Chain Denied Payout on Crab Fries Infringement

(CN) - A failing restaurant that infringed on Chickie's and Pete's crab fries by placing a picture of the crustacean next to the word fries on its menus need not pay damages, a federal judge ruled.

CPC Properties Inc., the Wilmington, Del.-based parent of the Philadelphia restaurant chain, claims that it has spent millions of dollars marketing and promoting its crab fries trademark.

Chickie's and Pete's allegedly conceived the signature potato side dish soon after the crab house and sports bar's 1977 opening while trying to make use of leftover crab seasonings in the winter.

Last year, CPC sued Dominic Inc., the owner of the family-style Italian restaurant Tony's Place, for showing an image of a crab next to the word "fries" on its menus and website.

CPC has sued several other companies over the years, including Chesapeake Inn, for infringing the crab fries mark.

Though Dominic agreed 11 years ago to stop using the terms "crab" and "crab fries" to describe its seasoned French fries, it has since achieved the same commercial effect by depicting a crab next to the word fries, according to CPC's complaint.

Days after CPC filed suit, a federal judge preliminarily enjoined Dominic from using the term "crab fries" in its sales or advertising, and ordered it to remove any picture of a crab near "fries" from its menus and website and immediately cancel advertisements using the image.

After a federal judge granted CPC's motion for contempt and awarded attorneys' fees, Dominic admitted earlier this year that it had inadvertently violated the injunction.

Senior U.S. District Judge Berle Schiller partially granted CPC's motion for judgment on the pleadings in August, finding a "likelihood of confusion."

The judge threw out CPC's unjust enrichment claim, however, because he said it would not be "an unconscionable injustice" to let Dominic retain any increased profits or other benefits.

Schiller refused to award CPC damages earlier this month, holding that Dominic did not profit from its use of the crab image.

"This was not a case in which defendant engaged in an 'elaborate shell game' in order to avoid its obligation not to use the term 'crab fries,'" the judge wrote. "Nor is this a case in which defendant meticulously crafted its product and advertisements to be identical to a trademarked product. Instead, defendant used an image of a crab near the word 'fries' on a single advertisement, its website, and its menus. When plaintiff brought this lawsuit, defendant immediately agreed to cease using the crab image. The absence of any justification for damages in this case makes it one in which injunctive relief, not damages, is the appropriate remedy."

The court also tossed aside CPC's claim that the crab image diverted its customers to Tony's Place, which has been losing money for about 10 years.

"The seasoned fries at the center of this case are small potatoes," Schiller wrote. "They are not a popular menu item and are one of over 100 dishes offered by Tony's Place. An order of seasoned fries costs $4.80. Tony's Place does not keep itemized records on the profits derived from each food item. However, this is not a case where incomplete record-keeping makes it difficult for the court to calculate actual damages. Here, the court has no doubt about the amount of actual damages; there is ample evidence that defendant simply did not profit from the use of the crab image."

Damages are not necessary to deter future infringement either, according to the ruling.

"There is nothing to indicate that Dominic's conduct was 'particularly culpable,'" Schiller wrote. "This case is almost remarkably run-of-the-mill. It [is] not the result of an elaborate scheme or plan of deception. Dominic's level of culpability was relatively low, and much of its culpable conduct occurred when it violated the stipulated preliminary injunction. The court already awarded attorneys' fees to plaintiff for litigating that issue, and it will not award additional attorneys' fees for litigating the remainder of the case because it does not believe that this case is exceptional."

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