Discount Muffler Shop v. Meineke Realty Corp.

• Decision Date: 19 February 1982
• Docket Number: No. C 80-621.,C 80-621.
• Citation: 535 F. Supp. 439
• Parties: DISCOUNT MUFFLER SHOP, INC., Plaintiff, v. MEINEKE REALTY CORPORATION, INC. et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

535 F. Supp. 439

DISCOUNT MUFFLER SHOP, INC., Plaintiff, v. MEINEKE REALTY CORPORATION, INC. et al., Defendants.

No. C 80-621.

United States District Court, N. D. Ohio, W. D.

February 19, 1982.

Harland M. Britz, Toledo, Ohio, for plaintiff.

Hugh L. Fisher, Toledo, Ohio, for defendants.

MEMORANDUM AND ORDER

WALINSKI, District Judge.

This cause came to be heard on the plaintiff's motion for preliminary injunction. The plaintiff, Discount Muffler Shop, Inc. (Discount Muffler) filed this action and asserts that the defendants have infringed plaintiff's common law trademark rights and alleges acts of unfair competition. Defendants, including Meineke Discount Muffler Shops, Inc. (Meineke Discount Muffler), have counterclaimed for infringement of their federal service mark Registration No. 1,042,467, issued June 29, 1976 under the Trademark Act of 1946, 15 U.S.C. § 1501 et seq. The plaintiff seeks a preliminary and permanent injunction against all defendants for trademark infringement and unfair competition. Also before the Court is the defendants' motion to dismiss and the plaintiff's opposition thereto.

This cause was originally filed in the Court of Common Pleas of Lucas County, Ohio and was properly removed to this Court by the defendants pursuant to 28 U.S.C. § 1441. This Court has jurisdiction over the parties and over the subject matter in issue in both the complaint and counterclaim.

An evidentiary hearing in which the parties appeared and presented witnesses was conducted. The parties have filed written arguments and the cause is before the Court for decision. Having been fully advised, therefore, the Court makes the following Findings of Fact and Conclusions of Law based on the evidence adduced at trial and on the arguments of counsel:

I. FINDINGS OF FACT

1. Plaintiff, Discount Muffler is an Ohio corporation having a principal place of business at 2113 Laskey Road, Toledo, Ohio.

2. Defendant, Meineke Realty Corporation, Inc., is a Delaware corporation, having a principal place of business at 12013 Wilcrest, Houston, Texas.

3. Defendant, Meineke Discount Muffler is a Texas corporation having a principal place of business at 12013 Wilcrest, Houston, Texas. Meineke Discount Muffler is engaged nationwide in the franchising and operation of muffler repair shops.

4. Defendant, Henry Gaylord is a resident of Napoleon, Ohio who has been franchised by Meineke Muffler to operate the muffler shop on Laskey Road in Toledo, Ohio. Defendants' Exhibit R.

5. Plaintiff's President, John P. Decker, started the plaintiff's business with a single muffler shop in 1970. The plaintiff now has six muffler shops in Toledo, including one at 2113 Laskey Road. Plaintiff's Exhibit 17. Each of plaintiff's shops has been known from its inception to date as "Discount Muffler".

6. On April 4, 1973 John P. Decker registered in Ohio the name Discount Muffler Shop as an assumed name for the business of repairing and replacing exhaust systems. Plaintiff's Exhibit 3.

7. John P. Decker, doing business as Discount Muffler Shop, was issued a State of Ohio Department of Taxation Vendor's License on July 17, 1972. Plaintiff's Exhibit 1.

8. The plaintiff incorporated in Ohio on August 20, 1973. Plaintiff's Exhibit 6. John P. Decker was one of the incorporators of the plaintiff corporation. Plaintiff's Exhibit 7.

9. John P. Decker, doing business as Discount Muffler Shop, transferred certain assets to the plaintiff on October 1, 1973 by a Bill of Sale. Plaintiff's Exhibit 8. The Bill of Sale does not specifically cite good will as an item transferred.

10. The plaintiff received a State of Ohio Department of Taxation Vendor's License on October 4, 1973. Plaintiff's Exhibits 9 and 10.

11. John P. Decker renewed the registration of the assumed name, Discount Muffler Shop, on March 28, 1978. Plaintiff's Exhibit 5. John P. Decker testified that he did not know whether he received any money from the plaintiff for the use of the assumed name.

12. On March 14, 1981, John P. Decker assigned the assumed name registration to the plaintiff. Plaintiff's Exhibit 11.

13. Defendant, Meineke Discount Muffler, was established in the early part of 1971. Defendants' Exhibit H.

14. Defendant, Meineke Discount Muffler, owns a U.S. Service Mark Registration No. 1,042,467 on which is the representation of a muffler with the name "Meineke" imposed thereon, with a smiling face to the left of Meineke as shown on the defendant's signs (Plaintiff's Exhibits M through Q) and below the muffler, the words "Discount Muffler", appear. This mark was registered June 29, 1976. This registration states a "first use" of July 20, 1972. There is no disclaimer of "discount" or "muffler" in this registration.

15. The defendant, Meineke Discount Muffler, entered into a franchise license agreement dated July 12, 1979, with Henry Gaylord (Defendants' Exhibit R) and conducted a site analysis of the 1705 Laskey Road site.

16. The "Site Analysis Report" dated May 8, 1980 (Defendants' Exhibit T) describes Laskey Road as a "major East/West artery" with a traffic load count of 18,800/21,650 cars per day. The analysis includes a map showing the proposed location of Gaylord's shop at 1705 W. Laskey Road and of the plaintiff's existing shop at 2113 Laskey Road. The plaintiff's existing shop is further noted, under the heading of "Location of Competitors," as "Discount—2 blocks west." Defendants' Exhibit T at VI.

17. Defendant Gaylord's shop opened for business about September 5, 1980.

18. The plaintiff's advertising consists primarily of large advertisements in the yellow pages of the Ohio Bell Telephone Book for Toledo and Vicinity each year since 1970. Plaintiff's Exhibit 13. The plaintiff's current (1980-81) yellow page advertisement is a half-page size on page 454.

19. The plaintiff has also advertised in "TV Facts" (Plaintiff's Exhibit 17); the November 11, 1980, United American Veteran News, using the words "Discount Muffler Shops" superimposed on a muffler (Plaintiff's Exhibit 14); a one time advertisement in the Fraternal Order of Ohio Veterans Salute (Plaintiff's Exhibit 15); an advertisement in the Toledo Union Journal on November 7, 1980 (Plaintiff's Exhibit 16) showing the words "Discount Muffler Shops"; and at one time a full-size bill-board advertisement within the city limits of Toledo. Plaintiff's Exhibit 19.

20. Defendant, Meineke Discount Muffler, advertises in the yellow pages of the Ohio Bell Telephone Book. Their half-page advertisement appears on page 455 directly opposite the plaintiff's half-page advertisement. Plaintiff's Exhibit 18. The defendant has also advertised in The Blade. Plaintiff's Exhibit 33. The Blade newspaper is the only daily paper of wide distribution in this marketing area and is the sole outlet for wide distribution newspaper advertising.

21. Defendant, Meineke Discount Muffler has advertised nationally from as early as September 14, 1972 in the Wall Street Journal. (Defendants' Exhibits A, B, D, E, F, G, J and K) and other major city newspapers (Defendants' Exhibits F, I and K) and used the name Meineke Discount Mufflers, Inc. and Meineke Discount Mufflers.

22. The purchasing public, those owners or operators whose automobiles may need a muffler or other exhaust system repair or replacement, is the relevant object of the plaintiff's and the defendants' advertisements. That defendant, Meineke Discount Mufflers, advertises heavily in business publications such as the Wall Street Journal to attract investors as new franchisees has no relevance as to the question of likelihood of confusion by that part of the public which is the prospective customer for an exhaust system.

23. The plaintiff's President, John P. Decker, testified that the basis for representing itself as Discount Muffler was that the plaintiff's prices were less than the prices of Midas, a major competitor.

24. The defendant, Meineke Discount Mufflers, has shown in its authorized advertising the amount of its discount. Defendant's Exhibit C.

25. The defendant, Meineke Discount Mufflers, provides its franchisees with a price schedule with suggested list price, net price and an economy price, which prices are available to the public. Defendants' Exhibit S.

26. At the time of the institution of this action, each of the plaintiff's six shops featured a large sign bearing the name "Discount Muffler" in black letters on a yellow background. See, e.g., Plaintiff's Exhibits 24 and 25.

27. There is some variation among the plaintiff's six shops in the color schemes of the buildings and the stylizing of the words "Discount Muffler Shop." Plaintiff's Exhibits 20 to 25.

28. Defendant Gaylord's shop at 1705 Laskey Road has an elevated street sign closely adjacent to the road. The word "Meineke" appears in yellow letters on a black muffler with a smiling face. The words "Discount Muffler" appear in black letters on a yellow background. A second sign on the building itself, a converted gas station, facing Laskey Road reads "Meineke Discount Muffler Shop." The letters are black on a yellow background. The words "Discount Muffler" are in larger and bolder letters than the other words. Plaintiff's Exhibit 26.

29. The sign at the defendants' Laskey Road shop is a standard sign and is required to meet certain specifications pursuant to a sign agreement.

30. Defendant Meineke Discount Mufflers' outside free standing signs are all the same. Defendants' Exhibits M to Q.

31. Defendant, Henry Gaylord, testified that the building colors at 1705 Laskey Road derived from the prior occupant, Union 76.

32. The dominant feature of the signs at the plaintiff's and the defendants' Laskey Road locations is the term "Discount Muffler" so that the confusion between the two shops is possible.

33. Defendant, Gaylord, testified that, in his opinion, there is "no confusion between the companies" but that there is actual confusion between the shops, both located on Laskey Road. The Court...