Tenth Circuit Gives Broad Scope to Franchisor’s Trademark

Many franchisors own a number of U.S. trademark registrations for their principal mark. In some cases, the registrations cover the main business activities of the franchisor; in others, the registrations cover the services the franchisor provides its franchisees to establish and support its franchisees’ businesses. In Team Tires Plus, Ltd. v. Tires Plus, Inc., 394 F.3d 831 (10^th Cir. 2005), the Court of Appeals for the Tenth Circuit interpreted the scope of a franchisor’s registration covering such support and held that the registration was broad enough to support an infringement claim even if the defendant is not engaged in franchising per se. Nevertheless, the case demonstrates the importance of obtaining broad trademark registrations for the franchisor’s core business, not just for franchising services.

In 1981, the plaintiff, Team Tires Plus, began using the name Tires Plus for its business of franchising and operating retail tire stores and automobile maintenance centers. In 1983, it registered the TIRES PLUS trademark for "rendering technical aid and assistance in the establishment of automobile tire stores and automobile maintenance centers," but it did not obtain a trademark registration for tire and auto repair at that time. In 1986, the defendant began using the mark TIRES PLUS in connection with the operation of its retail tire centers. A trademark infringement lawsuit followed.

Relying heavily on the fact that the description of the goods and services in the plaintiff’s trademark registration did not, in fact, cover franchising services, the district court dismissed the suit on summary judgment on the grounds that the goods and services provided by the plaintiff and defendant were not directly competitive and thus non-infringing.

But Decision Was Reversed as Erroneous

The Tenth Circuit reversed. It rejected the notion that an infringement only occurs if the plaintiff and defendant use the subject mark on directly competing goods, holding that trademark law has long protected against the use of a mark on non-competing but "related" goods----that is, any goods related in the minds of consumers. The degree of direct competition between the goods and services provided under the marks is only a factor to consider and is not dispositive.

The Tenth Circuit also took issue with the district court’s myopic interpretation of the plaintiff’s description of its services in its trademark registration—"rendering technical aid and assistance in the establishment of automobile tire stores and automobile maintenance centers." The district court had held that such a description more accurately reflects business consulting services rather than franchising services. This underlay the district court’s (erroneous) conclusion that the goods and services of the plaintiff and the defendant were too dissimilar to support an infringement finding. However, the district court failed to take notice that, at the time of the plaintiff’s application, the United States Patent and Trademark Office defined franchising services as "offering technical assistance in the establishment and/or operation of [a particular type of business, e.g., restaurants, shoe stores, car washes]."¹ Plaintiff’s description of its services were nearly identical to the USPTO’s definition. Thus, the appellate court held that, with respect to the franchise services offered by the plaintiff, the description of those services in its registration was an accurate reflection thereof. The Tenth Circuit reversed the district court and remanded the case for a determination of whether or not there was a likelihood of consumer confusion.

The lesson of the Tire Plus case is clear. A registration covering technical assistance in establishing a franchise offers some measure of protection against infringement by a non-franchisor. However, a registration covering the franchisor’s core business provides a far stronger weapon against most infringements. If the plaintiff in the Tires Plus case had promptly registered its mark for its services of retail tire stores and automobile maintenance, it would have had a stronger hand against the infringer.

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