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Greek Gourmet, Inc. v. Greek Village, Inc.

A-0023-07T3 (N.J. Super. App. Div. 2008) (Unpublished)

TRADE NAMES — A trade name, as goodwill, is a protectable asset and a business with a long established trade name and which gives a competitor notice of the fact before the competitor opens for business, is entitled to bar the competitor from using the same trade name, including by way of injunction.

A restaurant owner in one municipality operating under the name “Greek Village” discovered that a competitor was planning to open a restaurant about ten miles away under the name “Greek Village Tavern.” The original restaurant owner’s attorney sent a “cease and desist” letter to the competitor before it opened its restaurant. The competitor opened its restaurant anyway. The first restaurant sued the competitor for trademark infringement, claiming that the competitor had unlawfully appropriated its trade name for its new restaurant. It argued that since its own restaurant had been open for eight years before the competitor’s restaurant opened, the trade name had generated good will among its customers. Further, the first restaurant claimed that use of the similar names was causing confusion in the marketplace among restaurant suppliers and credit card companies. The lower court rejected the competitor’s claim that it was unaware of the owner’s use of the name when planning his restaurant, finding that the competitor was on notice that the owner was using the trade name even though it was not registered with the State as its alternate trade name. The lower court found that the character of the two restaurants was essentially the same, as they had similar menus, and that the manner of marketing the competing restaurants was the same. It noted that even though the two were not in direct competition, the second restaurant’s future expansion plans would make them two direct competitors in the same geographic area. Therefore, the lower court reasoned that the first owner was entitled to an injunction to protect its business reputation, good will, and its common law right to its trade name already in use for eight years. The lower court found that the injunction was particularly appropriate when considering that the competitor had admitted that the name meant nothing to it and that it had not invested in the trade name. Further, since the competitor only used the name for a short time, there was little damage to the competitor in requiring a name change.

The competitor appealed, but the Appellate Division affirmed. The Court noted that the first restaurant had a long established trade name and the competitor chose to use it despite receiving notice before opening its restaurant. Further, the competitor’s intent was to open restaurants in the same geographic area using the same name. The Court held that good will is a protectable asset. It also found that it is not necessary to prove that the similar names actually cause consumer confusion and just the potential for consumer confusion is sufficient.

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