News Briefs

U.S. House Passes Obesity Lawsuit Protection

On March 10, the U.S. House passed the Personal Responsibility in Food Consumption Act (H.R. 339), which would provide restaurants with protection from most obesity lawsuits.

Representatives of the franchising industry have actively supported the measure. “We certainly believe it is a real issue. Even if judges keep throwing frivolous cases out of court ' and that is a huge 'if' ' it still costs companies that get sued a lot of money to defend themselves,” said John Gay, vice president of government relations for the International Franchise Association. “Why should companies be put at risk when it should be self evident that they are not at fault?”

On the day that the House passed the bill, the White House announced its strong support. “Food manufacturers and sellers should not be held liable for injury because of a person's consumption of legal, unadulterated food and a person's weight gain or obesity,” the White House said in a statement.

Sen. Mitch McConnell (R-KY) introduced the companion bill in the Senate, S. 1428, in July 2003, and it is in the Judiciary Committee. Despite the White House's backing, Gay said that passage in the Senate is far from assured.

To date, Louisiana is the only state that has passed a bill to stop obesity lawsuits (see FBLA, February 2004). According to the National Conference of State Legislatures, bills have been introduced in 19 other state legislatures: Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Kentucky, Mississippi, Missouri, Nebraska, New Hampshire, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, Washington, and Wisconsin.

Trademark Dispute Drains Coffee Shop Franchise

Losing a trademark infringement lawsuit proved to be fatal for a small chain of franchised coffee cafes located mostly in the Front Range area of Colorado (Denver, Boulder, Fort Collins, and other areas). Fourteen of the franchisees of Capri Coffee Break, based in Windsor, CO, sent notice that they are breaking their franchise agreements, after the company lost a lawsuit related to its name.

In 1992, Caffe D'Arte, a Seattle-based coffee roaster and distributor, trademarked the name Capri Coffee. When Caffe D'Arte learned about the Capri Coffee Break franchise in 2002, it alleged infringement on its trademark, and won summary judgment in February 2004 in Federal District Court in Seattle. Under the settlement, Capri agreed to change its name by March 15, 2004, and even tentatively selected Ciena Coffee Break as its new name.

But before the change was implemented, the company's franchisees discovered that the former CEO of Capri, John Larson, had known for at least 6 months that Caffe D'Arte was claiming that Capri infringed on its trademark. They allege that Larson did not tell them about the potential legal problem, even as he sold more franchises and encouraged some of his franchisees to spend thousands of dollars on Capri signage. Adding insult to injury, their franchise agreements obligated them to pay the costs associated with the name change.

Instead of staying on as franchisees under another name, 14 former Capri franchisees hired Jeff Cowman, partner in the Denver office of Perkins Coie. In an interview with FBLA, Cowman explained that the franchisees notified Capri “that they have declared their independence from the franchise, and asked for a declaration from Capri that the franchise agreement is null and void.”

In return, the franchisees promised to release Capri from any liability for its “egregious and incurable breaches … in not conducting due diligence on the franchise name,” said Cowman.

After about a month of back-and-forth negotiations between the franchisees and three different chairmen (“It's been a revolving door over there,” said Cowman), the parties almost had an agreement on March 20. But last-minute snags over confidentiality and territorial rights for franchises undermined the negotiations, said Megan Holstein, an attorney at Howard O. Bernstein, P.C. (Boulder, CO), which is representing Capri.

Although a settlement had not been reached by April 1, neither side has filed a lawsuit. The idea is to end the possibility of litigation that would be hanging over all parties, said attorneys for both sides.

The one thing that franchisor and franchisee seem to agree on is that there's money to be made selling coffee in the Front Range. The franchisees kept operating their stores independently of Capri, and they might try to create a new chain under a new brand name. Larson, the founder of Capri, has launched a new coffee franchise in the area, called Saxby's. However, Larson's new venture has further angered the former franchisees, as they allege that he registered the chain while he still was chairman and a major stockholder in Capri, and he solicited Capri franchisees to switch their names to Saxby's. As part of a settlement, the franchisees want some territorial protection against Saxby's, said Cowman.

Yoga Teacher, Students Continue Fight Over Trademark

Bikram Choudhury, the best-known yoga instructor in the United States, has sent cease-and-desist letters to about 100 former students and other yoga instructors who he says have infringed on his intellectual property: 26 postures that he copyrighted and trademarked. Choudhury has trained hundreds of yoga teachers, and has licensed nearly 1000 schools around the world to former students who teach his techniques. He charges about $5000 for training and the right to use the patented postures.

But his trademark has been challenged by a group of yoga teachers and students called Open Source Yoga Unity, who filed a lawsuit in July 2003 (Open Source Yoga Unity v. Bikram Choudhury, U.S. District Court for the Northern District of California, San Francisco Division). The plaintiffs say that Choudhury cannot patent yoga positions that have been used for millennia.

Although media accounts and many of Choudhury's students who became instructors (both those who have paid to license Choudhury's postures, and those who have not) refer to the business arrangements as “franchises,” it is not clear if they really meet that definition. “Bikram Choudhury has franchising plans, or at least he refers to them in his contracts,” said Elizabeth Rader, one of two attorneys representing Open Source Yoga Unity. Rader is a Fellow in Residence at Stanford Law School's Center for Internet and Society. “On the documents right now the yoga instructors are called 'affiliate contractors,' but there is forward-looking language that indicates there will be franchises and exclusive territories.”

Court ordered mediation in December 2003 was unsuccessful. “We went through the motions [of mediation], but the case is very much alive,” said Rader, who submitted briefs on March 24. (The briefs can be read at http://cyberlaw.stanford.edu/blogs/rader/.) A hearing is scheduled for April 14.

Choudhury's representatives did not return phone calls to comment on the lawsuit.

In the one dispute that nearly came to trial, the owners of a Southern California yoga studio settled out of court with Choudhury in July 2003. Choudhury was seeking $150,000 for the alleged trademark violation, but neither party has divulged the terms of the settlement, including if any money was involved.

U.S. House Passes Obesity Lawsuit Protection

On March 10, the U.S. House passed the Personal Responsibility in Food Consumption Act (H.R. 339), which would provide restaurants with protection from most obesity lawsuits.

Representatives of the franchising industry have actively supported the measure. “We certainly believe it is a real issue. Even if judges keep throwing frivolous cases out of court ' and that is a huge 'if' ' it still costs companies that get sued a lot of money to defend themselves,” said John Gay, vice president of government relations for the International Franchise Association. “Why should companies be put at risk when it should be self evident that they are not at fault?”

On the day that the House passed the bill, the White House announced its strong support. “Food manufacturers and sellers should not be held liable for injury because of a person's consumption of legal, unadulterated food and a person's weight gain or obesity,” the White House said in a statement.

Sen. Mitch McConnell (R-KY) introduced the companion bill in the Senate, S. 1428, in July 2003, and it is in the Judiciary Committee. Despite the White House's backing, Gay said that passage in the Senate is far from assured.

To date, Louisiana is the only state that has passed a bill to stop obesity lawsuits (see FBLA, February 2004). According to the National Conference of State Legislatures, bills have been introduced in 19 other state legislatures: Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Kentucky, Mississippi, Missouri, Nebraska, New Hampshire, Ohio, Pennsylvania, South Dakota, Tennessee, Utah, Washington, and Wisconsin.

Trademark Dispute Drains Coffee Shop Franchise

Losing a trademark infringement lawsuit proved to be fatal for a small chain of franchised coffee cafes located mostly in the Front Range area of Colorado (Denver, Boulder, Fort Collins, and other areas). Fourteen of the franchisees of Capri Coffee Break, based in Windsor, CO, sent notice that they are breaking their franchise agreements, after the company lost a lawsuit related to its name.

In 1992, Caffe D'Arte, a Seattle-based coffee roaster and distributor, trademarked the name Capri Coffee. When Caffe D'Arte learned about the Capri Coffee Break franchise in 2002, it alleged infringement on its trademark, and won summary judgment in February 2004 in Federal District Court in Seattle. Under the settlement, Capri agreed to change its name by March 15, 2004, and even tentatively selected Ciena Coffee Break as its new name.

But before the change was implemented, the company's franchisees discovered that the former CEO of Capri, John Larson, had known for at least 6 months that Caffe D'Arte was claiming that Capri infringed on its trademark. They allege that Larson did not tell them about the potential legal problem, even as he sold more franchises and encouraged some of his franchisees to spend thousands of dollars on Capri signage. Adding insult to injury, their franchise agreements obligated them to pay the costs associated with the name change.

Instead of staying on as franchisees under another name, 14 former Capri franchisees hired Jeff Cowman, partner in the Denver office of Perkins Coie. In an interview with FBLA, Cowman explained that the franchisees notified Capri “that they have declared their independence from the franchise, and asked for a declaration from Capri that the franchise agreement is null and void.”

In return, the franchisees promised to release Capri from any liability for its “egregious and incurable breaches … in not conducting due diligence on the franchise name,” said Cowman.

After about a month of back-and-forth negotiations between the franchisees and three different chairmen (“It's been a revolving door over there,” said Cowman), the parties almost had an agreement on March 20. But last-minute snags over confidentiality and territorial rights for franchises undermined the negotiations, said Megan Holstein, an attorney at Howard O. Bernstein, P.C. (Boulder, CO), which is representing Capri.

Although a settlement had not been reached by April 1, neither side has filed a lawsuit. The idea is to end the possibility of litigation that would be hanging over all parties, said attorneys for both sides.

The one thing that franchisor and franchisee seem to agree on is that there's money to be made selling coffee in the Front Range. The franchisees kept operating their stores independently of Capri, and they might try to create a new chain under a new brand name. Larson, the founder of Capri, has launched a new coffee franchise in the area, called Saxby's. However, Larson's new venture has further angered the former franchisees, as they allege that he registered the chain while he still was chairman and a major stockholder in Capri, and he solicited Capri franchisees to switch their names to Saxby's. As part of a settlement, the franchisees want some territorial protection against Saxby's, said Cowman.

Yoga Teacher, Students Continue Fight Over Trademark

Bikram Choudhury, the best-known yoga instructor in the United States, has sent cease-and-desist letters to about 100 former students and other yoga instructors who he says have infringed on his intellectual property: 26 postures that he copyrighted and trademarked. Choudhury has trained hundreds of yoga teachers, and has licensed nearly 1000 schools around the world to former students who teach his techniques. He charges about $5000 for training and the right to use the patented postures.

But his trademark has been challenged by a group of yoga teachers and students called Open Source Yoga Unity, who filed a lawsuit in July 2003 (Open Source Yoga Unity v. Bikram Choudhury, U.S. District Court for the Northern District of California, San Francisco Division). The plaintiffs say that Choudhury cannot patent yoga positions that have been used for millennia.

Although media accounts and many of Choudhury's students who became instructors (both those who have paid to license Choudhury's postures, and those who have not) refer to the business arrangements as “franchises,” it is not clear if they really meet that definition. “Bikram Choudhury has franchising plans, or at least he refers to them in his contracts,” said Elizabeth Rader, one of two attorneys representing Open Source Yoga Unity. Rader is a Fellow in Residence at Stanford Law School's Center for Internet and Society. “On the documents right now the yoga instructors are called 'affiliate contractors,' but there is forward-looking language that indicates there will be franchises and exclusive territories.”

Court ordered mediation in December 2003 was unsuccessful. “We went through the motions [of mediation], but the case is very much alive,” said Rader, who submitted briefs on March 24. (The briefs can be read at http://cyberlaw.stanford.edu/blogs/rader/.) A hearing is scheduled for April 14.

Choudhury's representatives did not return phone calls to comment on the lawsuit.

In the one dispute that nearly came to trial, the owners of a Southern California yoga studio settled out of court with Choudhury in July 2003. Choudhury was seeking $150,000 for the alleged trademark violation, but neither party has divulged the terms of the settlement, including if any money was involved.