McDonald's Corp. v. McBagel's, Inc.
| Decision Date | 10 December 1986 |
| Docket Number | No. 85 Civ. 7868 (JMW).,85 Civ. 7868 (JMW). |
| Citation | 649 F. Supp. 1268 |
| Parties | McDONALD'S CORPORATION, Plaintiff, v. McBAGEL'S, INC. and Ken McShea, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Robert E. Wagner, Wallenstein, Wagner, Hattis, Strampel & Aubel, Chicago, Ill., Joseph D. Garnon, Brumbaugh, Graves, Donohue & Raymond, New York City, John R. Horwitz, Sr. Corporate Atty., Oak Brook, Ill., for plaintiff.
Lawrence S. Lawrence, Yvonne Cort, Lawrence, Ciovacco and Walsh P.C., Hempstead, N.Y., for defendants.
Plaintiff McDonald's Corporation ("McDonald's") brings this action to enjoin the Defendants McBagel's, Inc. ("McBagel's") and its sole shareholder Ken McShea ("McShea") from using the name "McBAGEL'S" in connection with a bagel bakery and restaurant located in Fishkill, New York. McDonald's claims that defendants are violating both statutory and common law, and asserts causes of action for trademark infringement under 15 U.S.C. § 1114(1)(a); unfair competition under 15 U.S.C. § 1125(a); common law unfair competition; and dilution under New York General Business Law § 368-d (McKinney 1984).1
The Court reaches these findings of fact and conclusions of law following a careful review of the testimony offered by both sides at a bench trial, as well as a word-by-word reading of the trial transcript, the Court's trial notes, the depositions and exhibits received in evidence, and the extensive pre-trial and post-trial submissions of the parties.
McDonald's, a Delaware Corporation with its principal place of business in Oak Brook, Illinois, is perhaps the largest fast food chain in the United States. Since its founding in the mid-1950's, McDonald's has grown steadily.
In 1955, Ray A. Kroc opened a single restaurant in Des Plaines, Illinois, a suburb of Chicago. Kroc originally licensed the right to use the name and mark "McDONALD'S" from Richard and Maurice McDonald, who had operated a restaurant under that name in San Bernadino, California. A few years later, Kroc paid the McDonald brothers several million dollars, purchasing rights to use the name "McDONALD'S" throughout the United States. During the past 30 years, McDonald's has expanded to include more than 9,000 restaurants throughout the world, 6,800 of which are located in the United States. In 1984, the company's revenues exceeded $2.5 billion.
McDonald's opened its first New York State restaurant in 1958, and since that time has established several hundred restaurants in New York. One of these is located in Fishkill, about one mile from the McBagel's bagel bakery and restaurant. The Fishkill McDonald's, like about 75 percent of McDonald's restaurants, is operated as an independent franchise and staffed by local residents.
In 1955, McDonald's original menu consisted of hamburgers, french fries, and milkshakes. Subsequently, McDonald's has experimented with, tested, and sold a wide variety of products in various stores throughout its system. For instance, in 1968, after market testing in California, McDonald's introduced a breakfast sandwich called the "EGG McMUFFIN" in restaurants across the United States. In 1979, McDonald's first experimented with a chicken dish called "CHICKEN McNUGGETS." These "McNuggets" are now served at most McDonald's restaurants.
Today, McDonald's restaurants offer a substantially uniform menu, including hamburgers, cheeseburgers, special sandwiches, french fried potatoes, chicken nuggets, fried fish sandwiches, shakes, hot pies, sundaes, cookies, soft drinks, and other beverages. Most McDonald's restaurants operating in the United States and Canada are also open during breakfast hours with a breakfast menu that includes the "EGG McMUFFIN" and "McMUFFIN" sandwiches, pancakes, and other breakfast fare. Still interested in expanding the range of food items available in McDonald's stores, the company frequently test markets new items and licensees often participate in or initiate such testing.
McDonald's has made a point of identifying each new product or service with the "Mc" or "Mac" prefix. Although McDonald's holds no trade or service mark registration for the "Mc" prefix standing alone, it has registered some thirty-four marks which contain "Mc" or "Mac". These registered marks represent a variety of food items and services.2
McDonald's originally advertised only its name "McDONALD'S" and its well-known "ARCHES" trademark. In recent years, however, it has expanded this advertising to include other distinctive marks, which are derived from "McDONALD'S" and begin with "Mc" or use "Mac", such as "EGG McMUFFIN", "SAUSAGE McMUFFIN", "McD.L.T.", "BIG MAC", "RONALD McDONALD", and CHICKEN McNUGGETS". Today, all advertisements contain the mark "McDONALD'S" and the "ARCHES", and most include at least one of these specific products designated by the "Mc" or "Mac" formative.
McDonald's makes substantial investments in advertising and marketing the products designated by its trademarks and service marks. In fiscal year 1984, McDonald's and its licensees spent over $300 million in national and local television, radio, newspaper, magazine, billboard, and other advertising. In 1985, the McDonald's system increased its advertising expenditures to $350 million. In that year, in addition to its general advertising expenses, McDonald's spent $125 million on in-store promotions.
About ninety percent of this large annual advertising budget is used solely for television commercials. The Court received in evidence numerous storyboards proposed for McDonald's local and national television commercials, which usually run for from four to six weeks. As of the trial of this action, McDonald's was the nation's largest advertiser of any single good, service, or establishment, and the nation's fifth largest advertiser overall.
McBagel's, owned by defendant and sole shareholder Ken McShea, was incorporated in the State of New York in August of 1984. After completing construction in December 1984, McBagel's opened its bagel bakery and restaurant in a Fishkill, New York shopping center under the name "McBAGEL'S".
Since its opening, McBagel's primarily has sold a variety of bagels baked each day on the premises. McBagel's menu includes bagels, salads, sandwich fillers such as egg salad, tuna fish, chicken salad, shrimp salad, as well as a wide variety of hot and cold sandwich meats. The restaurant also serves soft drinks, soup and breakfast items, such as eggs, buttered bagels, egg & ham on a bagel, and traditional breakfast beverages. The name "McBAGEL'S" appears on a neon sign reading "McBagel's Bagel Bakery & Restaurant", which defendants have placed above the entrance to the store, and on cardboard signs serving as menus, which are located inside the restaurant. McBagel's has an advertising budget of between $10,000 and $15,000 a year, and has used "McBAGEL's" in flyers and coupons, weekly newspaper advertising, telephone directory ads and regularly-broadcast radio commercials. In the year prior to trial, McBagel's also received some free advertising from the coverage by various local newspapers, WCBS-TV in New York and INN News, of the instant dispute between McDonald's and McBagel's.
Plaintiff McDonald's objects to the defendants use of the "Mc" prefix in conjunction with a generic food item, the bagel, to denote McBagel's services as a bagel bakery and restaurant. McDonald's first voiced it opposition to the restaurant's name in December 1984, and subsequently filed this action in October 1985. The essence of plaintiff's claim is that defendants' use of the phrase "McBAGEL'S" creates confusion among customers as to whether McDonald's somehow sponsors or is otherwise associated with McBagel's.
McDonald's, however, has limited the scope of the trademark protection it requests in this action. McDonald's expressly stated at trial that it had no complaint with defendants' use of the "Mc" prefix in conjunction with a word unrelated to food products. Thus plaintiff would not have objected had defendants called the bakery and restaurant "McSheagels," the name selected by the public, but never adopted by defendants, in a name contest run by defendants after they first learned of McDonald's opposition to their use of the name McBagel's.
McBagel's, on the other hand, broadly asserts that McDonald's extensive advertising program actually eliminates any possibility of confusion with McBagel's, since the McDonald's marks and every aspect of its distinctive business, including McDonald's unique restaurants and their golden arches, are so well known.
The mark for which McDonald's claims protection is the prefix or formative "Mc" when used with a generic food item, as in the numerous marks already registered by plaintiff. See Note 2 supra. While it does not hold a registered mark in "Mc", plaintiff may claim protection for this prefix as a common component of a "family of marks." 3A R. Callman, The Law of Unfair Competition Trademarks and Monopolies § 20.24 (4th ed. 1986) hereinafter cited as Callman. In other words, if McDonald's can demonstrate that it has established a "family of marks", the corporation may obtain trademark protection against one whose mark is thought to emanate from the same source as the plaintiff's family.
The existence vel non of a family of marks is a question of fact based on the distinctiveness of the common formative component and other factors, including the extent of the family's use, advertising, promotion, and its inclusion in a number of registered and unregistered marks owned by a single party. In this case, the Court has no hestitation in finding that McDonald's owns a "family of marks", both registered and unregistered, whose common characteristic is the use of "Mc" or "Mac" as a formative. The...
To continue reading
Request your trial
-
Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc.
...in much the same way they assess the strength of the mark when evaluating likelihood of confusion. See McDonald's Corp. v. McBagel's, Inc., 649 F.Supp. 1268, 1281 (S.D.N.Y.1986); P.F. Cosmetique, S.A. v. Minnetonka Inc., 605 F.Supp. 662, 672 (S.D.N.Y.1985). "To establish secondary meaning i......
-
In re Leslie Fay Companies, Inc., Bankruptcy No. 93 B 41724(TLB)
...`truly of distinctive quality' or one which has `acquired a secondary meaning in the mind of the public.'" McDonald's Corp. v. McBagel's, Inc., 649 F.Supp. 1268, 1280 (S.D.N.Y.1986) (quoting Miss Universe v. Patricelli, 753 F.2d 235, 238 (2d Cir.1985)); (2) a "plaintiff must show that the s......
-
Major League Baseball v. Sed Non Olet Denarius
...was sufficiently far from plaintiff's Los Angeles restaurant to preclude finding of infringement). Compare McDonald's Corp. v. McBagel's, Inc., 649 F.Supp. 1268 (S.D.N.Y.1986) (where plaintiff had national chain, as opposed to a single use, defendants' name McBagel's infringed restaurant ch......
-
Bristol-Myers Squibb Co. v. McNeil-PPC, Inc.
...market research does not conclusively decide the issue of likelihood of confusion in Lanham Act cases" (see McDonald's Corp. v. McBagel's Inc., 649 F.Supp. 1268, 1278 S.D.N.Y. The Court remains cognizant of the fact that Bristol-Myers was not required to introduce any survey evidence, and t......
-
Consumer Uncertainty in Trademark Law: an Experimental Investigation
...for an "appreciable" number of consumers, which may not even be a majority).38. Id.39. See, e.g., McDonald's Corp. v. McBagel's, Inc., 649 F. Supp. 1268, 1277 (S.D.N.Y. 1986) (showing that 25% supports finding of likely confusion); Bell v. Starbucks U.S. Brands Corp., 389 F. Supp. 2d 766, 7......