United States District Court, Maryland

“ A trademark only gives the right to prohibit the use of it so far as to protect the owner’s goodwill against the sale of another’s product as his. ... When the mark is used in a way that does not deceive the public we see no such sanctity in the word as to prevent its being used to tell the truth. ”

“ Having no product to compete in the economy segment, Quality International designed a concept for a hotel with a smaller basic room which would rent for between $20 and $29 per night. Each room would have a queen size bed, plush carpeting, color TV, and a contiguous bathroom. There would be no conference rooms, food or other amenities on the premises, except a swimming pool in certain geographical areas. These economy hotels would all be of new construction and a consistent architecture. The name selected by Mr. Hazard for this product was “McSleep Inn.” ”

“ McDonald’s restaurants serve over 18 million people daily, and of all the people in the United States who eat out, 11 percent eat dinner and 25 percent eat breakfast at McDonald’s. McDonald’s claims that within the last four weeks, 89 percent of all children between the ages of two and seven and 64 percent of all adults have eaten at a McDonald’s restaurant. Indeed, over 95 percent of the entire American population has eaten at a McDonald’s, and eight percent of the entire work force in the United States once worked at a McDonald’s restaurant. ”

“ Some motels actually provide food in competition with fast food businesses which seem to spring up around motels. Quality International recognizes this relatedness in its own franchise agreement which prohibits its franchisees from using the name McSleep Inn or variation of it in the food business. Quality International’s other products, moreover, promote food and lodging together. The public has come to associate the two markets to such an extent that one would expect that McDonald’s has or would enter into this market. ”

“ The owner of a mark who has developed a reputation and identity with a mark through his products, service, marketing, and presence in the market, has an interest in protecting the business and reputation for which the mark stands, not only at the present time in the current markets in which he does business, but for future times and in related markets that the development of his business might naturally take him. ”

“ A family of marks may have a synergistic recognition that is greater than the sum of each mark. But that is not to say that the prefix “Mc” coupled with any generic word may be precluded by McDonald’s. Each allegedly offending use must be tested against the likelihood of confusion, for the scope of enforceability, as the Court has already noted, is measured by the scope of confusion.
In this case the only examination that is made, and the only conclusions that are reached, relate to the allegedly infringing use of “McSleep Inn” by Quality International in the lodging business. ”

“ So long as there is no abandonment or estoppel by acquiescence, a trademark owner’s tolerance of third-party uses of his marks will not bar enforcement of his rights against an infringing user. It may, however, bear on the issue of the strength of his mark. The damage that third-party users of a mark can cause an owner who seeks to enforce his mark is the weakening of the mark’s strength. ”

“ The question whether a “likelihood of confusion” exists is, however, answered most persuasively by the survey evidence presented at trial. Although none of the surveys was perfect, they all spoke consistently that an appreciable number of consumers would be confused.
In Dr. Zeisel’s telephonic survey, the responses were closest to a statistical sample. Its greatest shortcoming was that perhaps the first question, which allowed the respondent to associate, brought McDonald’s to mind and therefore provided fuel for the next question as to who owns or sponsors McSleep Inn. ”

“ McDonald’s golden arches and the McDonald’s logo rank among the strongest marks, enjoying instant recognition among virtually all members of our society. As noted earlier, evidence showed that among children McDonald’s “Ronald McDonald” enjoys virtually 100 percent recognition. To take judicial notice of a mark would perhaps be unprecedented, but the parties were not troubled with the notion in this ease as to some of McDonald’s marks such as the golden arches and Big Mac. ”

“ Quality International’s own survey evidence shows that even with all the mitigating factors, which were clearly depicted (more clearly than would be the case in real life) in a rendering of a McSleep Inn, still 16% to 20% of the public would continue to believe that it was sponsored by McDonald’s. Projected across the 144 million people who are considered to be the potential audience for McSleep Inn, well over 20 million would be likely to be confused. ”

“ Here the confusion in a different, but related market, entitles McDonald’s to enforce its marks in that market.
Intent of Quality International
Intent of the infringing user to confuse is not necessary to establish a likelihood of confusion. On the other hand, the existence of an intent to confuse is “strong evidence establishing likelihood of confusion, since one intending to profit from another’s reputation generally attempts to make his signs, advertisements, etc., to resemble the other’s so as deliberately to induce confusion.” ”

“ The name McSleep should help consumers instantly identify the product for what it is—a consistently clean, quality product at a low price. *⁠*⁠*⁠*⁠*⁠* McSleep is aimed at the entire travel market. Like McDonald’s, it is acceptable for the upscale traveler who wants only a good night’s sleep and for the economy traveler who wants to save money.
Yet, when questioned at trial whether the promise of a consistent, convenient and quality product at a low price brought to mind McDonald’s, Mr. Hazard said it never occurred to him, though it was possible “it might remind some folks of McDonald’s.” ”

“ The court rejected the old rule limiting enforcement to competitive goods and said a mark would e protected on any goods which buyers would be likely to think came from the same source as plaintiff’s goods.
[W] e think that goods, though different, may be so related as to fall within the mischief which equity should prevent. Syrup and flour are both food products, and food products are commonly used together. Obviously the public, or a large part of it, seeing this trademark on a syrup, would conclude that it was made by the complainant. ”

“ It cannot be overlooked, however, that a close affinity of markets for two different products or services can create in the public perception a belief or expectation that one would be expected to go into the other. This belief or expectation becomes a factor in explaining confusion that may be shown between two products that do not compete with each other. Thus, the relatedness of markets in which the competing marks are used is relevant to the likelihood-of-confusion issue. ”

“ Quality International is a Delaware corporation with its principal offices in Silver Spring, Maryland. It is engaged in the lodging business, particularly in inns, hotels, suites, and resorts. Since 1981 it has been the fastest growing hotel franchise chain in the United States and is now the third largest franchiser of hotels both in terms of hotels and rooms available. ”

“ Quality International not only was aware of the risk that attended its adoption and use of the name McSleep Inn, a risk that it was infringing McDonald’s family of marks, but it also had good reason to believe that the public might be actually confused. ”

“ Quality International has pointed out that there are a substantial number of third-party uses of “Mc” with a generic word that would give rise to infringement to the same extent as would the mark McSleep Inn. Quality International urges that these uses by third parties are so pervasive that McDonald’s should now be denied the right to enforce its marks against McSleep Inn. ”

“ Hazard pursued for Quality International, the possibility of actually working with McDonald’s in a joint venture involving an inexpensive, quality hotel with a fast-food restaurant was on the Quality International agenda at the time Mr. Hazard selected “McSleep.”
Years before, McDonald’s had adopted and used the name McStop in connection with a traveler’s plaza for the long distance traveler. The plaza by concept included a McDonald’s fast-food restaurant, a convenience store, gas station, lodging, and related businesses. ”

“ When the strength of the mark is so pervasive, however, to the point that the public actually attributes competitive products or services to the mark without the intent of attributing source, then the mark may be lost to the public domain. The public comes to understand the mark to refer only to the kind of goods and not to the origin. Thus, once enforceable marks such as aspirin, thermos, cellophane, and escalator have become generic words. ”

“ Dr. Jacoby conducted his own survey using as stimuli: an airline travel magazine advertisement for Quality International, a mock up yellow pages advertisement, and an artist’s rendering showing McSleep Inn with a clarifying sign underneath it which reads, “by Quality International.” The magazine advertisement was so diluted in its presentation, focusing principally on the Quality Inns range of products, that the Court concludes that it was not useful data to consider. Likewise, there was significant confusion relating to the yellow page advertising. ”

“ Each participant was given a questionnaire inquiring about specific aspects of the rooms under consideration. There was one question, however, inserted at Mr. Hazard’s request, that read as follows: “What is your overall impression of the name ‘McSleep Inn’ for the type of hotel/motel accommodations described in the above statement?” The respondent was then given a choice of four grades ranging from “excellent name” to “poor name.” Over 40 of the respondents volunteered a written comment in response to that question suggesting an association with McDonald’s. ”

“ In recent years, McDonald’s began to focus on a long distance travel market, defined by customers traveling on the road who are more than 30 miles from home when they use the service. Pursuing this market, McDonald’s took over numerous tollway restaurants and converted them to McDonald’s restaurants. ”

“ Over 31 percent (31.9%) of all the respondents expressed the belief that McDonald’s owns or operates the hotel. If only respondents who stayed in a hotel at least once during the last 12 months are included, 34.5 percent believed that McDonald’s owns or operates McSleep Inn; and if only respondents who stayed in hotels 12 or more times during the past year are included, 38.5 percent believed that McDonald’s owns or operates McSleep Inn. ”

“ Failure to take reasonable steps to prevent third-party uses of the mark may weaken a mark to the point where it is entitled to only a narrow scope of enforcement, and ultimately the question may become one of abandonment. However, where the owner of the mark has been reasonably diligent in protecting his rights, even though infringements exist, no intent to abandon will be inferred. ”

“ In the area of clothes, McFashion has been used in connection with smaller, specialized express stores for kids, imitating the concept of a fast food outlet.
McMedicine has been used to refer to prompt, inexpensive medical care centers, and McSurgery becomes surgery without overnight hospital stays.
McLaw has been used to describe the legal franchise phenomenon, suggesting that legal advice is dispensed through drive-in windows. Describing franchising in other areas have been McFuneral for funeral operations ”

“ Whether a trademark owner delayed in enforcing its trademark rights against others, however, is not relevant to establishing an estoppel defense, since estoppel by acquiescence focuses on a plaintiff’s acts toward the defendant, not toward others. Acquiescence is a personal defense that merely results in a loss of rights against the defendant. ”

“ Because of the ample presentation of evidence on the promotion and awareness of the marks of McDonald’s, the Court will not be required to consider whether judicial notice should be taken here. McDonald’s spends almost a billion dollars each year on marketing and advertising, a sum which increases steadily with its sales, which are at $14 billion. ”

“ While the plaintiff proffered many such purportedly infringing marks from the trademark register, the Court received into evidence as relevant only those marks on which there was evidence of actual use in the marketplace. These uses were evidenced by telephone directories, visual observations, credit reports, newspaper references, and telephone calls to the businesses.
The evidence established that there are many third-party uses. McHappy and McDonuts are used for baked goods and doughnuts in Ohio and the midwest area. McMaid is used for maid service franchising in various midwestern states. ”

“ It may be seized by another, and the person doing so gains rights against the whole world. 15 U.S.C. § 1115. However, as the court in Sweetheart Plastics emphasized, “ [t] he issue is hardly ever ‘abandonment,’ because that requires proof that the mark has lost all significance as an indication of origin” and is “completely without signs of life.” ”