Burger Chain Fight Shows Value of Trademarks

By Olson, Elizabeth | International New York Times, October 29, 2015 | Go to article overview

Burger Chain Fight Shows Value of Trademarks


Olson, Elizabeth, International New York Times


Ensuring that a brand is registered and protected requires several important steps, and not taking the time now can backfire later, experts say.

When Payam Tabibian, who is known as Peter, sketched his idea for a hamburger restaurant name and logo on a napkin a decade ago, he never thought that his distinctive Z-Burger trademark would be at the center of a legal fight.

He registered the 1950s-style red, white and yellow logo in 2007, before he even opened his first fast-food restaurant the next year in a reviving Washington, D.C., neighborhood. Mr. Tabibian, 42, who immigrated to the United States from Iran as a fifth grader in 1982, had operated a vending-machine business and sold neckties from the trunk of his car, but he was always passionate about marketing hamburgers.

Beginning as a teenager in Bloomington, Minn., Mr. Tabibian mopped floors at a local Burger King outlet, then, after his family moved to the Washington area, worked at several more Burger Kings and other fast-food outlets, rising to manager along the way.

After studying hamburger marketing, he came up with the concept for a lively, accessible store that tied itself to the local community with contests, food giveaways, fund-raisers and happy hours. His marketing pitch: Z-Burger's hamburger patties are made of a unique meat blend, the buns are specially baked, the fries are doubly cooked and the milkshakes are extra-rich.

His first restaurant was an immediate hit, attracting students from nearby American University. Two years ago, the place drew public praise when it gave free food to federal workers who were furloughed from their jobs during government budget cutbacks.

Mr. Tabibian, of Great Falls, Va., began expanding, adding stores in Maryland and at other locations in Washington. He worked 80 to 100 hours a week managing the quality of the food and service at the restaurants.

A couple of years after its 2008 start, the burger chain -- which Mr. Tabibian operated with two partners, the brothers Mohammad and Ebrahim Esfahani -- had grown to six locations. He had met Mohammad Esfahani while installing a gumball machine at one of the restaurants he had worked at earlier.

But when Mr. Tabibian fell out with his partners last year, they wound up in court, wrangling over control of the Z-Burger name and trademarks.

That type of legal clash is far from uncommon when measured by the number of trademark filings every year. Businesses are becoming more active in protecting their intellectual property.

Nearly 3,200 trademark cases were filed in federal district courts in the 2013 fiscal year, the latest year for which statistics are available, according to FTI Consulting, which tracks such information.

Even though trademarks like the Nike swoosh logo and McDonald's golden arches are widely recognized and help define major industries, the importance of locking in a word, name or symbol that identifies the goods or services being provided is often overlooked.

Typically, it is large corporations seeking to protect their market share that try to block smaller ventures from using similar brand names or trademarks. For example, the snack food giant Frito- Lay, a subsidiary of PepsiCo, several years ago challenged Princeton Vanguard, the maker of Pretzel Crisps. Frito-Lay argued that the name "Pretzel Crisps," which Princeton Vanguard used for its flat crackers, was a generic term that could not be trademarked.

Initially, Princeton Vanguard lost the case, after spending an estimated $1 million in legal fees. The trademark appeals body, called the Trademark Trial and Appeal Board, found that Pretzel Crisps was the generic name for a pretzel cracker, not a brand name, as its makers had asserted when they sought to register the name a decade ago.

Then, last May, a federal appeals court upset the conventional wisdom that descriptive names like Pretzel Crisps face an uphill battle gaining trademark registration. …

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