Around the end of July, media outlets were reporting that Denver, CO-based fast food restaurant chain Chipotle Mexican Grill (NYSE:CMG) was gearing up to launch a new franchise brand of restaurants. The first Tasty Made will open this fall in Lancaster, OH, and locations will feature menus focusing on burgers, hand-cut fries and milkshakes. This isn’t Chipotle’s first foray into new cuisines as it has opened 15 locations of its ShopHouse Southeast Asian Kitchen restaurants as of this April. In recent years Chipotle has also partnered with Pizzeria Locale, a chain of fast casual pizzerias which currently operates four locations.
As Tasty Made has been making headlines, a Boston-based chain of burger fast food restaurants has raised a legal issue over trademarks, which it believes Chipotle is infringing. Reports indicate that Tasty Burger has issued a cease and desist letter to Chipotle, which charges the latter company with using a brand name and logos that are similar to marks held by Tasty Burger. Tasty Burger operates six locations, including four Boston stores and two in Washington, D.C. The burger chain is alleging that not only are the names very similar but the color scheme and shape of the logos share many similarities as well.
Querying the Trademark Electronic Search System made available online by the U.S. Patent and Trademark Office, we found that Chipotle has filed for 102 trademarks, 76 of which are currently live. Two of the dead marks are for standard character marks for a “Better Burger” which some reports indicate was an early vision for Chipotle’s burger chain brand name. The earliest of these marks was filed in March of this year and they were both abandoned on May 24th.
The four Tasty Made trademark applications aren’t owned directly by Chipotle but have been filed for by TastyMade LLC; by contrast, the Better Burger and ShopHouse Southeast Asian Kitchen marks are owned directly by Chipotle. Two of the trademark applications are for standard character marks on the Tasty Made name while the other two applications seek trademarks on illustration drawings including words. One of the illustrations, reflected in U.S. Trademark Application No. 87121235, includes the words “Tasty” and “Made” on a stylized banner and separated by a diamond shape. Diamond shapes also separate the words “Burgers,” “Fries” and “Shakes” which run below the banner. The second illustration mark found in U.S. Trademark Application No. 87121210 includes similar basic elements in a new configuration. The same stylized banner including the words “Tasty” and “Made” appears here, although the banner itself isn’t shaded as in the other illustration mark. “Burgers,” “Fries” and “Shakes” are again separated by diamond shapes but appear within two concentric circles which are overlapped by the stylized banner. Currently, all four trademarks are live and awaiting examination.
Tasty Burger has filed for two trademarks, both of which are illustration drawings including words. One of these trademarks, U.S. Trademark No. 4159275, has been registered at the USPTO since June 2012 and consists of the words “Tasty Burger” within a stylized banner. There appear to be similarities with the trademark in the ‘235 application as both utilize a shaded banner with white wording. There are differences as well as the Tasty Burger banner has a more rounded appearance, utilizes a cursive font and does not include additional wording underneath the banner. Tasty Burger is also trying to register U.S. Trademark Application No. 87127273 which would protect an illustration drawing which is very similar to Tasty Burger’s ‘275 trademark. Both Tasty Burger and Tasty Made have published their shaded banner logos in a red color, but none of the trademark applications or registered marks including the banners claim any color for the banners so Tasty Burger cannot claim that the color similarities pose any trademark infringement.
It’s not surprising to see Tasty Burger taking such a proactive response in protecting its intellectual property rights in this situation. Indeed, an inability to control third-party usage of a registered trademark can make the mark generic and unenforceable. Unlike patents, where a patent owner can watch infringement occur for some time before deciding to file a suit, trademark owners are incentivized to enforce their IP rights as soon as infringement is spotted. Indeed, damage can get done very quickly to a trademark owner, so swift action is absolutely mandatory.
A widely reported response to Tasty Burger’s allegation of trademark infringement issued by a Chipotle spokesman argued that the USPTO has refused to issue a trademark to Tasty Burger, calling the mark “merely descriptive and not enforceable.” It should be noted that Tasty Burger is the only entity in this matter who actually holds a registered trademark for any logos or character marks in this situation. However, Tasty Burger’s ‘275 trademark is on the Supplemental Register, which affords a trademark owner fewer rights than if that same mark were on the Principal Register.
For most individuals and businesses, when you file a United States trademark application you will want to file for protection via the Principal Register, which will provide rights superior to those provided by the Supplemental Register. The best way to explain the difference is that trademarks on the Supplemental Register are less protectable and, therefore, not entitled to as much protection against competitors as those on the Principle Register. If you seek registration on the Principal Register and cannot achieve it because the trademark examining attorney believes your mark is merely descriptive of the goods or serves you provide, you can agree to fall back to the Supplemental Register. In this situation getting on the Supplemental Register, if you can, still has benefits.
Only those trademarks that have been granted United States federal trademark rights can use the familiar R in a circle – ®. You can use this designation if your trademark is on the Principle Register or even if it is on the Supplemental Register, so for most you really won’t see much of a difference in terms of outward affect. However, if and when you need to enforce your trademark rights there is a big difference between trademarks on the Principal Register and those on the Supplemental Register. Of course, a trademark infringement action can be brought in federal court even if the trademark is on the Supplement Register. Indeed, no registered trademark is even required to bring an lawsuit under 15 U.S.C. 1125(a), which focuses on the likelihood of confusion. Such an action, however, is much stronger for the aggrieved trademark owner if there is a trademark registration on the Principle Register.
Any success by Tasty Burger in enforcing trademark rights could be damaging to Chipotle’s fortunes at a time where the company is looking for some good news. Its most recent earnings report for the second quarter of 2016 shows that the company lost revenue on a year-over-year basis. The company’s $998.4 million in quarterly revenues were 16.6 percent less than the company took in 2015’s second quarter. Comparable restaurant sales decreased 23.6 percent and restaurant transactions decreased 19.3 percent, and both of those figures were slightly worse when comparing the first six months of 2016 to the first six months of 2015. The earnings report did note growing interest in the company’s Chiptopia loyalty program which rewards customers who make multiple paid visits to Chipotle restaurants. We should also note that U.S. Trademark Application No. 87038413 has been filed by Chipotle for a standard character mark protection of Chiptopia; the application is live and awaiting examination. 58 new Chipotle locations were opened during the second quarter to bring the total number of restaurants run by the chain to 2,124 locations.