## Facts

- A 1994 reorganization split territorial rights to operate Benihana restaurants and use Benihana trademarks: Benihana, Inc. held rights in the United States (among other regions), while Benihana of Tokyo, LLC held rights elsewhere.
- A later license/franchise agreement permitted Benihana of Tokyo to operate a Benihana restaurant in Hawaii under conditions that required Benihana, Inc.’s prior written approval for menu items, advertising materials, and certain trademark uses.
- The agreement allowed termination for “good cause” upon breach of a “substantial term” not cured within 30 days after written notice.
- The agreement also stated Benihana, Inc. could seek injunctive relief for specified breaches (including trademark and advertising restrictions) without proving irreparable harm, and it required arbitration of disputes.
- Benihana of Tokyo began selling hamburgers at the Honolulu restaurant without obtaining prior approval; after notice and a declared breach triggering a 30-day cure period, Benihana, Inc. asserted Benihana of Tokyo did not cure and continued offering burger items and related advertising/trademark uses.
- Benihana, Inc. terminated the license for cause, initiated arbitration, and sought a preliminary injunction in federal court to preserve the status quo pending arbitration.

## Issues

1. Whether the district court abused its discretion by preliminarily enjoining Benihana of Tokyo’s unapproved menu offerings and unapproved trademark use pending arbitration.
2. Whether the district court improperly interfered with arbitration by enjoining Benihana of Tokyo from arguing to arbitrators that an extended cure period should be awarded if breach were found.

## Decision

- The Second Circuit affirmed the preliminary injunction insofar as it barred unapproved menu items and unapproved trademark use/advertising pending arbitration.
- The court found the record supported likelihood of success, threatened harm to brand and goodwill, and that the balance of hardships and public interest favored enforcing the contractual and trademark restrictions during arbitration.
- The Second Circuit reversed the portion of the injunction that prohibited Benihana of Tokyo from arguing to the arbitral panel for an extended cure period.
- The court held that restricting a party’s remedial arguments to arbitrators improperly intrudes on matters committed to arbitration and amounts to a premature judicial determination of arbitral remedies.

## Legal Principles

- Courts may issue preliminary injunctions in aid of arbitration when traditional preliminary-injunction requirements are satisfied, including to preserve contractual and trademark rights pending arbitration.
- Clear violations of franchise/license provisions governing menu approval and trademark/advertising restrictions can support injunctive relief to prevent consumer confusion and protect goodwill.
- Contractual clauses permitting injunctive relief without proof of irreparable harm may be considered, but courts must still avoid orders that decide issues reserved for arbitration.
- A court may not preemptively limit the arbitral tribunal’s authority by barring a party from making arguments about remedies (including cure periods) that fall within the scope of the arbitration agreement; challenges to an arbitrator’s remedial decisions are addressed, if at all, after an award.

## Conclusion

The Second Circuit permitted preliminary injunctive relief to stop ongoing, unapproved menu and trademark-related conduct pending arbitration, but held that courts may not interfere with arbitration by restricting the parties’ remedial arguments or narrowing the remedies the arbitrators may consider.


Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887 (2d Cir. 2015)