IHOP v. IHOP: House of Pancakes Sues House of Prayer

On September 3, 2010, IHOP IP, LLC, a Delaware limited liability company, the owner of various IHOP registered trademarks in the United States, sued the International House of Prayer alleging various trademark infringement theories, including dilution. According to the amended complaint, which was filed on September 9, 2010, the first International House of Pancakes restaurant opened in Toluca Lake, California in 1958 and in 1960 the company began to expand through franchising. The plaintiff claims to have formally adopted the acronym “IHOP” for marketing purposes in 1973. In 1992 the company opened its 500th IHOP restaurant and in 1993 sales per IHOP restaurant exceeded $1 million. The defendant International House of Prayer is alleged to be misappropriating the fame and notoriety of their household name IHOP to help promote their religious organization, which they probably are actually doing in reality.

The plaintiff owns US Reg. No. 3,429,406 — IHOP — for restaurant services; US Reg. No. 3,514,724 — INTERNATIONAL HOUSE OF PANCAKES — for restaurant services, carry out food services; US Reg. No. 3,731,730 — IHOP CAFE — for restaurant services, carry-out cafe and restaurant services and coffee house services; US Reg. No. 3,616,420 — IHOP ‘N GO — for restaurant services, take out restaurant services; US Reg. No. 3771,927 — IHOP EXPRESS — for restaurant and food take-our restaurant services. Over the years the plaintiff IHOP says that they have extensively advertised and publicized their business using these IHOP trademarks across the United States. They claim the trademark is widely recognized among the general consuming public in the United States as a designation of the goods and services of International House of Pancakes, which they say has been famous for more than 25 years.

The plaintiff IHOP brings two causes of action against the defendant. The first being the claim that the defendant through the use of various IHOP marks is engaging in dilution under 15 U.S.C. 1125(c). The second claim is straight trademark infringement under 15 U.S.C. 1114.

Dilution is probably a far more interested cause of action, at least to comment on because it requires that the mark being used be a famous mark. In a nutshell, if a mark is famous it is entitled to far more protection than an average, non-famous trademark.

In essence, dilution is a variety of trademark infringement that protects famous trademarks from situations where there is not necessarily a likelihood of confusion, but where the defendant’s use of the famous mark tarnishes the image of the mark (i.e, tarnishment) or blurs the distinctiveness of the mark (i.e., blurring). Dilution by blurring, which is what is alleged by the plaintiff IHOP, occurs when there is an association arising from the similarity between a trademark or trade name and a famous trademark that impairs the distinctiveness of the famous mark. In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including the following:

1. The degree of similarity between the mark or trade name and the famous mark.
2. The degree of inherent or acquired distinctiveness of the famous mark.
3. The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark.
4. The degree of recognition of the famous mark.
5. Whether the user of the mark or trade name intended to create an association with the famous mark.
6. Any actual association between the mark or trade name and the famous mark.

Dilution by tarnishment, which is not alleged, is association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.  An example would be a wholesome trademark being used by something perceived to be seedy or unsavory.  It does not seem that the plaintiff IHOP could make such a claim, thus it is appropriate not to have been brought.

It should be noted that the plaintiff IHOP also did not bring a likelihood of confusion cause of action, which is unusual in one sense but understandable.A likelihood of confusion cause of action is a go-to cause of action that is nearly ubiquitous in trademark infringement claims. It is not even necessary to prove that confusion would or could exist, although it does help, but rather requires that there be a potential for confusion. By not bringing a likelihood of confusion claim that likely signals that the plaintiff IHOP realizes that no one would or could confuse the Pancake House with a religious organization, but that there is nevertheless a diminution in the value of the plaintiff IHOP’s trademark portfolio. This seems reasonable given that if others were able to use the mark it would chip away at the value and distinctiveness of the trademarks, which is not good. But the question will be whether the IHOP marks are famous.

Federal Trademark Dilution Act (FTDA) became law in 1995 and is codified at 15 U.S.C. 1125(c). The key hurdle to overcome as a plaintiff urging a dilution theory is whether the trademark is famous. In determining whether a mark is famous a court may consider the following non-exclusive factors:

1. The degree of inherent or acquired distinctiveness of the mark;
2. The duration and extent of use of the mark in connection with the goods or services with which the mark is used;
3. The duration and extent of advertising and publicity of the mark;
4. The geographical extent of the trading area in which the mark is used;
5. The channels of trade for the goods or services with which the mark is used;
6. The degree of recognition of the mark in the trading areas and channels of trade used by the marks’ owner and the person against whom the injunction is sought;
7. The nature and extent of use of the same or similar marks by third parties; and
8. Whether the mark was registered on the principal register.

While a lot is certainly left to be determined, and the defense has not even mounted its case, there is one observation that I can make about the plaintiff IHOP’s complaint — it is remarkably straightforward and does not seem to be overreaching.  This ought not to be newsworthy, but unfortunately it really is in the world of intellectual property.  Patent trolls file complaints that are little more than an uninforming ambush that says I own a patent, you engage in business, therefore you are probably infringing my patent.  Similarly, in trademark matters extraordinarily overreaching cease and desist letters are literally a dime a dozen, and nearly ask for your first born child in exchange for settling a would-be case.  These types of nearly extortion tactics are unfortunately common-place.  Whatever your thoughts are about a big corporation suing a religious organization what I can say is that the plaintiff IHOP seems to have a legitimate claim and this does not seem to be a case of corporate overreaching, but rather a legitimate attempt to protect valuable trademark rights.

So is IHOP famous? In my opinion it seems likely that IHOP will be determined to be a famous trademark and entitled to dilution protections, which should spell doom for the defendant IHOP. Of course, the primary breakfast joint that family frequents is IHOP in Leesburg, so in my household IHOP is certain famous. But is IHOP famous to you, and will it be determined to be famous by the district court in Los Angeles? Stay tuned!