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The ultimate question in determining whether a new mark infringes an existing mark is whether there exists a likelihood that an appreciable number of ordinarily prudent purchasers will be misled, or indeed simply confused, as to the source of the goods or services in question. In conducting this inquiry, courts apply a flexible test that considers the following nine factors: (1) the strength or distinctiveness of the plaintiff's mark as actually used in the marketplace; (2) the similarity of the two marks to consumers; (3) the similarity of the goods or services that the marks identify; (4) the similarity of the facilities used by the markholders; (5) the similarity of advertising used by the markholders; (6) the defendant's intent; (7) actual confusion; (8) the quality of the defendant's product; and (9) the sophistication of the consuming public. This judicially created list of factors is not intended to be exhaustive or mandatory, and not all these factors are always relevant or equally emphasized in each case. In determining whether the defendant's use is likely to cause confusion, a court must consider how the two parties actually use their marks in the marketplace.
Plaintiff, Choice Hotels International, Inc., was the owner of a "family" of ECONO LODGE trademarks which it was using in connection with its lodging franchise business. The defendants were the owners of a hotel in Myrtle Beach (the "Subject Property") that was previously owned by Kelley Properties, LLC, a former franchisee of the plaintiff. Kelley operated an ECONO LODGE INN & SUITES, but its rights to do so were terminated before the hotel was acquired by the defendants. Nevertheless, the defendants continued to operate the hotel as an ECONO LODGE INN & SUITES, displaying the plaintiff's trademark on a large sign in front of the Subject Property. When the defendants finally rebranded the hotel, they changed the name to ECONO STUDIOS INN & SUITES, and replaced the plaintiff's sign with a new sign bearing the new name. The plaintiff alleged that the modified name violated its trademark and created a likelihood of consumer confusion. The plaintiff advanced causes of action for trademark infringement and unfair competition under the Lanham Act and common law. The plaintiff filed a motion for summary judgment. The plaintiff also sought a permanent injunction prohibiting the defendant from further use of any of the marks in the ECONO LODGE family of marks and from further use of the similar ECONO STUDIOS INN & SUITES.
The court granted the plaintiff’s motion for summary judgment, holding that the defendants' use of the similar name created a likelihood of consumer confusion and infringed the plaintiffs' mark, in violation of the Lanham Act, 15 U.S.C.S. § 1114(a), because the plaintiffs' marks were distinct, the defendant's marks were similar, and the plaintiff demonstrated actual confusion. The court further held that the plaintiffs were entitled to permanent injunctive relief under 15 U.S.C.S. § 1116 particularly because they established irreparable injury from consumer confusion and there was a lack of an adequate remedy since the risk of a suit and monetary damages were insufficient to deter the defendants from infringing the plaintiffs' mark.