Zerorez Franchising System, Inc. v. Distinctive Cleaning, Inc.
103 F. Supp. 3d 1032
D. Minnesota2015Background
- Zerorez Franchising System, Inc. (owner of the federally registered mark “Zerorez”) and franchisee HSK LLC (ZEROREZ) operate carpet-cleaning services in the Twin Cities; Distinctive Cleaning, Inc. (Distinctive) and its owner Jennifer Carr compete in the same market.
- From 2012–2013 Distinctive ran Google AdWords and other ads using variations such as “Zero Rez,” “Zero Res,” and related phrases; Plaintiffs sent cease-and-desist letters and filed suit in August 2013.
- The parties stipulated (and the court ordered) that Defendants would not use “zerorez” or close variants in advertising but could use certain descriptive phrases (e.g., “no residue”); Defendants violated the stipulation and were found in contempt in March 2014.
- Evidence showed Distinctive purchased Zerorez-related keywords, employees represented similarity to Zerorez to customers, and a call-center manager documented repeated customer confusion.
- Plaintiffs moved for summary judgment on Lanham Act claims (trademark infringement, false designation of origin, counterfeiting) and sought injunctive and monetary relief; the court held a hearing and granted relief in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trademark infringement / false designation of origin | Zerorez owns the mark and Distinctive used confusingly similar terms in advertising causing likelihood of confusion | Distinctive denied intent and blamed advertising manager; argued uses were descriptive/fair use and not identical | Court: Granted summary judgment for Plaintiffs — five of six likelihood-of-confusion factors favor Plaintiffs; likelihood of confusion exists as a matter of law |
| Trademark counterfeiting | Distinctive knowingly used a counterfeit or substantially indistinguishable mark after being warned | Distinctive argued no exact use of “Zerorez” and lack of liability for agent’s actions | Court: Granted summary judgment for Plaintiffs — willful, knowing use of substantially indistinguishable marks supports counterfeiting claim |
| Personal liability of Carr | Carr participated in and authorized advertising decisions and budget/AdWords management, making her personally liable | Carr claimed limited involvement and shifted responsibility to advertising manager | Held: Carr personally liable — inconsistent testimony and documentary evidence show active participation and authority |
| Remedies: injunction, profits, damages, fees | Permanent injunction, disgorgement of profits, actual damages, trebling for counterfeiting, and attorney’s fees | Defendants disputed scope and amount of monetary relief; argued no damages causally linked | Held: Permanent injunction issued (broadly prohibiting use of "zero", "0", or "residue" or similar derivations in advertising). Monetary relief (profits, damages, fees) reserved for supplemental briefing; fees awarded as the case is exceptional but trebling of damages declined |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- SquirtCo. v. Seven-Up Co., 628 F.2d 1086 (likelihood-of-confusion multi-factor test)
- Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ’s Church, 634 F.3d 1005 (likelihood-of-confusion standard and factors)
- Frosty Treats v. Sony Computer Entm’t Am. Inc., 426 F.3d 1001 (trademark strength analysis)
- eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (standard for permanent injunction)
- Minn. Pet Breeders, Inc. v. Schell & Kampeter, Inc., 41 F.3d 1242 (when accounting of profits is appropriate)
- Metric & Multistandard Components Corp. v. Metric’s Inc., 635 F.2d 710 (equitable discretion in Lanham Act remedies)