If you are an aspiring small business owner – or in the process of becoming one – you might already have a dream name in mind. Perhaps it carries some sentimental connection to family, friends, or a long-treasured idea of yours.
That is all fine and good, but, as you have probably learned, intellectual property lawyers must play the role of the wet blanket – who looks out for your best interests.
Even if your heart is set on a business name, you should run a thorough trademark clearance search. This will protect your hard-earned business from a financially demolishing lawsuit in the long run.
Taco Chon’s Mexican grill in Minneapolis, MN has been learning this lesson this year.
Setting the Stage
Taco John’s is a chain of Mexican fast food restaurants. They originated in 1968 and currently maintain over 300 locations in the U.S. Its claim to fame is the Potato Olé.
Taco Chon’s is much newer. The owner of this small Mexican cafe opened his first Minneapolis location in 2019 and a second in 2021. They focus on serving food from the owner’s home region in Mexico. One thing they apparently didn’t do, though? Engage in adequate trademark clearance.
As a result, in early 2022, Taco John’s sent Taco Chon’s a cease and desist letter, asserting that they were trading on the consumer goodwill of the larger chain. Because their name and business were so similar.
The small business bristled at the demand to change their name. Facing little traction outside of court, Taco John’s filed a lawsuit in late April.
Taco John’s Complaint
Taco John’s claims that they do not like attacking a small business. Rather, they feel compelled to file a lawsuit because of these damaging issues to their brand:
- Federal trademark infringement
- Trademark dilution
- Unfair competition
They assert that diners are likely to be confused with the similar names, because:
- Both Taco Chon’s locations are within five miles of a Taco John’s – one within less than two miles – which could lead to a Google Maps “Oops!”
- Both restaurants serve fast-casual Mexican food.
These are issues that tend not to occur when thorough trademark clearance work is done.
Taco Chon’s Defense
Taco Chon’s points to emotional reasons to keep their name. The owner explained that “Taco Chon’s” comes from his father’s restaurant in Mexico with the same name. Trademark infringement or purposeful confusion never crossed his mind when he started his business.
Taco Chon’s also argues that the restaurants are not so similar. Taco Chon’s is dine-in casual, not fast food. They serve authentic Mexican food, whereas Taco John’s serves “West-Mex” or “Mexican-inspired fast food.”
Lawyers on this side have brought up weighty points of cultural appropriation: how can the “Potato Olé” fast food chain compare itself to a small grill that hosts genuine cultural events and cooks real recipes from Mexico? They paint a narrative in which Taco John’s is bullying Taco Chon’s out of its shot at the American Dream.
Can Taco Chon’s Make It… Despite Their Lack of Trademark Clearance Work?
Of course, it would be nice to see a small business (with probably much better food) survive. But the intellectual property reality of this story is: the Taco Chon’s founder did not engage in adequate trademark clearance. He needed to check the name before forging ahead with his business. No matter the appeal to pathos, businesses register marks to protect themselves. And the marks used first in US commerce usually win.