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Benihana of Tokyo, LLC v. Benihana Inc.

United States District Court, S.D. New York

April 19, 2017

BENIHANA OF TOKYO, LLC, as successor to BENIHANA OF TOKYO, INC., Plaintiff and Counter Defendant,
v.
BENIHANA, INC., as successor to BENIHANA NATIONAL CORP. and NOODLE TIME, Inc., Defendants and Counter Claimants,
v.
KEIKO AOKI, Counter Defendant.

          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge.

         This decision resolves a motion to dismiss counterclaims by Benihana, Inc. ("BI") and Noodle Time, Inc. against Benihana of Tokyo, LLC ("BOT") and Keiko Aoki, BOT's chief executive officer. BOT originally brought this action, but, after BOT's voluntary dismissal of its claims and the Court's ruling that certain of BI's counterclaims were required to be resolved in arbitration, the only remaining claims are those brought by BI and Noodle Times in their Third Amended Counterclaims ("TACC"). Those claims are under the Lanham Act, for trademark infringement, false designation of origin and unfair competition, and trademark dilution. BOT now moves to dismiss these claims.

         For the reasons that follow, the Court denies the motion to dismiss.

         I. Background

         A. Factual Summary[1]

         The Court assumes familiarity with the background and procedural history of this case, including the decision in Benihana of Tokyo, LLC v. Benihana, Inc., 73 F.Supp.3d 238 (S.D.N.Y. 2014), which dismissed some of BI's counterclaims in favor of arbitration. The Court also assumes familiarity with the long and tangled history of legal disputes between these parties in this Court, including Benihana of Tokyo, LLC v. Angelo, Gordon & Co., L.P., No. 16 Civ. 3800 (PAE), 2017 WL 933111 (S.D.N.Y. Mar. 8, 2017), in Benihana, Inc. v. Benihana of Tokyo, LLC, No. 15 Civ. 7248 (PAE), 2016 WL 3913599 (S.D.N.Y. July 15, 2016), and Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887 (2d Cir. 2015). The following is a brief summary of the claims in this case, drawing upon the TACC.

         BI[2] alleges that, under the March 17, 1995 Amended and Restated Plan of Reorganization (“ARA”) between BI and BOT, it owns rights to the various Benihana trademarks and service marks (the “Trademarks”) in the United States, Central America, South America, and the Caribbean (the “Territory, ” as referred to in the ARA), while BOT owns the trademarks and service marks outside of the Territory. TACC ¶ 9; see also Id. ¶ 10 (list of Benihana trademarks owned by BI). In the ARA, BI and BOT agreed that neither would use the Trademarks in such a way that could reasonably be expected to reduce the value or the usefulness of the Trademarks to either party. Id. ¶ 12; see also TACC, Ex. A (“ARA”), § 7.10. Overall, the ARA gives BI the right to operate Benihana restaurants in the United States, save in Hawaii, where BOT has a contractual license from BI to do so. Currently, BI owns 66 Benihana restaurants and franchises 11 others within the Territory. For its part, BOT owns or franchises 19 Benihana restaurants outside the Territory, plus the Hawaii restaurant, located in Honolulu. Id. ¶ 13.

         In summary, BI alleges that BOT and Aoki have violated BI's trademark rights as secured by the Lanham Act, through (1) statements, images, and other content on BOT's website, (2) statements in various press releases, and (3) statements by Keiko Aoki.

         For example, as alleged, on or about September 4, 2012, BOT established a website with the domain name www.benihanaworld.com “to advertise and promote BOT's business as the ‘world-wide' leader.” Id. ¶ 14. This domain name, BI alleges, is accessible in the United States and “perpetuates the false impression stated on BOT's original (and also still active) website (benihana-of-tokyo.com/eatertainment.php) that it is BOT that ‘has more than 100 locations worldwide, in more than 20 countries, '” and wrongly suggests that “BOT owns or operates Benihana restaurants throughout the world and/or has the right to use the BENIHANA® Trademarks throughout the world.” Id. ¶¶ 14-15. The website initially featured a rotating globe featuring various famous global landmarks, including the Statue of Liberty. This, BI alleges, gave website visitors “the misleading impression that BOT owns or operates Benihana restaurants” in the United States generally and in New York. Id. ¶¶ 17-18. In fact, BI notes, it has the exclusive rights to operate Benihana restaurants in the Territory and to use the Benihana Trademarks there. Id. After BI brought its counterclaims, the Statue of Liberty was removed from BOT's rotating globe. Id. ¶ 18.

         BI alleges that other statements on the same website misstated BOT's geographic rights to operate Benihana restaurants. For example, it alleges that “BOT inaccurately identifies the areas controlled by BOT” so as to state that BOT ‘now control[s] the territories of Hawaii, Canada, Mexico, Europe, the Middle East, Australia, Asia, and Africa, '” id. ¶ 19 (modifications in original), and that “BOT ‘operates privately with franchisees all around the world that emulate and carry out the vision of Rocky Aoki, '” id. ¶ 21. In fact, BI alleges, “BOT does not have the right to operate Benihana restaurants ‘all around the world.'” Id. BI further alleges that statements on BOT's website “make it unclear that BOT's rights are separate and distinct from those of BI, which has exclusive ownership of the BENIHANA® Trademarks in the Territory and the exclusive right to operate Benihana restaurants within the Territory.” Id. ¶ 23. BOT's website further states that it is “‘the originator of the unique hibachi cooking style and ‘eatertainment' created in the United States, '” which, BI alleges, gives the “false impression that BOT owns and operates Benihana restaurants within the United States where the brand was first launched in 1964, has some sort of partnership with BI in operating such restaurants, or that BI operates as a BOT franchisee or licensee.” Id. ¶ 24. This, BI alleges, “causes customer confusion and damages the Benihana brand and image within the Territory.” Id.

         BI also alleges violations in connection with BOT's opening of a restaurant “named KOA (presumably using [counter defendant] Keiko Ono Aoki's initials), ” in connection with which BOT issued a press release, held special events, and made statements on its website. Id. ¶ 27. As alleged, BOT's press release confused customers by conflating its rights to the Benihana brand with BI's rights. For example, the press release referenced a “‘Benihana restaurant chain' with ‘over 100 locations in 15 countries' that is now in its ‘50th year'” so as to imply that that chain was “BOT, the entity purportedly opening KOA.” Id. BI also alleges that, in celebrating the 50th anniversary of the Benihana restaurants, BOT assembled “a Japanese hip-hop dance duo dubbed the ‘Beni-Girls'” and promoted itself with the statement that “both hip-hop dance and Benihana were created in New York.” Id. ¶ 28. The intended effect of this, BI alleges, was to “create confusion and the knowingly false impression that BOT is in fact the entity operating the Benihana restaurants located in New York, and that BOT owns the goodwill and history of ‘the Benihana restaurant chain, ' which according to the BOT/KOA press release, has ‘over 100 locations in 15 countries.'” Id. BI also alleges that BOT and Aoki created a website called “Keiko Aoki Inner Makeup, ” which purported to offer sushi catering services in New York City, “featuring a ‘live performance' by a ‘veteran sushi chef' fully clad in a Benihana uniform, bearing the BENIHANA® logo.” Id. ¶ 30 & Ex. H.

         B. Procedural Background

         The Court describes here only background relevant to BI's counterclaims.

         On January 13, 2014, BOT filed the original complaint in this action. Dkt. 1. On March 20, 2014, BI filed an answer with a broad set of counterclaims against BOT. Dkt. 7. On May 2, 2014, BOT filed a motion to voluntarily dismiss its complaint, Dkt. 24, and a motion to dismiss BI's counterclaims, or, in the alternative, to stay this action and compel arbitration of BI's counterclaims, Dkt. 28. On July 22, 2014, the Court issued a decision in which it denied BOT's motion to dismiss, but granted its motion to compel arbitration of certain of BI's counterclaims and denied its motion to compel arbitration of others. Dkt. 42. As to the claims that the Court did not order be resolved in arbitration, on July 31, 2014, BI filed amended counterclaims. Dkt. 43. Later, on November 3, 2014, the Court granted leave for BI to file Second Amended Counterclaims, Dkt. 58, Ex. A. Dkt. 60. On February 18, 2015, the Court stayed discovery in this case pending the arbitration. Dkt. 68.

         On September 1, 2016, the Court granted BI leave to file the TACC. Dkt. 86. On September 30, 2016, BI filed the TACC. Dkt. 87. On October 14, 2016, BOT filed a motion to dismiss and, in support, a memorandum of law (“BOT Br.”) and the Declaration of Joseph L. Manson III, attaching the ARA and License Agreement at issue in these cases. Dkts. 89-91.[3]On October 28, 2016, BI filed a memorandum of law in opposition, Dkt. 92; on November 4, 2016, BOT filed a reply memorandum of law, Dkt. 94. On December 16, 2016, BOT asked the Court to stay discovery pending resolution of its motion to dismiss the TACC, Dkt. 97; on December 22, 2016, BI filed a letter in opposition, Dkt. 99. On January 18, 2017, the Court ...


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