Opinion
No. 3:01-cv-1247-J-12HTS
June 12, 2002
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION
This cause is before the Court on Plaintiff Howard Johnson International, Inc.'s Motion for Preliminary Injunction (Doc.12). The Court heard oral argument on Plaintiff's motion on May 9, 2002. The Court, having reviewed the entire record, including the Verified Complaint (Doc. 1), Plaintiff's Motion for Preliminary Injunction and Supporting Memorandum of Law (Doc. 12), the Affidavit of C. Wayne Miller and exhibits thereto (Doc. 13), the Affidavit of Regina Zemzicki and exhibits thereto (Doc. 26), Defendants' Response and Memorandum of Law in Opposition to Plaintiff's Motion for Preliminary Injunction (Doc.16), the Affidavit and Supplemental Affidavit of Donald Craven II (Docs. 17 24), and the Affidavit of Michael Carr (Doc. 17), having heard argument of counsel, and being otherwise advised in the premises, will grant Plaintiff's Motion for Preliminary Injunction. In support of its ruling, the Court makes the following findings of fact and conclusions of law:
FINDINGS OF FACT
Plaintiff, Howard Johnson International, Inc. ("HJI") has the exclusive right to sublicense the use of various trade names and service marks (which are on the principal register of the United States Patent and Trademark Office), logos, and derivations thereof (the "Howard Johnson marks"), as well as the distinctive Howard Johnson System, which provides hotel services to its licensees, including a centralized reservation system, advertising, publicity, and training services. Those registrations are in full force and effect, unrevoked and uncancelled pursuant to 15 U.S.C. § 1065. (Affidavit of C. Wayne Miller ("Miller Aff.") at ¶ 3 and Exhibit A). HJI has given notice to the public of the registration of the Howard Johnson marks as provided in 15 U.S.C. § 1111. (Miller Aff. at ¶ 4).
On or about January 17, 1991, HJI entered into a license agreement (the "License Agreement") with Craven Properties Ltd, Inc. ("Craven Properties"), f/k/a St. Augustine Hotel Associates, for the operation of a 144-room guest lodging facility located at 2050 AIA South, St. Augustine, Florida (the "Facility"). Pursuant to Paragraph 15 of the License Agreement, Craven Properties was obligated to operate a Howard Johnson® guest lodging facility for a ten-year term during which time Craven Properties was permitted to use the Howard Johnson marks in association with the operation of its Facility as part of the Howard Johnson franchise system. By its own terms, the License Agreement terminated on April 30, 2001. (Verified Complaint, Exhibit A at ¶ 15).
Upon termination of the License Agreement, pursuant to Paragraph 15(c), Craven Properties' obligations included the immediate cessation of all use of the Howard Johnson marks. (Verified Complaint, Exhibit A). As shown in the post-termination inspections, however, Defendant Craven Properties and its principal, J. Donald Craven ("Craven") have been operating under the name "Howard's Resort Hotel" (the "alleged infringing mark"). (Miller Aff., Exhibit B). The alleged infringing mark is displayed on the very same exterior signage, using the same coloring and style, and with an almost identical background that once displayed the Howard Johnson marks. Id. In addition, until at least May 8, 2002, Defendants were using the Howard Johnson marks on their website. (Affidavit of Regina Zemzicki ("Zemzicki Aff."), at ¶¶ 4-5 and Exhibit B)
By letters dated June 28, 2001 and August 27, 2001, HJI demanded that Defendants immediately discontinue the use of the Howard Johnson marks, and/or colorable imitations thereof, in and around the Facility. (Verified Complaint, Exhibits B and C; Miller Aff. at ¶¶ 12 and 13). Despite HJI's demands, Defendants have continued to operate under the name "Howard's."
In addition, HJI's Customer Service Department received 12 complaints from guests who stayed at the Facility since the Licensing Agreement terminated on April 30, 2001. (Zemzicki Aff. at ¶ 9 and Exhibit C).
Defendants' argument in response to the motion for preliminary injunction is that the name "Howard's" does not infringe upon HJI's trademark rights. In support of their position, Defendants offer the statements of Michael Carr who was engaged by Defendants to change the exterior signage from "Howard Johnson" to "Howard's," to cover the sunburst symbol, and to use a different font. Carr Aff. at ¶¶ 3-6. Moreover, Defendant Craven states that he did not want to be associated with HJI after the termination, and therefore changed the name of the Facility to "Howard's Resort-Hotel." Affidavit of Craven ("Craven Aff."), Doc. 17 at ¶¶ 3-6. Defendants, however, offer no explanation as to why the name "Howard's" as opposed to any other name, was chosen.
CONCLUSIONS OF LAW
The Court may issue a preliminary injunction if Plaintiff establishes the following: (1) a substantial likelihood that Plaintiff may prevail on the merits; (2) a substantial threat that Plaintiff will suffer irreparable injury if interlocutory injunctive relief is not granted; (3) that the threatened injury to Plaintiff outweighs any threatened harm an injunction may do to Defendants, and (4) that granting a preliminary injunction will not disserve the public interest. See McDonald's Corp. v. Robertson, 147 F.3d 1301 1306 (11th Cir. 1998) (citing All Care Nursing Services Inc. v. Bethesda Memorial Hospital. Inc., 887 F.2d 1535, 1537(11th Cir. 1989)); E. Remy Martin Co., S. A. v. Shaw-Ross Int'l Imports. Inc., 756 F.2d 1525, 1530 n. 13 (11th Cir. 1985) (citation omitted).
A. Likelihood of Success on the Merits
The Eleventh Circuit has held that in order to establish a likelihood of success on the merits in a trademark infringement claim, the plaintiff must show that its mark was used in commerce by the defendant without the registrant's consent and that the unauthorized use was likely to deceive, cause confusion, or result in mistake. See Robertson, 147 F.3d 1307; Burger King Corp. v. Mason, 710 F.2d 1480, 1492 (11th Cir. 1983), cert. denied, 465 U.S. 1102(1984).
This Circuit has held that a terminated licensee's continued use of its former franchisor's trademarks, by its very nature, constitutes trademark infringement. Mason, 710 F.2d 492; see also Howard Johnson Company, Inc. v. Khimani, 892 F.2d 1512, 1516 17 (11th Cir. 1990) (finding that a former licensee's use of the name "H.J. Inns" was an impermissible colorable imitation of the Howard Johnson trade and service marks and was likely to confuse the public).
In Khimani, a former franchisee of Howard Johnson Corporation continued to use the Howard Johnson trademarks and service marks after the license agreement between the parties terminated. After a preliminary injunction was entered, the former franchisee began using the name "H.J. Inns" on the same sign that had once said "Howard Johnson's." The court held that the "consuming public was likely to confuse the two marks because they created the same general impression and had been used in the same context." Khimani, 892 F.2d at 1517. The fact that the facility had previously operated as a Howard Johnson franchise would greatly increase the possibility that consumers would interpret "H.J. Inns" as designating a Howard Johnson establishment. Id.
There is no dispute that the License Agreement terminated on April 30, 2001 and that after such date Defendants no longer had HJI's consent to use the Howard Johnson marks in and around the Facility. (Verified Complaint, Exhibit A, ¶ 15(c)). It is also undisputed that since the termination, despite HJI's demand to cease using the Howard Johnson marks and/or colorable imitations thereof, Defendants have operated and continue to operate the Facility under the name "Howard's Resort-Hotel." Craven Aff., Doc 17 at ¶ 5; Miller Aff., Exhibit A).
The Court must now determine whether the Defendants' unauthorized use of the name "Howard's" is likely to cause confusion. The factors relevant to the determination of whether Defendants' unauthorized use of the alleged infringing mark is likely to cause confusion are: (1) the type of mark; (2) the similarity of design between plaintiffs marks and those used by the defendant; (3) the similarity of the products; (4) the similarity of retail outlets and purchasers; (5) the similarity of advertising media used; (6) defendant's intent; and (7) actual confusion. See Deiter v. B H Indus. of S.W. Fla., Inc., 880 F.2d 322, 326 (11th Cir. 1989), cert. denied, 498 U.S. 950(1990).
While the License Agreement in this case states that it is governed by Massachusetts law, and therefore the law of the First Circuit governs the disputes arising out of the License Agreement, the law of the First Circuit and the Eleventh are the same with respect to the findings required to prevail on a Lanham Act claim, although the First Circuit's test consists of eight factors because it separates the class of prospective purchases from the channels of trade instead of treating them as one factor. See Aura Communications v. Aura Networks, 148 F. Supp.2d 91, 95 (D. Mass. 2001).
As more fully set forth below, the Court is of the opinion that application of the aforementioned factors to the undisputed facts in this case leads to the conclusion that Defendants' continued use of the name "Howard's" is substantially likely to result in consumer confusion.
1. The Strength of the Marks
First, the Howard Johnson marks are valid and strong. Not only are they registered, incontestable, and subject to a statutory presumption of validity under Sections 7 and 15 of the Lanham Act ( 15 U.S.C. § 1057(b) and 1065(1999)), they are also highly fanciful, arbitrary in their selection and enjoy a distinctiveness and recognition which sets them apart as having HJI as their source. Such strong marks enjoy the greatest scope of protection. See Burger King Corp. v. Majeed, 805 F. Supp. 994, 1002 (S.D. Fla. 1992) (BKC marks which are registered and subject to a statutory presumption of validity under Sections 7 and 15 of the Lanham Act ( 15 U.S.C. § 1057(b) and 1065] which are highly fanciful, arbitrary in their selection and enjoy a distinctiveness and recognition are "widely protected"); Chassis Master Corp. v. Borrego, 610 F. Supp. 473, 476 (S.D. Fla. 1985).
2. The Similarity of the Marks
In evaluating the similarity of trademarks, the Court must consider the overall impression created by the marks, including a comparison of the manner in which the marks are displayed. Nailtiques Cosmetic Corp. v. Salon Sciences Corp., 1997 WL 244746, at *3 (S.D. Fla. 1997) (quoting E. Remy Martin and Co. v. Shaw-Ross, 756 F.2d 1525, (11th Cir. 1985)). Slight differences surrounding the mark will have little impact on the consuming public. See Nailtiques Cosmetic Corp., 1997 WL 244746, at *3
After termination of the Licensing Agreement, Defendants concede that they changed their name from "Howard Johnson" to "Howard's." Merely because the word "Johnson" is deleted does not make the marks dissimilar. See Nailtiques Cosmetic Corp,: 1997 WL 244746, at *3.
Aside from the intrinsic similarities of using the common name "Howard," both marks are displayed such that they create the same overall impression. Khimani, 892 F.2d at 1517. Defendants concede that they are using the similar name "Howard's" on the very same sign that once read "Howard Johnson." (Craven Aff., Doc. 17 at ¶ 5). As shown in the photographs submitted by HJI, Defendants are using white lettering on a blue background just as HJI uses in connection with the authentic Howard Johnson marks. Defendants are using script letters, just as HJI uses in its authorized signs, and Defendants employ a wavy line under the name "Howard's" on the sign, exactly like the one used beneath the Howard Johnson marks. (Miller Aff. at ¶ 11 and Exhibit B; Zemzicki Aff. at ¶ 5 and Exhibit B). The only record evidence submitted by Defendants as to the difference between the two marks is the Affidavit of Michael Carr which states that he used a different font than that used by HJI and that he covered the sunburst symbol.
The Court is of the opinion that these minor difference will not sufficiently prevent consumer confusion. See Nailtiques Cosmetics Corp., 1997 WL 244746, at *3 Notwithstanding the use of the "Implus BT font" on the "Howard's" sign, the marks create the same overall impression Id.:Khimani, 892 F.2d at 1516-17.
3. The Similarity of Products or Services
"The greater the similarity between the products and services, the greater the likelihood of confusion.'" John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 976 (11th Cir. 1983) (quoting Exxon Corp. v. Texas Motor Exch. Inc., 628 F.2d 500, 505 (5th Cir. 1980)). Here, both HJI and Defendants provide guest lodging services. Thus, the marks identify identical products and services.
4. Similarity of Retail Outlets and Customers
Through the use of the Howard Johnson marks at its authorized guest lodging facilities, HJI offers guest lodging services to the traveling public. Under the name "Howard's" at their guest lodging facility, Defendants offer the identical services to the identical customers.
5. Similarity of Advertising Methods
As set forth in the License Agreement, HJI's authorized franchisees contribute to a marketing fund that advertises nationally in radio, TV and print advertisement in national publications. (Verified Complaint, Exhibit A at ¶¶ 7 and 9). HJI also advertises on the Internet. (Zemzicki Aff. at ¶ 5 and Exhibit B). Defendants advertise locally in print advertising as well as on the internet. Craven Affs. Doc. 17, Exhibit 1 and Doc. 25 at ¶ 3. Therefore although HJI employs methods of advertising that Defendants do not, both of the advertising methods utilized by Defendants are also utilized by HJI.
6. Defendants' Intent
While proof of intentional infringement is not required to establish liability under the Lanham Act, such proof "is sufficient of itself for [the] Court to base a finding of `likelihood of confusion.'" See Varitronics Sys., Inc. v. Merlin Equip., Inc., 682 F. Supp. 1203, 1207 (S.D. Fla. 1988) (citation omitted). "A wrongful intent appears easy to infer where the defendant knew of the plaintiffs mark, had the freedom to choose any mark, and `just happened' to choose a mark confusingly similar to the plaintiffs mark." Nailtiques Cosmetic Corp., 1997 WL 244746, at *3 Moreover, "[a] party with a prior relationship with the first mark has a greater duty to adopt a clearly distinguishable mark than does a mere stranger." Chassis Masters Corp., 610 F. Supp. at 478.
Although Defendant Craven states in his affidavit that he no longer wanted to be affiliated with HJI, Defendants have failed to provide an explanation for why they chose the name "Howard's" when they changed the name after the License Agreement terminated. Defendant Craven's first name is not "Howard." Therefore, this is not a case of a lodge owner using his own name or initials to name an establishment, unaware that a similar trademark name was being used by another facility. See Khimani 892 F.2d at 1518. Here, Defendants' unexplained use of the name "Howard's," give the previous relationship with HJI, clearly suggests an intent to pass the Facility off as an authorized Howard Johnson facility, or an intent to gain some business or monetary advantage by implying a non-existant association with HJI, by continuing to utilize the Howard Johnson marks, or colorable imitations thereof, despite knowledge that they have no contractual right to use them.
7. Actual Confusion
While actual confusion is not essential to a finding of likelihood of confusion, it is the "`best evidence of likelihood of confusion.'" See John H. Harland Co., 711 F.2d. at 978 (quoting Amstar Corp. v. Domino's Pizza. Inc., 615 F.2d 252, 263 (5th Cir. 1980)).
HJI has received at least a dozen complaints from Defendants' hotel guests who stayed at the Facility after April 30, 2001. The fact that these guests stayed at the Facility after the termination of the License Agreement, but still contacted HJI to register their complaints, demonstrates that they were likely confused as to Defendants' affiliation with HJI.
Defendants' contention at oral argument that the complaints constitute double hearsay is unpersuasive. The Affidavit of Regina Zemzecki establishes that the complaints are business records admissible under Rule 803(6), Fed.R.Evid. Moreover, the complaints were not submitted to prove the truth of the contents of the complaints themselves, but to show that they had been made to HJI following the expiration of the License Agreement.
Defendants assert that these complaints resulted from HJI's failure to update the HJI hotel listings until August, 2001. However, there is at least one complaint received by HJI, on November 10, 2001, after the new August 2001 listings. Accordingly, there is evidence that the public has been and remains confused by Defendants' use of marks that are confusingly similar to the HJI marks.
Under this seven prong analysis, the Court finds that Defendants' use of the name "Howard's" is substantially likely to cause confusion. Based on the expiration of the term of the License Agreement, Defendants do not have the authority to use the Howard Johnson marks and/or colorable imitations thereof. Therefore, HJI has established a substantial likelihood of success concerning its claims under the Lanham Act.
B. Substantial Threat of Irreparable Injury
The Court must now determine whether Plaintiff has met the second prong of the test to warrant the issuance of a preliminary injunction: a showing of a substantial threat of irreparable injury if the preliminary injunction is not granted. The Eleventh Circuit has held that a "sufficiently strong showing of likelihood of confusion [caused by trademark infringement] may by itself constitute a showing of . . . [a] substantial threat of irreparable harm. See Robertson, 147 F.3d. at 1310. In fact, numerous courts, including this Court, have recognized that in cases involving a claim of copyright or trademark infringement, a plaintiff who has established a strong likelihood of confusion, that is a likelihood of success on the merits of the infringement claim, may have thereby made the required showing of irreparable injury. See e.g., Sundor Brands, Inc. v. Borden, Inc., 653 F. Supp. 86, 93 (M.D. Fla. 1986).
In the instant case, the Court has found that HJI has made a prima facie case of trademark infringement. As noted above, by Defendants' continued unauthorized use of the infringing name "Howard's," there is a substantial likelihood of confusion by the public that Defendants' Facility is an authorized HJI facility.
In addition, the Eleventh Circuit has noted that irreparable harm exists in a trademark case where the moving party shows it will lose control over the reputation of its trademark pending trial. Robertson, 147 F.3d at 1310. Since Craven Properties is no longer a franchisee, it is no longer contractually bound to adhere to the Howard Johnson system standards and conversely, HJI is no longer permitted access to the Facility to inspect the Facility's rooms to enforce HJI's standards. As a result, HJI has lost control over the reputation of its trademark being used by the Defendants. Accordingly, based upon the strong showing of likelihood of confusion and the loss of control over the Howard Johnson marks, this Court finds that HJI has established a substantial threat of irreparable injury if the preliminary injunction is not granted. C. The Balance of Hardships
Defendants claimed at oral argument that HJI cannot demonstrate irreparable harm because it has sought to recover monetary damages under the Lanham Act. Both monetary damages and injunctive relief are available under the Lanham Act. See 15 U.S.C. § 1114 and 1125(a) and (c). In this case, HJI is seeking injunctive relief to prevent the loss of goodwill and control over its trademarks, damages which cannot be compensated by a monetary award.
The third prong of the preliminary injunction analysis is whether the threatened injury to HJI outweighs the threatened harm to Defendants. The injury to HJI is that the goodwill associated with the HJI's marks will be eroded when the traveling public confuses the "Howard's" hotel with a Howard Johnson guest lodging facility.
On the other hand, Defendants can continue to operate as a hotel at the same location under a different non-infringing name. More importantly, any injury to Defendants is self-inflicted and Defendants should not be heard to complain about hardship when their actions were taken with knowledge of HJI's trademarks. See Nailtiques Cosmetic Corp., 1997 WL 244746, at *5 As stated in American Home Prods. Corp. v. Johnson Chemical Co., 589 F.2d 103, 107 (2nd Cir. 1978), "[o]ne who adopts the mark of another for similar goods acts at his own peril" since he has no claim to the profits or advantages thereby derived. Here, any harm that may be suffered by Defendants is occasioned by their own actions. Defendants have chosen to use the HJI marks or colorable imitations thereof without authorization and are therefore acting at their own peril.
D. The Public Interest
The fourth and final prong for this Court to consider in determining whether to grant a preliminary injunction is the public interest. In a trademark infringement case, the interest of a third party, the consuming public, is present and paramount. See Sundor Brands, 653 F. Supp. at 93. Consumers who rely on the Howard Johnson marks when staying at the Defendants' "Howard's" hotel are being deceived by the mistaken belief that Defendants are operating as a licensed Howard Johnson facility. Therefore, granting the injunction will serve the public interest by preventing customer confusion.
CONCLUSION
Based on the foregoing, the Court finds that Defendants are improperly using HJI's federally registered trademarks and/or colorable imitations thereof and that HJI has met the four requirements necessary for a preliminary injunction.
The Court must now determine the amount of bond that Plaintiff must post. Defendants claim that an injunction against them would cause "significant monetary damages," but have failed to present evidence of the amount of such damages. The record reflects that Defendants have two outdoor signs at their facility and that they advertise in at least one publication as well as on their website. The Defendants will incur costs associated with changing the name of the Facility in these media as well as costs associated with notifying customers with reservations of the name change.
There is no way for the Court to determine the monetary costs, if any, resulting if customers who have already made reservations with "Howard's Resort Hotel" cancel their reservations or are confused. For all these reasons, the Court finds that a bond of $25,000.00 is sufficient.
Based on the foregoing findings of fact and conclusions of law, it is hereby
ORDERED AND ADJUDGED that Plaintiff HJI's Motion for Preliminary Injunction (Doc. 12) is GRANTED.
1. Defendants Craven Properties and Craven, their respective employees, agents, members, affiliates, parents, subsidiaries, officers, directors, shareholders, representatives, independent contractors, and successor and assigns, of any and all of them, and all those who act in concert or participation with them, are hereby enjoined and restrained from the following:
(a) Marketing, promoting or renting guest lodging facilities at or relating to 2050 AIA South, St. Augustine, Florida, such that the origin of Defendants' goods or services are falsely designated as being those of HJI, or are designated in a manner that is confusingly similar to those of HJI, including, but not limited to, the use of any and all print or telecommunications, advertisements, drafts, labels, signs, flyers, stationery, envelopes, applications, booklets, brochures, catalogs, circulars, pamphlets, periodicals, bulletins, instructions, minutes, other communications, URLS, purchase orders contracts, agreements, options to purchase, deeds, memoranda of agreements, assignments, licenses, books of account, orders, accounts, working papers, plans, internet sites, domain names, websites, and/or e-mail addresses that display, employ and/or relate to, in any manner, the Howard Johnson trade names and service marks, and/or colorable imitations of the Howard Johnson marks, including but not limited to "Howard's Inn" and/or "Howard's Resort Hotel;"
(b) Otherwise infringing upon the Howard Johnson marks, slogans, logos, trade names or trade dress;
(c) Unfairly competing with HJI in any manner;
(d) Causing actual confusion or the likelihood of confusion or injury to HJI's identity, reputation and/or good will;
(e) Advertising in any manner that is designated to suggest any affiliation or association of any person or entity with HJI.
2. Defendants and all persons acting on their behalf, in concert with them, or under their control, are further enjoined and ordered:
(a) to recall and deliver to HJI, or destroy all signs, banners, labeling, packaging, advertising, promotional display and point-of-purchase materials which bear or make reference to the Howard Johnson marks or colorable imitations of the Howard Johnson marks;
(b) to recall and deliver to HJI all copies and editions of HJI manuals which are in Defendants' actual or constructive, direct or indirect, possession, custody or control, including all supplements and addenda thereto, and all other materials containing the guest lodging facility operation instructions or business practices or plans of HJI;
(c) to comply with their post-termination obligations in accordance with Paragraph 15 of the License Agreement between Craven Properties and HJI; and
(d) to file with the Court and to serve on HJI's counsel within forty-five (45) days after HJI posts the required bond set forth below a report in writing and under oath, setting forth in detail the manner in which Defendants have complied with such injunction.
3. Within ten (10) days, HJI is required to post a bond in the amount of $25,000.00.
4. This Court retains jurisdiction to enforce the terms of this Preliminary Injunction, and violation of this Preliminary Injunction may result in a finding of contempt of Court and shall entitle the aggrieved party to attorneys' fees, disbursements, expenses and costs in investigating and bringing the violation to the Court's attention, and any damages suffered as a result of the violation.