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December 3, 1999


The opinion of the court was delivered by: Schenkier, United States Magistrate Judge.



As a nation, we long have extolled the virtues of free and vigorous competition, and frequently have cited our devotion to competition as a principal reason for our nation's unparalleled economic success. At the same time, we hold no less dear the right of individuals and corporations to control and use their own property, including intellectual property such as trademarks. Protection of trademark rights has been a part of our common law since the inception of this nation and has been expressed in federal legislation dating back to 1870.

However, the boundaries of these respective rights of competition and protection often are not clear, and often come into conflict. Is one party merely seeking to compete freely and fairly, or is it attempting to unfairly usurp the intellectual property of another? Is one party merely attempting to protect its legitimate right to control and use its intellectual property, or is it seeking to unfairly expand its intellectual property rights beyond their proper scope? Questions such as these typically lie at the core of intellectual property litigation, and this lawsuit is no exception.

On July 29, 1996, Planet Hollywood (Region IV), Inc. and Planet Hollywood International, Inc. (collectively, "Planet Hollywood") initiated this lawsuit against Hollywood Casino Corporation and related corporations and individuals (collectively, "Hollywood Casino"). Hollywood Casino operates casinos in Aurora, Illinois and Tunica, Mississippi, and is in the process of establishing a third casino in Shreveport, Louisiana. As now amended, Planet Hollywood's complaint alleges that Hollywood Casino is guilty of false designation of origin and trade dress infringement, in violation of the Lanham Act, 15 U.S.C. § 1125 and common law (Count I); has infringed Planet Hollywood's design marks, in violation of the Lanham Act, 15 U.S.C. § 1114 and the common law (Count II); has violated the Lanham Act, 15 U.S.C. § 1125 (c) and the Illinois Anti-Dilution Act, 765 ILCS 1035/15, by diluting the distinctive quality of Planet Hollywood's design marks (Count III); has committed the common law tort of unfair competition (Count IV); and has violated the Illinois Deceptive Business Practices Act, 815 ILCS 505/1, et seq. (Count V). In addition, Planet Hollywood seeks a declaratory judgment that Planet Hollywood would not infringe any trademark rights of Hollywood Casino were Planet Hollywood to use its design mark for casinos or hotels, an injunction barring defendants from asserting a claim of infringement or unfair competition based on Planet Hollywood's future use of its design mark for those purposes, and an order canceling all of Hollywood Casino's registered trademarks for casino services (Count VI).

Hollywood Casino has responded by denying any infringement, asserting an array of affirmative defenses attacking the scope and validity of Planet Hollywood's trademarks and trade dress, and pleading its own counterclaim for infringement and declaratory relief against Planet Hollywood (and, to boot, joining two senior Planet Hollywood officers as parties to that claim). Hollywood Casino's counterclaim, as amended, asserts that by placing certain of its restaurants in buildings that also house casino operations run by others, Planet Hollywood already has infringed Hollywood Casino's trademark and trade name and committed false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1114, 1125(a), and 1126 (Counts I and II); has committed common law unfair competition (Count III); has diluted Hollywood Casino's trademark and trade name in violation of the Lanham Act, 15 U.S.C. § 1125 (c), and the Illinois Anti-Dilution Act, 765 ILCS 1035/15 (Count IV); and has violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 (Count V) and the Nevada Deceptive Business Trade Practices Act, N.R.S. 598.0915(1)-(3) (Count VIII). Hollywood Casino alleges that Planet Hollywood has unjustly enriched itself by virtue of those alleged violations (Count VI), and pleads a separate count for damages allegedly due and owing for the violations of law alleged in Counts I through VI in connection with the Planet Hollywood restaurant located at Caesar's Tahoe in Stateline, Nevada (Count VII).

Hollywood Casino's amended counterclaim also asserts a declaratory judgment count based on Planet Hollywood's possible future use of its mark for casino services. Hollywood Casino claims that if Planet Hollywood in fact embarks upon the use of its trademark name for casino services, this would constitute trademark and trade name infringement and dilution of the Hollywood Casino mark in violation of the Lanham Act and applicable state statutes, common law unfair competition, deceptive trade practices in violation of applicable state statutes, and unjust enrichment. As a mirror image to Planet Hollywood's declaratory judgment claim, Hollywood Casino seeks not only that declaration but, in addition, a declaration that Hollywood Casino's marks are valid and neither generic nor descriptive, and an injunction barring Planet Hollywood from using its mark in the future for casino services (Count IX).

This case originally came before the Court on five summary judgment motions filed by the parties, which raised a number of issues concerning the validity and alleged infringement of Planet Hollywood's trademark and trade dress, and Hollywood Casino's trademark.*fn1 During a pretrial conference on June 1, 1999, the Court denied all summary judgment motions as moot, in view of an agreement by the parties to convert the motions for summary judgment into a bench trial on the papers, pursuant to Federal Rule of Civil Procedure 52 (doc. #148-1). At the June 1 pretrial conference, the Court also ruled that the trial of this matter would be bifurcated, and the Rule 52 proceeding that is the subject of this opinion would only address issues of liability; that ruling was further confirmed in a subsequent order dated June 7, 1999 (doc. #149-1).

The parties agreed that the declarations, documents and other evidentiary materials submitted in connection with the summary judgment motions would constitute the evidentiary record for the Court to consider in this Rule 52 proceeding, that the fact statements submitted in connection with the summary judgment motions would be treated as proposed findings of fact, and that the summary judgment briefs would be considered as trial briefs. At the parties' request, the Court also accepted certain supplementations to that record. Each party submitted additional exhibits, the admissibility of which was ruled on at a pretrial conference held on June 25, 1999 (doc. #156-1). At Hollywood Casino's request, and with the agreement of all parties, the Court also conducted site visits of the Hard Rock Café and Planet Hollywood restaurants located in Chicago, Illinois on July 1, 1999, and of the Hollywood Casino located in Aurora, Illinois on July 8, 1999. By agreement of the parties, those site visits were conducted without the presence of counsel or the parties, and without the dates of the visits being disclosed to the employees of the respective facilities. In addition, at the request of Hollywood Casino, the Court convened an evidentiary proceeding for a four-day period from July 19 through 22, 1999, at which time in-court testimony was received from four witnesses called by Hollywood Casino. Planet Hollywood also examined each of the witnesses, but elected to call no witnesses affirmatively.

The Court then heard closing argument from each side on July 26, 1999, and allowed the parties to submit additional proposed findings of fact to take into account the full evidentiary record, including what had transpired during the evidentiary hearing. Those findings of fact were submitted on August 17, 1999: Hollywood Casino submitted 403 proposed findings of fact, spanning 79 pages; Planet Hollywood submitted 257 proposed findings of fact, spanning 52 pages (not surprisingly, those proposed findings substantially overlapped with the fact statements previously submitted on summary judgment).

During closing argument, the Court raised, sua sponte, the issue of subject matter jurisdiction of the parties' respective declaratory judgment counts: that is, whether Planet Hollywood has sufficiently progressed with concrete steps to use its name for a casino so as to create a justiciable controversy at this time. Planet Hollywood argued that the Court possessed subject matter jurisdiction, and Hollywood Casino did not argue to the contrary. Neither side addressed that issue further in the proposed findings submitted on August 17, 1999. However, after the submission of proposed findings, Hollywood Casino moved to dismiss all declaratory judgment claims in the Amended Complaint and Amended Counterclaim for lack of subject matter jurisdiction (doc. #179-1). Planet Hollywood opposes the motion, but asserts that if it is granted, attorneys' fees and costs should be assessed against Hollywood Casino under 28 U.S.C. § 1927 for vexatiously litigating the declaratory judgment issues for several years, and thus saddling Planet Hollywood with unnecessary litigation expenses.

Since the filing of these motions, the case has taken a few more twists and turns. First, on October 12, 1999, Planet Hollywood (Region IV) and Planet Hollywood International, Inc. filed petitions in the bankruptcy court in Delaware seeking protection under Chapter 11 of the Bankruptcy Code. Although that filing triggered an automatic stay of all plenary litigation against Planet Hollywood and thus normally would have barred further consideration of the Amended Counterclaim (but not Planet Hollywood's Amended Complaint) at this time, Planet Hollywood and Hollywood Casino jointly asked the bankruptcy court to lift the stay for purposes of this lawsuit, a request that was granted on November 19, 1999. The pending bankruptcy action, therefore, does not affect this Court's authority to address the entire case before it. However, the parties have argued about the impact of this bankruptcy filing — and certain comments attributed to one of the individual plaintiffs about it — on the Court's consideration as to whether there is a sufficiently concrete case or controversy to vest jurisdiction over the declaratory judgment actions, and the parties have submitted further written argument on that issue.

Second, on October 21, 1999, Hollywood Casino filed a motion under Fed.R.Civ.P. 15(b) to further amend its Amended Counterclaim to conform to the evidence (doc. #181-1). In substance, that motion seeks to excise Counts I-VIII from Hollywood Casino's Amended Counterclaim — that is, all claims asserting violations based on Planet Hollywood's past and current uses of its marks. Planet Hollywood resists that motion, and that matter also is presently before the Court.

The Court has carefully considered the evidence and arguments submitted by the parties in this Rule 52 proceeding. The ...

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