News Briefs

Glass Doctor Wins Trademark Claim in Virginia

Franchisor Glass Doctor won a ruling to uphold its trademarked name when the U.S. Court of Appeals for the Fourth Circuit upheld a January 2005 ruling in the U.S. District Court for the Eastern District of Virginia, Norfolk Division, against Judy Fine Korman, who had used that name in marketing her windshield replacement business. Korman, who operates in the Virginia Beach, VA, area, was also ordered by the lower court to pay four years of profits to Glass Doctor, although the appeals court has suspended the payment while asking the lower court to clarify its reasoning for the level of monetary damages.

The case is Synergistic International v. Korman et al., (No 05-2295, U.S. Dist. Ct. Eastern District of Virginia, Norfolk).

Glass Doctor expanded to Norfolk, VA, in 2004, and it became aware of Korman at that time, according to Christopher Bussert (Kilpatrick Stockton LLP), who represented Synergis-tic International, which owns and franchises Glass Doctor. Korman had registered her business as The Windshield Doctor in 1987, and she occasionally listed herself in the telephone directory as Glass Doctor. Glass Doctor sent Korman a cease-and-desist letter in 2004, demanding that she stop using both names. She agreed to stop calling her business Glass Doctor, but maintained that her use of The Windshield Doctor was protected.

'The issues really involved a frequent situation when a senior federal mark-holder, which Synergistic is, is moving into a new territory,' said Bussert. 'If a competitor has a mark that is confusingly similar, you are entitled to that mark. The two names are not identical, but the court found that they are confusingly similar.'

U.S. District Judge Henry Coke Morgan not only ruled that Korman had to give up her trademarked name, but also awarded Synergistic $142,000 ' the amount of Korman's profits from the first time she used 'Glass Doctor' in advertising through 2004. The U.S. Court of Appeals for the Fourth Circuit said the lower court had 'abused its discretion' in making that judgment, noting that the court specifically ruled Korman had not acted in bad faith and was not 'malicious, fraudulent, willful or deceitful.' In awarding damages, the appellate opinion noted that other circuits have adopted guidelines for determining how they should be justified. The Third and Fifth Circuits, it said, have adopted a six-point set of factors to consider when balancing such considerations, such as whether there was intentional deceit by the infringer, or loss of sales to the trademark holder. No such calculations were present in this case, said the appellate court, instructing Judge Morgan to revisit the matter.

'They essentially ordered the lower court to show its work,' said Bussert, adding that, for his clients, getting Korman to stop using her old business name was the key concern.

John W. Hart of Virginia Beach, who represented Korman in the appeal, said, 'we expect, when reheard by the lower court, that there will be little, if any, damages awarded in this case.' Korman's business is now called Jody's Windshield Repair.

7-Eleven Not Responsible for Franchisee Negligence

Franchisor 7-Eleven cannot be held liable for the alleged negligence of a franchisee who spilled hot coffee on a customer during an alleged argument, ruled Suffolk County (NY) Supreme Court Justice Robert W. Doyle in late December 2006. Doyle granted summary judgment dismissing a suit against the franchisor by Eugene Nickola, who alleges he was injured during an altercation between another customer and an employee of a Greenport 7-Eleven. Claims against the franchisee, Farroq Baig, and Mirzra Mahmud, the employee involved in the altercation, will be heard in June.

In Nickola v. 7-Eleven, 03-13494, Justice Doyle explained that in determining whether a franchisor may be held vicariously liable for the acts of its franchisee, the most important factor to consider is the degree of control the franchisor maintains over the daily operations of the franchisee. 'In the absence of a principal/agent relationship, or proof that the franchisor exercised a high degree of control over the franchisee, there is no basis for holding the franchisor responsible for the franchisee's misconduct,' Doyle said.

The dispute arose from an incident in May 2002, when Mahmud began struggling with a customer for possession of a coffee pot, and Nickola was hit by coffee on his head, neck, and shoulder. Although Nickola was standing next to the customer having the dispute, he was not involved in the dispute, according to his statement.

Prominent Franchisors Named in FTC, State Investigations

Nearly 100 businesses, ranging from established franchisors to online get-rich-quick schemes, were named in the Project Fal$e Hope$ investigation by the Federal Trade Commission ('FTC') and state law enforcement officials in December 2006. Project Fal$e Hope$ targets allegedly bogus business opportunities, as well as legitimate business operators who allegedly make inaccurate, 'guaranteed' earnings claims to prospects.

As part of the latest developments in Project Fal$e Hope$, the FTC brought new or additional complaints against more than 20 franchisors and business opportunities promoters. The franchisors cited in complaints offered vending machines or ATM locations. 'Many, but not all, of the claims in the franchise complaints are for false or unsubstantiated earnings claims,' said FTC spokesperson Jacqueline Dizdul. 'These were advertised earnings claims, or in an offering circular, but with nothing to back them up.'

California and Maryland were the states which announced the most actions in conjunction with Project Fal$e Hope$. Maryland in particular named numerous well-known franchisors, such as Coffee Beanery, GNC, KaBloom, Mailcoups, and Quiznos ' typically for alleged disclosure violations related to earnings claims or risks factors.

IFA Names New Franchise Compliance Program Administrator

Former Cendant Corp. Executive Vice President and Deputy General Counsel Joel R. Buckberg will be-come the new administrator of the International Franchise Association's ('IFA') Franchise Compliance Pro-gram this month. The program, launched in partnership with the Federal Trade Commission in 1998, educates franchisors about how to meet the requirements of franchise sales and disclosure regulations.

Buckberg, who currently heads the franchise and hospitality practices of the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., will assume the responsibilities of the post currently held by Delia Burke. Buckberg is a member of FBLA's Board of Editors.

The Glass Doctor and 7-Eleven news briefs were excerpted from ALM's Dec. 29, 2006 Fulton County Daily Report and Jan. 2, 2007 New York Law Journal respectively.

Glass Doctor Wins Trademark Claim in Virginia

Franchisor Glass Doctor won a ruling to uphold its trademarked name when the U.S. Court of Appeals for the Fourth Circuit upheld a January 2005 ruling in the U.S. District Court for the Eastern District of Virginia, Norfolk Division, against Judy Fine Korman, who had used that name in marketing her windshield replacement business. Korman, who operates in the Virginia Beach, VA, area, was also ordered by the lower court to pay four years of profits to Glass Doctor, although the appeals court has suspended the payment while asking the lower court to clarify its reasoning for the level of monetary damages.

The case is Synergistic International v. Korman et al., (No 05-2295, U.S. Dist. Ct. Eastern District of Virginia, Norfolk).

Glass Doctor expanded to Norfolk, VA, in 2004, and it became aware of Korman at that time, according to Christopher Bussert (Kilpatrick Stockton LLP), who represented Synergis-tic International, which owns and franchises Glass Doctor. Korman had registered her business as The Windshield Doctor in 1987, and she occasionally listed herself in the telephone directory as Glass Doctor. Glass Doctor sent Korman a cease-and-desist letter in 2004, demanding that she stop using both names. She agreed to stop calling her business Glass Doctor, but maintained that her use of The Windshield Doctor was protected.

'The issues really involved a frequent situation when a senior federal mark-holder, which Synergistic is, is moving into a new territory,' said Bussert. 'If a competitor has a mark that is confusingly similar, you are entitled to that mark. The two names are not identical, but the court found that they are confusingly similar.'

U.S. District Judge Henry Coke Morgan not only ruled that Korman had to give up her trademarked name, but also awarded Synergistic $142,000 ' the amount of Korman's profits from the first time she used 'Glass Doctor' in advertising through 2004. The U.S. Court of Appeals for the Fourth Circuit said the lower court had 'abused its discretion' in making that judgment, noting that the court specifically ruled Korman had not acted in bad faith and was not 'malicious, fraudulent, willful or deceitful.' In awarding damages, the appellate opinion noted that other circuits have adopted guidelines for determining how they should be justified. The Third and Fifth Circuits, it said, have adopted a six-point set of factors to consider when balancing such considerations, such as whether there was intentional deceit by the infringer, or loss of sales to the trademark holder. No such calculations were present in this case, said the appellate court, instructing Judge Morgan to revisit the matter.

'They essentially ordered the lower court to show its work,' said Bussert, adding that, for his clients, getting Korman to stop using her old business name was the key concern.

John W. Hart of Virginia Beach, who represented Korman in the appeal, said, 'we expect, when reheard by the lower court, that there will be little, if any, damages awarded in this case.' Korman's business is now called Jody's Windshield Repair.

7-Eleven Not Responsible for Franchisee Negligence

Franchisor 7-Eleven cannot be held liable for the alleged negligence of a franchisee who spilled hot coffee on a customer during an alleged argument, ruled Suffolk County (NY) Supreme Court Justice Robert W. Doyle in late December 2006. Doyle granted summary judgment dismissing a suit against the franchisor by Eugene Nickola, who alleges he was injured during an altercation between another customer and an employee of a Greenport 7-Eleven. Claims against the franchisee, Farroq Baig, and Mirzra Mahmud, the employee involved in the altercation, will be heard in June.

In Nickola v. 7-Eleven, 03-13494, Justice Doyle explained that in determining whether a franchisor may be held vicariously liable for the acts of its franchisee, the most important factor to consider is the degree of control the franchisor maintains over the daily operations of the franchisee. 'In the absence of a principal/agent relationship, or proof that the franchisor exercised a high degree of control over the franchisee, there is no basis for holding the franchisor responsible for the franchisee's misconduct,' Doyle said.

The dispute arose from an incident in May 2002, when Mahmud began struggling with a customer for possession of a coffee pot, and Nickola was hit by coffee on his head, neck, and shoulder. Although Nickola was standing next to the customer having the dispute, he was not involved in the dispute, according to his statement.

Prominent Franchisors Named in FTC, State Investigations

Nearly 100 businesses, ranging from established franchisors to online get-rich-quick schemes, were named in the Project Fal$e Hope$ investigation by the Federal Trade Commission ('FTC') and state law enforcement officials in December 2006. Project Fal$e Hope$ targets allegedly bogus business opportunities, as well as legitimate business operators who allegedly make inaccurate, 'guaranteed' earnings claims to prospects.

As part of the latest developments in Project Fal$e Hope$, the FTC brought new or additional complaints against more than 20 franchisors and business opportunities promoters. The franchisors cited in complaints offered vending machines or ATM locations. 'Many, but not all, of the claims in the franchise complaints are for false or unsubstantiated earnings claims,' said FTC spokesperson Jacqueline Dizdul. 'These were advertised earnings claims, or in an offering circular, but with nothing to back them up.'

California and Maryland were the states which announced the most actions in conjunction with Project Fal$e Hope$. Maryland in particular named numerous well-known franchisors, such as Coffee Beanery, GNC, KaBloom, Mailcoups, and Quiznos ' typically for alleged disclosure violations related to earnings claims or risks factors.

IFA Names New Franchise Compliance Program Administrator

Former Cendant Corp. Executive Vice President and Deputy General Counsel Joel R. Buckberg will be-come the new administrator of the International Franchise Association's ('IFA') Franchise Compliance Pro-gram this month. The program, launched in partnership with the Federal Trade Commission in 1998, educates franchisors about how to meet the requirements of franchise sales and disclosure regulations.

Buckberg, who currently heads the franchise and hospitality practices of the law firm of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., will assume the responsibilities of the post currently held by Delia Burke. Buckberg is a member of FBLA's Board of Editors.

The Glass Doctor and 7-Eleven news briefs were excerpted from ALM's Dec. 29, 2006 Fulton County Daily Report and Jan. 2, 2007 New York Law Journal respectively.