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How Lone Star Steaks Lost Its Mark (and How to Protect Yours)


By John L. Hay, Attorney, Gust Rosenfeld PLC

However true the saying, A rose by any other name would smell as sweet, it offers little consolation to a business that has spent large sums of money and time to promote its company name or product names only to have to later change them as a result of a trademark infringement claim.

PROTECT YOUR MOST PRECIOUS ASSET
A company's name is arguably its most precious asset, yet many businesses fail to recognize the importance of obtaining federal trademark registrations and taking action to protect their trademarks. This oversight can lead to harsh consequences as experienced by Texaz Grill, a well-regarded, north-central Phoenix steakhouse that was known as Lone Star Steaks for several years before a trademark infringement claim arose.

OVERSIGHT CREATES BIG PROBLEM
In 1985, Lone Star Steaks opened up a steakhouse on the corner of 16th Street and Bethany Home Road. Lone Star Steaks continued to build its reputation in the Valley until a competitor, Lone Star Steakhouse & Saloon, Inc. ("Lone Star Steakhouse"), a Midwestern chain, decided to open up a location in Arizona in 1995.

This presented a problem for Lone Star Steaks because Lone Star Steakhouse had obtained a federal trademark registration with the United States Patent and Trademark Office ("USPTO") for "Lone Star Cafe" in 1981.

As the owner of a federally registered trademark, Lone Star Steakhouse generally had the right to use the trademark nationwide. Further, its registration constituted nationwide notice that it owned the trademark and allowed it the right to bring an infringement suit in federal court.

A NAME CHANGE THAT COULD HAVE BEEN AVOIDED
Consequently, Lone Star Steakhouse, the owner of the trademark, demanded that Lone Star Steaks change its name. In order to avoid a lawsuit, Lone Star Steaks complied with this demand by becoming "Texaz Grill"-this, after 10 years of building goodwill under its original name.

Unfortunately for Lone Star Steaks, this whole conflict could have been avoided if it had performed some due diligence before picking a restaurant name. A simple search through the USPTO records in 1985 would have revealed that the trademark "Lone Star" was already being used as a restaurant's name.

IMPORTANT LESSONS
There are several lessons to be learned from Texaz Grill's misfortune.

Lesson #1: Start-up companies and companies wishing to expand nationally should always research potential company and product names to make sure that there are no conflicting trademarks already registered. A simple search can be done online at the USPTO website (www.uspto.gov), and there are trademark search companies that can conduct more comprehensive searches.

Lesson #2: Once a name is chosen, it should be immediately registered as a trademark on the USPTO principal register.

Lesson #3: The owner of a federally registered trademark should continually monitor new and existing businesses to ensure that others are not infringing.

Lesson #4: Trademark owners must file an affidavit after six years of registration and renew the trademark every 10 years or else they can lose their trademark registration.

At Gust Rosenfeld, we counsel and assist clients in trademark matters. Please contact one of our Intellectual Property attorneys with your trademark concerns.

John L. Hay - 602.257.7468 - jhay@gustlaw.com
John practices intellectual property, corporate and franchise law.

Christina M. Noyes - 602.257.7488 - cmnoyes@gustlaw.com
Christina practices intellectual property, franchise and corporate law.

End Note: Gust Rosenfeld did not represent any of the parties identified in this article.

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