Appellant, Amoco Oil Company (Amoco), appeals from a district court’s decision denying Amoco’s motion for a preliminary injunction. We will reverse and remand.
In 1976 Amoco created Rainbow Oil Company (Rainbow Oil), a new division, to operate its Salt Lake City, Utah, area service stations as self-service outlets. Since that time, Rainbow Oil has operated exclusively *557 under the “Rainbo” mark. The word “Ra-inbo” appears in white on signs at these stations against a black background and below a red-orange-yellow-blue truncated rainbow logo. Amoco registered its “Rain-bo” service mark and trademark with the United States Patent Office in 1978, and with the State of Utah in 1982. Since the creation of Rainbo Oil, convenience foods such as hot dogs, soda drinks, and candies have been sold at the Rainbo stations. In 1980, ice slush drinks were introduced at two Rainbo stations. Although these slush drinks have, since 1980, been sold at four different Rainbo stations, they have never been sold at more than two stations at any given time. (R.Vol.IV at 16.)
During the summer of 1981, appellee Scott G. Van Leeuwen (Van Leeuwen) sold snow cones, under the name “Sno Shоp,” from two stands in the Salt Lake City area. Van Leeuwen thereafter decided to expand his snow cone business, and on October 5, 1981, he reserved the name “Rainbow Snow” with the State оf Utah as the name for his expanded business. The following summer, 1982, Van Leeuwen reentered the snow cone business under the name of Rainbow Snow, Inc., selling snow cones from fourteen round, 10 foоt by 6 foot booths. These booths are blue with a 180-degree, red-orange-yellow-green rainbow appearing on the upper half of the face of the booth; below the rainbоw, in white letters, appears the name “Rainbow Snow.” Some of these booths, at the time of the hearing on Amoco’s motion for a preliminary injunction, were located adjacent to Rainbo stations; others were within a few blocks.
On December 6, 1982, Amoco filed suit against Van Leeuwen and Rainbow Snow, Inc., seeking injunctive and other relief, alleging that use of the “Rainbow Snow” mark constituted trademark infringement in violation of state 1 and federal law, 2 a false designation of origin in violation of Section 43(a) of the Lanham Act, 3 and unfair competition and illegal trade practices. (R.Vol.I, 1-8.) On July 28, 1983, following a two-day evidentiary hearing, the district court denied Amoco’s motion for a preliminary injunction. Amoco appeals that decision pursuant to 28 U.S.C. § 1292(a)(1).
Thе function of a preliminary injunction is to preserve the status quo pending trial on the merits.
Lundgrin v. Claytor,
(1) substantial likelihood that the movant will eventually prevail оn the merits; (2) a showing that the movant will suffer irreparable injury unless the injunction issues; (3) proof that the threatened injury to the movant outweighs whatever damage the proposed injunction may сause the opposing party; and (4) a showing that the injunction, if issued, would not be adverse to the public interest.
Lundgrin, supra,
Amoco’s trademark infringement claim is governed by the provisiоns of 15
*558
U.S.C. § 1114(1), which imposes liability for the “use in commerce [of] any reproduction, counterfeit, copy, or colorable imitation of a registered mark ...
likely to cause confusion,
or to cause mistake, оr to deceive ...” (emphasis added). This “likelihood of confusion” test is also applicable to Amoco’s claim of false designation of origin, 15 U.S.C. § 1125, its state claims of infringement, Utah Code Ann. § 70-3-13 (1953),
4
and its common law claims of unfair competition and deceptive trade practices.
Amstar Corp. v. Domino’s Pizza, Inc.,
Amoco maintains that the district court, in considering the issue of likelihood of confusion, misapprehended and misapplied governing lеgal principles. Specifically, Amoco asserts that the district court failed to consider whether prospective purchasers would believe Rainbo and Rainbow Snow were somehow related to or affiliated with each' other. Appellant’s Opening Brief, at 24.
The district court, quoting our decision in
Avrick v. Rockmont Envelope Co.,
We agree that the Restatement factors should be considered not only in the context of confusion of source, but also in the context of confusion that results from a mistaken belief in common sponsorship or affiliation. The Second Circuit recognized this distinction in
Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Inc.,
Defendants assert that the Lanham Act requires confusion as to the origin of the film, and they contend that no reasonable person would believe that the film originated with plaintiff. Appellants read the confusion requirement too narrowly. In order to be confused, a consumer need not believe that the owner of the mark actually produced the item and placed it on the market, [citations omitted.] The public’s belief that the mark’s owner sponsored or otherwise approved the use of the trademark satisfies the confusion requirement.
Similarly, the Seventh Circuit has said: Whаt is infringed is the right of the public to be free of confusion and the
*559 synonymous right of a trademark owner to control his product’s reputation. Thus Distiller’s evidence must be evaluated on the basis оf whether it disclosed a likelihood that consumers generally familiar with Distiller’s mark would be likely, upon seeing only Restaurant’s sign, to believe that Restaurant’s enterprise was in some way relatеd to, or connected or affiliated with, or sponsored by, Distiller. If so, a right to relief for trademark infringement has been shown.
John Burrough Ltd. v. Sign of the Beefeater, Inc.,
Here, the district court limited its inquiry to the issue оf confusion of source, and did not consider potential confusion which might result from a belief in common sponsorship or affiliation. Implicit in the court’s ruling was the conclusion that confusion was unlikely because prospective purchasers would not believe that Rainbow Snow cones originated with the Rainbo Oil Company. Although it is true that “likelihood of success on thе merits” is but one prerequisite to the issuance of a preliminary injunction, it is our view that the district court’s determination that confusion was unlikely may have affected its resolution of the other three prerequisites. We would be remiss if we did not observe that the district court did not have the benefit of the guidelines announced herein when it considered the issue of likelihood of cоnfusion. Thus, the case must be remanded so that the district court can reconsider its denial of Amoco’s motion for a preliminary injunction in accordance with the legal standards set fоrth herein.
REVERSED AND REMANDED.
Notes
. Utah Code Ann. §§ 70-3-1 to 70-3-17 (1953).
. 15 U.S.C. § 1051-1127 (1976).
. 15 U.S.C. § 1125(a) (1976).
. Although the parties disagreed as to the proper legal definition of "likelihood of confusion” (see discussion infra), they and the district court apparently agreed that, rеgardless which is the proper definition, it is the same under both Utah and federal law. Because none of the parties has raised this as an issue on appeal, we assume, but do not decide, that the tests are the same under Utah and federal law.
. The Restatement factors are:
"(a) the degree of similarity between the designation and the trade-mark or trade name in
(i) appearance;
(ii) pronunciation of the words used;
(iii) verbal translation of the pictures or designs involved;
(iv) suggestion;
(b) the intent of the actor in adopting the designation;
(c) the relation in use and manner of marketing between the goods or services marketed by the other;
(d) the degree of care likely to be exercised by purchasers.”