Franchisees Sued for Violation of Athlete's Foot Trademark

In July 2003, Turner Phase IV, LLC entered into a franchise operating agreement with Athlete’s Foot Brands to open an Athlete’s Foot store in the Southland Mall in Miami, Florida. In March 2005, Turner Phase V, LLC entered into a franchise operating agreement with Athlete’s Foot to open a store in the 163rd Street Mall, also located in Miami.

In May 2008, Athlete’s Foot sent both Phase IV and Phase V a Notice of Default for breaching the two franchise agreements, alleging failure to pay royalties and marketing fees, and failure to properly make reports. In June 2008, Athlete’s Foot sent Phase IV and Phase V Notices of Termination of the franchise agreements.

Athlete’s Foot then filed suit seeking a preliminary injunction to: (1) prevent Phase IV and Phase V from infringing its trademark, trade name, trade dress and proprietary and confidential information and systems of Athlete’s Foot; (2) enforce compliance with the non-competition clauses contained within the agreements; and (3) require Phase IV and Phase V to return Athlete’s Foot’s confidential and proprietary material.

Phase IV and Phase V did not dispute that they failed to pay royalties and marketing fees and to make timely reports, but argued that the Notice of Termination was improper because Athlete’s Foot sent the notices to the wrong address.

The District Court (S.D. Fla.) observed that the notice provision contained within the franchise agreements established the method of giving notice, and that Athlete’s Foot complied with the provision.

The Court then found that Athlete’s Foot successfully established a likelihood of success on the merits of its trademark infringement claim, but not on its trade dress claim. The Court held that an injunction was appropriate because there was no adequate remedy at law to redress the infringement of Athlete’s Foot’s trademark and that the infringement caused irreparable harm. Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018 (11th Cir. 1989).

On the non-compete claim, the Court held that there was nothing on the face of the non-compete provisions contained within the two agreements that raised the specter that the provisions were void for overbreadth or against public policy. Neither Phase IV nor Phase V argued that the non-compete provisions were invalid. Athlete’s Foot was thus likely to succeed on the merits of the claim to enforce the non-compete provisions.

The Court ordered Phase IV and Phase V to immediately cease using Athlete’s Foot's trademark, and enjoined Phase IV and Phase V from violating the terms of the non-compete provisions contained within the two agreements. The Court further instructed Phase IV and Phase V to return proprietary materials covered by the franchise agreements to Athlete’s Foot.

 

 

Judge(s): K. Michael Moore, District Judge
Related Categories: Civil Remedies , Contracts , Trademark
 

Plaintiff Lawyer(s)	Plaintiff Law Firm(s)
Douglas J. Giuliano	Astigarraga Davis Mullins & Grossman
Edward Maurice Mullins	Astigarraga Davis Mullins & Grossman

 

Defendant Lawyer(s)	Defendant Law Firm(s)
Damian E. Thomas	Wasserman & Thomas