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Super Wash, Inc. v. Sterling

March 2, 2006

SUPER WASH, INC. PLAINTIFF,
v.
CARSON STERLING AND C&W GROUP, INC. DEFENDANTS.



The opinion of the court was delivered by: John F. Grady, United States District Judge

MEMORANDUM OPINION

This trademark infringement case is before the court for ruling on the motion for summary judgment filed by defendants Carson Sterling and C & W Group, Inc. ("C & W") and the cross-motion for summary judgment filed by plaintiff Super Wash, Inc. ("Super Wash"). For the reasons explained below, the court denies defendants' motion for summary judgment and grants Super Wash's cross-motion for summary judgment in part. Specifically, the court finds defendants liable for trademark infringement and unfair competition under the Lanham Act and for common law unfair competition, but denies plaintiff's motion as it relates to the claim under the Illinois Uniform Deceptive Trade Practices Act.

BACKGROUND*fn1

For over twenty years, Super Wash has been engaged in providing a variety of automobile washing services and equipment throughout the United States under the trademark Super Wash. As part of its business, Super Wash grants non-exclusive licenses to qualified persons to operate Super Wash car washes. To identify the source, origin and sponsorship of Super Wash businesses and the services they offer, Super Wash has used certain trademarks, service marks, trade names, logos, emblems and indicia of origin, which are registered on the Principal Register of the United States Patent and Trademark Office.*fn2 Super Wash and its authorized licensees use the Super Wash marks*fn3 as the marks and trade identity by which the products and services offered by Super Wash and its licensees are distinguished from other car wash businesses and the products and services offered by them.*fn4

On or about May 13, 1998, defendant Sterling entered into two written contracts with Super Wash - the Operations Agreement and the Articles of Agreement - which granted Sterling a license to use the marks in the operation of a Super Wash car wash in Upland, Indiana (the "Upland Car Wash").*fn5 Sterling, an Illinois resident, operated the Upland Car Wash through defendant C & W, an Illinois corporation. Super Wash car washes, generally speaking, offer self-serve and brushless automatic car washing. Under the operating instructions set forth in the Operations Agreement, the owner/operator may not install brushes for customer use or allow attendants to use hand brushes without Super Wash's written consent. Despite that contractual requirement, defendants at some point installed brushes at the Upland Car Wash. On August 13, 2002. Super Wash confirmed that brushes had been installed. A few days later, on or about August 16, 2002, Super Wash instructed defendants to cease using the Super Wash marks at the Upland Car Wash.*fn6 Sterling attests that immediately after the August 16, 2002 conversation he removed all of the Super Wash marks from the Upland Car Wash except for the exterior "Super Wash" sign.*fn7 (Sterling 6.17.05 Aff. ¶ 5.) According to Super Wash, Super Wash again contacted defendants on or about October 21, 2003 to instruct them to cease using its marks. Sterling acknowledges that he had a second conversation with a Super Wash representative regarding the marks (although he does not concede the date of that conversation, which he cannot recall). According to Sterling, during the second conversation when Super Wash asked if all of the marks had been removed, he responded that all of the marks had been removed except for the exterior sign, and further informed Super Wash that it was welcome to remove the exterior sign at any time.*fn8 (Id. ¶¶ 6-7.)

Subsequently, Super Wash sent a cease-and-desist letter to Sterling dated April 16, 2004. In that letter, Super Wash set forth its understanding that defendants had terminated their relationship with Super Wash in November 2001 but continued to use the Super Wash marks, and demanded that Sterling de-identify the Upland Car Wash within two weeks of receipt of the letter.

Sterling, however, claims that he never received the cease-and-desist letter.*fn9

Then on July 14, 2004, Super Wash commenced this litigation, suing defendants for trademark infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), false designation of origin in violation of the Illinois Uniform Deceptive Trade Practices Act ("IDTPA"), 815 ILCS 510/2, and common law unfair competition. It is undisputed that the exterior sign with the Super Wash Mark remained on display at the Upland Car Wash until after Super Wash filed this lawsuit. Eventually, on or about September 1, 2004, defendants provided Super Wash with photographs demonstrating that they had removed all Super Wash marks from the Upland Car Wash.

With these facts in mind, we turn to the parties' cross-motions for summary judgment.

DISCUSSION

A. Legal Standard

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In considering such a motion, the court construes the evidence and all inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. See Pitasi v. Gartner Group, Inc., 184 F.3d 709, 714 (7th Cir. 1999). "Summary judgment should be denied if the dispute is 'genuine': 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Talanda v. KFC Nat'l Mgmt. Co., 140 F.3d 1090, 1095 (7th Cir. 1998) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "[U]nless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party," there is no issue for trial. Anderson, 477 U.S. at 248.

Here, Super Wash alleges that defendants used the Super Wash marks without consent after the licensing agreement was terminated, thus violating both §§ 1114 and 1125(a) of the Lanham Act, the IDTPA and common law regarding unfair competition. Although the case involves multiple claims, the parties agree that analysis of the Lanham Act claims will dispose of the claim arising under the IDTPA and the common law unfair competition claim.*fn10 See MJ & Partners Rest. Ltd. P'ship v. Zadicoff, 10 F. Supp. 2d 922, 929 (N.D. Ill. 1998) (legal inquiry is the same under the Lanham Act and IDTPA); Spex, Inc. v. Joy of Spex, Inc., 847 F. Supp. 567, 579 (N.D. Ill. 1994) (claims for deceptive business practices and unfair competition arising under state statute or common law "are to be resolved according to the principles set forth under the Lanham Act"); Clairol, Inc. v. Andrea Dumon, Inc., 303 N.E. 2d 177, 182 (Ill. App. Ct. 1973) (Illinois legislature passed Uniform Deceptive Practices Act to codify common law); see also, Corning Glass Works v. Jeannette Glass Co., 308 F. Supp. 1321, 1325 (S.D.N.Y. 1970) (The law regarding trademark infringement is a subset of the law prohibiting unfair competition; the purpose of both is to prevent a person from passing off his goods or services as those of another). Accordingly, in ruling on the motions for summary judgment, the court will focus on the Lanham Act claims.

The purpose of the Lanham Act is to uphold trademarks in order "to protect the public from deceit, to foster fair competition, and Furthermore, it appears that Indiana does not have a statute comparable to the IDTPA. See Nucor Corp. v. Aceros y Maquilas de Occidente, S.A. de C.V., No. IP 91-C-828, ...


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