Docstoc

Stanley Steemer TRO

Document Sample
Stanley Steemer TRO Powered By Docstoc
					 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 1 of 23 PAGEID #: 58



                               UNITED STATES DISTRICT COURT
                             FOR THE SOUTHERN DISTRICT OF OHIO
                                      EASTERN DIVISION

STANLEY STEEMER INTERNATIONAL,                            :
                                                          :
                                                          :
                Plaintiff,                                :   Judge Smith
                                                          :
v.                                                        :   Magistrate Deavers
                                                          :
SUSAN HURLEY, et al.,                                     :   Case No. 2:13cv00050
                                                          :
                Defendants.                               :

                   MOTION FOR TEMPORARY RESTRAINING ORDER

        Plaintiff, Stanley Steemer International, Inc. (“Stanley Steemer”) hereby moves for a

temporary restraining order against Defendants Susan Hurley, Stanley Steemer of Northern

Kentucky, and Jeffery Voges. In particular, Stanley Steemer seeks an order

     (1) temporarily enjoining and restraining Defendants from operating or using in their or any
         cleaning business (including but not limited to parking said vehicles in or around their or
         any such business) any vehicles painted with a color violating United States Patent and
         Trademark No. 3,182,240, covering the distinctive color Stanley Steemer vans are
         painted and described as: “The color yellow-orange is claimed as a feature of the mark.
         The color yellow-orange, which is the approximate equivalent of Pantone Matching
         System 143C, is applied to the entire surface of a van used in performing the services.”

     (2) temporarily enjoining and restraining Defendants from using any and all telephone
         numbers previously used by or otherwise associated with Defendant Hurley’s former
         Stanley Steemer franchise, as well as any and all classified listings and/or advertisements
         that incorporate such telephone numbers. Defendants must immediately transfer to
         Stanley Steemer any and all telephone numbers previously used by or otherwise
         associated with Defendant Hurley’s former Stanley Steemer franchise.

     (3) temporarily enjoining and restraining Defendants from holding themselves out as a
         present or former Stanley Steemer business franchisee.

     (4) temporarily enjoining and restraining Defendants from using, by advertising or in any
         manner whatsoever, any methods, procedures and techniques associated with the Stanley
         Steemer system in which Stanley Steemer has a proprietary right, title, or interest.

     (5) temporarily enjoining and restraining Stanley Steemer of Northern Kentucky from
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 2 of 23 PAGEID #: 59



       operating under the Stanley Steemer name.


       The grounds for this temporary restraining order are set forth in the attached

Memorandum in Support as well as in the Verified Complaint filed contemporaneously herewith.

                                             Respectfully Submitted,

                                             /s/Kimberly Weber Herlihy
                                             Kimberly Weber Herlihy (0068668), Trial Counsel
                                             Kenneth J. Rubin
                                             Vorys, Sater, Seymour and Pease LLP
                                             52 E. Gay Street, P.O. Box 1008
                                             Columbus, Ohio 43216-1008
                                             (614) 464-8283
                                             (614) 719-5021 (Facsimile)
                                             kwherlihy@vorys.com
                                             kjrubin@vorys.com

                                             Attorneys for Plaintiff,
                                             Stanley Steemer International, Inc.




                                                2
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 3 of 23 PAGEID #: 60



                               MEMORANDUM IN SUPPORT

   I. Introduction

       Susan Hurley, a Stanley Steemer franchisee who was caught not once, but twice,

underreporting her sales to Stanley Steemer – and thus not paying royalties due on those sales –

unilaterally stopped operating her Stanley Steemer franchise after a December audit revealed this

fraud. But, not only did Ms. Hurley (in concert with the other Defendants) stop operating her

franchise, she opened a new carpet cleaning business capitalizing and trading on her experience

as a Stanley Steemer franchisee. This new business uses vans violating Stanley Steemer’s

registered service mark, Stanley Steemer’s proprietary system, and a phone number associated

with her Stanley Steemer franchise. These actions violate the Lanham Act and Stanley

Steemer’s clear contractual rights. Stanley Seemer is suffering irreparable harm every day that

this continues and respectfully requests that this Court enjoin Defendants’ behavior.

   II. Statement of Facts

A. The Parties

       Stanley Steemer is an Ohio corporation with its principal place of business at 5800

Innovation Drive, Dublin, Ohio 43016. (Verified Complaint ¶ 1). Defendant Susan Hurley a/k/a

Susan Voges is a resident of Union, Kentucky and, until recently, was a Stanley Steemer

franchisee pursuant to a Franchise Agreement between her and Stanley Steemer dated July 26,

2009 (the “Franchise Agreement”). (Id. ¶ 2). Defendant Stanley Steemer of Northern Kentucky,

Inc. (“SSNKY”) is a Kentucky corporation with its principal place of business in Kentucky. (Id.

¶ 3). Upon information and belief, Ms. Hurley formed SSNKY and is SSNKY’s sole officer.

(Id.) SSNKY is the corporation that owned Ms. Hurley’s franchise’s trucks. (Id.) At all times,

Ms. Hurley was the only franchisee and remains personally liable under the Franchise
    Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 4 of 23 PAGEID #: 61



Agreement. (Id.). Defendant Jeffery Voges is a resident of Union, Kentucky. (Id. ¶ 4). Susan

Hurley a/k/a Susan Voges and Jeffery Voges appear to be married.1 (Id. ¶ 5).

B.       Facts

         1.      Stanley Steemer

         Stanley Steemer is in the business of carpet and upholstery cleaning, directly and through

the franchising of its unique business format and operating system for the carpet and upholstery

cleaning business. (Verified Compliant ¶ 10). Stanley Steemer prides itself on the high quality

cleaning services that it and its franchisees offer their customers. (Id. ¶ 11). Stanley Steemer

enjoys an excellent reputation and goodwill nationwide with respect to providing quality services

to its customers. (Id.) Its reputation and goodwill have been and continue to be an important

part of Stanley Steemer’s business value and important benefits to Stanley Steemer and its

franchisees. (Id.)

         Stanley Steemer owns and uses numerous trademarks and service marks in the marketing

and sale of its cleaning services that are registered with the United States Patent and Trademark

Office and are valid under the common law. (Id. ¶ 12). The most relevant registered mark for

purposes of this action is No. 3,182,240 for a design mark. (Id.) This mark covers the

distinctive color Stanley Steemer vans are painted and is described on the registration statement

as follows: “The color yellow-orange is claimed as a feature of the mark. The color yellow-

orange, which is the approximate equivalent of Pantone Matching System 143C, is applied to the

entire surface of a van used in performing the services.” (Id.) The mark applies to a van, as

shown below:




1
 A public records search reveals that Ms. Hurley has registered two cars as “Susan Voges” at the same address as
Mr. Voges and that both reside at that address.


                                                        2
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 5 of 23 PAGEID #: 62




This registration is currently in full force and effect. (Id.)

        Stanley Steemer also owns other registered marks. In addition to the marks described at

Exhibit B to the Franchise Agreement, Stanley Steemer also owns, Registration Nos. 1,006,675;

1,694,865; 2,274,323; and 2,442,125 (all covering the “Stanley Steemer” name). (Id. ¶ 13).

        2.      Stanley Steemer’s Relationship with Susan Hurley

        On July 26, 2009, Susan Hurley, as Franchise Owner, and Stanley Steemer executed the

Franchise Agreement, wherein Hurley obtained an exclusive license to operate a Stanley Steemer

carpet and upholstery cleaning business in Boone, Campbell, and Kenton counties, Kentucky.

(Verified Complaint ¶ 14). At the time she executed the Franchise Agreement, Ms. Hurley had

been a Stanley Steemer franchisee for over twenty years. (Id.) The Franchise Agreement, thus,

allowed her to continue operating as a Stanley Steemer franchisee. (Id.) A true and accurate

copy of the Franchise Agreement is attached to the Verified Complaint as Exhibit B.

        The Franchise Agreement required Ms. Hurley to make royalty payments to Stanley

Steemer. (Id. ¶ 15). Article II.B of the Franchise Agreement states: “Franchise Owner agrees to

pay Stanley Steemer a monthly royalty payment equal to the greater of the minimum monthly

royalty payment prescribed in paragraph D of this Article or ten percent (10%) of the Gross Sales

from Franchise Owner’s Stanley Steemer Business.” (Id.)

        Article VI of the Franchise Agreement also required Ms. Hurley to annually spend “not

less than ten percent (10%)” of gross sales on advertising and to make payment of National

Advertising Fees. (Id. ¶ 16). Article VI.B.3.a. of the Franchise Agreement states: “Franchise


                                                   3
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 6 of 23 PAGEID #: 63



Owner shall pay to Stanley Steemer or to an entity designated by Stanley Steemer that has been

formed for the purpose of operating a national advertising program a monthly national

advertising fee equal to two percent (2%) of the Franchise Owner’s monthly gross sales.” (Id.)

        Pursuant to Article XIII.A.1. of the Franchise Agreement:

        If Franchise Owner fails to pay any sum due to Stanley Steemer or any affiliate of
        Stanley Steemer within the time for paying the same without penalty or if Franchise
        Owner fails to comply with any of the substantial provisions of this Agreement, then
        Stanley Steemer may elect either

               1. to terminate this Agreement … .
(Id. ¶ 17).

        Pursuant to Article XIII.B.1. of the Franchise Agreement:

        Except as otherwise provided by state law, upon the occurrence of any of the following
        events of default Stanley Steemer may upon written notice to Franchise Owner
        immediately terminate this Agreement without providing an opportunity to cure the
        default. Such termination shall be effective immediately upon the mailing of such notice.
        …

        b. Cease Business. If Franchise Owner shall cease doing business for a period of more
        than seven (7) days, without prior approval of Stanley Steemer.

        c. Fraud or Misrepresentation. If Franchise Owner shall commit an act of fraud or
        misrepresentation in the operation of Franchise Owner’s Stanley Steemer Business or
        performance under this Agreement.

(Id.¶ 18).

        Articles VII.F. through VII.H of the Franchise Agreement required Ms. Hurley to (a)

“maintain complete and accurate books and records … in accordance with generally accepted

accounting principles,” (b) allow “Stanley Steemer, or its agents, at Stanley Steemer’s expense to

examine or audit such books and records,” (c) pay “Stanley Steemer for the cost of such

examination or audit” if “such examinations or audit discloses an error greater than two percent

(2%) in the computation of Gross Sales” and pay late charges of 1½% per month, (d) “submit to

Stanley Steemer, together with the monthly royalty payment, a complete and accurate statement



                                                4
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 7 of 23 PAGEID #: 64



of the monthly Gross Sales and profit and loss,” and (e) submit to Stanley Steemer complete and

accurate financial statements annually. (Id. ¶ 19).

        2.       Susan Hurley Breaches the Franchise Agreement

        An audit of Ms. Hurley’s franchise was conducted from December 3 through December

11, 2012. (Verified Complaint ¶ 20). That audit was a follow-up to a 2009 audit of Ms.

Hurley’s franchise that uncovered underreported sales and the failure of Ms. Hurley to meet her

advertising spending requirement. (Id.) The 2012 audit uncovered that Ms. Hurley had

defrauded Stanley Steemer by misrepresenting her franchise’s annual sales. (Id.) The audit

revealed that Ms. Hurley had under-reported $74,606.00 in sales for the period 2009 through

September 2012:

                   Year          Reported Amount        Truck Log Amount     Variance
                  2009                $789,270.00             $795,474.00      ($6,204.00)
                  2010                $744,532.00             $769,524.00     ($24,992.00)
                  2011                $704,932.00             $736,512.00     ($31,580.00)
             2012 (Jan - Sept)        $467,707.00             $479,537.00     ($11,830.00)
                 Totals             $2,706,441.00           $2,781,047.00     ($74,606.00)
(Id.)

        It was clear from the audit that Ms. Hurley had been purposefully underreporting her

gross sales to Stanley Steemer. (Id. ¶ 21). The audit revealed that Ms. Hurley had paid her

carpet cleaning technicians based on the full amount logged by each truck. (Id.) Ms. Hurley

then reported a lesser amount to Stanley Steemer and did not pay royalties on that amount. (Id.)

        The audit clearly identified a pattern of under-reporting of gross sales. (Id. ¶ 22). Ms.

Hurley has acknowledged this breach of the Franchise Agreement. (Id.) The fact that Ms.

Hurley’s payroll was calculated off of the actual gross sales for the period belies any contention

that this breach was unintentional, especially when viewed against the backdrop of the 2009

audit and Ms. Hurley’s subsequent conduct. (Id.)



                                                    5
    Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 8 of 23 PAGEID #: 65



         The 2012 audit also uncovered that Ms. Hurley had not met her 10% advertising

spending requirement. (Id. ¶ 24). In 2009, Ms. Hurley spent only 6.93% towards advertising; in

2010, she spent only 6.87% towards advertising; in 2011, she spent only 6.63% towards

advertising; and in 2012, she spent only 5.30% towards advertising. (Id.) Ms. Hurley did not

make her November or December royalty payments. Ms. Hurley currently owes Stanley

Steemer $13,927.64 in royalties ($7,927.90), advertising contribution ($1,585.58), interest

($2,721.98), and the cost of the audit ($1,692.18) and other amounts totaling $28,927.60. (Id. ¶¶

26 & 42).

         On or about January 3, 2013, Stanley Steemer learned, from sources other than Ms.

Hurley, that Ms. Hurley was operating another carpet cleaning business under the name “Custom

Clean,” and had ceased to operate her Stanley Steemer franchise. 2 (Id. ¶ 27). Stanley Steemer

was contacted by a customer via a Facebook post stating:

         I called the 1800 Steemer and it forwarded me to 859-342-7333[.] The woman answered
         Custom Clean. She says they just went thru a name change recently but are still using
         Stanley Steemer equiptment [sic] and product. I had referred a friend to them because of
         the name and reputation. Who are these people? My neighbor saw their van in our
         subdivision , a few days ago. It is the orange SS color but has Custom Clean on the sides.
         I called West Chester office and was put in VM for a Paul Carlson and have not heard
         back. I have been using SS for years. The woman at Custom Clean said if I called
         Cincinnati and asked for SS to service me, they would refer me to her? What?

(Id. & id. Ex. C).

         Ms. Hurley’s husband, Defendant Voges, who worked as her franchise’s manager, wrote

a letter to Stanley Steemer customers stating:

         Hello,

         Let me start by saying thank you for your business and support over the years. We have
         been serving the Northern Kentucky area as Stanley Steemer for the past twenty three
         years, do [sic] to the continuing increases in franchise fees and advertising fees we felt it

2
 Article VII.E of the Franchise Agreement prevents Ms. Hurley from “engag[ing] in, directly or indirectly, in the
ownership or operation of another carpet, upholstery, or other cleaning business or franchise.”


                                                         6
 Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 9 of 23 PAGEID #: 66



       was in our best interest to move away from Stanley Steemer so that we could continue to
       serve our customers with the same quality work for an affordable price[.] I cannot justify
       a price increase to our customers so that they can line their pockets with our money in
       Colombus [sic] Ohio. As of 1/1/2013 we will be changing our name to Custom Clean
       Carpet Cleaners. We will continue to use our equipment and standards of cleaning the
       employees are the same group and the “ONLY” thing changing is the name. Some things
       we will be adding are when we are on our way we will either e-mail or text you a picture
       of the Crew Chief in route, we now will also have the flexability [sic] to give our
       customers a greater savings on our additional products. Once again let me thank you for
       your business and support and we hope that you will continue on with us as a Home
       Town Small Business.

   Keep our money here in Ky and our employees working.

(Id. ¶ 28 & id. Ex. D). Stanley Steemer corporate received a copy of this letter on January 3,

2013. (Id. ¶ 29).

       Upon learning that Ms. Hurley had ceased operating her Stanley Steemer franchise and

had begun to operate another carpet cleaning business under the name “Custom Clean,” D. Ryan

Jankowski, Vice President of Legal Affairs & Chief Administrative Officer, called the number

for Ms. Hurley’s franchise. (Id. ¶ 30). The phone was answered as “Custom Clean” and Jeff

Voges, with whom Mr. Jankowski talked, told Mr. Jankowski that he had acquired the carpet

cleaning business from Ms. Hurley and that it was no longer affiliated with Stanley Steemer.

(Id.) As discussed above, Mr. Voges is believed to be Ms. Hurley’s husband. (Id.)

       When Mr. Jankowski subsequently reached Ms. Hurley by phone, she advised him that

she had “liquidated” her Stanley Steemer carpet cleaning business and sold and/or leased it,

including selling or leasing the vans, to Jeff Voges. (Id. ¶ 31). However, as discussed below,

SSNKY still has title to the vans now being used by Custom Clean and it otherwise appears that

Ms. Hurley still has a continuing interest in the business now being operated under the name

“Custom Clean.” (Id.) In their telephone conversation, Ms. Hurley advised Mr. Jankowski that

she was represented by Attorney Eric Deters and told Mr. Jankowski to contact Mr. Deters. (Id.




                                                7
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 10 of 23 PAGEID #: 67



¶ 32). Mr. Jankowski subsequently left messages for Mr. Deters and, as discussed below, carbon

copied Mr. Deters on correspondence terminating Ms. Hurley’s franchise. (Id.) On January 15,

2013, Mr. Deters wrote to Mr. Jankowski confirming he represented Defendants and stating:

“We are moving on.” (Id. ¶ 33 & id. Ex. E).

       Ms. Hurley’s new business continues to use the phone number of her prior business. (Id.

¶ 34). Ms. Hurley’s new business continues to use the Stanley Steemer cleaning system and

equipment. (Id. ¶ 35). Ms. Hurley has not offered Stanley Steemer the right of first refusal to

purchase any Stanley Steemer Carpet Cleaning Machine and/or van as required by Article

III.C.1.e of the Franchise Agreement. (Id. ¶ 36). Ms. Hurley’s franchise operated at least four

vans titled to SSNKY.3 (Id.) Those vans are still titled to SSNKY. (Id.) Stanley Steemer has

learned that Ms. Hurley’s new business continues to use vans painted in Stanley Steemer’s

trademarked color, in violation of United States Trademark No. 3,182,240. (Id. ¶ 37).

       On January 11, 2013, Stanley Steemer delivered to Ms. Hurley and her counsel a Notice

of Termination of Franchise Agreement immediately terminating her Stanley Steemer franchise

and demanding that she comply with all post termination requirements as set forth in Article XV

of the Franchise Agreement. (Id. ¶ 38). Among those contractual requirements were that Ms.

Hurley pay all sums due and owing, cease using Stanley Steemer’s Trademarks, cease using the

Stanley Steemer system (including but not limited to methods, procedure and techniques,

machines, vehicles, and equipment), cease using all telephone numbers associated with her

franchise, and comply with Stanley Steemer’s right of first refusal to purchase any Stanley

Steemer Carpet Cleaning Machine and/or van in which a machine is mounted as otherwise

required by Article III.C.1.e of the Franchise Agreement. (Id.) A true and accurate copy of this

3
 The four vans are: an ’06 Ford van, VIN # 1FTNE24L26DA74562; an ’08 Ford van, VIN#
1FTNE24LX8DA88986; an ’09 Ford van, VIN# 1FTNE24L69DA04065; and an ’12 Ford van, VIN#
1FTNE2EL3CDA27535.


                                                8
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 11 of 23 PAGEID #: 68



letter is attached to the Verified Complaint as Exhibit F.

        Additionally, Article XV.B prevents Ms. Hurley from working at or operating a

competing business within the same geographic area:

        Upon termination or expiration of this Agreement, whenever and however such
        termination may occur and for two (2) years thereafter, Franchise Owner will not, within
        the geographic area specified by this Agreement, work or enter into an Agreement or
        accept employment with any person or organization where his or her duties to would be
        to engage in activities similar to Franchise Owner’s Stanley Steemer business.

(Id. ¶ 39).

        Simply, Ms. Hurley has not complied with her termination obligations under the

Franchise Agreement.

    III.Argument

        The purpose of a temporary restraining order (“TRO”) is to preserve the status quo until

the rights of the parties can be fully and fairly litigated. Performance Unlimited v. Questar Pub.,

52 F.3d 1373, 1378 (6th Cir. 1995) (citing Am. Fed’n of Musicians v. Stein, 213 F.2d 679, 682

(6th Cir. 1954) (quoting Blount v. Societe Anonyme, 53 F. 98, 101 (6th Cir. 1892))). Federal

Civil Rule 65 permits a court to grant injunctive relief if it is shown that “immediate and

irreparable injury, loss, or damage will result to the movant. . .” Fed. R. Civ. P. 65(b). In

determining whether to grant a preliminary injunction, this Court must weigh four factors:

        (1) whether the movant has a strong likelihood of success on the merits;

        (2) whether the movant would suffer irreparable injury without the injunction;

        (3) whether issuance of the injunction would cause substantial harm to others; and

        (4) whether the public interest would be served by issuance of the injunction.

Chabad of S. Ohio & Congregation Lubavitch v. City of Cincinnati, 363 F.3d 427, 432 (6th Cir.

2004) (citing Blue Cross & Blue Shield Mut. v. Blue Cross & Blue Shield Ass’n, 110 F.3d 318,




                                                 9
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 12 of 23 PAGEID #: 69



322 (6th Cir. 1997) (citations omitted)). These four factors are to be balanced––all need not be

satisfied before injunctive relief can be granted. See Leary v. Daeschner, 228 F.3d 729, 736 (6th

Cir. 2000). The four factors are not prerequisites to be met, see Certified Restoration Dry

Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 542 (6th Cir. 2007) (citing Jones v. City

of Monroe, 341 F.3d 474, 476 (6th Cir. 2003) and In re De Lorean Motor Co., 755 F.2d 1223,

1228 (6th Cir. 1985)), “no single factor is determinative, and the Court should weigh each of the

factors in light of the factual circumstances of the case,” Stile v. Copley Twp., 115 F.Supp.2d

854, 859 (N.D. Ohio 2000).

       The Sixth Circuit does not require a particular finding of irreparable injury to support the

grant of preliminary injunctive relief in trademark infringement and unfair competition cases

under Lanham Act claims. See Circuit City Stores v. CarMax, Inc., 165 F.3d 1047, 1056 (6th

Cir. 1999), citing Wynn Oil Corp. v. Am. Way Serv. Corp. 943 F.2d 595, 608 (9th Cir. 1991).

Rather, when a plaintiff shows likelihood of success on the trademark claims, i.e., a likelihood of

consumer confusion, a Court should presume irreparable injury. See Worthington Foods, Inc.,

732 F. Supp. at 1460; Dunkin’ Donuts Franchised Rests. LLC v. Shrijee Inv., Inc., No. 08-12836,

2008 U.S. Dist. LEXIS 107353, at *23-25 ( E.D. Mich. Dec. 23, 2008) (same); Domino's Pizza

Franchising, LLC v. Seraj, No. 11-14542, 2011 U.S. Dist. LEXIS 122034, at *5, (E.D. Mich.

Oct. 21, 2011) (same).

       These tests weigh decisively in favor of awarding a temporary restraining order and

preliminary injunctive relief to Stanley Steemer.

A.     Stanley Steemer Is Likely To Succeed On Each Of Its Claims.

       1.      Breach of Contract Claims

       Stanley Steemer will succeed on its claims for breach of the Franchise Agreement.




                                                10
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 13 of 23 PAGEID #: 70



        The Franchise Agreement (Verified Complaint Ex. B) expressly provides, at Article V.C,

that “use of the Stanley Steemer Trademarks outside the scope of this Agreement without

Stanley Steemer’s prior written consent is an infringement of Stanley Steemer’s exclusive right

to use. . . the Stanley Steemer Trademarks.” 4 Upon termination, the franchisee:

        shall immediately cease using, by advertising or in any manner whatsoever, any
        methods, procedure and techniques associated with the Stanley Steemer System in
        which Stanley Steemer has a proprietary right, title or interest, and, in particular,
        Franchise Owner shall cease using, without limitation, all signs, machines,
        vehicles, equipment, advertising materials, stationery, forms, and any other
        articles which display in any form the Stanley Steemer Trademarks or other
        indicia associated with the Stanley Steemer System.

See also Articles XV.A.3, XV.2 (upon termination, franchisee will cease using the Stanley

Steemer name and trademarks, and shall not hold itself out as a present or former Stanley

Steemer franchisee), and XV.A.10 (upon termination, franchisee shall cease using any Stanley

Steemer Trademarks or any reproduction, copy or colorable imitation of the Trademarks).

        Defendants are operating a carpet cleaning business using the very same equipment, vans,

and cleaning standards previously used in Ms. Hurley’s Stanley Steemer franchise business.

Defendants have not changed the color of the vans, so they are still advertising carpet cleaning

services in Stanley Steemer’s trademarked yellow-orange color. Defendants are representing to

their customers that they “have been serving the Northern Kentucky area as Stanley Steemer for

the past twenty three years.” Indeed, Defendants are telling their customers that “the ‘ONLY’

thing changing [about their business] is the name.” All of these actions are in direct violation of

the clear language of the Franchise Agreement.

        In addition, the Franchise Agreement provides that Stanley Steemer has a right of first

refusal to purchase any “Stanley Steemer Carpet Cleaning Machine and/or van in which such

4
 The Stanley Steemer Trademarks are listed at Exhibit B to the Franchise Agreement, and include PTO Reg. No.
3,182,240, covering the use of Stanley Steemer’s familiar yellow-orange color on cleaning vans. See Exhibits A &
B to the Verified Complaint.


                                                       11
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 14 of 23 PAGEID #: 71



machine is mounted” before the franchisee sells or otherwise disposes of it (see Franchise

Agreement at Article III.C.e) and upon termination of the Franchise Agreement (see Franchise

Agreement at Article XV.A.8). Upon information and belief, Ms. Hurley disposed of the

cleaning vans and the cleaning machines housed therein to Mr. Voges by sale and/or lease,

without first offering Stanley Steemer the right to purchase those. And, now that her franchise

has been terminated, Ms. Hurley must permit Stanley Steemer its right of first refusal on the vans

and cleaning machines. Her refusal to do so violates the Franchise Agreement.

       The Franchise Agreement also requires each franchisee to obtain a telephone number or

numbers to advertise its business and provides that “upon termination of this Agreement for

whatever reason, Franchise Owner agrees that he or she shall immediately cease all use of such

telephone number(s) and listings and advertisement and that same shall become the sole property

of Stanley Steemer, at its option.” Franchise Agreement at Article VI.B.4. See also Franchise

Agreement at Article XV.A.6. (noting that franchisee shall transfer to Stanley Steemer all

telephone lines used in the franchise upon termination). Despite this clear language, Defendants

have not transferred the telephone line used by Ms. Hurley’s Stanley Steemer franchise, and are

continuing to use that number for their new carpet cleaning business, causing confusion among

customers seeking to hire Stanley Steemer.

       For all of these reasons, Stanley Steemer’s contract claims are likely to succeed.

       2.      Trademark and Unfair Competition Claims

       Stanley Steemer will likewise succeed on its Lanham Act claims. A claim for trademark

infringement under 15 U.S.C. § 1114 requires proof of: (1) ownership of a valid, protectable

trademark; (2) use of the mark in commerce by defendant without consent; and (3) a likelihood

of consumer confusion. The Ohio State Univ. v. Thomas, 738 F. Supp.2d 743 (S.D. Ohio 2010)




                                               12
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 15 of 23 PAGEID #: 72



(citing Too, Inc. v. TJX Cos., 229 F. Supp.2d 825, 829 (S.D. Ohio 2002)). The same standard is

applied to a claim for unfair competition under 15 U.S.C. § 1125. Id. (citing Frisch’s Rest., Inc.

v. Elby’s Big Boy, 670 F.2d 642 (6th Cir. 1982)). The likelihood of confusion “is the touchstone

of both a claim for trademark infringement and of a claim of unfair competition under the

Lanham Act.” Id. (citing Champions Golf Club, 78 F.3d at 1121).

       The existence of a likelihood of confusion, in turn, is determined by an evaluation of

several factors: (1) the strength of the plaintiff’s mark, (2) the relatedness of the goods involved,

(3) the similarity of the marks, (4) evidence of actual confusion, (5) marketing channels used, (6)

likely degree of consumer care, (7) defendant’s intent in selecting the mark, and (8) likelihood of

expansion of product lines. See, e.g., PACCAR Inc. v. TeleScan Techs., LLC, 319 F.3d 243, 249-

50 (6th Cir.2003); Frisch’s, 670 F.2d at 648. The foregoing factors “imply no mathematical

precision, and a plaintiff need not show that all, or even most, of the factors listed are present in

any particular case to be successful.” Abercrombie & Fitch v. Fashion Shops of Kentucky, Inc.,

363 F. Supp. 2d 952, 959 (S.D. Ohio 2005) (quotation omitted). The "ultimate question [is]

whether relevant consumers are likely to believe that the products or services offered by the

parties are affiliated in some way.'" Champions Golf Club, 78 F.3d at 1116 (citing Homeowners

Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d 1100, 1107 (6th Cir. 1991)).

               a.      Stanley Steemer Has Valid and Protectable Marks

       There is no question that Stanley Steemer has a number of valid and protectable

trademarks, chief among which for current purposes is PTO Reg. No. 3,182,240, covering the

use of Stanley Steemer’s familiar yellow-orange color on cleaning vans. A certificate of federal

registration serves as prima facie evidence that the mark is valid, that the registration exists, that

the registrant owns the mark in question, and that the registrant has the exclusive right to use the




                                                  13
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 16 of 23 PAGEID #: 73



mark in connection with the goods or services specified in the certificate. 15 U.S.C. § 1057(b).

Moreover, Stanley Steemer has filed in connection with its registrations affidavits pursuant to

section 15 of the Lanham Act (15 U.S.C. § 1065). (See Exhibit 1). The effect of such affidavits

is that the registrant’s exclusive right to use the mark is incontestable. Stanley Steemer’s rights

in the trademarks are thus absolute, and immune from any far-fetched challenges.

               b.      Defendants are Using Stanley Steemer’s Marks Without Consent

        As explained at length above, Stanley Steemer does not consent to Defendants’ use of

any of its trademarks, and has put Defendants on notice of this.

               c.      There is a Likelihood of Confusion

        An evaluation of the relevant “likelihood of confusion” factors weighs heavily in Stanley

Steemer’s favor. Stanley Steemer has been using its name for over six decades, and its

distinctive trademarked color is well associated with Stanley Steemer carpet cleaning.

               1.      Stanley Steemer’s Marks are Strong

        The chief mark at issue – Stanley Steemer’s trademarked yellow van – has been in use

since 1972 and was registered with the Patent and Trademark Office in 2006. (See Verified

Complaint Ex. A). As a result, the mark has achieved strong recognition in the carpet cleaning

industry and has become widely known as identifying Stanley Steemer’s brand and services.

Moreover, “[o]nce a mark has been registered for five years, the mark must be considered strong

and worthy of protection.” Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186-87 (6th Cir. 1988).

The first factor, therefore, weighs overwhelmingly in Stanley Steemer’s favor.

               2.      The Services and Marks are Identical

       Where the goods or services directly compete, and the marks used are sufficiently

similar, confusion is likely. Homeowners Group, Inc. v. Home Mktg. Specialists, Inc., 931 F.2d




                                                 14
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 17 of 23 PAGEID #: 74



1100, 1108 (6th Cir. 1991); Gaylord Ent. Co. v. Gilmore Ent. Group, LLC, 187 F.Supp.2d 926,

947 (M.D. Tenn. 2001). Here, of course, there is no question of competition or sufficient

similarity: Defendants are using the same trucks, in the same color, to provide the same service.

According to Defendants, “the ‘ONLY’ thing changing is the name.” The second and third

factors therefore weigh strongly in Stanley Steemer’s favor. See Thomas, 738 F. Supp.2d at 752.

(holding that confusion likely when parties direct competitors and marks identical).

               3.       Actual Confusion

       While actual confusion is the best evidence of likelihood of confusion, the absence of

actual confusion is inconsequential, especially where there has been no real opportunity for

discovery. See Thomas, 738 F. Supp.2d at 752 (agreeing with plaintiff’s assertion that it had not

yet had the opportunity to uncover actual confusion given that it had only known about

defendant’s activities for a few weeks). Stanley Steemer only very recently learned of

Defendants’ new business and has not yet had the chance to identify all customers who have

actually been confused by Defendants’ use of Stanley Steemer’s marks, and, in particular, the

trademarked yellow vans. Further, “[d]ue to the difficulty of securing evidence of actual

confusion, a lack of such evidence is rarely significant, and the factor of actual confusion 'is

weighted heavily only when there is evidence of past confusion, or perhaps, when the particular

circumstances indicate such evidence should have been available.” Wynn Oil I, 839 F.2d at 1188)

(quoting Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, 914 (Fed. Cir. 1984)).

       Nonetheless, there is evidence of actual confusion. As discussed above, a customer

seeking to hire Stanley Steemer was confused by both Defendants’ use of Stanley Steemer’s 800

number, “1-800-STEEMER” (a Stanley Steemer registered mark, Registration No. 3,464,933),

and their use of vans painted in Stanley Steemer’s trademarked color. The actual confusion




                                                 15
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 18 of 23 PAGEID #: 75



factor, therefore leans strongly in Stanley Steemer’s favor.

                       4.      The Marketing Channels Are the Same

       This factor, which involves “how and to whom the respective goods or services are sold,”

Too, Inc., 229 F.Supp.2d at 836, also favors Stanley Steemer. The parties are in the same

business, in the same geographical area, and serve (or seek to serve) the same customers. While

the precise nature of Defendants’ marketing efforts is not known to Stanley Steemer yet, it will

undoubtedly include the same marketing channels used before, and used by Stanley Steemer,

including yellow pages advertising, van visibility throughout the area, and internet presence.

Therefore, this factor weighs heavily in favor of Stanley Steemer. See Thomas, 738 F. Supp.2d

at 752-53 (“the similarities between the predominant customers of the parties’ respective goods

and services and the similar marketing approaches employed by them are likely to lead

consumers to believe that the parties ‘are affiliated in some way.’” (citation omitted)).

                       5.      Degree of Purchaser Care

       In determining the degree of purchaser care, courts generally apply the standard of a

typical buyer exercising ordinary caution. Homeowners Group, 931 F.2d at 1111. The degree of

care assumed may go up or down depending on factors such as the sophistication of the buyer

and the relative price of the good or service. Id. However, “confusingly similar marks may lead

a purchaser who is extremely careful and knowledgeable about the instrument that he is buying

to assume nonetheless that the seller is affiliated with or identical to the other party. See

Champions Golf Club, 78 F.3d at 1120-21 (sophisticated consumers who paid $ 15,000 fee to

join golf clubs at issue still might believe that clubs were affiliated because the marks and goods

at issue were identical); see also Induct-O-Matic, 747 F.2d at 364-65 (cautioning that "being

skilled in their own art does not necessarily preclude [consumers from] mistaking one trademark




                                                  16
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 19 of 23 PAGEID #: 76



for another when the marks are as similar as those here in issue, and cover merchandise in the

same general field").

       As discussed above, the marks here are identical. Thus, even a sophisticated, cautious

purchaser of carpet cleaning services could be mislead by Defendants’ use. This factor therefore

weighs in Stanley Steemer’s favor.

                        6.    Defendants’ Intent

       As this Court has recently recognized, “the use of a contested mark with knowledge of

the protected mark at issue can support a finding of intentional copying.” See Thomas, 738 F.

Supp.2d at 754 (citing Ferrari s.p.a.Esercizio Fabriche Automobili D. Corse v. Roberts, 944

F.2d 1235, 1243 (6th Cir. 1991)). Indeed, a defendant's intentional copying of a senior user's

mark creates a presumption of likelihood of confusion. See id. (citation omitted). Here,

Defendants’ intent is clear: to convince their customers and prospective customers that nothing

has changed, including using the same trademark-colored vans and the same equipment. They

cannot credibly claim that they are innocently using Stanley Steemer’s trademark-colored van.

Therefore, the seventh factor weighs in Stanley Steemer’s favor.

                        7.    Expansion of Product Line

       According to Sixth Circuit precedent, this factor takes into account whether or not either

party will expand its product line or marketing channels to compete directly with each other. See

Homeowner’s Group, 931 F.2d at 1112. Stanley Steemer operates a company-owned carpet

cleaning business in Cincinnati and, following termination of Ms. Hurley’s franchise, Stanley

Steemer is now servicing Ms. Hurley’s former territory through its company-owned operation.

Thus, the parties are already in competition with each other, in the same geographic area and for

the same customers. This final factor therefore weighs in Stanley Steemer’s favor.




                                               17
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 20 of 23 PAGEID #: 77



       3.      Stanley Steemer Will Be Irreparably Harmed In The Absence Of A TRO

       Stanley Steemer is being irreparably harmed, and will continue to be irreparably harmed,

by Defendants’ breach of contract, trademark infringement and unfair competition.

       As discussed above, a particular finding of irreparable injury is not necessary to support

the grant of preliminary injunctive relief in trademark infringement and unfair competition cases

under the Lanham Act. Stanley Steemer has made a strong showing of likelihood of success on

its trademark and unfair competition claims, and therefore irreparable injury is presumed.

       In any case, irreparable injury is occurring and will continue to occur absent a restraining

order. Stanley Steemer’s marks are core assets of its business and customers seek out Stanley

Steemer’s services because of its reputation for quality carpet cleaning and other cleaning

services. When persons not (or no longer) affiliated with Stanley Steemer use its trademarks and

its proprietary methods, procedures and techniques to confuse customers into believing they are

getting Stanley Steemer’s quality service, Stanley Steemer loses the ability to protect its goodwill

and reputation, assets that are essential to its business and its continued viability. There can be

no consequence more potentially devastating than this.

       The irreparable harm caused by Defendants’ use of the trademark-color vans is

compounded by the refusal to stop using, and to assign to Stanley Steemer as required by the

Franchise Agreement, the very same telephone number used when Ms. Hurley was still a

franchisee. Repeat customers who call that number thinking they are calling the former Stanley

Steemer franchise are diverted directly to Defendants’ business, and away from Stanley Steemer.

Once these customers are diverted, Stanley Steemer may never be able to get them back, thus

again suffering irreparable injury at Defendants’ hands.




                                                 18
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 21 of 23 PAGEID #: 78



       4.      A TRO Will Not Cause Harm To Others

       No third parties will suffer any harm should this Court issue a temporary restraining

order. Requiring Defendants to refrain from using trademark-yellow-colored vans, the existing

phone number and Stanley Steemer’s proprietary materials will not impose any hardship on

anyone, except potentially Defendants. However, they cannot be heard to complain about harm

that they brought on themselves. See Thomas, 738 F. Supp.2d at 756 (“A party who willfully

proceeds to expend funds on infringing activities cannot claim the loss of those funds as a ground

for denying preliminary injunctive relief”), citing Central Benefits Mut. Ins. Co. v. Blue Cross

and Blue Shield Ass'n, 711 F. Supp. 1423, 1435 (S.D. Ohio 1989). “Accordingly, if the plaintiff

alleging trademark infringement can show a likelihood of success, the 'harm to others' factor of

the preliminary injunction standard would normally favor the plaintiff as well." Thomas, 738 at

756 (citing Worthington Foods, 732 F. Supp. at 1462).

       Because there is no risk of harm to others, the requested temporary restraining order

should be granted.

       5.      The Public Interest Favors Granting A TRO And Preliminary Injunction

       Finally, the public interest also favors the granting of a temporary restraining order and

injunctive relief. The paramount public policy underlying the Lanham Act is protection of the

public from confusion. See, e.g. Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 198

(1984) (“The Lanham Act provides national protection of trademarks in order to…protect the

ability of consumers to distinguish among competing products”). Therefore, in trademark cases,

public policy concerns weighs towards injunctive relief that could stop confusion in the

marketplace. See Thomas, 738 F. Supp.2d at 756-57 (citation omitted).

       Moreover, “[t]he public interest is served when a court enforces contacts.” Caterpillar




                                                19
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 22 of 23 PAGEID #: 79



Fin. Servs. Corp. v. Smith & Johnson Constr. Co., Case No. 2:06-cv-00246, 2006 U.S. Dist.

LEXIS 29750, *4 (S.D. Ohio May 16, 2006), citing Federal Deposit Insurance Co. v. Aetna Cas.

and Sur. Co., 903 F.2d 1073, 1078 (6th Cir. 1990) "[T] he usual and most important function of

courts of justice is rather to maintain and enforce contracts, than to enable parties thereto to

escape from their obligations . . . ."). As in Caterpillar Financial, the preliminary injunction

Stanley Steemer seeks simply requests that Defendants honor the contract previously entered

into. See id. at *4. Accordingly, the public interest would be served by the issuance of a

temporary restraining order.

III.      Conclusion

          For the foregoing reasons, Stanley Steemer respectfully requests that this Court enter a

temporary restraining order, as follows:

       (1) temporarily enjoining and restraining Defendants from operating or using in their or any
           cleaning business (including but not limited to parking said vehicles in or around their or
           any such business) any vehicles painted with a color violating United States Patent and
           Trademark No. 3,182,240, covering the distinctive color Stanley Steemer vans are
           painted and described as: “The color yellow-orange is claimed as a feature of the mark.
           The color yellow-orange, which is the approximate equivalent of Pantone Matching
           System 143C, is applied to the entire surface of a van used in performing the services.”

       (2) temporarily enjoining and restraining Defendants from using any and all telephone
           numbers previously used by or otherwise associated with Defendant Hurley’s former
           Stanley Steemer franchise, as well as any and all classified listings and/or advertisements
           that incorporate such telephone numbers. Defendants must immediately transfer to
           Stanley Steemer any and all telephone numbers previously used by or otherwise
           associated with Defendant Hurley’s former Stanley Steemer franchise.

       (3) temporarily enjoining and restraining Defendants from holding themselves out as a
           present or former Stanley Steemer business franchisee.

       (4) temporarily enjoining and restraining Defendants from using, by advertising or in any
           manner whatsoever, any methods, procedures and techniques associated with the Stanley
           Steemer system in which Stanley Steemer has a proprietary right, title or interest.

       (5) temporarily enjoining and restraining Stanley Steemer of Northern Kentucky from
           operating under the Stanley Steemer name.



                                                   20
Case: 2:13-cv-00050-GCS-EPD Doc #: 3 Filed: 01/17/13 Page: 23 of 23 PAGEID #: 80



                                    Respectfully Submitted,

                                    /s/ Kimberly Weber Herlihy
                                    Kimberly Weber Herlihy (0068668), Trial Counsel
                                    Kenneth J. Rubin
                                    Vorys, Sater, Seymour and Pease LLP
                                    52 E. Gay Street, P.O. Box 1008
                                    Columbus, Ohio 43216-1008
                                    (614) 464-8283
                                    (614) 719-5021 (Facsimile)
                                    kwherlihy@vorys.com
                                    kjrubin@vorys.com

                                    Attorneys for Plaintiff,
                                    Stanley Steemer International, Inc.




                                      21
1/17/2013 15590332 V.2

				
DOCUMENT INFO
Shared By:
Tags:
Stats:
views:880
posted:1/18/2013
language:
pages:23