Choice Hotels Int'l, Inc. v. A Royal Touch Hospitality, LLC (NC)

• Decision Date: 26 August 2019
• Docket Number: Civil Action No.: 7:17-cv-381
• Citation: 409 F.Supp.3d 559
• Parties: CHOICE HOTELS INTERNATIONAL, INC., Plaintiff, v. A ROYAL TOUCH HOSPITALITY, LLC (NC), A Royal Touch Hospitality, LLC (VA), Ujas B. Patel and Ketki Patel, Defendants.
• Court: U.S. District Court — Western District of Virginia

409 F.Supp.3d 559

CHOICE HOTELS INTERNATIONAL, INC., Plaintiff,

v.A ROYAL TOUCH HOSPITALITY, LLC (NC), A Royal Touch Hospitality, LLC (VA), Ujas B. Patel and Ketki Patel, Defendants.

Civil Action No.: 7:17-cv-381

United States District Court, W.D. Virginia, Roanoke Division.

Signed August 26, 2019

C. Jacob Ladenheim, Fincastle, VA, Matthew Jacob Ladenheim, Pro Hac Vice, Trego, Hines & Ladenheim, PLLC, Huntersville, NC, for Plaintiff.

A Royal Touch Hospitality, LLC (NC), pro se.

A Royal Touch Hospitality, LLC (VA), pro se.

Ujas B. Patel, pro se.

Ketki Patel, pro se.

MEMORANDUM OPINION

Elizabeth K. Dillon, United States District Judge

This is an action for trademark infringement filed by Choice Hotels International, Inc. (Choice Hotels or Choice). Choice Hotels alleges that A Royal Touch Hospitality, LLC (NC) (A Royal Touch (NC)), Ujas B. Patel, and Ketki Patel (the Franchisee Defendants) continued using Choice's trademarks after their franchise agreement with Choice was terminated. Choice also alleges that A Royal Touch Hospitality, LLC (VA) (A Royal Touch (VA)), a related non-franchisee, made unauthorized use of Choice's marks. Choice moves for summary judgment. (Mot. Summ. J., Dkt. No. 36.) Defendants are not represented by counsel, and none of the defendants responded to Choice's motion for summary judgment.¹

For the reasons stated below, the court will grant Choice Hotels' motion for summary judgment.

I. BACKGROUND

Choice Hotels is the owner of a family of QUALITY® trademarks which it uses in connection with its lodging franchise business. Included in that family of marks are the following United States Trademark Registrations: the '881 registration; the '372 registration; the '294 registration; the '820 registration; and '488 registration; the '999 registration; the '875 registration; the '054 registration; the '436 registration; the '437 registration; the '888 registration; the '885 registration; the '789 registration; and the '912 registration. (Dkt. Nos. 1-1 to 1-14.)

On or about June 16, 2010, Choice Hotels entered into a Franchise Agreement with A Royal Touch (NC), Ujas B. Patel, and Ketki Patel, which permitted them to operate a QUALITY INN® hotel franchise at 429 Main Street, Covington, Virginia 24426 (the Subject Property). Seven days after execution of the Franchise Agreement, Ketki Patel created a new limited liability company in Virginia under the same name, A Royal Touch Hospitality, LLC, and identified the Subject Property as its registered office address. A Royal Touch (VA) was never a party to the Franchise Agreement or the later-executed Reinstatement Agreement, and thus was not permitted to operate a QUALITY INN® hotel franchise at the Subject Property.

Ketki Patel, Ujas Patel, and A Royal Touch (NC) defaulted on their material obligations under the Franchise Agreement, and on December 30, 2013, Choice Hotels terminated the Franchise Agreement. A Royal Touch (NC) was administratively dissolved in March 2014. Even so, on or about April 22, 2014, Choice entered into a Reinstatement Agreement with Ujas B. Patel, Ketki Patel, and (purportedly) A Royal Touch (NC) reinstating the Franchise Agreement. Ketki Patel executed the Reinstatement Agreement on behalf of A Royal Touch (NC) knowing that the company had been administratively dissolved. Thereafter, Ketki Patel, Ujas Patel, and A Royal Touch (VA)—purporting to be A Royal Touch (NC)—defaulted on the payment obligations imposed by the Reinstatement Agreement. Accordingly, on June 3, 2015, Choice Hotels terminated the Reinstatement Agreement. The Franchisee Defendants admit they did not comply with the terms of the Notice of Termination.

On July 22, 2016, Choice issued a Notice of Service Mark Infringement to the Franchisee Defendants. The Franchisee Defendants admit the Notice of Service Mark Infringement instructed them to immediately discontinue all use of the QUALITY® family of marks and to take immediate action to correct its identity with third-party booking sites like Tripadvisor.com, Expedia.com, and Booking.com. The Franchisee Defendants admit they did not comply with the Notice of Infringement.

On or about August 5, 2017, counsel for Choice conducted a site inspection of the Subject Property. Photographs show the QUALITY® family of marks on display. (Compl. ¶ 81, Dkt. No. 1.) Defendants admit that in addition to signage bearing the QUALITY® family of marks, the hotel at the Subject Property displays a white BAYMONT INN & SUITES® branded banner. (Answer ¶ 82, Dkt. No. 10.) BAYMONT INN & SUITES® is not a Choice Hotels brand. (Id. ¶ 83.) Defendants further admit in their answer that the online third-party booking site Tripadvisor.com identifies the Subject Property as a BAYMONT INN & SUITES® but displays photographs of the hotel bearing both QUALITY® and BAYMONT INN & SUITES® signage. (Id. ¶ 84.) A photograph shows the hotel located at the Subject Property in obvious disrepair. (Id. ¶ 85.)

A Royal Touch (VA) was never a party to an agreement that would allow it to operate a QUALITY INN® hotel franchise at the Subject Property. Even so, A Royal Touch (VA) operated such a franchise from March 2014 until September 2017 while purporting to be A Royal Touch (NC).

After the Reinstatement Agreement was terminated on June 3, 2015, A Royal Touch (NC), Ketki Patel, and Ujas B. Patel were not authorized to use any of the marks in the QUALITY® family of marks at the Subject Property. Notwithstanding, A Royal Touch (VA), purporting to be A Royal Touch (NC), Ketki Patel, and Ujas B. Patel continued to make extensive unauthorized use of the QUALITY® family of marks at the Subject Property until at least September 2017.

II. DISCUSSION

A. Standard of Review

To obtain summary judgment, the moving party must show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In considering a motion for summary judgment, the court will not "weigh the evidence and determine the truth of the matter." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Instead, the court will draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

As noted above, Choice's motion is unopposed, but the court does not automatically grant such a motion.

[I]n considering a motion for summary judgment, the district court ‘must review the motion, even if unopposed, and determine from what it has before it whether the moving party is entitled to summary judgment as a matter of law.’ Custer v. Pan Am. Life Ins. Co. , 12 F.3d 410, 416 (4th Cir. 1993) (emphasis added). ‘Although the failure of a party to respond to a summary judgment motion may leave uncontroverted those facts established by the motion,’ the district court must still proceed with the facts it has before it and determine whether the moving party is entitled to judgment as a matter of law on those uncontroverted facts. Id.

Robinson v. Wix Filtration Corp. LLC , 599 F.3d 403, 409 n.8 (4th Cir. 2010).

B. Federal Trademark Infringement

Federal trademark infringement is governed by Section 32 of the Lanham Act. 15 U.S.C. § 1114. To establish trademark infringement under the Lanham Act, Choice Hotels must prove: (1) that it owns a valid mark; (2) that the defendant used the mark "in commerce" and without plaintiff's authorization; (3) that the defendant used the mark (or an imitation of it) "in connection with the sale, offering for sale, distribution, or advertising" of goods or services; and (4) that the defendant's use of the mark is likely to confuse consumers. Rosetta Stone Ltd. v. Google, Inc. , 676 F.3d 144, 152 (4th Cir. 2012).

1. Ownership of a valid trademark

Choice's certificates of registration are attached as exhibits to the complaint. (See Dkt. Nos. 1-1 to 1-14.) When the Patent and Trademark Office issues a certificate of registration, that registration provides the registrant with prima facie evidence of the validity of the mark and its registration, the registrant's ownership, and the registrant's "exclusive right" to use the mark on or in connection with the goods and services specified in the certificate of registration. U.S. Search, LLC v. U.S. Search.com Inc. , 300 F.3d 517, 524 (4th Cir. 2002). In fact, these registrations have achieved "incontestable status" pursuant to Section 15 of the Lanham Act, 15 U.S.C. § 1065. (See Dkt. Nos. 1-1 to 1-14.) Incontestable status is "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b). Choice has demonstrated that it owns the trademarks at issue.

2. Unauthorized use of the mark in commerce

By failing to respond to Choice's requests for admission,² defendants admitted to making unauthorized use of the QUALITY® family of marks after termination of the Franchise Agreement/Reinstatement Agreement. (See Dkt. Nos. 37-3, 37-4, 37-5, 37-6.) In their Answer, defendants admitted that the QUALITY® family of marks "were visible" at the Subject Property following termination of the Franchise Agreement. (Compl. ¶ 74; Answer ¶ 74.) Choice Hotels also provided photographic evidence of defendants' unauthorized use, taken more than two years after termination of the Franchise Agreement/Reinstatement Agreement. (Compl. ¶ 81.) Choice has demonstrated unauthorized use in commerce.

3. In connection with sale of goods/services

By failing to respond to Choice's requests for admission, defendants admitted to making unauthorized use of the QUALITY® family of marks in connection with the provision of hotel services at the Subject Property after termination of the Franchise Agreement/Reinstatement Agreement. (Dkt. Nos. 37-3, 37-4, 37-5, 37-6....