Greater Westerly-Pawcatuck Area Chamber of Commerce v. South Kingstown Chamber of Commerce, Inc.

• Decision Date: 18 January 2012
• Docket Number: C.A. No. WB-11-0741
• Parties: THE GREATER WESTERLY-PAWCATUCK AREA CHAMBER OF COMMERCE; NARRAGANSETT CHAMBER OF COMMERCE; CHARLESTOWN CHAMBER OF COMMERCE, INC.; and NORTH KINGSTOWN CHAMBER OF COMMERCE, INC., Plaintiffs, v. SOUTH KINGSTOWN CHAMBER OF COMMERCE, INC., Defendant
• Court: Rhode Island Superior Court

THE GREATER WESTERLY-PAWCATUCK AREA CHAMBER OF COMMERCE; NARRAGANSETTCHAMBER OF COMMERCE;CHARLESTOWN CHAMBER OF COMMERCE, INC.; and NORTH KINGSTOWN CHAMBER OFCOMMERCE, INC., Plaintiffs,

v.SOUTH KINGSTOWN CHAMBER OF COMMERCE, INC., Defendant

C.A. No. WB-11-0741

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS WASHINGTON, SC SUPERIOR COURT

Filed: January 18, 2012

DECISION

Stern, J. On December 13, 2011, this Court entertained the Greater Westerly-Pawcatuck Area Chamber of Commerce, Narragansett Chamber of Commerce, Charlestown Chamber of Commerce, and North Kingstown Chamber of Commerce's (collectively hereafter referred to as the "Plaintiffs") Motion for Preliminary Injunction. The Plaintiffs sought to enjoin the South Kingstown Chamber of Commerce (hereafter referred to as "Defendant") from using the fictitious business name of the Southern Rhode Island Chamber of Commerce. Jurisdiction is pursuant to G.L. 1956 § 8-2-13.

I.Facts and Travel

This action arises from a dispute between the Plaintiffs and the Defendant's registering with the Secretary of State and use of the fictitious business name Southern Rhode IslandChamber of Commerce. The Defendant is a nonprofit organization that derives its income from members paying dues. The members consist of local businesses, such as restaurants, hotels, and local attractions. In return for the dues paid, the Defendant will promote the members' businesses when visitors or local citizens seek the Defendant out for such information.¹ The Defendant was founded in 1933. Since 2006, the Defendant has had a mission statement of "support[ing] and enhanc[ing] the business community of Southern Rhode Island. . . ." (Aff. of Clay Johnson at ¶ 4.) Also, reflected in that mission statement is the Defendant's desire to "advance the general welfare and prosperity" of Washington County and surrounding areas. Id. at ¶ 5. Based on the Defendant's regional outlook, the decision was made to change its name to the Southern Rhode Island Chamber of Commerce. The Defendant contends that the decision to change its name was based on legitimate business reasons. Id. at ¶ 15.

On July 25, 2011, Defendant registered the fictitious business name,² Southern Rhode Island Chamber of Commerce, with the Secretary of State. The Defendant contends that the decision to register this name and to ultimately use this new name was part of a long-standing business plan to expand business beyond South Kingstown. After the name was registered, the Plaintiffs became dissatisfied with Defendant's attempt to use its new name. Plaintiffs alleged that the new name would affect Plaintiffs' business operations, as they are located in the southern portion of the state. Thereafter, Plaintiffs filed this suit alleging violations of 15 U.S.C. § 1125 (a), also known as the Lanham Act, and the common law claim of unfair competition.

II.Standard of Review³

The moving party seeking a preliminary injunction bears the burden of proof. The moving party must demonstrate a reasonable likelihood of succeeding on the merits of its claim at trial. See Pawtucket Teachers Alliance Local No. 920, AFT, AFL-CIO v. Brady, 556 A.2d 556, 557 (R.I. 1989). Our Supreme Court has also stated the showing of reasonable likelihood of success need not rise to the level of a certainty of success. Coolbeth v. Berberian, 112 R.I. 558, 566, 313 A.2d 656, 660 (1974). Instead, the movant is only required to make out a prima facie case. Id. at 564, 313 A.2d at 660. Next, the moving party must show that it stands to suffer some irreparable harm that is presently threatened or imminent and for which no adequate legal remedy exists to restore the moving party to its rightful position. See Brown v. Amaral, 460 A.2d 7, 10 (R.I. 1983). Finally, the trial justice should next consider the equities of the case by examining the hardship to the moving party if the injunction is denied, the hardship to the opposing party if the injunction is granted, and the public interest in denying or granting the requested relief. In re State Employees' Unions, 587 A.2d 919, 925 (R.I. 1991).

In considering the equities, the [trial] justice should bear in mind that

"the office of a preliminary injunction is not ordinarily to achieve a final and formal determination of the rights of the parties or of the merits of the controversy, but is merely to hold matters approximately in status quo, and in the meantime to prevent thedoing of any acts whereby the rights in question may be irreparably injured or endangered." Fund for Community Progress v. United Way of Southeastern New England, 695 A.2d 517, 521 (R.I. 1997) (quoting Coolbeth, 112 R.I. at 564, 313 A.2d at 659).

Finally, a petition for temporary injunctive relief is left "to a trial justice's sound discretion." Id., 313 A.2d at 660.

III.Analysis

The law of unfair competition has its roots in the common-law tort of deceit—its general concern is with protecting consumers from confusion as to the source of a good and/or service. Bonito Boats Inc. v. Thunder Craft Boats Inc., 489 U.S. 141, 157 (1989). Unfair competition has long been recognized in tort law. However, it was later codified into federal law when Congress passed the Lanham Act. Rhode Island, like most jurisdictions, still recognizes the common law tort of unfair competition, in addition to the Lanham Act.

A. Lanham Act

The Lanham Act⁴ prohibits uses of trademarks, trade names, and trade dress that are likely to cause confusion about the source of a product or service. See 15 U.S.C. 1125(a)(1)(A). Prior to the adoption of the Lanham Act, the purpose behind unfair competition was to protectconsumers. As stated in Crescent Tool Co. v. Kilborn & Bishop Co., 247 F. 299, 301 (2d Cir. 1917):

"[T]he plaintiff has the right not to lose his customers through false representations that those are his wares which in fact are not, but he may not monopolize any design or pattern, however trifling. The defendant, on the other hand, may copy plaintiff's goods slavishly down to the minutest detail: but he may not represent himself as the plaintiff in their sale."

However, the Lanham Act provided for protection to not just consumers, but to manufacturers and entities offering services as well. Section 43(a) of the Lanham Act created a "distinct federal statutory tort," Franklin Mint, Inc. v. Franklin Mint Ltd., 331 F. Supp. 827, 831 (E.D. Pa. 1971), "designed to afford broad protection against various forms of unfair competition and false advertising. . . ." John Wright, Inc. v. Casper Corp., 419 F. Supp. 292, 324-25 (E.D. Pa. 1976), aff'd in part, rev'd and remanded in part. Donsco Inc. v. Casper Corp., 587 F.2d 602 (3rd Cir. 1978). "One of the main purposes of Section 43 of the Lanham Act is to protect persons engaged in interstate commerce against unfair competition caused by false or misleading representations or advertising about goods, services, or commercial activities." College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 131 F.3d 353, 357 (3d Cir. 1997). The law protects consumers from being misled by the use of infringing marks and also protects producers from unfair practices by an "imitating competitor." Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 163-164 (1995). Congress' intent in passing the Lanham Act was "to protect persons engaged in [interstate] commerce against unfair competition." See 15 U.S.C. § 1127.

The Lanham Act protects names used by entities that place goods or services into interstate commerce. The term, 'trademark,' includes "any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goodsand distinguish them from those manufactured or sold by others." 15 U.S.C. § 1127; Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 847 (1982). A service mark is used in commerce when, among other things, "it is used or displayed in the sale or advertising of services and the services are rendered in commerce," where "commerce" includes "all commerce which may lawfully be regulated by Congress." See 15 U.S.C. § 1127.

In support of its claims, Plaintiffs allege that Defendant has engaged in unfair competition and false advertising under the Lanham Act. For the unfair competition claim, Plaintiffs contend that Defendant's use of the name Southern Rhode Island Chamber of Commerce implies that the Plaintiffs are subsidiaries or are affiliated with the Defendant. Plaintiffs also contend that the name change implies that the Defendant is the exclusive or sole chamber of commerce in Southern Rhode Island.

To prevail on an unfair competition claim, Plaintiffs must prove that Defendant used a name or misleading description, and Defendant's use was likely to cause confusion as to affiliation with Defendant and Plaintiffs. See 90 Am. Jur. Proof of Facts 3d Establishing Liability for Unfair Competition 95, 158. The ultimate test is whether there is a likelihood of confusion. Id. In a claim for false advertising, Plaintiff must show that actual false statements were made or Defendant made statements, while true, were likely to mislead and confuse the public. Id.; see also American Council of Certified Podiatric Physicians and Surgeons v. American Board of Podiatric Surgery, Inc., 185 F.3d 606 (6th Cir. 1999) (A plaintiff seeking injunctive relief for false advertising faces a lower standard of "showing only that the defendant's representations about its product have a tendency to deceive consumers.") (quoting Max Daetwyler Corp. v. Input Graphics, Inc., 608 F. Supp. 1549, 1551 (E.D. Pa. 1985)) (internalquotations omitted). Thus, under both theories of liability, the Plaintiffs must prove a likelihood of confusion.

B. Unfair Competition

As stated above, unfair competition has its roots in the common law. The tort has long been recognized in Rhode Island. See Yellow Cab Co. of R. I. v. Anastasi, 46 R.I. 49, 124 A. 735 (1924). As our Supreme Court has aptly stated, "[t]he test of unfair...