What’s in a name? In the case of one Northwest Portland restaurant founded in 1903, seemingly everything.
Cana Flug, the operator of Besaw’s since 2005, and her landlord, C.E. John Co. Inc., are going to court to decide who truly owns the business name.
As attempts to renew the restaurant’s lease broke down, C.E. John filed a trademark application with the U.S. Patent and Trademark Office in January. Flug’s company, Tuatara Enterprises Inc., filed for the same name two months later. Tuatara sued C.E. John in U.S. District Court last month seeking summary judgment.
C.E. John’s claim is based on a lease, inherited from previous owners of the restaurant, Geri and Richard Beasley, stipulating that the name stays with the property. Flug affirmed the lease when she took over the restaurant although she had paid the Beasleys $380,000 for the restaurant, its name and goodwill.
Flug’s legal case centers on the assertion that C.E. John never operated the business, which her attorney, Dennis Steinman of Kell, Alterman & Runstein, LLP, says is necessary to establish trademark rights.
Flug closed the restaurant May 29 and plans to reopen by the end of the summer “within a stone’s throw” of her former location.
The dispute creates the theoretical possibility of two restaurants of the same name operating within a block of each other.
Or maybe not. C.E. John is still looking for a new operator to take over the restaurant at 2301 NW Savier St. Even if a new operator is found, company CEO Jim John said the space will not reopen until repairs and upgrades are made to the building.
Structurally, John called the building “a mess … not up to any code … that needs a considerable amount of work.”
By the time Flug’s new and former restaurants are operational, the trademark suit may be settled, the winner taking exclusive control of the name.
To Flug, keeping the name means retaining the goodwill and patronage she has built up over a decade.
“I believe passionately in being a steward for this brand,” she said. “We want to represent the heart and soul that this team has poured into it for these 10 years.”
And no one is saying she hasn’t been successful.
On her busiest days, she serves about 1,000 meals, a number so impressive one longtime local restaurant critic found it hard to believe.
Her customers are also loyal, as evidenced by a flood of online forum entries after the closing was announced. Many vowed to follow Flug wherever she might reopen and to shun any operator who might claim to be Besaw’s in her old place.
The loyalty extends to her staff. Flug said she hasn’t hired a new server in the past eight years, a period during which her entire management team of seven has also remained intact.
C.E. John’s most appealing public argument is that the name and historic building belong together.
“Besaw’s has been Besaw’s since 1903,” said John. “Operators come and go. It’s more important to keep the stability of the name.”
John said he wants to keep the historic building, name and business together. “She’s the one trying to move the name up the street,” he said.
John’s history is faulty. Besaw’s was actually founded across the street in what is now McMenamins Tavern & Pool, moving to its present location a year or two later. A restaurant, tavern, confectionary or soft drink business bearing the Besaw’s name has operated in this building less than half the time since 1903, according to research by historian Tanya Lyn March (historicpreservationclub.blogspot.com/2015/05/slabtown-nob-hill-fun-fact-17.html). The rest of the time it housed another business or was vacant.
While it’s a technicality Flug herself has glossed over in promotional materials that never mention the original location, the chronological detail weakens the landlord’s claim that this is and always was the Besaw’s building.
Details aside, the powerful public mood in Flug’s favor owes to the sense that C.E. John is reaping where it has not sown, acquiring a business without having to pay for it, in effect.
John was asked if a lease controlling a business’ name doesn’t reward uncooperative landlord behavior that would tend to drive the tenant out, in the process sacrificing the name and accumulated goodwill of the business.
John would not even acknowledge the logic of the question, insisting that C.E. John has been a good landlord, going “so far out of our way to deal” with Flug’s wishes, even forgoing rent increases in the five years as her landlord.
“To consider us the evil landlord,” said John, “that’s not right and it’s not fair.”
But some who commented online to various news reports were sensitive to the exploitative potential when a landlord claims a tenant’s business name.
“Is C.E. John trying to do identity theft and steal the business?” asked one person.
“Ever get the feeling that your landlord wants to own you?” asked another.
“John is behaving like a rich bully and an arrogant pig,” said another.
“C.E. John is trying to bully a small local business owner,” was another comment that reflected the mood of most online respondents.Reaction overblown?
Yet, there are some who say the fight over the Besaw’s name is overblown.
Lisa Schroeder, owner/chef of Mother’s Bistro in downtown Portland, was the chef at Besaw’s in 1997-99 when it was owned by the Beasleys.
She finds nothing unique in linking a restaurant’s name to a building. She mentioned the Heathman Restaurant & Bar as a name tied to the hotel through a series of operators over the years. Jake’s Famous Crawfish Restaurant has followed the same pattern since its founding in 1892.
“To me, the name Besaw’s belongs with the place,” said Schroeder. “I don’t know that people went there for the name. … I can’t see that the value of the restaurant rests on that name.
Schroeder said Besaw’s recent success owes far more to Flug’s leadership than the business’s name or history.
“Many are big fans of hers,” she said.
In time, Schroeder thinks “people will forget that there ever was a controversy.”
She does not, however, recommend that a new operator jump in before the dust settles.
“It would be foolish to put a new operator in the middle of that mess,” she said.
NW Examiner restaurant reviewer Michael Zusman also suggested the fight may be much ado about nothing.
“What is the value of a place named Besaw’s somewhere [else] versus some new name. If the owner can hire a good chef and offer great food, that is the main determinant for success,” said Zusman.
“Conversely, if you start over with a ‘Besaw’s’ in place [at 2301 NW Savier St.] … how much is that really worth if, for example, the new owners fail to deliver good value or a good product? The goodwill effect is limited and fades quickly over time if the operator fails to deliver an ‘authentic’ experience.”
He mentioned Yaw’s, the popular midcentury drive-in restaurant in east Portland that failed to reclaim the magic under a series of new owners.
Their expertise and experience notwithstanding, Schroeder and Zusman seem to be in the minority. Besaw’s loyalists are taking the naming rights very seriously.
What makes brand authentic?
David Howitt, CEO and founder of Meriwether Group, a private equity firm on Northwest 19th Avenue that works with consumer brands, wrote an opinion piece for the Portland Business Journal.
“C.E. John is missing something significant: An authentic brand is more than a name,” Howitt wrote. “C.E. John may own the Besaw’s brand name as matter of trademark law, but they do not ‘own’ the Besaw’s promise, heart, DNA and soul. In fact, they can’t.
“On any given weekend, one can drive past lines of people—hipsters, professionals, families, joggers, old, young, rich and not so rich—waiting to have an amazing meal at soon-to-be-closing Besaw’s. Often, I am one of them. We come and we wait because of the food, the servers, the energy, and frankly, the love.
Flug regrets that things couldn’t be worked out at 23rd and Savier.
“I’ve advocated and hoped for that for years” that the new structure would surround the historic building with a modern kitchen and additional dining space.
“To say I’m disappointed is an understatement,” she said. “I love this place. I wanted to stay forever.”
But the grieving is behind her and she’s excited to start afresh in a larger space free from the maintenance and operational headaches of a cramped 110-year-old building.
“I want to lead with our best foot forward,” she said in avoiding questions about the negotiation breakdown.
John said Flug could have remained in place until construction began. She was not, however, willing to build a brand she didn’t own.
In C.E. John’s interpretation, Flug was misled in 2005 when she paid the Beasleys $380,000 for the business, its name and goodwill.
The development company, meanwhile, paid nothing for the name; it merely assumed a lease that asserted ownership of the business name.
By this understanding, Flug paid for something she didn’t get, and C.E. John got something it didn’t pay for.
It’s a concept many find hard to swallow.