Boston East’s hotel, the “Daniel Hotel,” was foreclosed on during the COVID pandemic and sold by the mortgager Saco and Biddeford Savings Institution. Boston East filed suit, alleging that Saco & Biddeford had committed common law trademark infringement, false designation of origin, unfair competition and trademark dilution under the Lanham Act, trademark dilution under Massachusetts G.L. c. 110H § 13, violation of the Federal Trade Commission Act through unfair and deceptive practices, violation of c. 93A, conversion in connection with the retention of Boston East property that was in the hotel when the locks were changed, breach of contract, detrimental reliance and violation of the implied covenant of good faith and fair dealing in connection with its marketing and sale of the hotel.
Judge Sorokin granted Saco & Biddeford’s motion to dismiss the complaint in its entirety. He noted that the trademark claims all centered on use of the marks associated with the hotel and restaurant in advertising the foreclosure auction at which the hotel was sold, and that such use was expressly authorized by provisions in the loan agreement. The agreement granted a security interest in, among other things, all trademarks, trade names and goodwill which Boston East possesses, uses, or has authority to possess or use, and to use such trademarks when advertising and selling the property upon default. Judge Sorokin further notes that, while not necessary to come to his conclusion, the use of a mark even without the mark owner’s permission to describe the genuine goods that bear the mark is permissible. He further noted that, even assuming that a dilution claim could plausibly stand, the completion of the sale of the hotel rendered the dilution claims moot.
The parties agreed that the 93A claim rested on the alleged Lanham Act violations, so that claim fell as well. Finally, the remaining state law claims were also foreclosed by the language of the loan documents. Accordingly, the complaint was dismissed. Judge Sorokin ordered Boston East to show cause within 14 days why Saco & Biddeford are not entitled to an award of its costs and attorneys’ fees pursuant to language in the loan agreement.
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