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Federal District Court Dismisses Lanham Act Claims

Federal District Court Dismisses Lanham Act Claims

Franchise Attorney in New JerseyLicensor (and a Franchisee) of the “Tony Luke’s” mark filed a breach of contract action in the New Jersey Superior Court. Franchisor/Licensee then filed a suit in the federal district court alleging trademark and unfair competition claims under the Lanham Act, 15 U.S.C §1114(a) (Sections 32 and 43).

Background: The principals of the license holder are Anthony Lucidonia, Sr. and Nicholas Lucidonia, his son, who own one or more Tony Luke’s restaurants. In 2007, these principals assigned their rights to the Tony Luke’s trademarks to Anthony Lucidonia, Jr., another son, personally, who formed the franchise, TR Worldwide Phillyfood, LLC, and who was its only share member upon formation. (The record shows, however, that he had a business relationship with investor, Ray Rastelli.)

In 2010, the parties entered into an amended agreement, whereby, the Licensors, Anthony Sr. and Nicholas were permitted to open two additional locations using the marks. The Franchisor was not charged a royalty fee for use of the trademark. The Licensor agreed to provide the TR Worldwide’s Franchisees with prepared vegetable sides and sauces. In return TR Worldwide was to provide promotional, financial and logistical support for the brand.

The parties fell into discord in 2015. Mr. Lucidonia, Sr. “fired” Mr. Lucidonia, Jr. Following this event, the Licensor’s restaurants allegedly deviated from franchise requirements, such as purchasing from unauthorized vendors, changing the name of the restaurants to “The Original Tony Luke’s”, changing restaurant logos, and disparaging the quality of the Franchisees’ restaurants through social media outlets.

Anthony and Nicholas were the first to file suit in the Superior Court. The Franchisor then filed a separate action in the federal district court, but used the investor, Mr. Rastelli, as the face of the Franchise (but not a share member of the Franchisor) to do so, explaining that Tony Jr. did not wish to be directly involved in a lawsuit with his family. Tony Jr., however, gave his consent to the suit, as Licensee.

The district court granted the two Lucidonias’ motion to dismiss the federal action. The Court premised its decision upon the 2010 agreement, which specifically reserved to the Licensor the right to take action against third-parties regarding trademark enforcement. Further, the Licensee’s consent to the lawsuit did not establish standing for the Franchisor.

Citation: TR Worldwide Phillyfood, LLC v. Tony Luke, Inc., 2017 U.S. Dist. LEXIS 12239 (Note: Not authorized for Publication.)

BE ADVISED that these comments are not intended as legal opinions and are not to be relied upon as legal advice. If you need franchise-related legal advice, please contact us to discuss the specifics of your franchise business.
© KilcommonsLaw, P.C. 2017

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