Holiday Inns, Inc. v. Holiday Inn
| Decision Date | 14 March 1973 |
| Docket Number | Civ. A. No. 70-811. |
| Citation | 364 F. Supp. 775 |
| Parties | HOLIDAY INNS, INC., Plaintiff, v. HOLIDAY INN, Defendant, v. STRAND DEVELOPMENT CORPORATION, Additional, as Defendant on the Counterclaim. |
| Court | U.S. District Court — District of South Carolina |
Julius W. McKay, Columbia, S. C., James L. Kurtz, Washington, D. C., Richard A. Zachar, Chicago, Ill., for plaintiff.
D. Laurence McIntosh, Florence, S. C., Roy C. Hopgood, New York City, James P. Stevens, Loris, S. C., Steve Judlowe, New York City, for defendant.
FINDINGS OF FACT, CONCLUSIONS OF LAW and ORDER
This action is brought by the plaintiff, Holiday Inns, Inc., a Tennessee corporation, and the largest company in the restaurant and lodging business in the United States, hereinafter referred to as "The Chain". The suit is for alleged unfair competition and service mark infringement against the defendant Holiday Inn, a South Carolina corporation which operates a motel and restaurant at Myrtle Beach, South Carolina under the name of Holiday Inn. This defendant has counterclaimed alleging infringement and unfair competition under the common law of South Carolina and false representation and designation of origin by plaintiff under 15 U.S.C. § 1125(a), and seeks cancellation of certain of plaintiff's registrations under 15 U.S.C. § 1119.
The defendant Holiday Inn brought in as additional defendants on the counterclaim Fleming Jensen and Strand Development Corporation (hereinafter referred to as Strand), which is a South Carolina corporation and a franchisee of the Chain. Strand operates motel facilities at Myrtle Beach, South Carolina under the name of HOLIDAY LODGE and HOLIDAY DOWNTOWN. Strand also operates a facility under the name of HOLIDAY INN in the town of North Myrtle Beach, South Carolina. Fleming Jensen is an officer of Strand Corporation.
The counterclaim alleged certain antitrust violations by the Chain, Strand and Fleming Jensen. However, just prior to beginning the trial, these antitrust claims were dropped and withdrawn. All claims against Fleming Jensen were also withdrawn.
The plaintiff's basic charges against defendant are:
(a) That defendant intentionally adopted and used a sign designed substantially identical to the registered "great sign" used by the plaintiff.
(b) That defendant adopted and used a mark "YOUR HOST ON THE COAST" and "YOUR HOST WHILE IN MYRTLE BEACH", which are claimed to be substantially identical to the mark registered by the plaintiff: "YOUR HOST FROM COAST TO COAST".
(c) That the usage set forth in items (a) and (b) above are likely to cause confusion, mistake and deception among customers of hotel services in Myrtle Beach, South Carolina area.
(d) That the usages set forth in items (a) and (b) above constitute infringement and acts of unfair competition under the Trademark Act, 15 U.S.C. § 1051 et seq. and the common law of South Carolina.
In reply to defendant's counterclaim the plaintiff raised additional charges of infringement and unfair competition against defendant stemming from defendant's alleged use of signs and other materials which present the name HOLIDAY INN in a script form identical to that used by plaintiff and registered by plaintiff.
The issues raised by defendant Holiday Inn charge the plaintiff and Strand Corporation with trademark and service mark infringement, unfair competition under the South Carolina common law, false representation and false designation of origin under 15 U.S.C. § 1125. These charges are based upon plaintiff and Strand's use of the names and marks HOLIDAY LODGE and HOLIDAY DOWNTOWN in Myrtle Beach, South Carolina, and HOLIDAY INN in North Myrtle Beach. Defendant also seeks to cancel plaintiff's registration Nos. 592,539 and 592,540 because of alleged false statements made in connection with affidavits filed by the Chain pursuant to 15 U.S.C. § 1065.
This matter was heard before the Court without a jury and the Court has given considerable time to reading the voluminous depositions, considering and examining numerous exhibits, listening to argument of counsel, and reviewing briefs and memoranda of law submitted. Now in accordance with Rule 52, Federal Rules of Civil Procedure, the Court makes the following
1. The plaintiff Holiday Inns, Inc., hereinafter referred to as the "Chain", is a corporation organized and existing under the laws of the State of Tennessee, having its principal place of business in Memphis, Tennessee. It was founded in 1952 and since that time has grown to the point that it is now the largest factor in the restaurant and lodging business in the United States, and also does a considerable volume of business outside the United States. The plaintiff's principal business is providing restaurant and lodging services operating under the name Holiday Inn. These services are provided either through company owned facilities or facilities franchised by the Chain. At present the Chain has a facility in almost every major city in the United States, including 33 in the State of South Carolina. The Chain presently owns or franchises approximately 1,300 facilities in the United States.
2. The Chain's original concept was to establish a network of motels and restaurants spanning the entire country upon which the traveling public could rely in obtaining satisfactory services. The facilities affiliated with the Chain are readily recognizable, with quality controls exercised by the Chain and many similar services available at all facilities, such as free use of baby cribs, no charge for children under 12 when sleeping in the room with the parent, kennels for pets, acceptance of Gulf Oil credit cards, etc.
3. The Chain had developed and prominently displays on each facility a large sign, generally referred to as the "great sign". This sign is one of the major features by which travelers generally identify a motel as belonging to or affiliated with the Chain. This sign is quite large, but in some cities smaller versions are used in order to comply with local zoning restrictions. The sign has a green background with the name HOLIDAY INN in large distinctive script lettering, a large star at the top and smaller stars by the name HOLIDAY INN, a large orange arrow starting at the bottom of the sign and running in a sort of semi circle with the point indicating the location of the facility. There is always an attraction panel near the bottom of the sign.
4. In addition to the "great sign" most of the Chain facilities prominently display the words HOLIDAY INN in very large lettering in the distinctive script form directly on the side or face of the building.
5. In the promotion of its services the plaintiff also uses certain slogans, one of which is "YOUR HOST FROM COAST TO COAST". The United States Patent Office has registered applicable service marks of the plaintiff as follows:
REGISTRATION PUBLICATION ISSUE
MARK NUMBER DATE DATE
Holiday Inn 592,539 4/20/54 7/13/54
Holiday Inn 592,540 4/20/54 4/13/54
Holiday Inn
(Great Sign) 592,541 4/20/54 4/13/54
Holiday Inn
(Great Sign) 708,521 12/13/60
YOUR HOST
FROM COAST
TO COAST 740,362 8/21/62
6. Each of the above registrations was lawfully issued, is valid and currently subsisting. The requisite affidavits having been filed and accepted, these registrations have been accorded an incontestable status pursuant to 15 U.S.C. § 1065.
7. The above registered service marks of plaintiff are well known to the American traveling public. They have been extensively used and advertised in promoting plaintiff's services and the services of its franchisees. Numerous advertisements have appeared in magazines, newspapers, on radio and television and billboards, as well as a house magazine and a directory of member facilities of which more than ten million are printed and distributed each year. To indicate that its service marks are registered, the plaintiff has consistently used the R or "Reg. U.S. Pat. Office" designations in association with its marks.
8. The defendant Holiday Inn was incorporated in 1960. Prior to that time the business had been operated as a partnership or a proprietorship by Mr. and Mrs. George Hendrix. Mr. Hendrix died in 1959 and the following year Mrs. Hendrix incorporated the business and is the major stockholder and the president of the corporation. In 1966 she married William A. Smith, who since 1966 has held the office of vice-president and general manager of the motel known as Holiday Inn located at 1200 North Ocean Boulevard in Myrtle Beach, South Carolina.
9. When Mr. and Mrs. Hendrix began business in 1948 their resort consisted of an eight unit frame structure operating under the name Ocean Front Lodge. This facility was expanded to 20 units in 1949 and the name was changed to Holiday Inn having been derived from the popular movie "White Christmas". This name was presented in block letters until defendant's facility was expanded by the addition of approximately 15 units, which construction was completed in August 1955. At this time a new sign was erected and comprised the words HOLIDAY INN and applied directly to the newly constructed building. The lettering on this sign was in script form substantially identical to the distinctive script which plaintiff had adopted in 1952 and registered in 1954.
10. The defendant's facility grew over the years to its present 87 units.
11. In the beginning of defendant's business it did very little advertising. It operated a small facility offering rooms and apartments on a European plan without a restaurant. As the additions were made to defendant's facility it began to advertise on two or three billboards in the Myrtle Beach area using the script lettering of Holiday Inn. It also advertised on a limited scale in newspapers in South Carolina, North Carolina and...
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