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By: William Gildea
The Business Litigation Session of the Massachusetts Superior Court recently granted the prior owner of the registered trademark “Zuma” a preliminary injunction against a transferee’s decision to open a restaurant in Boston named “Zuma Boston.” B.B. Kitchen, Inc. v. Azumi, Ltd., 2019 Mass. Super. LEXIS, * 469 (Mass. Super. Ct. July 12, 2019 (Davis, J.). Plaintiff B.B. Kitchen, Inc. d/b/a Zuma Tex-Mex Grill (“Plaintiff”) sought to enforce a 2008 written settlement agreement (“Settlement Agreement”)with Defendant Azumi, Ltd. (“Defendant”). Plaintiff has operated a restaurant named “Zuma Tex-Mex Grill” in Faneuil Hall since 1989, while Defendant operates more than a dozen “Zuma” Japanese restaurants across the globe. Defendant recently opened a new restaurant “Zuma Boston” at the Four Seasons Hotel. After “Zuma Boston” opened, “Zuma Tex-Mex Grill” began experiencing “instances of actual confusion among members of the dining public” based off the name similarities.
The Settlement Agreement resolved “a prior dispute between the parties regarding their respective rights to use the ‘ZUMA’ mark in conjunction with the provision of restaurant services.” Plaintiff held the trademark for the ZUMA mark, but eventually reached the Settlement Agreement where the mark would pass to Defendant, except in the “Licensed Territory” which expressly included the six New England States.
Plaintiff asserted the Settlement Agreement prohibited Defendant from opening any restaurant with the “ZUMA” mark in New England. Plaintiff filed suit alleging Defendant’s opening of “Zuma Boston” violated the Settlement Agreement, further alleging claims for breach of contract and violation of G.L. ch. 93A, § 11. Plaintiff sought damages and injunctive relief, specifically a preliminary injunction preventing Defendant from operating “Zuma Boston” under that name.
The Court found Plaintiff had satisfied all requirements entitling it to a preliminary injunction against Defendant. Plaintiff demonstrated a strong likelihood of success on the merits on its claim that Defendant breached the Settlement Agreement. The Court found that Defendant “expressly agreed in… the Settlement Agreement to ‘refrain from opening any restaurant incorporating the term ZUMA or any mark confusingly similar thereto as part of a trade name, trademark, or service mark within the Licensed Territory” which included Massachusetts.
The Court further found Plaintiff would suffer irreparable harm based off the evidence that the name similarities created “significant actual confusion among dining customers, financial institutions, and others.” Finally, the Court found the balance of harm weighed in Plaintiff’s favor as it is a small single location business while conversely, Defendant is an international operation with approximately $200,000,000 in annual revenue.
This decision reflects the importance of businesses doing due diligence prior to absorbing the high costs of opening a new business such as a restaurant. This decision further demonstrates a 10-year-old agreement can impact an organization’s rights. Counsel advising a new business should be wary of old agreements that may impact the rights of organizations they represent and the costs of opening in a new locale, including future litigation costs in connection with failing to abide by old agreements.
If you have any questions or would like more information, please contact William Gildea at [email protected].