McDonald's Corp. v. Druck and Gerner D.D.S., P.C. d/b/a McDental

HON. FREDERICK J. SCULLIN, JR.

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Plaintiff McDonald's corporation ("Plaintiff" or "McDonald's") is a Delaware corporation whose principal place of business is in Oak Brook, Illinois. McDonald's and its franchisees operate over 8,000 restaurants in the United states, over 400 of which are located in New York State. McDonald's maintains a regional office in Latham, New York (the "Latham office"), located approximately 150 miles from Plattsburgh, New York.

Defendant Druck and Gerner, D.D.S., P.C., d/b/a McDental ("McDental" or "Defendant") is a New York professional corporation located in Plattsburgh, New York that provides dental services under the name "McDental." Drs. Druck and Gerner named their corporation "McDental," and have operated under this name since the business opened on March 20, 1981 in the Pyramid Mall in Plattsburgh. At the time that they opened, Drs. Druck and Gerner placed an orange illuminated sign with the name "McDental" above the front of the office, and placed a fee schedule sign in the window. Shortly after opening in 1981, Defendant obtained a state service mark for the name "McDental" from the State of New York. Defendant also applied to register the name "McDental" with the United States patent and Trademark Office [hereinafter "USPTO"] in 1981, but the application process was not completed at that time and Defendant did not receive a federal trademark for "McDental."

In 1989, Defendant renewed its efforts to register "McDental." Plaintiff opposed Defendant's efforts, arguing that such registration would likely cause confusion with McDonald's family of "Mc" formative marks. Defendant did not defend itself in the opposition action brought by Plaintiff, and the Trademark Trial and Appeal Board rendered a decision dated January 4, 1990, entering a default judgment against McDental.

In 1985, Defendant opened a second "McDental" office in South Burlington, Vermont. As with the Plattsburgh office, Defendant contends that this office was "heavily advertised," and, like the Plattsburgh office, was similarly successful. However, apparently sometime subsequent to 1987, Defendant changed the name of the South Burlington office, and the business was sold in 1989. Plaintiff alleges that Defendant changed the name after receiving its first protest letters. . . .

Having been unsuccessful in its attempts to persuade Defendant to cease using the name "McDental," McDonald's initiated this lawsuit on August 30, 1990, alleging trademark infringement pursuant to 15 U.S.C. Sec.s 1114, 1121 and 1125, dilution of business pursuant to N.Y. . . .

Defendant claims, first of all, that any infringement alleged to have occurred would have had to commence in 1981 when Defendant began using the name "McDental," and that Plaintiff had notice of such use. Defendant then asserts that in 1981 Plaintiff's family of "Mc" marks combined with generic words was not substantial enough to entitle it to enjoin the use of "McDental;" that even if it were, there is no likelihood of confusion between Plaintiff and Defendant; and, since Plaintiff had notice of the use of McDental in 1981, this action is barred under the doctrine of laches. . . .


The issues in this case as framed by the parties' positions in their briefs and/or the trial testimony include the following: (1) whether Plaintiff owns trademark rights in a family of marks featuring the prefix "Mc" connected to generic non-food terms, (2) whether there is any likelihood that ordinary consumers are likely to be confused as to the source of Defendant's services, (3) whether Defendant's use of its name will dilute Plaintiff's business (4) whether Defendant is entitled to an affirmative defense of laches, and (5) whether defendant's default in the USPTO proceeding precludes defendant from asserting an affirmative defense of laches in the instant case under the doctrine of claims preclusion. Of these issues, the court finds it necessary to address only the first, second, and fourth.

DISCUSSION

I. TRADEMARK INFRINGEMENT CLAIMS
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The first step in resolving this case is determining whether Plaintiff possesses a trademark entitled to protection; if this is established, the court must then determine the "likelihood of confusion" with Plaintiff's marks that will result from Defendant's use of its mark.

A. FAMILY OF MARKS

McDonald's has used in commerce, and obtained federal registrations for, a number of marks distinguished by the "Mc" formative and is the exclusive owner of numerous registrations issued by the USPTO. These registrations encompass both food-related (e.g., "McDonuts") and non-food/generic ("generic") (e.g., "McD", an all-purpose cleaner) items. Underlying its trademark infringement claims is Plaintiff's contention that it possessed at the time of McDental's inception, and continues to possess, a family of "Mc" marks such that Defendant's use of "McDental" is likely to cause confusion among consumers. This contention has been addressed by other courts in litigation involving this Plaintiff. . . .

The McBagel's court, which granted McDonald's request to enjoin the defendant's use of the name "McBagel's" for its restaurant, stated that, "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.'" And, the McBagel's court noted that, "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." On an appeal from the USPTO, the Federal Circuit Court of Appeals defined a "family of marks" as

a group of marks having a recognizable common characteristic, wherein the marks are composed and used in such a way that the public associates not only the individual marks, but the common characteristic of the family, with the trademark owner. Simply using a series of similar marks does not of itself establish the existence of a family. There must be a recognition among the purchasing public that the common characteristic is indicative of a common origin of the goods.

Evidence produced at trial and recent caselaw clearly establish that Plaintiff possesses a family of marks comprised of the prefix "Mc" combined with food items. However, in the present case, Plaintiff must show that it has a protectable family of marks using the "Mc" prefix such that the use of "McDental" would be confused with Plaintiff's family of marks. As the McBagel's court explained:

Under the Lanham Act, Section 32(1)(a), 15 USC Sec. 1114(1)(a); as well as Section 43(a), 15 USC Sec. 1125(a), defendants are liable for infringement if their use of the name [McDental] is likely "to cause confusion, or to cause mistake or to deceive" typical consumers into believing some sponsorship, association, affiliation, connection or endorsement exists between McDonald's and defendants.

1. Family of Marks

Before the court may assess Plaintiff's family of marks vis-a-vis the name McDental, it must address an apparently somewhat unique problem not present in the other cited cases, to wit, resolving a dispute between the parties as to the proper date from which to assess the strength of Plaintiff's family of marks. Defendant argues that the court should assess the strength of Plaintiff's family of "Mc" marks by a 1981 time frame, based on its contention that Plaintiff had constructive and/or actual notice of Defendant's alleged infringement in 1981. Defendant contends that this is significant in that, while recognizing that Plaintiff may presently possess a family of marks, McDonald's did not possess a family of marks featuring the "Mc" prefix in combination with generic terms in 1981.

McDonald's contends that the court should assess the strength of its "Mc" family from a present standpoint, as confusion is measured in this manner, not retroactively, and that the time frame is only relevant, if at all, to the elements of notice and delay in the laches issue. Regarding the issue of laches, Plaintiff argues that it had no notice of McDental until 1987, as this was when the corporate officers with the responsibility as to trademark matters received notice of Defendant's use of the name. Plaintiff further asserts that it took prompt action to compel Defendant to cease its use of its name. Finally, Plaintiff states that regardless of the date employed, the result is the same, as the family of marks was strong enough to justify an injunction as early as 1981 and has continued to be thereafter.

The court notes that Plaintiff is requesting equitable (injunctive) relief only; Plaintiff is not asking for any damages. As injunctive relief is prospective, it would seem illogical to suggest that the court determine "the likelihood of confusion" retroactively. The more rational approach would be to measure the strength of the "family of marks" and the "likelihood of confusion" from a present standpoint. Defendant has not provided, nor has the court located, any authority to the contrary.

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The court . . . finds that the strength of Plaintiff's family of marks should be measured from a present standpoint, and that the dispute over the dates is relevant only to the issue of notice in the laches defense.

As stated, numerous courts have held that Plaintiff possesses a family of marks using the "Mc" formative entitled to trademark protection. Defendant, however, while acknowledging that "courts have held that Plaintiff has a family of marks comprising [sic] of 'Mc' followed by a generic food- related word," Defendant's Pre-Trial Memorandum disputes whether Plaintiff possesses a family of marks consisting of "Mc" in combination with all generic terms.

As support for this contention, Defendant cites to Quality Inns International, Inc. v. McDonald's Corp., wherein, in determining whether to enjoin Quality Inns from using the term "McSleep Inn" for a chain of economy hotels, the court stated:

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 . . . 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.

The Quality Inns court determined, nonetheless, that Plaintiff was entitled to enjoin Defendant's use of the term "McSleep Inn", noting "that the name McSleep is so similar to the McDonald's family of marks that in whatever clothing it is dressed, the public will persist in perceiving some connection with McDonald's." In arriving at this determination, the court noted that, "the marks that are owned by McDonald's and that were formulated by combining 'Mc' and a generic word are fanciful and enjoy a meaning that associates the product immediately with McDonald's and its products and service."

2. Likelihood of Confusion

Whether the family of marks possessed by Plaintiff is entitled to protection from Defendant's use of "McDental" turns on "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 in question.'" The Second Circuit has held that "such an assessment properly turns on the examination of many factors," and that this list is not exhaustive--the court may consider others. . . .

Applying the Polaroid factors, the court finds that, as in Quality Inns, the following factors are of particular importance in assessing the likelihood of confusion in this case: the strength of the mark; the evidence of confusion; the similarity between the marks (including signage and advertising); the proximity of the markets for the products and services identified for the marks, and the likelihood that Plaintiff will bridge the gap; and the intent of Defendant in choosing its mark and its good faith in doing so. The court will discuss each of these seriatim.

a. Strength of the Mark

Although the strength of Plaintiff's family of marks has already been discussed at some length, it should be noted that Plaintiff offered at trial numerous exhibits and testimony attesting to the widespread familiarity of the public with Plaintiff's use of the "Mc" language. Based on all of the evidence this court concludes, as others have, that Plaintiff's family of marks is a strong one.

b. Evidence of confusion

Plaintiff also presented survey evidence through its witness, Philip Johnson. Johnson conducted two surveys, in 1988 and 1991, both of which evidenced a likelihood of confusion resulting from Defendant's name. Among the conclusions drawn from the surveys was a finding that some 30% of the population surveyed associated Defendant's name with Plaintiff, the same percentage that another court found to be "substantial." The court rejects Defendant's bases for disallowing the survey evidence, and credits the survey evidence.

In addition to the survey evidence, Plaintiff introduced into evidence deposition testimony including that of former employees of Defendant. See Deps. of Kari Hathaway; William Miller; Holly Lamar. This testimony supports a finding that Defendant's name caused confusion among the public as to whether Defendant was somehow associated with Plaintiff. The court finds simply incredible Dr. Druck's testimony that he never heard anyone, even in a joking manner, associate McDental with McDonald's prior to the commencement of this lawsuit, nor did he himself ever associate the name with that of the Plaintiff.

c. Similarity between the two marks

The Quality Inns court stated that, "it is not the logo or the word 'sleep' that causes the [infringement] problem; it is the use of the fancifully coined word 'McSleep'." Likewise, the similarity between Defendant's name and Plaintiff's various "Mc" marks is obvious, and Defendant cannot hope to distinguish the two on the basis that it is the "Dental" and not the "Mc" that makes the name "instantly recognized."

d. Proximity of the products and the likelihood that Plaintiff will bridge the gap

This factor involves the likelihood "that customers mistakenly will assume either that [the defendant's goods] are somehow associated with [the Plaintiff's] or are made by [the plaintiff]." Initially, it would appear that dental services and fast food have nothing in common, except for the obvious connection between eating and dentistry, and that this factor should thus be weighed in Defendant's favor.

There was no showing at trial that the Plaintiff planned to enter the dental business per se. However, Dr. Cromie, who works with the Ronald McDonald charity houses, testified that since 1985, Plaintiff has included toothbrushes and other similar products in certain of its "Happy Meals" (a product for children). Dr. Cromie also testified that Plaintiff has sponsored dental cleaning via a mobile van that has travelled to different parts of the country, including parts of northern New York. Finally, Dr. Cromie added that the University of Mississippi, through a grant from Plaintiff, has been devising a dental machine for children. Although Dr. Cromie testified that Plaintiff provided the money for this machine, he could not say for certain whether the Plaintiff's name is on the machine.

The Quality Inns court found a connection between fast food and lodging, as one is logically associated with the other. However, notwithstanding the fact that oral hygiene normally follows the ingestion of fast (or any other) food, this court is disinclined to find that Plaintiff, even if it begins providing dental floss with its french fries, is likely to "bridge the gap" in any appreciable manner in this case. The evidence presented by Plaintiff did not convince the court that the proximity of the products in this case, or the likelihood that Plaintiff will "bridge the gap," i.e., enter the field of dental service, weighs in Plaintiff's favor.

e. Intent of Drs. Druck and Gerner and good faith in choosing the name "McDental"

When asked at trial why the name "McDental" was chosen for the business, Dr. Druck testified that the name was chosen because it had a "cute" sound to it, and a "quality of retentiveness." Dr. Druck disavowed any attempt to capitalize on the Plaintiff's well-recognized name and its association with family service and quality. He claimed, in essence, that the name was chosen because a friend of his and Dr. Gerner's, Mr. Josh Patrick, thought it was a name that they could remember-more so than other type names--that he never perceived any association with the two names, nor did he perceive anyone else having any association between the two, even in a social or humorous context.

Dr. Gerner echoed Dr. Druck's testimony in stating that the two had chosen "McDental" because they wanted a short, memorable name; that Mr. Patrick had agreed that this was the best name to use; and that Dr. Gerner never considered that there was any similarity between McDental and McDonald's. Dr. Gerner further testified that, prior to 1987, he never heard of anyone making any association between the business and the Plaintiff. However, Dr. Gerner was quoted in a news article as saying, in essence, that the choice of the name "should have been a compliment to McDonald's."

Interestingly enough, Dr. Druck also testified that a local Plattsburgh newspaper published an article entitled, "McDental Being McHassled Over McTrademark," that he "did not know" how the media learned of the lawsuit, but did admit to framing a copy of one of Plaintiff's protest letters and displaying it at the McDental office.

Contrasting with the testimony of the dentists was the testimony of Paul Pontiff, an attorney who advised Drs. Druck and Gerner regarding their name selection. In or about 1981, he had opined that "McDental" would not conflict with Plaintiff, apparently due to the dissimilar nature of the two services, although he informed Druck and Gerner that this was not a legal opinion, as he was not a patent/trademark attorney. It is difficult not to infer that the reason why the dentists sought Mr. Pontiff's opinion in this regard was that they had indeed considered the similarity with McDonald's in selecting their name.

The court need not deliberate long on the question of intent here. In short, the court finds that the explanations and statements of Drs. Druck and Gerner regarding the choice of the name "McDental" defy common sense and credibility; that they were fully cognizant of the name's similarity to McDonald's and chose to capitalize on Plaintiff's popularity. Consequently, the court easily finds that the good faith factor weighs in Plaintiff's favor.

Summarizing the relevant Polaroid factors, the court concludes that the strength of Plaintiff's mark, evidence of confusion, similarity of the marks and lack of good faith on the part of the individual defendants in choosing their name together support a finding of trademark infringement that warrants the issuance of an injunction in this case absent a valid defense. . . .