Landlord with Knowledge of Tenant’s Alleged Infringement Faces Contributory Trademark Liability

Toulabi v. Siddiqui, et al., No. 25 CV 9228, (N.D. Ill. Aug. 24, 2026) (Daniel, J.).

Judge Daniel granted-in-part and denied-in-part defendants Siddiqui’s and TLC Consultants’ (“TLC”) Fed. R. Civ. P. 12(b)(6) motions to dismiss in this Lanham Act trademark case involving the REZA’S restaurant mark. The Court dismissed plaintiff Toulabi’s dilution claims, but the other challenged claims survived.

Toulabi opened the first Reza’s Persian and Mediterranean restaurant in Chicago in 1984 (as an aside, I met my wife when we were both new associates at a large Chicago law firm, we got to know each other over many late night associate dinners many of them from Reza’s as one of the few healthier options), and later opened additional locations, including one in Oakbrook. Toulabi closed the Oakbrook location in early 2024. Shortly thereafter, Siddiqui formed a corporation called Reza’s of Oakbrook, and Siddiqui and TLC bought the property on which the Oakbrook restaurant had operated. Defendants opened “Reza’s restaurant” there, advertising that it was “under new management” and that they had acquired the restaurant. Toulabi alleged that he never sold the restaurant to anyone.

Of particular interest, the Court held:

• Toulabi sufficiently pled a protectable mark by alleging that REZA’S had acquired secondary meaning through decades of use, and likelihood of confusion by pointing to similar names, menus, advertising, and web addresses, along with examples of customer confusion.
• TLC argued that it never used the mark. But a landlord may be contributorily liable for its tenant’s infringement if it knew or had reason to know of it. Siddiqui was allegedly TLC’s president, secretary, and employee, TLC received Toulabi’s cease and desist letter, and TLC allegedly knew all along that Siddiqui would operate the restaurant. TLC’s contention that landlords are not liable absent control or participation misstated the standard, which allows that knowledge can be enough.
• Defendants’ argument that Toulabi abandoned the mark when he closed the Oakbrook location was an affirmative defense that turned on facts outside the pleadings and could not be resolved at the Rule 12 stage.
• Toulabi plausibly pled false advertising because defendants’ “under new management” and acquisition statements were allegedly false, and online reviews suggested that customers were deceived and that the deception was material.
• The dilution claims failed because Toulabi alleged only that the mark was known for Illinois restaurants. Since at least the 2006 amendment, niche fame is not enough. A mark must be widely recognized by the general consuming public of the United States.

The Court also allowed the unjust enrichment claims to proceed, noting that customers who might have traveled to another of Toulabi’s locations were plausibly diverted to defendants’ restaurant. And the respondeat superior claim against TLC survived because it is a theory of recovery that should not be resolved before liability.