Battle Boils Over for Besaw’s Brand Name

Tuesday, May 05, 2015

Rebecca Randall, GoLocalPDX Contributor

Photo credit: be saws.com

Besaw’s owner Cana Flug claims “common law ownership” over the Besaw’s brand in a lawsuit filed by Flug’s Tuatara Enterprises in the U.S. District Court in Portland on Friday. However, early Monday morning the building's landlord, Jim John of C.E. John’s, said he had not yet been served with any papers.

“Everyone else apparently knows about the lawsuit, and it’s been on TV, but she’s failed to get it to us,” said John. He anticipated he would get the papers later on Monday.

Flug asserts that in the 10 years she has operated Besaw’s she has “improved the reputation and goodwill of the restaurant and the ‘Besaw’s’ name and mark substantially, taking it from a local lunch counter to a popular and respected upscale bistro with full lunch and dinner service,” according to court documents.

She adds that customers associate Besaw’s good reputation with Tuatara.

Last week on GoLocalPDX, John asserted that the name belongs with the history of the building—something he said C.E. John plans to protect. Besaw’s began in 1903 with the founding of the saloon Besaw & Liberty serving the loggers and longshoreman in Nob Hill.

George Besaw and Medric Liberty were the first owners, who opened with some seed money from the famed brewer Henry Weinhard. The establishment saw its way through the 1905 World’s Fair and Prohibition before being owned by Besaw’s son. Eventually, it was purchased by real estate companies that leased it to other operators using the name Besaw’s.

Photo credit: commons.wikimedia.org

John said C.E. John's eventually plans to bring the building into ADA compliance and complete a much-needed update, saying he envisions a historic rebuild that “maintains the integrity of what Besaw’s is.” Besaw’s would be the anchor tenant.

“Unequivocally, we’ve been very aware that we are a steward of a major tradition in Portland, and we don’t take that lightly,” he said.

Last week, Flug announced that unsuccessful lease negotiations would lead to Besaw’s closure in a press release and social media post that read, “Due to factors beyond our control, the property owners have refused to renew our lease.”

The news upset many regular customers, some of whom assumed that the failed lease negotiations were the fault of the landlord. On Facebook, the post by Besaw’s got 971 likes and 175 shares. Many responses expressed their support of Flug, and some decried the landlord.

At the time, Flug declined to say whether the dispute was over the name’s inclusion in the lease. The lawsuit filing indicates that the name was included in the lease, but disputes that the landlord ever had rightful ownership.

John said that the company prefers not to discuss any legal issues publically, though last week he said that the dispute was over the name’s inclusion in the lease, adding that there was no rent increase or threat of tearing down the historic building. “A number of operators have been in Besaw’s over the years. Operators have come and gone but Besaw’s is about that building and that location,” said John. “It was clear in the lease that while [Flug] was an operator in there the name stayed with the building and the location.”

Flug bought the business in 2005 from Bill and Judy Sacheck, who operated Besaw’s Café from 1993 to 2005. She assumed that she purchased the name of the business, said Flug’s attorney Dennis Steinman. After 10 years of operating the restaurant, Flug has a right to “common law ownership” of the brand, according to the lawsuit.

The lawsuit seeks to ensure that the name is rightfully hers, meaning C.E. John would not be able to continue using the name at that property and she could reopen Besaw’s in a new location.

Steinman said that the problem is that neither C.E. John nor the real estate company from which it bought the property in 2011—the Jones Group—ever owned federal trademark rights or exercised “common-law trademark” authority.

Photo credit: commons.wikimedia.org

For example, a restaurant franchise like McDonald’s has the responsibility to ensure that all of its locations are using the trademarks appropriately. “In order to ensure that trademark is protected, they have to monitor how the licensee is using the mark,” said Steinman. “They could go after people who are not using the trademarks correctly.”

One can also own “common-law trademark” rights for using a brand continuously, said Steinman, but again, monitoring the brand is a legal requirement of ownership.

A landlord who owned the trademark could monitor the operator by maintaining control over menu choice, quality of service, or quality of food, for example. The Jones Group and C.E. John never did that, he said.

Flug’s lawsuit file claims that the Jones Group did not have the right to license use of the name Besaw’s in a lease to the Sacheks.

Additionally, trademark ownership must be tied to a service or good that you sell—not a piece of property.

Even iconic or historic properties cannot have a trademark, said Steinman. For example, the Empire State Building has a trademark for offering services, such as a gift shop, an observation deck, and entertainment, but it is not for the building itself.

It wasn’t until January of this year that C.E. John sought another mechanism to formalize its ownership of the Besaw’s name, when it applied for a trademark application with the U.S. Patent and Trademark Office.

Flug’s lawsuit takes issue with the fact that C.E. John’s application claims to have used the mark for restaurant services since 1903 and even submitted a menu developed by Flug and her staff as proof of using the trademark.

Flug’s Tuatara Enterprises followed up in March with its own application for “Besaw’s” and “Besaws Eat Drink,” which included a logo. It also demanded that C.E. John withdraw its application. C.E. John responded by threatening legal action if Tuatara uses the Besaw’s trademark after its lease terminates on May 31.

Tuatara demands a jury trial and seeks the ownership of the name Besaw’s as well as attorney fees. If the court sides with Flug, she could submit the order to the trademark office to advance her plans for a new restaurant space. The U.S. Trademark Office can take up to a year to make a determination. “It’s really imperative for both my client and my landlord to know as soon as possible who actually has the right to use the name,” said Steinman.