The Shapleys and Koestlers continued their war over the use of the "Shapley's" name in federal court last week as Koestler, Inc. asked the court to award them the "Shapley's" trademark and enforce a non-compete clause against Mark and Mary Shapley. Koestler is moving to the site formerly occupied by Ruth's Chris Steakhouse in Renaissance while Mark Shapley announced last week he and his wife are going to operate a restaurant at the current site of Shapley's on Centre Street in Ridgeland.
Mark and Mary Shapley sued Koestler, Inc. in U.S. District Court last month. They opened Shapley's in 1985. The Shapleys left the restaurant business and sold the assets such as the equipment and inventory, leased the building, Koestler, Inc. in 1998 for $1.69 million. Scott and Julie Koestler own Koestler, Inc. The lease had a term of ten years with an option to renew through June, 2018. The Shapleys claim that the lease, not the purchase, included the use of the name. That is the major bone of contention as Koestler claims it purchased the mark.
The Shapleys claimed in their complaint that they owned the "Shapley's" mark and that the use of the mark expires with the lease. They also argued the Koestlers could not use the mark within a 50-mile radius of Jackson.
However, Scott Koestler filed a federal trademark application to register "Shapley's" in 2009. His application was approved. Mark Shapley took great offense and challenged the registration in 2017 - eight years later. He claimed the application was fraudulent because Mr. Koestler never owned the Shapley's mark even though he stated he owned it in the application. The Koestlers and Shapleys are still slugging it out before the Trademark Trial and Appeal Board.
The Shapleys asked the court to rule that they own the Shapley's mark and have the exclusive right to use it when the lease expires on June 30. They also asked the court to enjoin Koestler from using the "Shapley's" name when the lease expires and cancel his registration.
The Shapleys took their shot at the Koestlers but the current operators of Shapley's took the punch and threw several right back. They filed an answer but said two can play this game and sued the Shapleys in return Friday.
Koestler argues a "a trademark is a symbol of goodwill, and trademarks and goodwill are inseparable." Koestler predictably claimed the mark transferred when he purchased the assets of the business and that it has been the "sole owner" of the mark since 1998.
The counterclaim charges that the Shapley's knew about the registatrion "at least as early as December 2, 2008) and that the application filing was published in the "Official Gazette" of the U.S. Patent & Trademark Office in January 2009. The registration was published in the Gazette on March 31, 2009. The Shapleys took no action for 8 years until the time approached for the renewal of the lease. Koestler argues that he could have rebranded or developed another name for the restaurant if the mark had been timely challenged.
However, Koestler didn't stop with arguing over marks and names but also asked the court to enforce a non-compete clause against the Shapleys. The Shapleys announced they are going to open a restaurant at the current Shapley's site on Centre Park. Mr. Shapley posted on his Facebook page last week:
Hey friends, You know I don’t post often but I wanted to inform and confirm that this summer, Mary and I are going back into our restaurant business in our original location on Centre Street. We are very excited about this opportunity and plan to continue the same great menu and service that you came to know from us years ago.Koestler said "not so fast, my friend", remember that non-compete clause? It claims the Shapleys can't use the nake "Shapley's" within a 50 mile radius of Jackson until the lease expires or if Koestler defaults on lease, whichever event occurs first. The company also posited that the Shapleys abandoned the mark for fourteen years.
The Shapleys allegedly created a website, mmshapleys.com, that had the name "Shapley's" and a picture of a steak at the top of the page (p.24). However, the website currently provides little information as most of the alleged content does not appear on the website.
However, the Koestler complaint alleges that the site at one time stated Mark and Mary Shapley are the owners, Mark is the executive chef, and Jeffery Shapley is the general manager as well as the sommelier. It charges the Shapleys are violating the non-compete clause and asked the court to enforce said clause and award damages.
Koestler asked the court to declare it to be the sole owner of the Shapley's mark and stop the Shapleys from using the name "Shapley's" for any restaurant when the lease expires this year. It also requested the court award attorney's fees.
Attorney Stephen Thomas of Bradley Arant represents Koestler. Attorneys Stephen Carmody and Karen Howell of Brunini Grantham represent the Shapleys.
Note: Counterclaim starts on p.18.
37 comments:
sounds like a circular argument. Lawyers will surely be the winners.
and scott and julie for the win.....the trademark issue is a slam dunk......mark if you snooze you lose......nice of you to remove all your shapleys info from the internet.....
Remind me again why this is important...its a restaurant for Pete's sake. Most folks in Jackson wouldn't know the difference between a steak from the Sizzler and either one of these overpriced/over-hyped dumps.
I think the entire dispute should be solved through a winner-take-all iron chef cook-off. It could be televised locally and would be a big draw as a live event.
They'll spend more on attorney's fees than the entire restaurant is worth.
If only Karen Howell could Tweet about this!
It should be pretty straightforward from reading the contract whether or not the name/trademark was transferred permanently. That's why people put things in writing.
One possible outcome is the Shapleys my wind up running a restaurant called "Old Original Shapley's", which is how a similar dispute was resolved with a Philadelphia, PA landmark restaurant.
The steaks are great at the current location. The grump at 3:18 can take a hike.
Barry Kripke at 3:18 is spot on. We are talking about dumb fucking slabs of meat! Let the two combatants wrestle it out in court, and may the best dumb fucking slab of meat win! Why is tjis occupying this site? Nobody CARES, Kingfish...truly.
" A trademark and goodwill are inseparable".
I don't think so. Trademarks are material in nature and "goodwill" is immaterial.
Plus, just because Shapely did not contest the awarding of a Trademark by the government, does not mean it was awarded in a valid manner. He probably was uninformed as to the activity concerning the trademark, regardless of some "Gazette"
I'm guessing (hoping), the lawyers read the contract documents before collecting the big retainers.
This is very interesting commercial litigation.
Any word on how the case got reassigned from District Judge Ozerden to Judge Reeves (based upon the attachments in the blog post that show a different District Judge on the Complaint versus the later pleadings)?
I do agree that the legal bills between Brunini and Bradley Arant will be in the stratosphere. However, the loser will likely get hit with the prevailing party's reasonable legal expenses, so this is basically just a game of high-stakes poker at this point.
Without reading through the transaction documents, it does seem far fetched for me to believe the new owner would purchase the operating of the restaurant, and its good will, without getting the mark of the business, let alone its other intellectual property.
I am eager to see how this shakes out. My money is that the parties will sober up and settle once they get a few more months worth of bills from Brunini and Bradley Arant.
@Macy Hanson, you are correct: "Without reading through the transaction documents, it does seem far fetched [that] the new owner would purchase . . . without getting the mark of the business. . . ." [sic]
However, read the excerpt of the purchase agreement that lists the Purchased Assets (which you can find in the Complaint that Kingfish posted on March 9), and you'll clearly see that the purchasers only purchased "[t]he exclusive right to use the name 'Shapley's' or 'Shapley's Restaurant'" during the term of the lease.
I'm thinking, at this point, if I'm the Koestlers, I would not want the name Shapley associated with my new restaurant. Anyway, and besides....we all know in order to be successful today, a new restaurant has to be associated with either Tex-Mex or oysters.
Methinks a Mississippi sand bar at dawn would be the best way to settle this...
If the purchaser loses, he should sue his attorney who did the original transaction. That attorney should have warned him what could happen in the future if it wasn't nailed down and wrapped up tightly.
I seriously doubt Mark shapley would think the Koestlers would pay almost $2 million to babysit his Restaurant for 20 years
A cooking contest is the only fair answer. As a consumer, I only care about who makes the best steak. All of this legal blabbering is irrelevant.
This will be a simple and straight forward case for Carlton.
He recently ruled using the parol evidence rule: what is in the 4-corners of the document? Google his ruling.
Hence, this will not go to trial.
If I were the Koestlers, I don't think I'd want my business to carry the Shapley monicker after all this bickering. All these families grew up together in Greenville.
See pg 82 of the attachments. Schedule 1.L.
Purchased Assets:
(b) The exclusive right to use the name "Shapley's" or "Shapley's Restaurant" within a 50 mile radius of Jackson, Mississippi for a term beginning on the date of this Agreement and ending on the date the Lease is terminated..."
Per the above contract language, it appears clear that the Koestlers only purchased the use of the name "Shapley's" for the term of the lease, i.e. temporarily, not permanently as they allege/claim. Also, implied in the 50 mile radius limitation is that the Shapleys retained the right to use that name outside a 50 mile radius of Jackson which again seems to indicate they did not completely and entirely sell the use of the name to the Koestlers.
If it were me, I'd be tempted to just say keep the name. Everyone knows who has been running it for twenty years. Advertise a little for a few months so the word gets out and keep on going.
Kingfish: That would mean when the Shapley family returns to the old location (which it built and made famous locally) they would not be able to use their own brand (name). If I were Shapley, I'd want to be able to use my own business name since I started the whole danged thing to begin with. Let Koestler come up with another name for his new place.
In fact, if I were Shapley (after winning this contest) I'd name my new place 'The Original Shapley's' or 'Shapley's - The Original'.
Has anything been said about whether Ely's will close down when the family reopens at the old location? That place has got to be some high dollar rent, parking is limited, the elevator is cumbersome and the place has developed a snotty, elitist ambience.
Grille De Koestler has a nice ring to it
You might want to read my question again. I think you took it to be the opposite of what it said. I asked if the Koestler's should just say have the name and go about their merry way.
You'd think Julie and Scott know that to open the place at a trendy location like Rennisance they have to give their place a modern hip name like:
Rare
Marbled
Loin
Hoof
Mo'Beef
La Vaca
Du Boeuf
or
Manzo and throw in a side of pasta
Maybe Koestler could go with Root Kris?
@10:56, or they could jt name it what it is "Shapley's Overpriced Steaks." Or...
https://www.youtube.com/watch?v=cMVvTl83gWg
With you on not wanting to be affiliated with the Shapley name, though if I paid $1.69 million, I might feel differently. Could go the route of Ruth's Chris Steakhouse, and have Koestler's Shapley Steakhouse! Truly, the Koestler's ARE Shapley's restaurant, whatever they are called in the new location. Mark Shapley should be prevented from using the name on the current restaurant location or within the 50 mi radius himself. Call it M+M. He's just doing this to be a jackA-- He doesn't want the restaurant life anyway.
Or, follow the lead of that stupidly-named "Ruth's Chris" and name the damned thing "Shapley's Koestler." Or " Shapler's Koestley." Or "Koepler's Shap..." Again, as others have moaned here...whooooo givvvvves a shhhhhitttttt? Amusing to follow this non-story, though.
3:47, whether he wants the restaurant life or not, he is doing this for business reasons, not personal JackA** reasons - at least it would seem to me. He leased the name for 10 years and renewed for another 10. The lease is running out and the Koestler's don't want to renew it. So, Shapley now has a building back, and according to the terms pointed out above, the name. Why the hell would he want to let it walk away now after he paid some attorney's a hell of a bunch of money to draw up an agreement that specifies something completely different?
If Koestler wants the name, I'm sure Shapley would be willing to sell it to him - for an additional sum. If Koestler wanted it forever back in the 90's he could have negotiated and paid for it then (probably gotten it a lot cheaper.)
But, this looks to me to be business - and is probably responsible for breaking up a previous friendship. But that's what often happens when friends do business with each other, particularly at this price range.
Hey, April 3, 2018 at 12:39 PM, not funny. But not surprised since you can't spell Renaissance.
As a lawyer....Mark sold his name and the only reason the lease existed was to restrict Mark.
It will take a while to get to the end result....but Mark loses this.
He better hope Reeves doesn’t award atty fees.....
don't know either party in this fight as i'm a Tico's fan BUT there is a CLEAR precedent for this kinda fight --look up the legal hassles w the Brennans in NOLA--one family VERY successful--the other side of the family busted-- PRIMARILY from paying legal fees for years over rights to Brennan's name---the ONLY thing that makes ANY sense about this tempest in a teapot is the free publicity it generates!!
Koestler just filed an encyclopedic motion for preliminary injunction which will likely bring this issue to a head relatively quickly.
Bottom line - Mark loses use of name he sold with biz for 1.7 m bucks 20 years ago.
Pigs get fed and hogs get slaughtered Mark.
They should turn this into a true life family feud and use it for marketing purposes. The Koestlers agin' the Shapleys. "This Town ain't big enough fer the both of us." Settle it over foie gras.
@4:55pm Manger la boeuf!
RE: Kingfish @ 11:42 AM
Agreed. Jackson is too damn small to spend all this money fighting over the name.
Seems odd that an aging former restaurateur, Mark Shapley, would want to open a new restaurant in such a dilapidated part of town with 4 or 5 other prime steakhouses within a five mile radius of his place. There has got to be an easier way for him to make money if he's now out of it
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