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Benihana, Inc. v. Benihana of Tokyo

784 F.3d 887 (2015)

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Benihana, Inc. v. Benihana of Tokyo

United States Court of Appeals for the Second Circuit

784 F.3d 887 (2015)

Facts

Benihana, Inc. (Benihana America) (plaintiff) and Benihana of Tokyo, LLC (Benihana Tokyo) (defendant) were parties to an agreement that granted Benihana Tokyo a license and franchise to operate Benihana restaurants in Hawaii. The agreement required Benihana Tokyo to obtain Benihana America’s prior written approval of all menu items, advertising materials, and usage of the Benihana flower trademark. The agreement specified that Benihana America would have good cause to terminate if Benihana Tokyo violated any substantial term of the agreement and failed to cure such violation within 30 days after written notice of the violation. The agreement further entitled Benihana America to seek injunctive relief without showing irreparable harm should Benihana Tokyo violate certain terms, including the trademark-use provisions and advertising restrictions. Finally, the agreement included an arbitration clause. In 2013, Benihana America notified Benihana Tokyo that Benihana Tokyo’s inclusion of hamburgers on the menu at its Honolulu location was not authorized and demanded that they be removed. When Benihana Tokyo did not comply, Benihana America sent a second letter, notifying Benihana Tokyo that it was in breach of the agreement and had 30 days to cure. Benihana Tokyo did not cure its breach and, despite assurances to the contrary, continued to include hamburgers on the Honolulu menu. Benihana Tokyo also advertised these items using Benihana trademarks allegedly in violation of the agreement. Benihana America then notified Benihana Tokyo that Benihana America was exercising its termination rights under the agreement. Benihana America petitioned for a preliminary injunction, and the district court enjoined Benihana Tokyo from selling unauthorized menu items or engaging in unapproved advertising pending arbitration of the parties’ dispute. Benihana Tokyo appealed.

Rule of Law

Issue

Holding and Reasoning (Lynch, J.)

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