In the landscape of trademarks, a point of tension exists between small and large businesses. Namely, well-funded corporations have the resources to dominate trademark real estate and to go after competitors.
Yet, trademark names are limited. Trademarks of similar names in different classes are registered all the time, because there are simply not enough words or phrases in the English language for one business to monopolize – though this makes a strong argument for choosing a trademark that is unique.
We see this tension playing out between the ever-expanding Whataburger franchise and a local eatery in North Carolina called What-a-Burger #13.
The Agreement
Whataburger originated as a hamburger stand in Corpus Christi, TX in 1950. Over the past several decades, they opened locations throughout the Southern United States, eventually selling to BDT Capital Partners to expand nationwide. This is how the franchise came to North Carolina.
In 1969, the Bost family opened What-A-Burger #13, which eventually became – and remains – two eat-in locations and one food truck. It is clear that the similarly named restaurants operate on very different geographic scales.
Though Whataburger existed first, the two restaurants were not in competition until Whataburger announced its plans to expand to North Carolina in 2025.
This raises the question: when a larger company enters a territory, is it their purview to clear away the already-established small businesses with trademarks of similar names and products/services? Or can there be space in the market for both?
In seeming friendliness, Whataburger and What-A-Burger #13 worked out a coexistence agreement so that the smaller competitor would not need to close their restaurants or food truck, as long as they only used the What-A-Burger #13 mark under the terms of the agreement. It went into effect on May 19, 2023.
So, why is Whataburger suing now?
Breaking the Agreement on Trademarks of Similar Names
According to Whataburger, What-A-Burger #13 breached tenets of their agreement on at least four occasions. The fast food chain notified the small business of its breach in April 2024, but What-A-Burger #13 did not make changes in a timely way. This nullified the entire coexistence agreement, rendering formerly permissible uses of the mark as infringement and leading to Whataburger’s lawsuit with a jury demand in June 2024.
How did the smaller business breach the contract? Whataburger’s major complaints are that Bost, under his businesses:
- Created WBC #13 LLC in secret a few days before signing the Whataburger agreement – Whataburger proposed that the lack of disclosure was a way to circumvent the contract
- Used the mark in ways that were not allowed in the agreement via the What-A-Burger #13 food truck
In its filing, Whataburger is suing for:
- Federal trademark infringement
- Federal and common law unfair competition
- Breach of contract
- Unfair and deceptive trade practices
Their goals have also transformed from the generosity of the original agreement to a more aggressive stance. Now, Whataburger wants the small restaurant to stop using the “What-A-Burger” name, destroy the signage, hand over its online domain name, and pay profits and/or compensation as fitting for the case.
What-A-Burger #13’s Retort
Bost’s legal representatives frame this lawsuit as a big business harassing a small business. They claim that, in 2022, Whataburger violated an earlier agreement between the previous Texan Whataburger owner and Bost’s businesses. They say that this former agreement protected What-A-Burger #13’s operations in their own North Carolinian counties.
Was the capital firm that purchased Whataburger unaware of this non-interference agreement? Or is this an attempt to evade the consequences of following trademark permissions in an imprecise way?
Does This David Have a Case against This Goliath?
Regardless of What-A-Burger #13’s intentions, it is clear that Whataburger has an abundance of consumer goodwill and registered trademarks to protect it, not to mention more money. One need only find news articles of customers lined up around the block when a Whataburger location opens in a new state to see proof of this brand’s strength.
Ideally, a larger chain and a local eatery could exist in the same commercial space. However, at this point, it may be difficult for this small competitor to find legal ground to defend their choices. What-A-Burger #13 may have to toe the line of the more recent agreement if they want to keep their doors open, but they may also have a good defense of waiver since they have been in existence since 1969. We shall see how the burger flips on this case as it continues.