Resource Lenders, Inc. v. Source Solutions, Inc.,
| Decision Date | 12 December 2005 |
| Docket Number | No. 1:05CV0999OWWLJO.,1:05CV0999OWWLJO. |
| Parties | RESOURCE LENDERS, INC., a California corporation Plaintiff, v. SOURCE SOLUTIONS, INC., a Nevada corporation, Defendant. |
| Court | U.S. District Court — Eastern District of California |
Mark D. Miller, Kimble, MacMichael and Upton, Fresno, CA, for Plaintiff.
Sharon Jane Adams, Adams Law Office, Walnut Creek, CA, for Defendant.
Plaintiff RESOURCE LENDERS, INC. ("Plaintiff" or "RESOURCE LENDERS") moves for a preliminary injunction against Defendant SOURCE SOLUTIONS, INC. ("Defendant" or "SSI"), enjoining SSI from using the designations "RESource" or "R.E.Source" or "R.E.*Source" (where the * is a house or other logo), or the introductory word "resource" or any representation of the word "resource" as the introductory word in its business name or service mark, in any manner in connection with the distribution, advertisement, promotion, offer for sale and/or sale of any real estate or mortgage services, SSI opposes the motion.
This trademark infringement, unfair trade practices, and dilution action arises out of the complaint of Plaintiff, a real estate mortgage loan provider, that defendant SSI has infringed on Plaintiff's service marks, which are (1) "Resource Lenders" and (2) "Resource Lenders Your Resource For Real Estate Loans." SSI, a real estate sales and mortgage loan company, currently uses the mark "R.E.*Source Redefining Real Estate." (where the * is a logo of a house) and argues that its mark does not infringe on or dilute Plaintiff's mark. Plaintiff argues that SSI's use of the terms "RESource", "R.E.Source", and/or "R.E.*Source" as the introductory word in its mark does infringe and should be enjoined.
Plaintiff filed its complaint on August 3, 2005. (Doc. 1, Compl.) Plaintiff brings six claims against Defendant: (1) Infringement of Federally Registered Service Mark (15 U.S.C. § 1114(1)); (2) Infringement of Service Mark; (3) Trade Name Infringement (Cal. Bus. & Prof.Code § 14330); (4) Unfair Competition and False Designation of Origin (15 U.S.C. § 1125(a)); (5) Unfair Competition and Unfair Business Practices (Cal. Bus. & Prof.Code § 17000, et seq., and § 17200); and (6) Dilution (15 U.S.C. § 1125(c); Cal. Bus. & Prof.Code § 14330). Defendant answered the Complaint on September 6, 2005. (Doc. 18, Answer)
On August 10, 2005, Plaintiff filed a motion for preliminary injunction (Doc. 5, Pl.'s Mot.) and three supporting declarations (Docs. 7, 8, 10). On September 2, 2005, defendant filed opposition. (Doc. 17, Def.'s Opp.) On September 12, 2005, Plaintiff filed a reply (Doc. 20, Pl.'s Reply) and three supplemental declarations (Docs. 21-23). Oral argument was heard on September 19, 2005. Mark D. Miller, Esq., appeared on behalf of Plaintiff. Sharon Jane Adams, Esq., appeared on behalf of Defendant. Additional briefing was scheduled to allow Defendant to object to supplemental evidence submitted by Plaintiff and to allow Plaintiff to submit additional evidence of actual confusion. On September 27, 2005, defendant filed a brief in compliance with the briefing schedule titled "Memorandum of Points and Authorities in Support of Defendant's Response to New Evidence Submitted with Plaintiffs Reply." (Doc. 30, Def.'s Sur-Reply) On September 30, 2005, Plaintiff responded, filing a brief titled "Plaintiff's Supplemental Reply Memorandum of Points and Authorities in Support of Motion for Preliminary Injunction." (Doc. 33, Pl.'s Sur-Reply) Plaintiff also filed twelve supplemental declarations. (Docs. 34-45) Defendant replied on October 7, 2005. (Doc. 47, Def.'s Mem. in Opp.)
Plaintiff RESOURCE LENDERS is a real estate mortgage and loan services provider headquartered in Fresno, California, with offices in Bakersfield, Visalia, Porterville, Hanford, and San Luis Obispo. RESOURCE LENDERS alleges it has engaged in extensive advertising and promotion of its real estate mortgage and loan services under the name "Resource Lenders" for the past fifteen (15) years including radio and newspaper advertising, circulating flyers and brochures, and advertising signs, including those posted on the scoreboard at Grizzlies Stadium in Fresno, California. The parties do not dispute that RESOURCE LENDERS owns two marks: (1) "Resource Lenders" and (2) "Resource Lenders Your Source for Real Estate Loans," Defendant SSI opened in 2004. SSI represents buyers and sellers in real estate transactions and also provides real estate loans. (Wren Decl. ¶¶ 2, 3) SSI asserts that the majority of its business is real estate transactions and not making loans. (Id. at ¶ 4) The mark currently in use by SSI is "R.E.*Source Redefining Real Estate" (where the * is a logo of a house). SSI has also used the mark "RESource Real Estate Mortgage," although SSI asserts it no longer used this mark.
In or about January 2005, RESOURCE LENDERS discovered that Defendant SSI had adopted the business name and designation "RESource Real Estate Mortgage" and that SSI was using these names to promote real estate mortgage and loan services in the Fresno area. (Barnes Decl. ¶ 8)
RESOURCE LENDERS sent a first demand letter to SSI on January 28, 2005 to which SSI failed to respond. RESOURCE LENDERS made a follow-up telephone call in March 2005, with no response. RESOURCE LENDERS sent a second letter with a draft unfiled complaint to SSI on March 22, 2005. SSI responded to this letter, and several weeks of discussions and negotiations between the parties regarding SSI's business name followed. The discussions did not result in any agreement or resolution. (Barnes Decl. ¶ 8)
In its opposition, Defendant asserts that settlement discussions broke down because Plaintiff refused to include a "notice and cure" provision in the proposed settlement agreement. Defendant asserts that it began using the designation "R.E.*Source Redefining Real Estate" in response to Plaintiff's complaints and "with the approval of Plaintiff's counsel." Defendant denies continuing to use the mark "RESource Real Estate Mortgage," and asserts that current appearances of this mark are merely infrequent and mistaken uses that have not yet been addressed in its transitioning process. (Doc. 17, Def.'s Opp. 2-3) Defendant argues it has taken steps to implement its name change, including ordering new business cards, signs, and filing a new fictitious business statement with the City of Fresno. However, Plaintiff notes that the mark "RESource Real Estate Mortgage" has appeared in the October 2005 issue of Guide to Better Homes. This advertisement lists two real estate agents at the top of the page and lists seven mortgage consultants and/or mortgage consultant/real estate agents at the bottom of the page. An almost identical advertisement appeared in the September 2005 issue of the Guide, which Plaintiff attached to its initial moving papers. (Doc. 23, 09/12/05 Miller Decl. Ex. F) Defendant states that it wants all of its agents to use its new mark, and attributes the appearance of this advertisement in the October 2005 issue to "confusion among Defendant's over 250 employees and contractors."
Despite defendant's changing its name to "RESource Redefining Real Estate", however, RESOURCE LENDERS argues that defendant's use of the mark "RESource" is nevertheless an infringing use because the term "RESource" is prominently displayed on the new mark, just as it was on the old mark.
RESOURCE LENDERS alleges that SSI uses the infringing marks in the following ways; (1) portable street signs (MacArthur Decl., Ex. H); (2) SSI maintains fictitious business name statements for "RESOURCE" and "RE-SOURCE" (Miller Decl. ¶ 8, Ex. E); (3) SSI has a mortgage broker's license listing its DBA's as "RESOURCE" and "RE-SOURCE" (Id. at ¶ 9, Ex. F); (4) SSI displays the mark on websites, including http://www.resource recruit.com; http://www.resource corporate.com; and http://www.resource ontheweb.com (Id. at Exs. H, I).
Certain prerequisites must be satisfied prior to issuance of a preliminary injunction. Under the so-called "traditional" standard, an injunction may issue if the court determines that (1) the moving party will suffer irreparable injury if the relief is denied; (2) there is a strong likelihood that the moving party will prevail on the merits at trial; (3) the balance of potential harm favors the moving party; and (4) the public interest favors granting relief. Under the "alternative" standard, an injunction properly issues when a party demonstrates either: (1) a combination of probable success on the merits and the possibility of irreparable injury if relief is not granted; or (2) the existence of serious questions going to the merits combined with a balancing of hardships tipping sharply in favor of the moving party. The requirement for showing a likelihood of irreparable harm increases or decreases in inverse correlation to the probability of success on the merits, with these factors representing two points on a sliding scale. Earth Island Institute v. United States Forest Service, 351 F.3d 1291, 1310 (9th Cir.2003).
The bases for injunctive relief (preliminary or permanent) in the federal courts have always been irreparable injury and the inadequacy of legal remedies. Weinberger v. Romero-Barcelo, 456 U.S. 305, 312, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982); High Sierra Hikers Ass'n v. Blackwell, 390 F.3d 630, 641-42 (9th Cir. 2004); Ford v. Reynolds, 316 F.3d 351, 355 (2nd Cir.2003). Under either the traditional or the reformed approach, to obtain a preliminary injunction, the Plaintiff must show that it is "likely" to prevail on the merits....
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