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BASKIN-ROBBINS ICE CREAM CO. v. D & L ICE CREAM CO

December 7, 1983

BASKIN-ROBBINS ICE CREAM COMPANY, Plaintiff, against D & L ICE CREAM CO., INC., and STEVEN DEJESUS, Defendants; BASKIN-ROBBINS ICE CREAM COMPANY, Plaintiff, against L & D ICE CREAM CO., INC., Defendant.


The opinion of the court was delivered by: MCLAUGHLIN

OPINION AND ORDER

McLAUGHLIN, District Judge

 Plaintiff, Baskin-Robins Ice Cream Company ("Baskin-Robbins"), sues the defendants D & L Ice Cream Co., Inc. ("D & L) and its president and sole shareholder, Steven DeJesus. In a related action, Baskin-Robbins also sues defendant L & D Ice Cream Company, Inc., ("L & D"). In both actions plaintiff asserts claims for trademark infringement and unfair competition under state and federal laws and violations of New york State statutes arising from the defendants' unauthorized use of Baskin-Robbins' trademarks in connection with the sale of ice cream and ice cream products.

 On August 24, 1983, plaintiff obtained a temporary restraining order restraining defendants from using Baskin-Robbins' trademarks, signs, and other trademarked materials. The hearing on the preliminary injunction was then consolidated with the trial on the merits, which was conducted on September 6, 8 and 20, 1983. At the conclusion of trial, defendants stipulated not to use plaintiff's trademarks or trademarked materials, sell Baskin-Robbins ice cream, or represent to the public that they are authorized by plaintiff or are selling plaintiff's products until a final decision was rendered by this Court.

 Plaintiff seeks (1) a permanent injunction restraining all defendants from using the Baskin-Robbins trademarks, from retaining Baskin-Robbins trademarked materials, and from otherwise infringing plaintiff's trademarks or competing unfairly with Baskin-Robbins; (2) an award of all monies due and owing by defendants for rent, ice cream, advertising and as set forth in a Stipulation previously entered into between the parties; (3) an award of costs and attorneys fees incurred by plaintiff in connecton with these litigations; (4) an award of full costs and attorneys fees incurred by plaintiff in prosecuting the contempt by L & D of the temporary restraining order issued on August 24, 1983; and (5) an accounting of defendants' profits made as a result of their trademark infringement.

 FACTS

 Plaintiff's Trademarks and Franchising Program Plaintiff is the owner of the following United States Trademark Registrations for ice cream and ice cream products (the "Baskin-Robbins Trademarks"): Trademarks Reg. No. Issued P. Ex. No. BASKIN-ROBBINS 1,185,045 1/05/82 1 BASKIN-ROBBINS 7 12,570 3/14/61 2 31 ICE CREAM Plus Design 31 Plus Design 710,670 1/31/61 3 31 FLAVORS 1,227,721 2/15/83 4 31 845,118 2/27/68 5 31 Plus Ice Cream 1,014,217 6/24/75 6 Cone Logo PRALINES 'N CREAM 1,124,751 9/04/79 7 CHILLY BURGER 992,637 9/03/74 8 CUT GALLONS 1,067,346 6/07/77 9 JAMOCA 974,405 12/04/73 10 Dot Design 1,103,164 9/26/78 11

 Plaintiff has established a franchising system of over 2,700 qualified franchises who purchase ice cram in bulk from Baskin-Robbins, Inc. for retail sale as licensed users of the Baskin-Robbins trademarks. Plaintiff requires that its franchisees (a) purchase ice cream in bulk only from an authorized Baskin-Robbins source; (b) sell only Baskin-Robbins ice cream under the Baskin-Robbins marks; and (c) keep specified business hours.

 Plaintiff's franchisees must also pay rent and ice cream invoices when due. Baskin-Robbins, Inc. is the prime lessee on virtually all leases of Baskin-Robbins ice cream stores. Baskin-Robbins, Inc. pays the rent pursuant to such leases and seeks reimbursement from each franchisee/sublessee. In effect, the franchisee is accorded a grace period in connection with the payment of rent.

 All Baskin-Robbins franchise agreements require that invoices for ice cream be paid within 7 days of delivery or at the next succeeding delivery, whichever is earlier (See P. Ex. 12, 13 P19). If a franchisee fails to honor that policy, then payment by certified check is required. When a franchisee on a certified check payment schedule fails to pay within the required 7 day period after delivery, pre-payment is then required. Well over 90 % of all Baskin-Robbins franchisees abide by plaintiff's requirement that rent reimbursement and ice cream invoices be paid when due.

 In the event that plaintiff is forced to institute suit for breach of a franchise agreement, the franchisee is required to pay for all costs incurred by plaintiff, including attorneys fees (P. Ex. 12, 13 P15).

 Defendants' Franchise Agreements

 On February 14, 1978, Baskin-Robbins, Inc. entered into a standard Baskin-Robbins Franchise Agreement with DeJesus (P. Ex. L2), granting him a license to use the Baskin-Robins Trademarks in connection with the operation of a retail ice cream store at 973 Flatbush Avenue, Brooklyn, New York.

 On September 20, 1978, Baskin-Robbins, Inc. entered a standard Baskin-Robbins Franchise Agreement granting L & D (P. Ex 13) a license to use the Baskin-Robbins Trademarks in connection with the operation of a retail ice cream store at 876 Utica Avenue, Brooklyn, New York. While the terms of that Agreement provided for expiration on January 31, 1983, the Agreement continued pursuant to company policy, on a month-to-month basis.

 Both L & D and D & L were high-volume Baskin-Robbins stores. The average annual delivery to a Baskin-Robbins franchise in the New York area is between 15,000 - 16,00 gallons of ice cream; but the defendants received well in excess of that gallonage. During 1982, the last full year the defendants were in operation, Baskin-Robbins, Inc. delivered approximately 24,000 gallons of ice cream to L & D and another 22,000 gallons to D & L.

 The Defendants' Breaches of the Franchise Agreements

 The Court finds that the defendants have breachd their Franchise Agreements in the following respects:

 1. During the course of their franchise, both L & D and D & L consistently failed to maintain the business hours at their retail ice cream stores required by paragraph 7 of their Franchise Agreements.

 2. During the course of their franchise, both L & D and D & L consistently failed to pay rent and to satisfy invoices for ice cream when due as required by paragraph 10(1) of their ...


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