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«IN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE September 28, 1998 Session CORPORATE CATERING, INC. v. CORPORATE CATERING, ETC., LLC, ET AL. Appeal ...»

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Daboub v. Gibbons, 42 F.3d 285, 288-89 (5th Cir. 1995); Butler v. Continental Airlines, Inc., 31 S.W.3d 642, 650 (Tex. App. 2000). A state law claim is “equivalent” to federal copyright law rights if the elements of the state claim would not establish qualitatively different conduct by the defendant, T his requirement is derived from the portion of 17 U.S.C.A. § 301(a ) limiting the provision to “works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified in sections 102 and 103.” This requirement is derived from the portion of 17 U.S.C.A. § 301(a) including within the statute’s coverage “all legal or equitable rights that are equiva lent” to one o f the bundle o f exclusive rights already protected by the federal copyright law s under 17 U.S.C.A. § 106.

-5than the elements for an action under the Copyright Act. Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 787 (5th Cir. 1999); Yost v. Early, 589 A.2d 1291, 1302 (Md. Ct. Spec. App. 1991).

Even if we were to assume that Corporate Catering, Inc.’s menu and menu items were copyrightable,5 there are two reasons why its common-law claim must fail. First, state common-law actions for copyright infringement no longer exist. Robert H. Jacobs, Inc. v. Westoaks Realtors, 205 Cal. Rptr. 620, 623 (Ct. App. 1984); Evans v. Lerch, 700 N.Y.S. 2d 400, 402 (Sup. Ct. 1999). Thus, a cause of action for common-law copyright fails to state a claim upon which relief can be granted.

Rommel v. Laffey, 194 F.R.D. 441, 444 (N.D.N.Y. 2000); Patrick v. Francis, 887 F. Supp. 481, 483W.D.N.Y. 1995). Second, even if the language in Corporate Catering, Inc.’s complaint could be stretched to assert some other common-law cause of action, it would clearly be preempted by the Copyright Act because the claim falls within the subject matter of 17 U.S.C.A. § 102 and because it undertakes to project rights that are protected by the federal copyright act.6 Accordingly, the trial court correctly directed a verdict on Corporate Catering, Inc.’s common-law copyright claim at the close of all the proof.

III. THE MENU CONVERSION CLAIM

Corporate Catering, Inc. also asserts that the trial court erred by directing a verdict on its claim that Corporate Catering, Etc., LLC converted its menu. It asserts that the “copying and subsequent use of its menu constitute[d] conversion.” The trial court directed a verdict on the ground that Corporate Catering, Inc. had failed to prove that the descriptive terms used in the menu had acquired a secondary meaning in the market. We agree with the trial court’s decision to direct a verdict on this claim; however, we rest our decision on different grounds.7 The two restauranteurs in this case are not fighting over tablecloths or kitchen equipment.

Their dispute involves intellectual property rights – an elastic legal term connoting products of the human mind. The term implicates such things as patents, trademarks, copyrights, and trade secrets.

Properly characterized, intellectual property is a species of intangible personal property. It is property that one can own that is not physical, as opposed to tangible personal property that can be seen, felt, weighed and measured.

See, e.g., TGI Friday’s Inc. v. National Restaurants Mgm’t Inc., No. 91 Civ. 5412, 1992 WL 164445, at *1, 3 (S.D.N.Y. June 24, 1992) (involving a copyright infringement action over a menu).

Corpo rate Catering, Inc.’s claims that Ms. Blaylock and Corporate Catering, E tc., LLC misa pprop riated its unique menu by reproducing and distributing the menu as part of its own business. These ac ts undoub tedly constrain a right within the general scope of the Copyright Act. 1 Nimmer on Copyright § 1.01[B][1], at p. 1-20.3, 1-20.5, 1-20.6.

The Court of Appeals may affirm a judgment on different grounds than those relied on by the trial court when the trial court reached th e correct re sult. Contine ntal Cas. C o. v. Smith, 720 S.W.2d 48, 5 0 (Tenn. 1986); Allen v.

National Bank of Newport, 839 S.W.2d 763, 765 (T enn. Ct. Ap p. 1992 ); Clark v. Metropolitan Gov’t, 827 S.W.2d 312, 317 (Tenn. Ct. App. 1991).

-6Understanding that intellectual property is intangible personal property matters in this case.

Conversion, by law, is the wrongful appropriation of another’s tangible property. B & L Corp. v.

Thomas & Thorngren, Inc., 917 S.W.2d 674, 680 (Tenn. Ct. App. 1995); Restatement (Second) of Torts § 222A(1) (1965). Although many jurisdictions hold otherwise, Tennessee is among the jurisdictions that have declined to recognize a civil cause of action for conversion of intangible personal property. B & L Corp. v. Thomas & Thorngren, Inc., 917 S.W.2d at 680; B & L Corp. v.

Thomas & Thorngren, Inc., No. 01A01-9506-CH-00274, 1996 WL 518079, at *4 (Tenn. Ct. App.

Sept. 13, 1996) (No Tenn. R. App. P. 11 application filed); accord Marley Co. v. Fe Petro, Inc., 38 F. Supp. 2d 1070, 1077-78 (S.D. Iowa 1998); MBF Clearing Corp. v. Shine, 623 N.Y.S.2d 204, 206 (App. Div. 1995).

Ms. Blaylock and Corporate Catering, Etc., LLC moved for a directed verdict on all claims at the close of Corporate Catering, Inc.’s case-in-chief. Attempting to give Corporate Catering, Inc.

every benefit of the doubt, the trial court appears to have analogized its conversion claim to a trademark infringement claim involving the menu items. However, Corporate Catering, Inc. did not include a trademark infringement claim in its complaint, and there is no evidence that the parties were trying a trademark infringement claim by consent.8 Courts do not have the responsibility to create and then adjudicate claims that the parties have not pleaded. Donaldson v. Donaldson, 557 S.W.2d 60, 62 (Tenn. 1977). Accordingly, we will treat Corporate Catering, Inc.’s claim as precisely what it is – a claim for conversion.





Corporate Catering, Inc.’s conversion claim fails to state a claim upon which relief can be granted because the property allegedly converted is intangible personal property. Accordingly, the trial court reached the correct result when it directed a verdict on the menu conversion claim at the close of Corporate Catering, Inc.’s case-in-chief. The trial court properly declined to send to the jury a claim that our law does not recognize.

IV. THE TRADE NAME INFRINGEMENT CLAIM

The final, and most substantial issue in this appeal, involves Corporate Catering, Inc.’s claim that Ms. Blaylock and Corporate Catering, Etc., LLC wrongfully misappropriated its business name.

Corporate Catering, Inc. originally prevailed on this claim, but the trial court set the judgment aside and entered a judgment in favor of Ms. Blaylock and Corporate Catering, Etc., LLC after concluding that Corporate Catering, Inc. failed to prove that its business name, “Corporate Catering,” had any value. We have concluded that the trial court reached the correct result. However, while our analysis also focuses on Corporate Catering, Inc.’s proof of damages, we have determined that the problem with its proof is not so much one of quality as it is one of kind.

A claim not articulated in a pleading may be considered when it is tried by the parties’ mutua l consent. Braden v. Varnell, 871 S.W.2d 690, 692-93 (Tenn. C t. App. 19 91). M erely introducing evidence of facts that could be relevant to a claim that has not been pleaded is not tantamoun t to trying the claim b y consent. Hiller v. Hailey, 915 S.W.2d 800, 805 (T enn. Ct. Ap p. 1995 ).

-7Even though the two corporations had distinctively different names, the common, short form of both their names is “Corporate Catering.” Corporate Catering, Inc. claims that “Corporate Catering” uniquely refers to its business and, therefore, that Ms. Blaylock and Corporate Catering, Etc., LLC was illegally usurping its business or trade name. At trial, Corporate Catering, Inc. went about proving its damages as if it were proving damages for the conversion of personalty. It presented evidence of the value of the property that the defendants allegedly took. Accordingly, Mr.

Cheek, as Corporate Catering, Inc.’s sole stockholder, gave his opinion that the name “Corporate Catering” was worth $50,000 to him – a figure that the jury obviously did not accept. From that time until this, the parties have been arguing about the admissibility of Mr. Cheek’s testimony, its weight, and its foundation or lack thereof. We have concluded that the real problem with this evidence is that it does not track the measure of damages applicable to claims for infringement of a business or trade name.

A.

A trade name is a word, name, symbol, device, or combination thereof used by an enterprise to identify its business and distinguish itself from other similar businesses. Men of Measure Clothing v. Men of Measure, 710 S.W.2d 43, 46 (Tenn. Ct. App. 1985). A trade name that becomes established in the public’s mind can have great value. Accordingly, trade names are entitled to legal protection (1) to protect the business owner’s established good will, (2) to protect the consuming public from being misled, and (3) to encourage and promote fair competition in the marketplace.

Inka’s S’coolwear v. School Time, LLC, 725 So. 2d 496, 500 (La. Ct. App. 1998).

The damages available for trade name infringement are intended to make it financially futile for a competitor to attempt to benefit from another’s business identity. The purpose of these damages is to neutralize any financial gain the infringer may realize. Accordingly, the measure of damages in cases of this sort includes one or more of the following: (1) an award based on the infringer’s profits,9 (2) an award based on the trade name owner’s actual business damages, including lost profits, and (3) punitive damages for the purpose of punishing the infringer. 5 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 30:57 (2000).

The law considers the infringer’s profits from the wrongful use of another’s trade name as money wrongfully diverted from the legitimate owner of the trade name. 2 Harry D. Minns, The Law of Unfair Competition and Trademarks § 424 (4th Ed. 1947). Thus, as a general matter, the law requires an infringer of a trade name to make an accounting to the trade name’s owner of any profits it has realized from the wrongful use of the trade name. Church of God v. Tomlinson Church of God, 193 Tenn. 583, 597, 247 S.W.2d 63, 69 (1952); see also California Prune & Apricot Growers, Ass’n v. H.R. Nicholson Co., 158 P.2d 764, 773-74 (Cal. Dist. Ct. App. 1945); Robert Reis & Co.

v. Herman B. Reiss, Inc., 63 N.Y.S.2d 786, 808 (Sup. Ct. 1946). This accounting provides a means for quantifying the benefit that the infringer obtained by wrongfully using another’s trade name.

The infringer’s profits is one permissible way to measure the trade name owner’s loss or to measure the damage s on an unju st enrichmen t theory.

–  –  –

Corporate Catering, Inc. presented no evidence during its case-in-chief showing that Ms.

Blaylock of Corporate Catering, Etc., LLC benefitted from using the name “Corporate Catering.” It appears to have been Mr. Cheek’s unarticulated assumption that the name must have had some value because of the pride he associated with it. The evidence, however, belies Mr. Cheek’s assumption. Ms. Blaylock testified categorically that using the name was of no benefit. In fact, she testified that using the name “Corporate Catering” caused her many business problems.10 She concluded her testimony by stating emphatically that she would never have used the name “Corporate Catering” if she had things to do over again.

The rest of the evidence is of the same tenor. During her cross-examination, for example, Ms. Blaylock testified that she had placed a value on her business of $70,000, and she attributed none of this value to the name “Corporate Catering.” In addition, a certified public accountant testifying on Ms. Blaylock’s behalf, testified that he had reviewed the business records of both Corporate Catering, Inc. and Corporate Catering, Etc., LLC and that he had concluded that the name “Corporate Catering” had no good will value to Corporate Catering, Etc. LLC.

The party seeking damages has the burden of proving them. Overstreet v. Shoney’s, Inc., 4 S.W.3d 694, 703 (Tenn. Ct. App. 1999). Damages cannot be awarded when the existence of damage is uncertain. Pinson & Assocs. Ins. Agency v. Kreal, 800 S.W.2d 486, 488 (Tenn. Ct. App. 1990);

Jennings v. Hayes, 787 S.W.2d 1, 3 (Tenn. Ct. App. 1989). Accordingly, there can be no award of damages in any amount without adequate evidence. Grantham & Mann, Inc. v. American Safety Prods., Inc., 831 F.2d 596, 601 (6th Cir. 1987) (applying Tennessee law).

Mr. Cheek’s opinion that the name “Corporate Catering” was worth $50,000 prior to his company’s bankruptcy shed no evidentiary light on what benefit, if any, Ms. Blaylock and Corporate Catering, Etc., LLC derived from using the name after Mr. Cheek’s company was liquidated in bankruptcy. All of the uncontroverted evidence at trial supports a conclusion that the name “Corporate Catering” did not benefit Ms. Blaylock or her company. Accordingly, using the proper measure of damages for trade name infringement, this court concludes that Corporate Catering, Inc.

failed to prove that it had been damaged by another’s use of its trade name. Because of the absence of competent evidence of damages, the trial court properly granted Ms. Blaylock and Corporate Catering, Etc., LLC’s motion for a judgment notwithstanding the verdict.

Ms. Blaylock was quite specific regarding the problems arising from her use of the “Corporate Catering” name. She testified: “I can ’t tell you how many telephone calls I got a day looking for Mr. Cheek, creditors, I had people coming by looking for Mr. Cheek. Anywhere from policemen, all the way down to – I mean people that had done business with him in the past that we re very angry b ecause they h ad been left out with a lot of m oney.”

-9V.

We affirm the directed verdicts dismissing Corporate Catering, Inc.’s claims for conversion and common-law copyright infringement and the judgment notwithstanding the verdict with regard to Corporate Catering, Inc.’s trade name infringement claim. We remand the case to the trial court for whatever further proceedings may be required. We also tax the costs of this appeal to Corporate Catering, Inc. and its surety for which execution, if necessary, may issue.

–  –  –



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