TUNA FAMILY MGMT INC.

v.

ALL TRUST MANAGEMENT INC.

ORDER ON DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT (DE 102)

This lawsuit stems from a dispute regarding the sale of a corporation, All Trust Management Inc. (“All Trust”), and a related a seafood restaurant known as The Twisted Tuna (the “Restaurant”) in Stuart, Florida. In 2018, Plaintiffs Tuna Family Mgmt Inc. (“Tuna Family”), Kenneth Gibbs III (“Gibbs”), and Rachelle Risley (“Risley”) sold All Trust and the Restaurant to Defendants Mad Twist LLC (“Mad Twist”) and Mad Twist’s Director, Defendant Sidharth Sethi. The sale took place through a series of financial transactions guaranteed by Sidharth Sethi and his father Defendant Amit Sethi, who together owned and operated Defendant SamJ Investments Inc. (“SamJ”) and Defendant Italeats Inc. (“Italeats”).

SamJ and Italeats offered two other restaurants – 125th Street Grill and Mad Pizza – as collateral for one of several loans used to purchase the Restaurant. Tuna Family and Mad Twist also entered a Licensing Agreement granting Mad Twist – through All Trust – an exclusive license to operate under The Twisted Tuna trademark and to use intellectual property associated with the trademark within a ten-mile radius from the physical address of the Restaurant (the “Territory”).

Since the sale, several disagreements have arisen regarding Defendants’ compliance with the financing agreements and the Licensing Agreement, and the propriety of disclosures that Plaintiffs made pertaining to the Restaurant’s sale. Both parties have filed motions for partial summary judgment.1 This Order addresses Defendants’ Motion for Partial Summary Judgment (DE 102).2 I have reviewed the motion and all pertinent portions of the record.³ For the reasons stated herein, Defendants’ Motion is GRANTED IN PART AND DENIED IN PART.

BACKGROUND

The following facts are undisputed.

A. The Restaurant Sale and Financing Agreements

Gibbs and Risley opened the Restaurant in 2014. DE 84 at 33, ¶15; DE 85 at ¶15. They owned the Restaurant through All Trust. DE 86-2 at ¶1; DE 91 at ¶1. On January 13, 2015, they registered the name “The Twisted Tuna” as a federal trademark. DE 109 at ¶44; DE 116 at ¶44. The registration, dated January 13, 2015, reflects that The Twisted Tuna mark (the “Mark”) is registered on the principal register for “restaurant and bar services” and was first used in commerce on March 1, 2014. DE 109-1 at 24, 69.

1Defendants’ Motion for Partial Summary Judgment is found in the record at DE 102. Plaintiffs’ Motion for Partial Summary Judgment and/or in the Alternative, Motion to Strike Claims Relating to the Lease Issue (“Plaintiffs’ Motion”) is found in the record at DE 86.

DE 86-2 at ¶4; DE 91 at ¶4; DE 84-1. The Stock Sale Agreement indicates that Plaintiffs Gibbs and Risley agreed to sell to Defendant Sidharth Sethi the stock of All Trust and the parking lot for the Restaurant for $3,850,000. DE 84-1. Of the total $3,850,000 purchase price, $3,000,000 was allocated to, inter alia, purchase of the All Trust stock, and $850,000 was allocated to the purchase of the parking lot.⁴ DE 84-1; DE 103 at ¶7; DE 109 at ¶7. The closing occurred on November 29, 2018 (“Closing Date”).

DE 86-2 at ¶13; DE 91 at ¶13. On the Closing Date, the parties executed a $1,750,000 note (the “$1.75MM Note”) representing additional costs for the purchase, which brought the total purchase price for the restaurant and parking lot to $5,600,000. DE 83-1 at 68; DE 103 at ¶7; DE 109 at ¶7. Defendants obtained both third-party financing and seller-financing to accomplish the purchase. DE 103-1; DE 83-1 at 68-71, 96-98. Defendant Mad Twist obtained third-party financing through a loan from Midwest Regional Bank (the “Lender”) guaranteed by the Small Business Administration (“SBA Loan”).⁵ DE 103 at ¶¶2-3, 12; DE 109 at ¶¶2-3, 12. Defendants

Gibbs and Risley provided seller financing consisting of a $490,000 note (“$490k Note”) in

Among other provisions, the SBA guaranty authorization requires Lender to obtain a standby creditor’s agreement from Plaintiffs Gibbs and Risley for the $490k Note, which provides for the subordination of the $490k Note to the SBA Loan. Id. at 11.

The provision expressly states that monthly payments of $5,440 may be made on the $490k Note so long as Defendants are not in default on the SBA Loan. Id. The provision also prohibits Plaintiffs Gibbs and Risley from taking action against Defendants All Trust and Mad Twist relative to the $490k Note without the Lender’s consent. Id. addition to financing the additional purchase price amount of $1,750,000 through the $1.75MM Note. DE 83-1 at 68-71, 96-98; DE 83 at ¶53; DE 84 at ¶53. The $490k Note, made by Defendants Mad Twist and All Trust on November 29, 2018, carries a 6% interest rate and is payable to Defendants Gibbs and Risley in 120 monthly installments of $5,440.00 each. DE 83-1 at 96. The note is secured by a second lien on the business assets of the Restaurant, pursuant to a Security Agreement (the “$490k Security Agreement”) entered on the same date, behind the first lien of Midwest Regional Bank. DE 83-1 at 97; DE 103- 6. Defendant Sidharth signed the $490k Note as an individual guarantor of the note’s payment and performance. DE 83-1 at 98. The $1.75MM Note, made by Defendants Sidharth Sethi, SamJ, Italeats, Mad Twist, and All Trust on November 29, 2018, carries a 6% interest rate and is payable to Defendants Gibbs and Risley in 120 monthly installments of $19,428.59 each. DE 109-2 at 5. The note is secured by a lien on the assets of 125th Street Grill and Mad Pizza pursuant to a Security Agreement (the “$1.75MM Security Agreement”) entered on the same date. Id. at 6.

The $1.75MM Security

Agreement was made by Defendants Sidharth Sethi, SamJ, Italeats, Mad Twist and All Trust as Debtors, and pledges as security to Plaintiffs Gibbs and Risley the following: (1) all assets of SamJ, Mad Twist, and All Trust; (2) the fixtures furniture, equipment, and inventory of 125th Street Grill, owned by SamJ and located in Seattle, Washington; and (3) the fixtures, furniture, equipment, and inventory of Mad Pizza, owned by Italeats and located in Seattle, Washington. Id. at 10-17. The $1.75MM Security Agreement requires Defendants “[t]o retain possession of the Collateral during the e[x]istence of [the Security] Agreement.” Id. at 11.

As such, the $1.75MM Security Agreement prohibits Defendants from selling, exchanging, assigning, loaning, delivering, leasing, mortgaging, or otherwise disposing of the security pledged except for inventory sold in the ordinary course. Id. Sidharth Sethi and his father, Amit Sethi, guaranteed the 1.75MM Note. DE 86-2 at ¶¶10, 12; DE 91 at ¶10, 12; DE 86-2 at ¶12; DE 91 at ¶12; DE 109-2 at 18-23.

B. The Licensing Agreement

Contemporaneously with closing on the sale of the Restaurant, Tuna Family and Mad Twist entered a Licensing Agreement on November 29, 2018. The Licensing Agreement was between Tuna Family as Licensor and All Trust, owned and controlled by Mad Twist, as Licensee. DE 86- 2 at ¶20; DE 91 at ¶20; DE 84 at 54, ¶80; DE 85 at ¶80. The Licensing Agreement grants All Trust a license to operate under The Twisted Tuna trademark within a ten-mile radius from the physical address of the Restaurant (the “Territory”).

DE 86-2 at ¶22; DE 91 at ¶22. Under the Licensing Agreement, Tuna Family grants All Trust an exclusive license for use in the Territory and All Trust may use Tuna Family’s intellectual property to make, use and apply the Mark in the course of its business. DE 91 at ¶81; DE 94 at ¶81. As Licensor, Tuna Family retains exclusive rights to the Mark outside the Territory; however, it cannot compete with All Trust, as Licensee, within the Territory. Id. Tuna Family also agrees in the Licensing Agreement to provide updated operating procedures, new recipes, and any other information necessary for All Trust to successfully operate the business. Id. The Licensing Agreement includes provisions restricting All Trust from: (a) contesting the validity of Tuna Family’s rights outside the Territory; (b) taking actions which might impair or interfere with Tuna Family’s rights outside the Territory; (c) associating or commingling Tuna Family’s intellectual property with other intellectual property without Tuna Family’s prior consent; (d) using Tuna Family’s intellectual property in an unauthorized manner; and (e) seeking to register any trademark, copyright or industrial design registration anywhere in connection with Tuna Family’s intellectual property. DE 86-2 at ¶¶23(a)-(d); DE 91 at ¶¶23(a)-(d).

The Licensing Agreement also provides: “Licensee shall not use the Trademark in a fashion that the Licensor deems to be contrary or may cause a detriment to the brand or concept of the Trademark.” DE 86- 2 at ¶31; DE 91 at ¶31. The Licensing Agreement includes provisions allowing regular, unscheduled, onsite visits by Tuna Family to the Restaurant for inspection of the operations, purchases, policies, preparation, inventory, equipment, recipes, financial, POS system, etc. DE 86-2 at ¶25; DE 91 at ¶25. Further, the Licensing Agreement provides a thirty-day right to cure a default after receipt of formal notice of same. DE 86-2 at ¶28; DE 91 at ¶28. As consideration for the Licensing Agreement, All Trust is required to pay ten dollars per month as a licensing fee, which it has not paid for over a year. DE 86-2 at ¶¶27, 35 (citing Exhibit A at ¶18); DE 91 at ¶¶27, 35; DE 86-3 at 107.

C. The Lease Agreement

Plaintiffs, through All Trust Management, LLC, as Tenant, entered into a Lease Agreement for the premises housing the Restaurant beginning June 1, 2014, with Red Sky, Inc. as Landlord. DE 86-3 at 205-28. The initial term of the lease was five years with provision for three subsequent five-year renewals (“Option Terms”) to occur automatically in the absence of one-year advance notice of intent not to renew. Id. at 206-07. The minimum base rent for the first year of the lease was $15,000 per month, or $180,000 per year, with 3% increases for each of the following four years such that rent was expected to be $16,882 per month, or $202,591 per year, in year five. Id. at 208.

The section of the Lease Agreement governing options to renew, section 1.04, states that each of the five-year Option Terms shall be “on the same terms and conditions as this Lease, saving and excepting this option and the minimum rent which shall adjust to the current fair market rents at the time of renewal.” Id. at 206 (emphasis added).

Further, this section of the Lease states that “[t]he fixed minimum rent during the initial year of the three (3) Option Terms shall be Three Percent (3%) higher than the last year of the previous term.” Id. at 207 (emphasis added).

The Lease also prohibits assignment without prior written consent of the Landlord and states that any assignment or occupancy by another shall not release Plaintiffs, as Tenant, from performance under the Lease. Id. at 217.

Plaintiffs knew the lease pertaining to the land and buildings housing the Restaurant was below market rate and was one of the Restaurant’s most valuable assets. DE 91 at ¶66; DE 94 at ¶66. The Lease Agreement was provided to Defendant Sidharth Sethi approximately eleven (11) months prior to the closing on the Restaurant for his review and study over that period, and he reviewed the agreement without retaining counsel to review it. DE 86-2 at ¶¶38, 42-43; DE 91 at ¶¶38, 42-43. The Lease Agreement expressly states that the agreement is between All Trust Management, LLC (as Tenant) and Red Sky, Inc. (as Landlord), and these entities are signatories to the lease. DE 86-2 at ¶¶39-40; DE 91 at ¶¶39-40. Plaintiffs voluntarily dissolved All Trust Management, LLC on March⁴, 2014, which date was five days after entering into the subject lease. DE 91-18 at 6, p.95:11-p.96:2; DE 91-28 at 6, p.128:14-p. 129:13. Plaintiffs did not provide notice of the dissolution to the Landlord. Id. Plaintiffs incorporated All Trust Management, Inc. on March³, 2014, without notice to the Landlord, and Plaintiffs sold the capital stock of All Trust Management, Inc. to Sidharth Sethi and Mad Twist without notice to the Landlord on November 29, 2018. DE 91-18 at 6, p.96:3-11; DE 91-28 at 6-7, p. 129:1-130:15. All Trust Management, LLC never assigned the lease to All Trust Management, Inc. DE 91 at ¶68; DE 94 at ¶68. Plaintiffs understood the implications – that the Landlord could change the lease rate and possibly add other provisions. DE 91 at ¶69; DE 94 at ¶69; DE 91-29.

Thus, Plaintiffs insisted on structuring the sales transactions as a stock sale, representing that the leasehold interest would transfer and avoid renegotiating a new lease with the Landlord. DE 91 at ¶70; DE 94 at ¶70; DE 91-29. Defendant Sidharth Sethi never spoke to the Landlord prior to closing on the sale of the restaurant. DE 86-2 at ¶44; DE 91 at ¶44. On or around May 2019, Defendant Sidharth attempted to exercise the Lease Option Term. DE 91 at ¶73; DE 94 at ¶73.

On May 27, 2019, Defendants, through All Trust Management, Inc. as Tenant, executed a

First Addendum to Indenture of Lease for The Twisted Tuna premises with Red Sky, Inc. as Landlord (“Lease Addendum”). DE 91-20. The Lease Addendum, among other things, modified the rent due under the Lease. Id. In particular, the Addendum provides that “the Parties agree the appropriate rent, based upon the current ‘Fair Market Value’, effective June 1, 2019, is [$21,600] per month.” Id. Although a partial forbearance structure was agreed upon, Defendant All Trust became obligated for the minimum rent amount of $21,600 per month with 3% increases thereafter in the following four years. Id.

D. The Fysh Bar & Grill Restaurant in Port Orange, Florida

In 2019, Defendant Sidharth Sethi began exploring an additional restaurant location near Jacksonville, Florida.

On April¹⁰, 2019, Plaintiffs Gibbs and Riley signed a letter on behalf of

Tuna Family stating, in part, that “All Trust Management Inc may be granted permission to operate additional business locations . . . in Licensor’s sole discretion.” DE 91-17.

On June 26, 2019, Defendant Sidharth Sethi executed a non-binding letter of intent issued by a broker indicating that “Twisted Tuna” would be the tenant of an⁸,000 square foot facility in Jacksonville, Florida. DE 86-3 at 166-170.

In September 2019, Sidharth Sethi sent an email discussing terms for a loan, which contained a business plan for “a seafood restaurant in Port Orange” called Fysh Bar & Grill (“Sept. 2019 Business Plan”).

DE 86-3 at 142-144; 177-84; DE 103 at ¶47; DE 109 at ¶47; DE 109-11 at 3-9. In the email, the Sept. 2019 Business Plan includes, in part, the following statements: 1. Summary of Fysh Bar & Grill. Fysh Bar & Grill will be a replication of our current flagship restaurant, The Twisted Tuna. Fysh will consist of the same highly successful waterfront, mixed dining concept with a few additions. Fysh Bar & Grill will serve of [sic] a mix of authentic American, Japanese, and Italian Cuisines within a family friendly atmosphere. It will have⁴ separate kitchens,³ full bars, a 300-seat banquet facility, daily live entertainment, and an authentic modernized gelato station.

2. Summary of The Twisted Tuna. The Twisted Tuna has been one of the most successful family owned restaurants in Florida. The restaurant opened approximately⁵ year ago and has been increasing in revenue ever since. . . . The Twisted Tuna concept consists of multiple different eatery and drinking scenes under one roof along with daily live entertainment, all of which is right on the waterfront. The restaurant’s phenomenal views, entertainment attractions, and wide variety of eating options make The Twisted Tuna an extremely unique and differentiated all-in-one concept.

3. Reason for Rebranding? The sellers of The Twisted Tuna currently own the brand. All of our growth strategies need approval from them. Instead of being limited under their name and policies, we have decided to create our own brand while duplicating our Tuna concept. . . . Rebranding to Fysh would allow our talented chefs and management team to come together and push ideas which would further enhance our already successful concept. . . . Fysh Bar & Grill will be marketed as a sister company of The Twisted Tuna so we can spread the word of our new brand and gain trust and interest from our current customer base. . . .

4. Management & Training. . . . We will use our main management members at The Twisted Tuna to train our team in Port Orange. Our current management understands the ins and outs of our business and will easily be able to train and pass on their knowledge to our Fysh staff.

Furthermore, training will not be difficult since we are implementing the exact same policies, procedures, and structure within Fysh as we currently have at The Twisted Tuna. . . .

5. Fysh’s menu will be extremely similar to our current menu at The Twisted Tuna, which can be viewed on our website (thetwistedtuna.com). With that being said, our chefs will train our kitchen staff at Fysh on how to make the exact same food, which has been a pivotal part of our success at The Twisted Tuna. DE 109-11 at 3-9. On January 27, 2020, Sidharth Sethi posted a 13-minute documentary video on YouTube about the Fysh Bar & Grill in which he stated that the restaurant’s concept was “somewhat based” on The Twisted Tuna. DE 103 at ¶48 (citing https://www.youtube.com/watch?v=ZUMHs3mJ-

wU); DE 109 at ¶48. Sidharth Sethi also commented that Fysh Bar & Grill would be a waterfront concept with a large menu. DE 103 at ¶48; DE 109 at ¶48.

On March¹⁰, 2021, Sidharth hosted a groundbreaking ceremony for the Fysh Bar & Grill in Port Orange, Florida. DE 109 at 12, ¶38; DE 116 at ¶38. One of the pictures from the ceremony shows a Twisted-Tuna-branded water bottle on a table. DE 109 at 12, ¶38; DE 116 at ¶38. The following day, on March 11, 2021, the Daytona Beach News-Journal published an article about the groundbreaking ceremony. DE 103-12. The article states in part: Rick Julyia, [sic] director of operations for Twisted Tuna, was on hand to take part in the groundbreaking as well as oversee the serving of samples of some of the food Fysh Bar & Grill will offer to the more than 50 people in attendance.

“I will be moving here to oversee this location,” he said. “Great town.” We’ve been coming here and looking at this location for (nearly) three years.”

Id. at 4.

STANDARD OF REVIEW

Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A dispute is genuine if “a reasonable trier of fact could return judgment for the nonmoving party.” Miccosukee Tribe of Indiana of Fla. v. United States, 516 F. 3d 1235, 1243 (11th Cir. 2008). A fact is material “if it would affect the outcome of the suit under the governing law[.]”. Id. When deciding a summary judgment motion, the Court views the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party’s favor. Furcron v. Mail Ctrs. Plus, LLC, 843 F. 3d 1295, 1304 (11th Cir. 2016). Courts do not weigh conflicting evidence or make credibility determinations. Furcron, 843 F. 3d at 1304; Skop v. City of Atlanta, 485 F. 3d 1130, 1140 (11th Cir. 2007).

If a genuine dispute of material fact exists, the Court must deny summary judgment. Skop, 485 F. 3d at 1140. The moving party bears the initial burden to demonstrate the absence of a genuine issue as to any material fact. Fickling v. United States, 507 F. 3d 1302, 1304 (11th Cir. 2007). “If the moving party meets this burden, the nonmoving party must present evidence beyond the pleadings showing that a reasonable jury could find in its favor.” Shiver v. Chertoff, 549 F. 3d 1342, 1343 (11th Cir. 2008) (internal quotation marks and citation omitted). “[T]he plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

DISCUSSION

On March 16, 2021, Plaintiffs filed a ten-count Third Amended Complaint (“Complaint”) (DE 83) against the Defendants alleging the following causes of action: Count Cause of Action Against Sidharth Sethi Infringement of U.S. Trademark No. 4670129 – 15 Mad Twist, LLC I U.S.C. § 1114(1) All Trust Management, Inc. Sidharth Sethi Unfair Competition and False Designation of Origin Mad Twist, LLC II – 15 U.S.C. § 1125(a) All Trust Management, Inc. Sidharth Sethi III Fraud Amit Sethi Sidharth Sethi SamJ Investments Inc. IV Breach of Promissory Note - $1.75MM Italeats Inc. Breach of Absolute Unconditional Continuing Gty Sidharth Sethi V Agmt - $1.75MM Amit Sethi VI Breach of Guaranty Agreement - $490k Sidharth Sethi Declaratory Judgment (that Plaintiff Tuna Family VII Mgmt Inc. is entitled to terminate License Agmt) All Trust Management, Inc. VIII Breach of License Agmt All Trust Management, Inc. Mad Twist, LLC IX Breach of Promissory Notes ($490k and $1.75MM) All Trust Management, Inc. Sidharth Sethi X. Tortious Interference with a Business Relationship Amit Sethi

DE 83.

In their Motion for Partial Summary Judgment, Defendants seek summary judgment on Counts I and II alleging trademark infringement, unfair competition, and false designation of origin; Count IV alleging breach of the $1.75MM Note; Count V alleging breach of the guarantee agreements securing the $1.75MM Note; Count VI alleging breach of the guarantee agreement securing the $490k Note; and Count IX alleging breach of the promissory notes for $490,000 and $1.75MM. Regarding Counts I and II, Defendants argue that Plaintiffs’ trademark infringement, unfair competition, and false designation of origin claims fail because Plaintiffs offer no evidence showing a likelihood of consumer confusion or damages. Regarding Counts IV, V, VI, and IX, Defendant argues that these claims – which all relate to alleged breaches of the 1.75MM and 490k notes or the guarantees securing these notes – are premature because the notes were obtained to satisfy SBA and Lender financing requirements, which prohibit actions to enforce the notes unless the SBA Guaranteed Loan has been satisfied or the Lender consents in writing. Since the SBA Guaranteed Loan has not been satisfied and no evidence in the record demonstrates Lender consent, Defendants contend that Counts IV, V, VI, and IX must be dismissed.⁶ I address these arguments in turn.

A. Counts I & II: Trademark, Unfair Competition, and False Designation

Defendants move for summary judgment as to Counts I and II on the basis that Plaintiffs have not produced any evidence to sustain their claims for trademark infringement and unfair competition under the Lanham Act. DE 102 at 15. Defendants make two arguments as to these counts.

First, Defendant argue that Plaintiffs have produced no evidence of a likelihood of consumer confusion, which is necessary to sustain claims for trademark infringement and unfair competition. Id.

Second, Defendants contend that the claim of unfair competition separately fails because Plaintiffs have not established any likelihood of damages.⁷ Id. at 22. Plaintiffs must prove the same elements both for trademark infringement under § 32(1), codified at 15 U.S.C. § 1114(1), and for false designation of origin, also referred to as “a federal cause of action for unfair competition,” under § 43(a), codified at 15 U.S.C. § 1125(a). Savannah

Coll. of Art & Design, Inc. v. Sportswear, Inc., 872 F. 3d 1256, 1261 (11th Cir. 2017) (citations omitted). Specifically, Plaintiffs must establish “enforceable trademark rights in a mark or name” and “unauthorized use of its marks such that consumers were likely to confuse the two.” Id. (internal quotation marks and citation omitted).

Accordingly, Plaintiffs have enforceable trademark rights in The Twisted Tuna name and Mark. As to the second element, “the touchstone of liability in a trademark infringement action is not simply whether there is unauthorized use of a protected mark, but whether such use is likely to cause consumer confusion.” Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc., 508 F. 3d 641, 647 (11th Cir. 2007).

See also John H. Harland Co. v. Clarke Checks, Inc., 711 F. 2d 966, 972 (11th Cir. 1983) (“[T]he critical question in most actions under § 32(1) is whether there is a likelihood of confusion, mistake, or deception between the registered mark and the allegedly infringing mark”); Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F. 2d 821, 831 (11th Cir. 1982) (“The essential element of an action under § 43(a) is proof by the plaintiff that the alleged infringement by the defendant creates a likelihood of confusion on the part of consumers as to the source of the goods.”).⁸ Indeed, claims under both § 1114 and § 1125 “generally turn[] on the confusion analysis.” Savannah Coll. of Art & Design, Inc., 872 F. 3d at 1261. To determine if likelihood of confusion exists, courts consider and weigh seven factors: (1) the type/strength of the asserted mark; (2) the similarity of the marks; (3) the similarity of the

A court must “fully consider the seven factors, … evaluate the weight to be accorded the individual factors, which varies with the circumstances of the case, and then make its ultimate decision only after doing so.” J-B Weld Co., LLC v. Gorilla Glue Co., 978 F. 3d 778, 794 (11th Cir. 2020); see also Custom Mfg. & Eng'g, Inc., 508 F. 3d at 649 (recognizing that application of the multi-factor test “entails more than the mechanistic summation of the number of factors on each side; it involves an evaluation of the ‘overall balance’”).

Among the seven factors, “the type of mark and the evidence of actual confusion are the most important.” Planetary Motion, 261 F. 3d at 1201 n.22 (citing Dieter, 880 F. 2d at 326). “Although likelihood of confusion is a question of fact, it may be decided as a matter of law.” Alliance Metals, Inc., of Atlanta v. Hinely Indus., Inc., 222 F. 3d 895, 907 (11th Cir. 2000).

Courts routinely weigh the likelihood-of-confusion factors on summary judgment. Tana, 611 F. 3d at 775 n. 7 (citations omitted).

Defendants argue that Plaintiffs have produced no evidence of consumer confusion. DE 102 at 9-10, 15-22. Plaintiffs respond that Defendants are illegally using the Mark outside of the geographic area permitted under the License Agreement to gain interest in and support for their new endeavor. Id. at 15-16. Plaintiffs contend that this use of the Twisted Tuna Mark in association with the opening of the Fysh Bar & Grill results in “certainty of confusion as a matter of law.” DE 108 at 15-16. “Ordinarily, trademark infringement cases are predicated on the complaint that the defendant employed a trademark so similar to that of the plaintiff that the public will mistake the defendant’s products for those of the plaintiff.” Burger King Corp. v. Mason, 710 F. 2d 1480, 1491-92 (11th Cir. 1983) (citing Exxon Corp. v. Texas Motor Exchange of Houston, Inc., 628 F. 2d 500 (5th Cir. 1980).

However, “falsely suggesting affiliation with the trademark owner in a manner likely to cause confusion as to source or sponsorship constitutes trademark infringement” as well. Id. at 1492 (citing Professional Golfers Ass’n of America v. Bankers Life & Casualty Co., 514 F. 2d 665, 670 (5th Cir. 1975), cert. denied, 449 U.S. 1022 (1980)) (emphasis in original). “Thus, a trademark infringement case need not just involve imitation of the registrant’s mark. The unauthorized use of a trademark which has the effect of misleading the public to believe that the user is sponsored or approved by the registrant can constitute infringement.” Id. (citing Professional Golfers Ass’n, 514 F. 2d at 670. Plaintiffs’ causes of action under the Lanham Act are based on the theory that by using the Twisted Tuna Mark in association with the opening of their new restaurant, the Fysh Bar & Grill, Defendants falsely suggest that Fysh Bar & Grill is sponsored by and affiliated with the Twisted Tuna. This type of infringement is cognizable under the Lanham Act. I therefore examine

Plaintiffs’ proof in light of this enforceable (albeit less common) claim for trademark infringement. As an initial matter, I consider Plaintiffs’ assertion that under the circumstances present here there is a likelihood of confusion “as a matter of law.” DE 108 at 16-17. For support, Plaintiffs rely on a line of cases in which courts in this Circuit have held that a terminated franchisee’s continued operations create “a certainty of confusion” among consumers that the terminated franchisee’s products actually are the certified products of the franchisor. See, e.g., McDonald’s Corp. v. Robertson, 147 F. 3d 1301, 1309 (11th Cir. 1998); see also Burger King Corp. v. Mason, 710 F. 2d 1480, 1492 (11th Cir. 1983); Burger King Corp. v. Agad, 911 F. Supp. 1499, 1504 (S.D. Fla. 1995).

Plaintiffs emphasize that it is “well settled that when a terminated franchisee continues to use the former franchisor’s trademarks without authorization, that conduct, by its very nature, confuses consumers and constitutes trademark infringement.” DE 108 at 17 (citing Peterbrooke Franchising of Am., LLC v. Miami Chocolates, LLC, 312 F. Supp. 3d 1325, 1339 (S.D. Fla. 2018)).

Thus, Plaintiffs contend that I may find likelihood of confusion here without undertaking the seven factor likelihood of confusion test. Plaintiffs’ case is distinct, however, from one in which a franchisor has terminated a franchise agreement and the franchisee continues to operate under the franchisor’s mark despite the termination of the agreement authorizing it to do so. In such a case, Common sense compels the conclusion that a strong risk of consumer confusion arises when a terminated franchisee continues to use the former franchisor’s trademarks. A patron of a restaurant adorned with the Burger King trademarks undoubtedly would believe that [Burger King Corporation] endorses the operation of the restaurant. Consumers automatically would associate the trademark user with the registrant and assume that they are affiliated. Any shortcomings of the franchise therefore would be attributed to [Burger King Corporation]. Because of this risk, many courts have held that continued trademark use by one whose trademark license has been cancelled satisfies the likelihood of confusion test and constitutes trademark infringement.

Mason, 710 F. 2d at 1492-93. Here, Plaintiffs have not terminated the License Agreement. Defendants remain authorized to use the Mark according to the terms of the License Agreement. And Plaintiffs are not operating any Twisted Tuna branded restaurant without a valid License Agreement or outside the Territory permitted by the Licensing Agreement.

Thus, the “certainty of confusion cases” are not applicable here. Having dispensed with Plaintiffs’ “certainty of confusion as a matter of law” argument, I turn to the question of whether Plaintiffs have put forth sufficient evidence showing Defendants used the Mark in violation of the License Agreement in a manner likely to cause consumer confusion to survive summary judgment. I find that they have.

The record contains evidence showing that Defendants used the Twisted Tuna Mark outside the geographic area and in a manner not contemplated by the License Agreement in the following ways: On June 24, 2019, Defendants filed an application attempting to register the Mark with the

Florida Department of State. DE 109 at ¶34(a).

Defendant Amit Sethi testified that he attempted to do this independent of Plaintiffs. DE 109-9 at 4. Defendants argue that this filing was a misunderstanding and not an attempt to register the Mark in violation of the Licensing Agreement. Defendants contend, rather, that they received a letter from the government regarding the trademark needing to be renewed as a matter of urgency and that Defendant Amit Sethi submitted the paperwork in an effort to comply and informed Plaintiffs afterwards. DE 116 at ¶34(a).

Plaintiffs maintain that Defendants’ attempt to register the Mark was done in conjunction with their efforts to open an unauthorized Twisted Tuna restaurant and that “[a]t no time did Defendants state there was a mistake or mix-up.” DE 109-1 at 5:¶17; 50:¶17. This is a genuine dispute of material fact that warrants a trial.

On June 25, 2019, Sidharth Sethi executed a Letter of Intent regarding the opening of a Twisted Tuna Restaurant at Beachwalk in St. Johns County, Florida. DE 109-10 at 2-11. St. Johns County is outside of the Geographic Territory contemplated by the License Agreement. Plaintiffs contend that Sidharth Sethi executed the Letter of Intent without their written permission. DE 109 at 34(b).

Defendants contend, however, that the parties negotiated an agreement in April 2019 that allowed Sidharth to explore the St. Johns County opportunity. DE 116 at 34(b) (citing DE 91-17).

This is a genuine dispute of material fact that warrants trial. A few months later, on September 22, 2019, Sidharth Sethi presented a business plan for Fysh Bar & Grill (which subsequently opened in St. Johns County) which stated that Defendants’ new restaurant “will be a replication of our current flagship restaurant, The Twisted Tuna.” DE 109-11 at 2-3. Plaintiffs contend that, having been unsuccessful in obtaining written approval for a Twisted Tuna restaurant, Defendants “decided to just change the name of the prospective restaurant and use all of the Twisted Tuna concepts and menu.” DE 109 at 10, ¶34(b).

Defendant

Sidharth Sethi testified in October 2020 that “nothing has been done, nor will [this business plan] be done.” DE 109-8 at 20, 212:23-24. Defendants contend that they “have not informed anyone the Fysh Bar & Grill will ‘be based on the Twisted Tuna concept or otherwise licensed, affiliated or sponsored by Tuna Family.’” DE 116 at 7, ¶34(b). This is a genuine dispute of material fact that warrants a trial.

On August 23, 2019, a newspaper article in The Daytona Beach News-Journal quoted Sidharth Sethi as stating that the Fysh Bar & Grill concept was “based off the company’s Stuart restaurant, called the Twisted Tuna.” DE 83-1 at 49.

On January 27, 2020, Sidharth Sethi posted a 13-minute documentary video on YouTube about the Fysh Bar & Grill in which he stated that the restaurant’s concept was “somewhat based” on The Twisted Tuna. DE 103 at ¶48 (citing

“I will be moving here to oversee this location,” he said. “Great town.” We’ve been coming here and looking at this location for (nearly) three years.” DE 103-12 at 4. Plaintiffs contend this is proof that Defendant Sidharth Sethi attempted to unlawfully associate and comingle the Mark with Fysh Bar & Grill, and to suggest that Fysh Bar & Grill came from the same source or was sponsored by The Twisted Tuna. DE 108 at 3-4. Defendants either deny or minimize Plaintiffs’ claims. This is a genuine dispute of material fact that warrants a trial. In considering whether Defendants use of the Mark in association with the Fysh Bar & Grill was likely to cause consumer confusion, I find that the record contains sufficient evidence on the relevant factors to warrant a trial. Although some factors – such as similarity of the marks at issue – do not apply, other factors are quite helpful to the analysis.

1. Type of Mark

The first factor requires the Court to determine “the strength and distinctiveness of plaintiff’s mark.” John H. Harland Co., 711 F. 2d at 973. The Eleventh Circuit explains that this factor is “the second most important factor in the balance.” Caliber Auto. Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F. 3d 931, 938 (11th Cir. 2010).

The fact that a Mark is registered indicates that it is deserving of strong protection. 15 U.S.C. § 1057(b) (stating, inter alia, that registration is “prima facie evidence of the validity of the registered mark and . . . of the owner's exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate”).

See also United States Pat. & Trademark Off. v. Booking.com B. V., 140 S. Ct. 2298, 2302 (2020) (instructing that the most distinctive marks are those that qualify for registration).

Here, the Mark is registered for restaurant and bar services. DE 83-1 at 2.

Therefore, I find that it qualifies for strong protection.

Furthermore, “[o]nly distinctive marks are entitled to trademark protection under the Lanham Act.” Superior Consulting Servs., Inc. v. Shaklee Corp., No. 19-10771, 2021 WL 4438518, at *6 (11th Cir. Sept. 28, 2021) (internal quotations omitted)). Marks are recognized as falling into four categories in descending order of distinctiveness: (1) arbitrary or fanciful; (2) suggestive; (3) descriptive; and (4) generic. Welding Servs., Inc. v. Forman, 509 F. 3d 1351, 1357 (11th Cir. 2007). “The categories are based on the relationship between the name and the service or good it describes.” See Frehling Enterprises, Inc. v. Int’l Select Grp., Inc., 192 F. 3d 1330, 1335 (11th Cir. 1999). “Also important in gauging the strength of a mark is the degree to which third parties make use of the mark. The less that third parties use the mark, the stronger it is, and the more protection it deserves.” Frehling Enterprises, Inc., 192 F. 3d at 1336 (citations omitted).

Here, I find that Plaintiffs’ Mark is at least “suggestive” on the spectrum of distinctiveness. Welding Servs., Inc., 509 F. 3d at 1357. Nothing about the words “Twisted Tuna” describes a restaurant in the manner that “vision center” describes a place where eyeglasses are sold, which exemplifies a mark that is descriptive if not generic. Frehling Enterprises, Inc., 192 F. 3d at 1335. Rather, because Tuna is used as food, the Mark could suggest an eatery similar to the way the word penguin suggests a refrigerator (because it is cold).

Id. Since the mark is at least suggestive, it qualifies for strong protection on this basis. Defendants argue that the Mark is weak based upon third party use because there are restaurants and bars in Florida that have names that begin with “Twisted” or include the word “Tuna.” DE 103 at ¶54 (citing, e.g., Twisted Fin, Twisted Crab, Twisted Fork, Twisted Tavern, Tuna’s Raw Bar & Grille). Defendants maintain that a cursory Google search indicates that at least 30 restaurants or bars, many in Florida, use “Twisted” or Tuna” in their names. DE 102 at