Taco John’s on Tuesday opted to give up its right to the trademark for “Taco Tuesday,” ending a two-month battle with Taco Bell over the right to use the phrase in restaurant marketing.
The company estimated that it would cost $1 million to keep fighting Taco Bell for the right to keep a trademark it’s held since 1989. The company instead put out a press release saying it would instead donate $40,000 to CORE, or Children of Restaurant Employees, and challenged other brands to do the same.
“We didn’t feel it was worth the battle it was going to take to do that,” CEO Jim Creel said in an interview. “We’re still planning to use it with our advertising. We’re going to use Taco Tuesday. But this was a way for us to shed light on CORE that’s done a lot of good for franchisees and their workers in the past.”
There is also this: Taco John’s had a very real chance that the $1 million would go for naught. When the NBA star LeBron James registered for the trademark in 2019, he was told that the phrase was “too generic.” “That gave us a hint on how the board would rule,” Creel said, referring to the U.S. Patent and Trademark Office Trademark Trial and Appeal Board.
And, as Taco Bell noted in its own legal filings in the case, the board recently indicated that “Taco Tuesday” was a common term in a separate ruling on a case involving an Atlanta brewery. In essence, the company said Taco John’s effectively abandoned the trademark by not doing enough to defend it and keep it from becoming the commonplace term it is now.
By this point, not nearly enough people connect “Taco Tuesday” with Taco John’s to warrant it keeping the mark.
“Taco Bell does seem to have a point,” said Elizabeth Baio, an intellectual property counseling and transaction lawyer with Nixon Peabody. “Taco Tuesday was being pretty widely used within the restaurant field.”
“It seems more likely than not that the mark would have been ruled generic because of its wide use,” she added.
In the process, Taco Bell gave Taco John’s a difficult choice: Spend $1 million and risk losing its trademark, or just give up and save the problem. The latter, it seems, was probably the better choice because Taco John’s didn’t just risk losing a bit of money if it lost the case. It risked damaging its own reputation and be considered a “trademark hoarder.”
“There could have been fairly serious PR fallout that Taco John’s was trying to hoard this mark that even the U.S. PTO thought rightly belongs to everyone because of its genericized nature,” Baio said. “Taco John’s probably made a smart move for several reasons.”
At the same time, we can’t help but note the size of the respective companies. Taco Bell is 20 times Taco John’s, and more like 50 times if you consider the full size of parent company Yum Brands, which also owns KFC, Pizza Hut and Habit Burger.
In this fight, in other words, Taco Bell’s Goliath beat Taco John’s David. Taco Bell effectively pressured a much smaller competitor into abandoning its trademark.
The smaller chain, Taco John’s, opted to avoid spending $1 million because it didn’t think it had enough of a chance to warrant spending it. And so it walked away and created a marketing campaign instead.
“I can’t say you’re wrong,” Creel conceded. “That is our legal system at this point in time. A giant company can come in and force you to do something.
“It’s a business decision. Could we afford it if we had to? We would. But that’s not the best use of funds to do that.”
Taco John’s has used that phrase in local marketing for 40 years, highlighting various taco promotions, and they’ve become popular. Now, Taco Bell and any other Mexican chain can do the same thing, without fear of hearing from Taco John’s lawyers.
Even then, Taco John’s turned the David-v.-Goliath match on its head. Taco John’s challenged Taco Bell to donate $100 per location to CORE. While that meant a $40,000 donation from the 400-unit Taco John’s, for the 7,200-location Taco Bell that’s a $720,000 donation.
It’s worth noting that the battle for the Taco Tuesday name is not fully over. Gregory’s Bar has registered the trademark in New Jersey, which it has held for longer than Taco John’s. That case has not been settled. So the trademark is not completely free.
All that said, the promotion has been good for Taco John’s in one sense: Taco Bell jumping on the Taco Tuesday bandwagon generated tons of publicity for a chain that cannot advertise nationally the way its larger rival can.
And customers showed up, especially on Tuesdays. “In some of our markets where we’ve had Taco Tuesdays for a while, like Wyoming, those markets are up 30%,” Creel said. “It’s been a help to us.”
Still, he said, “we’re sad that Taco Tuesday is not going to be our registered trademark anymore. But we’re going to take advantage of this like everybody else.”
But let that be a lesson: Defend your trademarks. You never know who may come in and try to cancel them.