In the restaurant industry, imitation is not just the sincerest form of flattery; it may be grounds for a lawsuit.
Recent cases of alleged intellectual-property theft and trademark infringement have pitted the owners of upstart restaurants against former employers and ensnared perceived competitors even though their businesses are 350 miles apart.
Rebecca Charles, chef-owner of the 10-year-old Pearl Oyster Bar in New York City, settled out of court late last month with her former sous chef, Edward McFarland, owner of the nearby Ed’s Lobster Bar, whom she had sued last year for replicating family recipes she said she taught him.
Meanwhile, a federal judge has barred a San Jose restaurateur from using “Boiling Crab,” “Boiling Crawfish” or any version of a name that references boiled crustaceans for his three seafood restaurants in Northern California—which were held to be strikingly similar to the four-unit Boiling Crab chain based in Garden Grove, Calif.
In that case, the judge rejected the defense position that the San Jose operator had patterned his restaurants after an eatery in Vietnam, apparently because it had debuted there after the launch of the Garden Grove concept. The Southern California restaurant also had distinctive elements that were also evident in San Jose but not in the Vietnamese restaurant.
Operators and experts familiar with such lawsuits say they are indicative of an ever-present problem restaurateurs face: how to protect ideas, recipes and concepts in a highly competitive industry.
Restaurant owners often fail to take the precautions necessary to protect their businesses, said Chicago lawyer Charles Valauskas, who has been involved in intellectual-property issues in the industry for the past 20 years.
“You have to take care of your business and, often times, [operators] don’t,” said Valauskas, who is preparing a lawsuit on behalf of a Florida restaurant against a copycat concept he declined to identify. “Restaurant owners understand what it takes to get the doors opened and get the cash register ringing, but they don’t take steps to protect it. If you’ve lasted more than a year, maybe you should do something like register the copyright of the menu, if nothing else.”
Pearl Oyster Bar’s Charles, who would not discuss specifics of her settlement with McFarland, said the lawsuit had been her attempt to protect her business after reading on blogs and in media reports that McFarland intended to open more Lobster Bar restaurants.
“It was just too much to bear,” she said. “It was not about copyrighting a recipe or trying to protect a single recipe. I was trying to protect an entire business model.”
In her federal lawsuit, Charles had accused McFarland of stealing “each and every element” of her concept in lower Manhattan, right down to the wall colors and her mother’s Caesar salad dressing recipe. McFarland had been Charles’ sous chef for six years. He opened his own restaurant three months after leaving Pearl’s.
“[The lawsuit] was settled to the mutual satisfaction of both parties,” McFarland said.“We’re very happy with the settlement.”
Terms of the settlement require Charles and McFarland to refrain from discussing details of the resolution. However, observers have noted that Ed’s Lobster Bar has made slight changes in its decor in areas that had been singled out in Charles’ complaint as being exact copies. Gray wainscoting had been painted white and the stained-wood backs on chairs and bar stools were painted white.
On the menu, the former bouillabaisse, a standard Pearl’s menu item, has been renamed “New York Shellfish Stew.” The Caesar salad, however, was still being made with English-muffin croutons, according to a New York Times report.
Charles’ lawyers had encouraged her to start having employees sign confidentiality and noncompete agreements.
Such employment contracts are one method of protecting a business, and patenting recipes and trade secrets and registering trademarks are other steps operators should take, Valauskas said.
“Often there is no meeting of the minds, and that’s where it goes wrong,” he said. “At the beginning, lay out the ground rules. Then there is less ambiguity.”
Employers need to know that usually what employees bring to a business, such as their own recipes, still belong to the employees when they leave. However, recipes and ideas that an employee is paid to develop for the employer become that businesses’ property, Valauskas said.
An apparent gray area, however, are recipes that the employer teaches to the employee, which was a bone of contention in the case of Charles v. McFarland.
Valauskas said operators also need to take precautions to protect their concepts from competitors who may not be former employees, but are customers or just admirers of the restaurant.
Besides registering trade names and seeking patents, operators should stick to one color scheme or design. They will have less clout in a lawsuit if they are constantly changing the look of their establishment, Valauskas said.
In the Boiling Crab case, Judge William Alsup ruled in favor of the plaintiffs, Sinhdarella Inc., granting an injunction blocking defendant Kevin Vu of San Jose from using the phrases “boiling crab,” “boiling crawfish” or similar words in his business. In his ruling, the judge said there was a “boatload of evidence” that Vu’s restaurant was creating confusion between the rival concepts.
Vu could not be reached for comment, but he had argued that he fashioned his restaurant, which opened in 2006, after the similar concept in Ho Chi Minh City, Vietnam. However, Sinhdarella’s attorney presented evidence that the restaurant in Vietnam opened after Sinhdarella’s owners launched their first store in Garden Grove in 2003. All of the restaurants involved offer Louisiana-style crab and shellfish, which has become a popular trend in California’s Vietnamese communities.
Dada Ngo and Sinh Nguyen own Sinhdarella. They could not be reached for comment. They now have five units, three in California, one in Houston and one in Dallas, and have announced plans to open in San Jose.
Vu has since changed the name of his three restaurants in Northern California, including one in San Francisco, to Coco’s Crawfish.