Del Taco Sues Over Trademark

Del Taco Inc., the second-largest Mexican American fast-food chain in the nation, has filed suit seeking to force Southland Corp. to stop selling a new El Taco food item at its 7-Eleven stores.

In a suit filed in U.S. District Court in Los Angeles, Laguna Beach-based Del Taco says Dallas-based Southland is violating its Del Taco trademark, confusing customers and unfairly competing by marketing the new taco, introduced March 4. Del Taco was joined in the complaint by Boca Raton, Fla.-based Creative Food ‘N Fun Co., which owns the Del Taco name.

“Southland’s use of ‘El Taco’ has caused and continues to cause irreparable harm to Del Taco,” the company says in the suit, which asks a judge to award damages and order Southland to stop using the El Taco designation.

Closely held Del Taco, with most of its 300 restaurants in California, has estimated annual sales of more than $200 million. Its biggest competitor is Irvine-based Taco Bell, a unit of Tricon Global Restaurants Inc., with about 6,800 stores and recent annual sales topping $4 billion.

Officials for Southland, with about 5,600 stores and $6.21 billion in 1998 sales, declined to comment on the suit. Southland shares were unchanged Tuesday at $1.94.