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In August 2006, Siegal received a letter saying that Moulavi was terminating his franchise agreement.
"The very same day," Siegal says, "his employees were calling, saying 'When will the cookies be delivered?' We said, 'Never.'"
Siegal says Moulavi would double his profits by cutting his franchise parent out. He'd get even more money for himself by not buying Siegal's products anymore, Siegal says.
But Moulavi maintains that there wasn't anything sinister about his motives.
"As franchises opened, operators realized that the name Siegal was not well known," Moulavi's lawyers asserted in court documents. As early as June of 2005, he stopped using the Siegal name because it "was not driving significant business."
In 2002, Dr. Siegal had registered eight trademarks to protect his business, including "Siegal Medical Group," "The Siegal Cookie," and "Siegal Diet Program" — but not "the cookie diet." The term, as Moulavi saw it, was there for the taking. In 2005, he filed a trademark application for "The Cookie Diet."
By the time their relationship fell apart in 2006, court documents allege, there were "consistency issues" with Dr. Siegal's cookies. The size and weight varied. The shapes were irregular — some looked like bites had been taken out of them. And in some cases, court documents say, the cookies "contained foreign matter such as human hairs, insects, metal fragments, and plastic filaments."
That's a low blow, Siegal says. Complete nonsense. He gladly shows off his bakery, which is almost clinically sterile, with concrete floors and employees in hair nets. It doesn't even smell like cookies, though a fresh batch sits on a tray. Siegal admits one instance of finding mold — when he changed the recipe to get rid of trans fats. The problem was quickly rectified, he says.
As the dispute heated up, Moulavi arranged for inspectors to visit the bakery. Siegal denied them entry, characterizing the "inspection" as a backstabbing ploy. "Dr. Moulavi made frequent attempts, such as this one, to learn the formulation of Dr. Siegal's diet cookie," his lawyers wrote in a complaint. Sharing it would "jeopardize the confidentiality of his trade secrets."
Siegal says he has a legal right to keep his formula secret because "our government, in their benevolence" doesn't require listing the exact ingredients of foods. The label on Siegal's cookies show that water, glycerin, and whole wheat flour are the top three ingredients; his secret protein blend likely comes from elements listed as "milk protein" and "egg white solids."
"Imagine if Coca-Cola had to give away their secret formula!" the doctor says.
"You know," Moulavi says, sighing over the secrecy, "I'm not associated with him any more because of stuff like that."
Moulavi had promised that upon termination of their agreement, he would cease any association with the Siegal diet program. So he did.
But he still wanted to capitalize on his investment. By now, "The Cookie Diet" had been featured in hundreds of newspaper articles, many diet websites, and a slew of television news segments. Dr. Siegal, in his white coat and stethoscope, had even been a subject on Good Morning America.
In January 2007, after their breakup, an NBC affiliate identified Moulavi as the creator of "The Cookie Diet," according to court documents. In the background, eagle-eyed viewers could see a Smart for Life label over the word "Siegal" on the package. Furthermore, Moulavi advertised his diet using a photo of someone who'd lost weight — on Siegal's diet. And on his websites, he planted the words "Siegal" and "cookie diet" as metatags in the source code. Now it was Siegal's turn to unleash the lawyers.
In February of 2007, Siegal filed a federal lawsuit through his company SM Licensing Corporation. He may never have registered the term "the cookie diet," he argued, but he owned it as a common-law trademark based on having invented the diet more than 30 years earlier. Furthermore he claimed that Moulavi's website amounted to "cyberpiracy." Siegal, the complaint alleged, had suffered "serious and irreparable harm."
Moulavi claimed he had registered the trademark fair and square. Now that he and Siegal had split, his marketing efforts had basically gone to waste, he said. And it cost him $4,000 apiece to change the signage and get Siegal's name off each of his franchises.
In July 2007, a judge ordered a preliminary injunction granting Siegal the rights to the term "the cookie diet." Moulavi balked and was set to appeal. The pair was ordered to mediation.
Neither side will divulge the exact terms of the agreement they finally hashed out, but each is claiming victory. In addition to selling cookies at his practice, Dr. Siegal sells them online (at CookieDiet.com) and in malls from here to Arizona to New Jersey. In fact, he says, his kiosk in the Boca Mall is the highest-grossing kiosk in the nationwide chain of Simon Property Group malls. Siegal says he was practically forced to compete with Moulavi because "we had drummed up production to tremendous volumes," and he needed an outlet for all the cookies. He says he's having fun with his newfound role as a businessman.
"Let's face it, the cookie diet is going to be my legacy," he wrote in a press release.