of goods or services with
respect to each party’s actual performance in the marketplace. CareFirst, 434 F.3d at 272. With regard to
the similarity of the goods or services identified by the marks, “the goods in question need not be identical
or in direct competition with each other.” George & Co., 575 F.3d at 397 (citation omitted). The Fourth
Circuit has held that where the “products and services provided by the two companies serve the same
purpose,” this factor weighs in favor of a likelihood of confusion. Lone Star Steakhouse & Saloon, 43 F.3d
at 937 (quoting Pizzeria Uno, 747 F.2d at 1535). In Pizzeria Uno, the Fourth Circuit held that the parties
offered similar services despite the fact that the plaintiff offered Italian cuisine and a full bar in a sit-down
restaurant while the defendant offered drive-through and counter service for Mexican food. Pizzeria Uno,
747 F.3d at 1522.
While there are notable differences in the menus at CALLI BAKER’S and FIREHOUSE SUBS®,
both serve the same purpose: providing restaurant and catering services to the general public in the greater

38

Myrtle Beach, South Carolina area. Additionally, both offer dine-in and take-out lunch and dinner meals;
sandwiches; drinks; chili; and salads. Further, both restaurants service the same types of customers: men,
women, and children of all ages. As “both parties operate restaurants and are in food service,” this factor
may weigh in favor of a likelihood of confusion. See Pizzeria Uno, 747 F.3d at 1535.
4. Similarity of Facilities
The fourth factor in the likelihood of confusion analysis is the similarity of the facilities used by the
parties. George & Co., 575 F.3d at 393. In weighing the similarity of the respective facilities, “the court
is to consider . . . the context in which [consumers] make their purchases.” Renaissance Greeting Cards,
Inc. v. Dollar Tree Stores, Inc., 227 F. App’x 239 (4th Cir. 2007) (citation omitted). Other Circuits have
held that this factor will weigh in favor of the alleged infringer when there are “basic differences between
plaintiff’s and defendant’s modes of distributing their products.” See, e.g., Amstar Corp. v. Domino’s Pizza,
Inc., 615 F.2d 252, 262 (5th Cir. 1980). Here, CALLI BAKER’S is located in a stand-alone building with
visible signage both on the building and adjacent to the highway in front of the restaurant and features a
large fire engine in clear view of passing customers. In addition, CALLI BAKER’S has an enclosed
outdoor eating area that is visible from the exterior, but can be entered only from the inside of the
restaurant. CALLI BAKER’S also includes a dining room and separate bar and smoking area. Further,
CALLI BAKER’S is a full-service establishment with a host stand and several wait-staff stations
throughout the restaurant. In short, CALLI BAKER’S is a full-service, sit-down restaurant: customers are
seated by a host or hostess and orders are taken at the customer’s table with food and drinks delivered to
the table by the wait staff.
In contrast, the FIREHOUSE SUBS® establishments at issue in this case are located in strip malls
anchored by either a Wal-Mart or a Bi-Lo store. They sit adjacent to an oversized parking lot and have

39

minimal storefront exposure. Additionally, FIREHOUSE SUBS® restaurants strictly adhere to the
FIREHOUSE SUBS® store layout and building requirement plans. Customers enter the restaurant and,
as with all other FIREHOUSE SUBS® locations, there is a counter directly to one side where the food
products are prepared. At the end of the counter farthest from the entrance there are cash registers where
customer orders are taken and payment is received. As the customers exit from the register area, there is
a self-service beverage station where the customers can prepare their own drinks. Both drinks and potato
chips are self-service. Unlike CALLI BAKER’S, FIREHOUSE SUBS® facilities do not allow for
customers to sit and order at a bar, order from wait staff, or be seated on an outdoor patio.
5. Similarity of Advertising
Another factor to be considered is the similarity of the advertising used by the two parties. Pizzeria
Uno, 747 F.2d at 1527. In comparing advertising, courts examine a variety of factors: the media used, the
geographic areas in which the advertising occurs, the appearance of the advertisements, and the content of
the advertisements. CareFirst, 434 F.3d at 273 (internal citations omitted). Here, at least three of these four
factors show significant differences between the two parties’ advertising. CALLI BAKER’S “advertises”
primarily through word of mouth and spends very little money on advertising. (See Scurfield Dep., pp.90107). CALLI BAKER’S advertising efforts have consisted of print advertising, such as coupon books,
direct mailing to people in the Myrtle Beach area, and a website. In contrast, FRG employs outside
marketing firms to conduct advertising campaigns on behalf of the entire FIREHOUSE SUBS® system.
FRG advertises via radio, television, and billboard, and has spent tens of millions of dollars on advertising
over the past ten years. However, FRG also utilizes print advertising.

40

6. Intent of the Alleged Infringer
“The intent of a junior user is relevant only if the junior user intended to capitalize on the good will
associated with the senior user’s mark.” CareFirst, 434 F.3d at 273. Initially, the Plaintiffs asserted an
advice of counsel defense claiming they, in good faith, conferred with a lawyer prior to renaming the
restaurant “Calli Baker’s Firehouse Bar & Grill.” The Plaintiffs have since withdrawn their advice of
counsel defense. (See Stipulation of Counsel, Docket # 139). The Defendants argue that Scurfield was
aware of FIREHOUSE SUBS® prior to purchasing and changing the name of his restaurant. The Plaintiffs
argue that Scurfield never intended to capitalize on the good will associated with FRG’s registered marks.
This is a question of fact for the jury.
7. Actual Confusion
Evidence of actual confusion is “often paramount” in the likelihood of confusion analysis.
CareFirst, 434 F.3d at 268. “Actual confusion can be demonstrated by both anecdotal and survey evidence.
Evidence of only a small number of instances of actual confusion may be dismissed as de minimis.” George
& Co., 575 F.3d at 398 (internal citations omitted); see Petro Stopping Ctrs., 130 F.3d at 95 (concluding
that evidence of actual confusion consisting of only a few instances out of more than $2 billion in sales was
“at best de minimis.”). Here, the evidence reveals that both parties have experienced some instances of
actual confusion. Shortly after CALLI BAKER’S relocated to its current location, a few customers began
to inquire about the affiliation between CALLI BAKER’S and FIREHOUSE SUBS®. In fact, the Plaintiffs
admit that customers at CALLI BAKER’S have asked a CALLI BAKER’S employee whether CALLI
BAKER’S is a FIREHOUSE SUBS® restaurant on at least three occasions. Similarly, Three Alarm and
Fireside began receiving inquiries from customers asking about their restaurants’ affiliation with CALLI
BAKER’S. Employees of Three Alarm claim to have received between 10 and 50 telephone calls and

41

encountered 10 to 15 instances of in-store customer inquiries about the affiliation between Three Alarm
and CALLI BAKER’S. (See Bryan Paquin, Jr. Decl. ¶¶5-6, Docket # 137-9; Laura Whitesides Decl. ¶¶8-9,
Docket # 137-11; Robert Blakenship Decl. ¶6, Docket # 137-8; see also Mary Paquin Decl. ¶¶6-7 & 10,
Docket # 137-7). Fireside also claims that it received a few phone calls in 2008 and/or 2009 inquiring into
its location and whether it served alcohol. (Deborah Duncan Dep., pp.78-83). However, the extent of any
actual confusion and whether these instances of confusion may be dismissed as de minimis is unclear from
the evidence presented.
8. Remaining Factors
Counsel for the parties agree that the remaining factors in the likelihood of confusion analysis have
no relevance in this case. Factor eight, the quality of the defendant’s product applies in “situations
involving the production of cheap copies or knockoffs of a competitor’s trademark-protected goods.” Sara
Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 467 (4th Cir. 1996). Here, that is not the case. The ninth
factor, the sophistication of the consuming public, is only applicable “when the relevant market is not the
public at-large.” Id. Here, the relevant market is the public at-large.
In sum, the Court has considered all of the likelihood of confusion factors and finds that there are
genuine issues of material fact with respect to whether there is a likelihood of confusion between CALLI
BAKER’S use of the word “Firehouse” and FRG’s registered marks.

The Court finds that the

determination of likelihood of confusion in this case is “particularly amenable to resolution by a jury.”
Anheuser-Busch, 962 F.2d at 318. Thus, the Court denies the Plaintiffs’ Motion for Partial Summary
Judgment.

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V:

Defendants’ Motion for Partial Summary Judgment
In their Motion for Partial Summary Judgment, the Defendants move for summary judgment on all

counts asserted in the Second Amended Complaint and all remaining counterclaims. As noted above, the
Court finds that a genuine issue of material fact exists as to whether there is a likelihood of confusion
between CALLI BAKER’S use of the word “Firehouse” and FRG’s registered marks. Because a likelihood
of confusion is an essential element of the following claims, the Defendants’ Motion for Partial Summary
Judgment is denied as to the following causes of action: (1) Plaintiffs’ First Cause of Action for Declaratory
Judgment of Non-Infringement, (2) Defendants’ First Counterclaim for Trademark Infringement pursuant
to 15 U.S.C. § 1114, (3) Defendants’ Second Counterclaim for False Designation of Origin pursuant to 15
U.S.C. § 1125(a), and (4) Defendants’ Third Counterclaim for Common Law Trademark Infringement and
Unfair Competition. Thus, the Court will now address the two remaining claims in the Second Amended
Complaint- (1) Plaintiffs’ Second Cause of Action for violation of the South Carolina Unfair Trade
Practices Act and (2) Plaintiffs’ Third Cause of Action for Trademark Cancellation Due to Fraud- and the
one remaining counterclaim- (1) Defendants’ Counterclaim for Unjust Enrichment.
A:

Plaintiffs’ Second Cause of Action for Violation of the South Carolina Unfair Trade Practices Act
The Defendants argue that they are entitled to summary judgment on the Plaintiffs’ South Carolina

Unfair Trade Practices Act (“SCUTPA”) claim for two reasons: (1) Plaintiffs and their experts have not
identified, quantified, or calculated any amount of recoverable damages, and (2) Plaintiffs have produced
no evidence of an unfair or deceptive trade practice. In response to the lack of damages argument, the
Plaintiffs argue:
Scurmont, LLC has borrowed significant funds from the Somerset Trust
Company line of credit in order to pay attorneys’ fees, expert witness fees,
and other costs in defending the litigation. Although attorneys’ fees are not
damages, the significant interest that is accruing on the loan is not part of
43

attorneys’ fees, and is a separate element of damage to the Plaintiffs. The
interest on the loan, for which Plaintiff’s are responsible, is a financial loss
sustained directly as a result of Defendants’ assertion of a fraudulently
obtained trademark.
(Pls.[‘s] Br. in Opp’n to Defs.[‘s] Mot. for Summ. J., p.31, Docket # 147). Further, the Plaintiffs argue that
there is a genuine issue of material fact as to whether the Defendants have engaged in an unfair or deceptive
trade practice.
To maintain a private cause of action under the SCUTPA, a plaintiff need only establish: “(1) that
the defendant[s] engaged in an unlawful trade practice, (2) that the plaintiff suffered actual, ascertainable
damages as a result of the defendant[s’] use of the unlawful trade practice, and (3) that the unlawful trade
practice engaged in by the defendants had an adverse impact on the public interest.” Havird Oil Co. v.
Marathon Oil Co., 149 F.3d 283, 291 (4th Cir. 1998); see S.C. Code Ann. § 39-5-20 (2006) (The SCUTPA
declares unlawful any “unfair . . . acts or practices in the conduct of any trade or commerce.”).
Accordingly, the act or trade practice complained of must be unfair or deceptive. See, e.g., Camp v. Springs
Mortgage Corp., 426 S.E.2d 304, 306 (S.C. 1993). Under the SCUTPA, an act or trade practice is unfair
“when it is offensive to public policy or when it is immoral, unethical, or oppressive.” Gentry v. Yonce, 522
S.E.2d 137, 143 (S.C. 1999). Section 39-5-140(a) creates a private right of action to recover actual
damages in favor of “[a]ny person who suffers any ascertainable loss of money or property, real or personal,
as a result of the use or employment by another person of an unfair or deceptive method, act or practice
declared unlawful by § 39-5-20 . . . .” S.C. Code Ann. § 39-5-140(a).

“Actual damages under the

[SC]UTPA include special or consequential damages that are a natural and proximate result of deceptive
conduct.” Collins Holding Corp. v. Defibaugh, 646 S.E.2d 147, 149 (S.C. Ct. App. 2007) (quoting Global
Prot. Corp. v. Halbersberg, 503 S.E.2d 483, 488 (S.C. Ct. App. 1998)). Section 39-5-140(a) further
provides, “[u]pon the finding by the court of a violation of this article, the court shall award to the person
44

bringing such action under this section reasonable attorney’s fees and costs.” S.C. Code Ann. § 39-5-140(a).
Thus, “actual damages are distinct from attorneys’ fees.” Mull v. Ridgeland Realty, LLC, 693 S.E.2d 27,
32 (S.C. Ct. App. 2010).
The Court finds that the Defendants are entitled to summary judgment on the Plaintiffs’ SCUTPA
claim because the Plaintiffs cannot show that they suffered actual, ascertainable damages as a result of the
Defendants’ alleged use of an unlawful trade practice. As the Plaintiffs concede, attorney’s fees are not
actual damages. A finding by this Court that the Plaintiffs’ SCUTPA cause of action to recover interest
on a loan obtained to pay attorneys’ fees survives summary judgment would eviscerate the rule that
attorneys’ fees themselves do not constitute actual damages sufficient to maintain a claim under SCUTPA.
See Mull, 693 S.E.2d at 32. The Plaintiffs argue that “costs” incurred by a party in defending an action are
appropriate damages under the SCUTPA; however, such an argument contradicts § 39-5-140(a), which
provides for the award of reasonable attorney’s fees and costs only after all elements have been proved and
a violation of the SCUTPA has been found. See S.C. Code Ann. § 39-5-140(a) (“Upon the finding by the
court of a [SCUTPA violation], the court shall award . . . reasonable attorney’s fees and costs.”). The
Plaintiffs’ argument is further contradicted by Mull. See id. at 32. Moreover, a plaintiff is only entitled to
compensation for all loss of money or property “which is the natural and probable consequence of
defendant’s wrong” under the SCUTPA. Collins Holding Corp., 646 S.E.2d at 149. Although not discussed
in the context of a SCUTPA claim, the South Carolina Supreme Court has held that “finance charges are
not damages naturally and proximately arising . . . and accordingly are not consequential damages.” Long
v. Quality Mobile Home Brokers, Inc., 248 S.E.2d 311, 313 (S.C. 1978).
Similarly, the Plaintiffs cannot produce admissible evidence to show that the defendants’ alleged
unlawful acts caused an ascertainable amount of lost profits. In order to recover damages for lost profits

45

under the SCUTPA, a plaintiff must establish that the alleged unfair or deceptive trade practice is the cause
of the lost profits and that the amount of such damages can be established with reasonable certainty. See,
e.g., Global Prot. Corp., 503 S.E.2d at 488. The Plaintiffs have established neither in this case.
Specifically, the Plaintiffs have failed to establish that they suffered any lost profits as a result of receiving
Defendants’ cease and desist letter and/or as a result of the inability to utilize the word “Firehouse” in a
marketing campaign. The Plaintiffs’ own expert concluded that there was no nexus between the use of the
word “Firehouse”in CALLI BAKER’S name and CALLI BAKER’S loss of business. Specifically, the
Plaintiffs’ own damages expert, Charles L. Alford, III, opined that CALLI BAKER’S performed poorly
both prior to Scurfield’s acquisition of the restaurant in 2005 and subsequent to the name change. Notably,
Mr. Alford opined that the “Firehouse” name added no benefit whatsoever to CALLI BAKER’S
profitability. (See Expert Report of Charles Alford, III, Docket # 138-12). More troubling to the Plaintiffs’
SCUTPA claim is that, had they opted to conduct their marketing and advertising campaigns despite
receiving the cease and desist letter, Plaintiffs do not know whether the campaigns would have increased
CALLI BAKER’S revenues at all. (Scurfield Dep., pp.308-310). Because the Plaintiffs cannot show that
they suffered actual, ascertainable damages as a result of the Defendants’ alleged use of an unfair or
deceptive trade practice, the Court grants the Defendants’ Motion for Partial Summary Judgment as to the
Plaintiffs’ Second Cause of Action for violation of the South Carolina Unfair Trade Practices Act.
B:

Plaintiffs’ Third Cause of Action for Trademark Cancellation Due to Fraud
Plaintiffs’ Third Cause of Action for Trademark Cancellation Due to Fraud alleges that FRG

committed fraud before the USPTO and, therefore, the FIREHOUSE word mark should be cancelled. In
any action involving a registered mark, a court may order the cancellation of the registration, in whole or
in part, when such action is warranted. 15 U.S.C. § 1119. Fraud in the procurement of a trademark

46

registration is also a defense to a claim of trademark infringement. See, e.g., Lone Star Steakhouse &
Saloon, 43 F.3d at 931 n.12. “Fraud on the [USPTO] in connection with trademark registration requires
that the following elements be alleged and proven: (1) The challenged statement was a false representation
regarding a material fact[;] (2) The person making the representation knew that the representation was false
(‘scienter’)[;] (3) An intent to deceive the USPTO[;] (4) Reasonable reliance on the misrepresentation[;
and] (5) Damage proximately resulting from such reliance.” J. Thomas McCarthy, McCarthy on
Trademarks & Unfair Competition § 31:61 (West 2010). Conclusory allegations that a trademark holder
knew of a third-party’s rights to use a mark or conclusory allegations concerning prior use of a mark are
deficient. King Auto., Inc. v. Speedy Muffler King, Inc., 667 F.2d 1008, 1010-11 (C.C.P.A. 1981).
Additionally, even a material misrepresentation will not qualify as fraud under the Lanham Act warranting
cancellation absent the requisite intent to deceive the USPTO. Id. at 1011 n.4; L.D. Kichler Co. v. Davoil,
Inc., 192 F.3d 1349, 1352 (Fed. Cir. 1999) (noting that even if others’ use was significant, in order to cancel
the mark there must be a showing that a false declaration was submitted with the intent to deceive) As
such, a trademark is obtained fraudulently only if the applicant or registrant “knowingly makes a false,
material representation with the intent to deceive the [USPTO]. In re Bose Corp., 580 F.3d 1240, 1245
(Fed. Cir. 2009).
Specifically, the Plaintiffs claim that FRG
submitted its oath, pursuant to 18 U.S.C. § 1001, that to the best of its
knowledge and belief no other person, firm, corporation or association has
the right to use the mark in commerce, either in the identical form thereof or
in such near resemblance thereto as to be likely, when used on or in
commerce with the goods/services of such other person, to cause confusion,
or to cause mistake, or to deceive . . . . [despite the fact that] FRG knew that
there were many other pre-existing food and beverage businesses with the
name FIREHOUSE or some substantially similar variation thereof.

47

(Second Amended Compl. ¶¶45 & 47, Docket # 46). Firehouse Grill & Pub, which has been registered and
doing business in Tampa, Florida, since October 4, 1990, is one of the alleged pre-existing businesses using
the FIREHOUSE word mark at issue in this case. In August 2002, more than six months before FRG filed
the FIREHOUSE word mark application, it learned about the Firehouse Grill & Pub in Tampa, Florida.
(See Defs.[‘s] Ex. G-1, Docket # 138-14). Robin Sorensen’s communications with Mr. Kanji, a
FIREHOUSE SUBS® franchisee, evidence that he believed and understood that the Firehouse Grill & Pub
“may have superior rights” to the FIREHOUSE word mark. Id. In fact, in his deposition, Robin Sorensen
admitted that he knew, at the time the FIREHOUSE word mark application was filed, that the Firehouse
Grill & Pub had a superior right to use the FIREHOUSE word mark, and there was some concern that there
would be a likelihood of consumer confusion. (Sorensen Dep., pp.85-88). Communications continued for
several months between Robin Sorensen and Mr. Kanji regarding the presence of the Firehouse Grill & Pub
in Tampa, and concerns regarding FIREHOUSE SUBS® entering the Tampa market. (Id. at 54-60). On
March 8, 2003 (just four days before submitting the FIREHOUSE word mark application), Robin Sorensen
and one of his colleagues traveled to Tampa to investigate the Firehouse Grill & Pub. (Id. at 62-63).
According to Robin Sorensen, the owner of the Firehouse Grill & Pub did not have any concerns about
FIREHOUSE SUBS® opening a restaurant in the Tampa area. (Id. at 64).
Although FRG claims that the FIREHOUSE word mark application was submitted only after Robin
Sorensen and the owner of the Firehouse Grill & Pub had reached a coexistence agreement, there is
arguably some evidence that indicates otherwise. The record reveals that an agreement may not have been
reached until after FRG applied for the FIREHOUSE word mark. On April 2, 2003, over twenty days after
submitting the FIREHOUSE work mark application, Robin Sorensen wrote a letter to the owner of the
Firehouse Grill & Pub, in which he proposed a coexistence agreement and enclosed a check for $5,000.

48

(Defs.[‘s] Ex. G-3, Docket # 136-17). Under the proposed agreement, the Firehouse Grill & Pub would
be required to “consent[]” to FRG’s use of its trademarks, including “FIREHOUSE” and “FIREHOUSE
SUBS,” “even if such uses or activities may cause confusion, dilution or otherwise conflict with Grill &
Pub’s use of the business name ‘The Firehouse Grill & Pub’ or any of Grill & Pub’s trademarks or service
marks.” (Id.). Notably, with regard to the issues of senior rights to the FIREHOUSE word mark and
possible likelihood of confusion, Robin Sorensen also offered: “We will continue our growth elsewhere
if you are uncomfortable with this arrangement.” (Id.).
Whether FRG believed, in good faith, that there would be no likelihood of confusion, upon
FIREHOUSE SUBS® entry into the Tampa market, is a question that will require assessment of the
witnesses’ credibility in light of the evidence before the Court. For example, Robin Sorensen contends that
he believed there was no likelihood of confusion between the Firehouse Grill & Pub, a restaurant that
served bar food and alcohol, and FIREHOUSE SUBS®. (Sorensen Dep., p.50). However, he now
contends that CALLI BAKER’S, a restaurant that also serves bar food and alcohol, is essentially a direct
competitor and the same type of restaurant as FIREHOUSE SUBS®. A jury must assess the credibility of
Robin Sorensen’s testimony in this regard, as well as his testimony that he did not think there was any
“issue” because, as far as he knew, the Firehouse Grill & Pub was not doing business in interstate
commerce. The facts outlined above demonstrate a genuine issue of material fact for the jury on the issue
of the Defendants’ alleged fraud on the USPTO. Therefore, the Defendants’ Motion for Partial Summary
Judgment is denied as to this claim.

49

C:

Defendants’ Counterclaim for Unjust Enrichment
The Defendants have also moved for summary judgment on their counterclaim for unjust

enrichment. “Unjust enrichment is an equitable doctrine, akin to restitution, which permits the recovery
of that amount the defendant has been unjustly enriched at the expense of the plaintiff.” Ellis v. Smith
Grading &Paving, Inc., 366 S.E.2d 12, 14 (S.C. Ct. App. 1988). To recover on a theory of restitution, the
party pleading unjust enrichment must establish: (1) conferral of a nongratuitious benefit on the opposing
party; (2) the opposing party realized some value from the benefit; and (3) it would be inequitable for the
opposing party to retain the benefit without paying its value. Moore-Hudson Oldsmobile/GMC, Inc. v.
Waterman, 378 S.E.2d 279, 280 (S.C. Ct. App. 1989). A party may be unjustly enriched when it has and
retains benefits or money which in justice and equity belong to another. (Id.). At the motions hearing,
counsel for the Defendants advised the Court that they were not seeking damages in this dispute. Based
on the Defendants’ counsel’s statement that they are only seeking injunctive remedies, it appears that the
Defendants are no longer pursuing this claim.
Conclusion
Based on the foregoing, it is ORDERED that:
(1) Defendants’ [77] Motion to Strike Expert Witness Report of William O. Bearden and to Exclude the
Testimony of William O. Bearden at Trial is granted in part, denied in part. Specifically, Dr. Bearden
is precluded from testifying as to “6. Alleged Infringer’s Intent” and “7. Actual Confusion”;
(2) Plaintiffs’ [79] Motion in Limine to Exclude Testimony and Report of George M. Thomas is granted
in part, denied in part. Specifically, Mr. Thomas is precluded from testifying as to the materiality of
FRG’s actions before the USPTO, whether FRG acted with deliberate intent before the USPTO, whether

50

FRG’s conduct before the USPTO was fraudulent, or the similarity of the parties’ marks and any perceived
connection between the parties’ respective restaurants;
(3) Plaintiffs’ [80] Motion in Limine to Exclude Testimony and Rebuttal Report of Dr. Sealey is denied;
(4) Plaintiffs’ [81] Motion for Partial Summary Judgment is denied; and
(5) Defendants’ [135] Motion for Summary Judgment or, in the alternate, Partial Summary Judgment is
granted in part, denied in part. Specifically, the Court grants the Defendants’ Motion for Partial
Summary Judgment as to the Plaintiffs’ Second Cause of Action for violation of the South Carolina Unfair
Trade Practices Act. The Defendants’ counterclaim for Unjust Enrichment is deemed withdrawn or moot.
Additionally, the Court instructed the parties in court and via Text Order to advise the Court of their
position on realignment. At the motions hearing, counsel for CALLI BAKER’S advised the Court that she
had no objection to realignment as Defendants asserting a counterclaim for Trademark Cancellation Due
to Fraud. Counsel for FRG has not notified the Court of any objection to realignment as the Plaintiffs as
previously requested by FRG’s counsel in an earlier motion and also suggested by the Court at the motions
hearing for an orderly disposition of this case. Therefore, the parties shall be realigned in this dispute so
that (1) Firehouse Restaurant Group, Inc., a Florida corporation, (2) Three Alarm Subs, Inc., a South
Carolina corporation, and (3) Fireside Restaurant Company, Inc., a South Carolina corporation are
designated as Plaintiffs, AND (1) Scurmont LLC, d/b/a Calli Baker’s Firehouse Bar & Grill and (2) Heath
Scurfield, an individual, are designated as Defendants.
AND IT IS SO ORDERED.
s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge
July 8, 2011
Florence, South Carolina

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