The Franchise Memorandum

The federal district court in Minnesota granted a franchisor's motion for summary judgment against a competitor who used variations of its trademark in online advertisements and when interacting with customers. Zerorez v. Distinctive Cleaning, Inc. 2015 U.S. Dist. LEXIS 58635 (D. Minn. May 5, 2015). Zerorez Franchising System, a carpet cleaning franchisor, brought suit against Distinctive Cleaning, a competing carpet cleaning business located in the same area, and its owner and day-to-day manager after discovering online advertisements for "Zero Rez Carpet Cleaning" with links to Distinctive's website. These ads were discovered after doing Google searches for "Zerorez," "twin cities carpet cleaning," and other related phrases. Zerorez filed suit alleging violations of the Lanham Act and Minnesota consumer protection statutes. The parties entered into a stipulated order forbidding Distinctive from using the trademark ZEROREZ or similar phrases in connection with any advertising. Zerorez later discovered that Distinctive was violating the court order by using similar phrases and brought an action for trademark infringement, false designation of origin, and other related state law claims. Zerorez then moved for summary judgment.

The court granted Zerorez's motion on its trademark infringement and false designation claims, but denied the related Lanham Act and state claims as duplicative. The court found that five of the six "likelihood of confusion" factors weighed in favor of Zerorez and that no material factual disputes existed. The violation of the stipulated order, evidence of actual consumer confusion, and the advice of counsel served as important evidence in the court's analysis. The court also held that Zerorez was entitled to summary judgment on trademark counterfeiting claims because Distinctive continued to use "Zero Rez" and "Zero Res" in advertisements in violation of the stipulated order and against the advice of its own attorney. The owner was held personally liable for infringement of the ZEROREZ mark. The court entered a permanent injunction against Distinctive's use of ZEROREZ and other similar marks and awarded Zerorez attorneys' fees because the infringement was "willful, deliberate, and blatant."