The Franchise Memorandum

In Dudley v. HealthSource Chiropractic, Inc., 2008 WL 4507714 (W.D.N.Y. Sept. 30, 2008), the owner of a chiropractic practice brought claims against a franchisor and local franchisee alleging trademark infringement and cybersquatting. The plaintiff had used the trademark HEALTHSOURCE in connection with a chiropractic practice in the Rochester, New York area prior to the defendant franchisor’s adoption of the same mark. The franchisor’s system expanded to over 170 franchisees, including one in the Rochester area. The plaintiff brought suit alleging that links to that franchisee as “HealthSource of Rochester” on the franchisor’s website at www.healthsourcechiro.com and use of the mark HEALTHSOURCE on other promotional material constituted trademark infringement under the Lanham Act and cybersquatting under the Anticybersquatting Consumer Protection Act. 

The court denied the plaintiff’s motion for a preliminary injunction on the grounds that the plaintiff failed to show a likelihood of success on the merits. The court held that no likelihood of confusion as to the source of services existed, particularly since the website reference to the Rochester franchisee was changed to a different name and the franchisee had ceased using promotional material with the franchisor’s mark.