Frisch's Restaurant, Inc. v. Shoney's Inc.

• Decision Date: 25 April 1985
• Docket Number: No. 84-3240,84-3240
• Citation: 759 F.2d 1261
• Parties: FRISCH'S RESTAURANT, INC., Plaintiff-Appellant, v. SHONEY'S INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1261

759 F.2d 1261

225 U.S.P.Q. 1169

FRISCH'S RESTAURANT, INC., Plaintiff-Appellant, v. SHONEY'S INC., Defendant-Appellee.

No. 84-3240.

United States Court of Appeals,

Sixth Circuit.

Argued Nov. 6, 1984.

Decided April 25, 1985.

Carl Genberg (argued), Genberg and Aucoin, Columbus, Ohio, for plaintiff-appellant.

Virginia Conlan Whitman, Thomas L. Conlan, Cincinnati, Ohio, Gary M. Brown (argued), Ward DeWitt, Trabue, Sturdivant & DeWitt, Nashville, Tenn., for defendant-appellee.

Before KENNEDY, KRUPANSKY and MILBURN, Circuit Judges.

KRUPANSKY, Circuit Judge.

Plaintiff-appellant Frisch's Restaurants, Inc. (Frisch's) initiated this proceeding alleging a cause of action under the Lanham (Trademark) Act, 15 U.S.C. Sec. 1125(a), seeking monetary damages, and injunctive relief against defendant-appellee Shoney's Inc. (Shoney's) enjoining Shoney's from constructing or continuing to operate any restaurant under the name "Shoney's" in states in which Frisch's has the exclusive right to use the "Big Boy" trademark. The district court issued a thirty-two page opinion denying the injunction and there followed this timely appeal. Frisch's Restaurants, Inc. v. Shoney's Inc., No. 1-82-834 (S.D.Ohio, Mar. 7, 1984) (Holschuh, J.).

For twenty-five years, Shoney's had been licensed to use the "Big Boy" trademarks to promote its restaurants in West Virginia, Virginia, North Carolina, South Carolina, Tennessee, Georgia, Alabama, Mississippi, Arkansas, Louisiana, and Missouri. In those states, Shoney's operated or sublicensed 381 "Shoney's Big Boy Restaurants". Frisch's has the exclusive "Big Boy" rights in Ohio, Kentucky, Indiana, and Florida.

In 1982, and thereafter, Shoney's launched food service operations in Kentucky and Florida under the tradename of "Shoney's Towne and Country Restaurant". Frisch's charged that the operation of "Shoney's Towne and Country" restaurants in the territory reserved to it for the use of the "Big Boy" mark violated the Lanham Act because of the public's association of the name "Shoney's" with "Big Boy".

The case is before this court upon timely appeal from the district court's order denying Frisch's motion for a preliminary injunction against Shoney's enjoining the use of the "Shoney's" name outside the Shoney's "Big Boy" license area.

This circuit has enunciated four elements which must be considered and "carefully balanced" in deciding to issue or withhold a preliminary injunction. Mason County Medical Ass'n v. Knebel, 563 F.2d 256, 264 (6th Cir.1977);

1. Whether the movant has shown a strong or substantial likelihood or probability of success on the merits.

2. Whether the movant has shown irreparable injury.

3. Whether the preliminary injunction could harm third parties.

4. Whether the public interest would be served by issuing the preliminary injunction.

563 F.2d at 261 (citing cases). See also In re DeLorean Motors Co., 755 F.2d 1223 (6th Cir.1985); USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94 (6th Cir.1982); Mobil Corp. v. Marathon Oil Co., 669 F.2d 366, 368 (6th Cir.1981). The standard of appellate review of a district court order granting or denying a preliminary injunction is whether it abused its discretion. Tate v. Frey, 735 F.2d 986, 990 (6th Cir.1984). See also, e.g., In re DeLorean Motors Co., supra; Friendship Materials Inc. v. Michigan Brick, Inc., 679 F.2d 100, 102 (6th Cir.1982); Adams v. Federal Express Corp., 547 F.2d 319 (6th Cir.1976). Rigid adherence to the "abuse of discretion" standard is required to avoid untoward disruption of the progression of lawsuits as the lower court decision "was in no sense a final disposition". Tate v. Frey, 735 F.2d at 990 (citing Securities and Exchange Comm'n v. Senex Corp., 534 F.2d 1240 (6th Cir.1976); Brandeis Machinery and Supply Corp. v. Barber-Green Co., 503 F.2d 503 (6th Cir.1974)). See, e.g., In re DeLorean Motors Co., supra.

Of course, the Mason County criteria "do not establish a rigid and comprehensive test for determining the appropriateness of preliminary injunctive relief". Tate v. Frey, 735 F.2d at 990 (quoting Friendship Materials, Inc. v. Michigan Brick, Inc., 679 F.2d at 102). See also Roth v. Bank of the Commonwealth, 583 F.2d 527, 537 (6th Cir.1978), cert. dismissed, 442 U.S. 925, 99 S.Ct. 2852, 61 L.Ed.2d 292 (1979). "[T]he four considerations applicable to preliminary injunction decisions are factors to be balanced, not prerequisites that must be met." In re DeLorean Motor Co., 755 F.2d at 1229. Cf. Roth v. Bank of the Commonwealth, 583 F.2d at 537-38 (quoting Metropolitan Detroit Plumbing & Mechanical Contractors Ass'n v. H.E.W., 418 F.Supp. 585, 586 (E.D.Mich.1976)). In the case at bar, the district court concluded that "Frisch's has failed to demonstrate a likelihood of success on the merits", and denied injunctive relief without consideration of whether the remaining three factors might nevertheless have counseled in favor of the injunction. On appeal the parties have again addressed Frisch's ability or lack thereof to support its probability of success on the Lanham Act claim.

Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), provides:

(a) Any person who shall ... use in connection with any goods or services ... a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce ... shall be liable to a civil action by any person doing business in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.

The Congress enacted the Lanham Act to make "actionable the deceptive and misleading use of marks in ... commerce ... [and] to protect persons engaged in such commerce against unfair competition". 15 U.S.C. Sec. 1127. The Sixth Circuit has previously concluded that false representations about the origin of goods or services are actionable under Sec. 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a). Federal-Mogul Bower Bearings, Inc. v. Azoff, 313 F.2d 405, 408 (6th Cir.1963). In Federal-Mogul, this court determined that the Lanham Act provided "a right of action to persons engaged in interstate and foreign commerce, against deceptive and misleading use of words, names, symbols, or devices, or any combination thereof, which have been adopted by a ... merchant to identify his goods and distinguish them from those manufactured by others". Id. at 409, quoted in Frisch's Restaurants, Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 647 (6th Cir.), cert. denied, 459 U.S. 916, 103 S.Ct. 231, 74 L.Ed.2d 182 (1982).

In this circuit, equitable relief, such as a preliminary injunction, is available to a Lanham Act plaintiff upon demonstrating, at a minimum, a likelihood of confusion among consumers as to the origin of the goods and services provided by defendant resulting from the defendant's use of the disputed mark, as well as irreparable harm to the plaintiff's interests. Frisch's Restaurants, Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d at 647, 651. See also Carson v. Here's Johnny Portable Toilets, Inc., 698 F.2d 831, 833 (6th Cir.1983).

In Frisch's Restaurants, this circuit articulated eight factors for evaluating the "likelihood of confusion". 670 F.2d at 648. These factors are not immutable, but merely indicate the need for weighted evaluation of the pertinent facts in arriving at the legal conclusion of confusion. See Carson v. Here's Johnny etc., supra, 698 F.2d at 833 ("[i]n Frisch's Restaurants we approved the balancing of several factors.... In that case we examined eight factors" (emphasis added)). These factors were culled from the Ninth Circuit cases of AMF v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir.1979), and Toho Company, Inc. v. Sears, Roebuck & Co., 645 F.2d 788, 790 (9th Cir.1981). They are:

1. strength of the plaintiff's mark;

2. relatedness of the goods;

3. similarity of the marks;

4. evidence of actual confusion;

5. marketing channels used;

6. likely degree of purchaser case;

7. defendant's intent in selecting the mark;

8. likelihood of expansion of the product lines.

The district court's factual findings as to the evidence supporting the eight factors addressing the issue of "likelihood of confusion" are subject to the clearly erroneous rule of appellate review. Frisch's Restaurants, Inc. v. Elby's Big Boy of Steubenville, Inc., 670 F.2d at 651. However, the evaluation of those findings is a question of law subject to de novo examination by the appeals court. Id., followed by Carson v. Here's Johnny etc., 698 F.2d at 833.

The strength of a mark is a factual determination of the mark's distinctiveness. The more distinct a mark, the more likely is the confusion resulting from its infringement, and, therefore, the more protection it is due. As stated in a modern legal treatise:

A mark is strong if it is highly distinctive, i.e., if the public readily accepts it as the hallmark of a particular source; it can become so because it is unique, because it has been the subject of wide and intensive advertisement, or because of a combination of both.

Callmann, Unfair Competition, Trademarks & Monopolies, p 20.43 (4th ed. 1983).

In the case at bar, the district court concluded that the "Big Boy" mark was neither an indicator of origin nor distinctive, but was "a relatively weak mark". The "Big Boy" mark, the court explained, is owned by the Marriott Corporation which leases it to independent licensees throughout the country who obtain exclusive rights to the mark in particular areas. According to the lower court, the evidence disclosed that "each user of the Big Boy mark develops and operates its own system". As a result, "[t]here are substantial differences between each competitor's restaurants [and] [t]he only...