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La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V.

United States Court of Appeals, Ninth Circuit

August 6, 2014

LA QUINTA WORLDWIDE LLC, Plaintiff-Appellee,
v.
Q.R.T.M., S.A. DE C. V., dba Quinta Real, Defendant-Appellant

Argued and Submitted, San Francisco, California: May 16, 2014.

Page 868

[Copyrighted Material Omitted]

Page 869

[Copyrighted Material Omitted]

Page 870

Appeal from the United States District Court for the District of Arizona. D.C. No. 4:09-cv-00175-RCC. Raner C. Collins, Chief District Judge, Presiding.

SUMMARY[**]

AFFIRMED IN PART; VACATED AND REMANDED IN PART.

Trademark Law

The panel affirmed in part the district court's judgment after a bench trial and vacated a permanent injunction in a trademark infringement case brought by La Quinta Worldwide LLC (" La Quinta" ) against Q.R.T.M., S.A. de C.V. (" Quinta Real" ).

The panel held that the " use in commerce" element of Lanham Act sections 32 and 43(a) claims is not a jurisdictional requirement, and that it had subject-matter jurisdiction under 15 U.S.C. § 1121(a) over La Quinta's claims.

The panel held that the district court correctly concluded that expansion of Quinta Real's Mexican hotel business into the United States would result in a likelihood of consumer confusion with La Quinta.

The panel held that the defense of laches did not apply.

The panel concluded that the district court did not provide a sufficient analysis balancing the equities in its decision to grant a permanent injunction.

The panel affirmed in part as to trademark violations, but vacated the permanent injunction and remanded in part for further assessment of the equities.

Richard P. Jacobson (argued), Frank J. Colucci & Janice K. Yoon, Colucci & Umans, New York, New York, for Defendant-Appellant.

Joseph C. Gioconda (argued) & Jonathan A. Malki, Gioconda Law Group PLLC, New York, New York, for Plaintiff- Appellee.

Before: Barry G. Silverman and Ronald M. Gould, Circuit Judges, and Ivan L.R. Lemelle, District Judge.[*] Opinion by Judge Gould.

OPINION

Page 871

GOULD, Circuit Judge:

Q.R.T.M., S.A. de C.V. (" Quinta Real" ), appeals from the district court's judgment and order concluding that expansion of Quinta Real's Mexican hotel business into the United States would result in a likelihood of consumer confusion with La Quinta Worldwide, LLC (" La Quinta" ). The district court issued a permanent injunction against the use of " Quinta Real" in association with hotels and lodging in the United States. We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1291. We conclude that there is federal subject-matter jurisdiction over the trademark claims, and that the district court correctly found a likelihood of confusion, but that the district court did not provide a sufficient analysis balancing the equities in its decision to grant a permanent injunction. We affirm in part as to trademark violations, but vacate the permanent injunction and remand in part requesting further assessment of the equities.

I

Since 1968, La Quinta has operated hotels and motels in the United States on its own and through franchise agreements, and it has long held trademarks for " La Quinta" in connection with " motel services." Today there are more than 800 La Quinta mid-tier hotels across the United States, including more than 80 in major U.S. cities, renting 23 million rooms to hotel guests each year. About half of La Quinta's hotels are operated by franchisees.

Page 872

La Quinta's franchise agreements require it to provide operational support, marketing, and training to its franchisees. La Quinta also offers franchisees a non-compete geographic zone in which no other La Quinta hotel will be opened, and La Quinta agrees to ensure " that there is no misuse or infringement that could harm franchisees' investment in the brand," and to maintain and enforce quality control standards. La Quinta spends millions of dollars each year advertising on national television, radio, in print advertising, through direct mail and multiple formats of internet advertising. La Quinta is often featured in magazines, travel guidebooks, and on internet travel sites.

Quinta Real opened its first hotel in 1986 in Guadalajara, Mexico, and today operates eight luxury hotels throughout Mexico. Quinta Real's hotels are considered to be some of the most luxurious in Mexico, and the average daily room rate is $183 per night. Quinta Real hotels offer a wide range of amenities, and about 40% of Quinta Real's hotel guests are from the United States. Like La Quinta, Quinta Real has authorized third-party websites such as Expedia.com and Orbitz.com to promote and book reservations at its hotels. Quinta Real is also often featured in travel guidebooks.

Quinta Real plans to develop a luxury hotel in a major U.S. city. In 1994, Quinta Real entered into a letter of intent to build a hotel in San Antonio, Texas, and this letter was publicized, although there was no indication of what the hotel would be called. La Quinta has said that it was " unaware of Quinta Real's exploration of the San Antonio hotel market." This letter of intent came to nothing, and Quinta Real next entered into a letter of intent in 2007 to build a hotel in Tucson, Arizona. Although that letter also came to nothing, Quinta Real still intends to enter the United States market. While Quinta Real's efforts to open a hotel in the United States have not yet reached fruition, La Quinta, by contrast, has already opened several hotels in Mexico.

La Quinta filed the complaint giving rise to this action in March 2009, two years after the date of Quinta Real's last letter of intent. After a bench trial, the district court granted La Quinta a permanent injunction, concluding that a likelihood of confusion exists and that the permanent injunction factors listed in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), favored La Quinta. This appeal followed. In substance Quinta Real raises four arguments: (1) that there is no federal subject-matter jurisdiction over this case; (2) that La Quinta's suit is barred by laches; (3) that ...


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