Tumblebus Inc. v. Cranmer
| Decision Date | 13 January 2005 |
| Docket Number | No. 04-5060.,04-5060. |
| Citation | 399 F.3d 754 |
| Parties | TUMBLEBUS INC., Plaintiff-Appellee, v. Meredith CRANMER, d/b/a Tumblebus of Louisville, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Jack Allen Wheat, Stites & Harbison, Louisville, Kentucky, for Appellant. James R. Higgins, Jr., Middleton Reutlinger, Louisville, Kentucky, for Appellee. ON BRIEF: Jack Allen Wheat, Bethany A. Breetz, Stites & Harbison, Louisville, Kentucky, Samuel F. Miller, Stites & Harbison, Nashville, Tennessee, for Appellant. James R. Higgins, Jr., Julie A. Gregory, Robert J. Theuerkauf, Middleton Reutlinger, Louisville, Kentucky, for Appellee.
Before: MOORE and CLAY, Circuit Judges; HAYNES, District Judge.*
Defendant-Appellant Meredith Cranmer ("Cranmer"), d/b/a Tumblebus of Louisville, appeals from the district court's order granting Plaintiff-Appellee Tumblebus Incorporated's ("Tumblebus Inc.") motion for a preliminary injunction restricting Cranmer's use of the TUMBLEBUS mark and related trade dress during the pendency of the underlying infringement action. For the reasons set forth below, we AFFIRM in part, VACATE in part, and REMAND to the district court for further consideration of Tumblebus Inc.'s motion for a preliminary injunction.
In 1987, Brenda Scharlow ("Scharlow") launched Tumblebus Inc., a company which provides gymnastics and physical education instruction to children. Tumblebus Inc., which bills itself as a "mobile gym on wheels," furnishes such instruction on-site at day-care centers, birthday parties, and the like through the use of school buses retrofitted with gymnastics and other athletic equipment. Tumblebus Inc. currently operates three to four buses on a regular basis, marketing its services in the greater Louisville, Kentucky area.
Tumblebus Inc.'s business has also expanded to include the sale of retrofitted school buses to other persons wishing to enter the mobile-gymnastics-instruction market. Tumblebus Inc. has sold over two hundred retrofitted school buses to persons across the United States. Buses sold by Tumblebus Inc. seem to be similar in appearance to those used by Tumblebus Inc. in its own gymnastics-instruction business. Tumblebus Inc. permits purchasers to use the "Tumblebus" name when marketing their services, and many purchasers operate under names that include the word "Tumblebus." For approximately six years, Tumblebus Inc.'s training session for new bus purchasers has included a presentation by Donna Dugan ("Dugan"), owner of the Hot Fonts printing company, who offers for sale pre-designed letterhead, flyers, and other marketing materials containing the Tumblebus name and iconography.
According to Scharlow, Tumblebus Inc.'s expansion into selling retrofitted buses to other operators began somewhat informally, and the decision was made early on not to structure the business as a franchise because franchising would require too much on-site monitoring of individual franchisees' operations. Tumblebus Inc.'s record-keeping also appears rather informal, and according to Scharlow, Tumblebus Inc. does not have a complete list of all persons who have purchased retrofitted buses. Tumblebus Inc., however, has maintained contact with some purchasers, distributing new lesson plans and business development ideas.
In November 2001, Tara Pate ("Pate") purchased a retrofitted bus from Tumblebus Inc. When Pate first discussed her potential purchase with Scharlow, she indicated that she planned to operate in Lexington, Kentucky. Scharlow, however, informed Pate that two other persons were already operating in Lexington, but suggested that Pate could instead service Elizabethtown, Brandenburg, Mt. Washington, Bardstown, and Radcliff, Kentucky. According to Scharlow and her husband, Pate orally agreed to operate in this area but not to expand into Louisville, where Tumblebus Inc. was based. The Scharlows admit, however, that they forgot to put this agreement in writing. Testimony at the hearing also indicates that during a meeting between Pate, Pate's mother, and Scharlow, Scharlow refused to include a territory provision in Pate's purchase contract. When asked what would prevent Pate from operating in the Louisville area, Scharlow apparently responded that there would be nothing that she could do to stop Pate from soliciting customers in the Louisville area, but that she was confident in her customers' loyalty to Tumblebus Inc.1
In January 2002, Scharlow learned that Pate had distributed flyers advertising her business to day-care centers in the Louisville area. Scharlow contacted Pate, reminding Pate that she was not supposed to be operating in that area. Pate explained that she was having difficulty in obtaining customers in Elizabethtown and the surrounding areas, to which Scharlow responded that Pate could expand her operations into north Bullitt County, Kentucky, which included a day-care center that Tumblebus Inc. previously had serviced. Ultimately, however, Pate decided to leave the mobile-gymnastics-instruction market and listed her bus for sale in a Louisville newspaper.
Cranmer noticed Pate's advertisement in the Louisville newspaper and contacted Tumblebus Inc. in order to determine, for comparison purposes, what a newly retrofitted bus from Tumblebus Inc. would cost. Scharlow testified that when Cranmer called, she noticed that Cranmer's telephone number had a Louisville area code, so she asked Cranmer from where she was calling. When Cranmer explained that she was calling from Louisville, Scharlow apparently responded that she would not sell Cranmer a bus in Louisville because other Tumblebus operators were already in that area. Cranmer then stated that her sister was interested in purchasing a bus for operation in Bloomington, Indiana, and the discussion continued.
In April 2002, Cranmer purchased Pate's Tumblebus and began operating in the Louisville area under the name "Tumblebus." Upon learning that Cranmer was operating in Louisville, Scharlow contacted Cranmer. Cranmer and Scharlow discussed the possibility of Cranmer changing or adding something to the name of Cranmer's business, and Scharlow suggested such names as "Meredith's Tumblebus," "Fun Bus," and "Gym on Wheels." Cranmer eventually listed her business in the fall 2002 Louisville telephone book (with the same Louisville telephone number previously used by Pate) under the name "Tumblebus of Louisville." Tumblebus Inc. also appeared in the fall 2002 Louisville telephone book, but was listed after "Tumblebus of Louisville," appeared in smaller typeface, and included a New Albany, Indiana telephone number. Scharlow then began insisting that Cranmer remove the word "Tumblebus" from her business's name.
Scharlow claims that Tumblebus Inc. has suffered adverse consequences because of Cranmer's operation in the Louisville area. During the preliminary hearing, Scharlow recounted incidents in which customers apparently confused the two businesses, such as customers sending their payments to the wrong business and persons who had contracted with Cranmer telephoning Tumblebus Inc. when Cranmer failed to show up for scheduled appointments. According to Scharlow, Tumblebus Inc.'s income has declined as a result.
In July 2003, Tumblebus Inc. filed suit against Cranmer in the U.S. District Court for the Western District of Kentucky, accusing Cranmer of trademark infringement, trade dress infringement, and false advertising in violation of § 43 of the Lanham Act, 15 U.S.C. § 1125(a), as well as trademark infringement, trade dress infringement, and unfair competition under Kentucky common law. Tumblebus Inc. then moved for entry of an order preliminarily enjoining Cranmer from using the TUMBLEBUS mark and associated trade dress. In December 2003, the district court held a hearing with respect to whether a preliminary injunction should issue, during which Scharlow, Scharlow's husband (Larry Scharlow), Cranmer, Pate, Pate's mother (Karen Morris), and Dugan testified. At the conclusion of the hearing, the district judge stated that he would grant Tumblebus Inc.'s request for a preliminary injunction with respect to Cranmer's use of the TUMBLEBUS mark in Jefferson County, Kentucky; Floyd County, Indiana; and Clark County, Indiana (collectively, the "greater Louisville area"). The district judge also indicated that he would enjoin Cranmer from using the TUMBLEBUS trade dress in the greater Louisville area, but stated that he would allow Cranmer time to decide whether she would continue to provide mobile-gymnastics services in the greater Louisville area (which would require physical alteration of the bus's appearance) or whether she would operate exclusively outside the greater Louisville area (in which case no change in the bus's exterior would be required).2 In January 2004, the district court issued its preliminary injunction order, and Cranmer timely appealed to this court.
When considering a motion for preliminary injunctive relief, courts must balance:
(1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuance of the injunction.
PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 249 (6th Cir.2003). The preliminary question of whether a movant is likely to succeed on the merits is a question of law which we decide de novo. N.A.A.C.P. v. City of Mansfield, 866 F.2d 162, 169 (6th Cir.1989). We review for abuse of discretion, however, the district court's ultimate...
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