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Taco Cabana International, Inc. v. Two Pesos, Inc.

United States Court of Appeals for the Fifth Circuit
932 F.2d 1113 (1991)


Taco Cabana, Inc. (plaintiff) operated fast-food Mexican restaurants, each of which had a distinctive architectural and aesthetic design. Taco Cabana described its design as “a festive eating atmosphere having interior dining and patio areas decorated with artifacts, bright colors, paintings, and murals. . . . The stepped exterior of the building is a festive and vivid color scheme using top border paint and neon stripes. Bright awnings and umbrellas continue the theme.” Taco Cabana opened its first restaurants in San Antonio and started expanding into new cities. Two Pesos, Inc. (defendant) opened its own Mexican restaurants with a motif very similar to that of Taco Cabana’s restaurants. Two Pesos opened its first restaurants in the Houston area, where Taco Cabana had not yet expanded. Taco Cabana sued Two Pesos for trade-dress infringement under § 43 of the Lanham Act. The United States District Court for the Southern District of Texas found in favor of Taco Cabana and awarded it $306,000 for lost profits and $628,300 for lost income. These calculations assumed the foreclosure of five Taco Cabana restaurants in the Houston area. The district court then doubled the damages to $1,868,600 on account of Two Pesos’s intentional infringement. Finally, the district court awarded $937,550 in attorneys’ fees. Two Pesos appealed.

Rule of Law


Holding and Reasoning (Reavley, J.)

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