Opinion

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

| HONORABLE KAREN M. WILLIAMS

CHOICE HOTELS INTERNATIONAL, INC., |

Plaintiff, | ad Att

| Civil Action

| No, 1:22-ev-4779 (KMW-AMD)

AMBA CORPORATION ef al,

Defendants, | OPINION

Robert M. Ford, Esquire James Thomas McCarthy, Esquire

BIRDSALL & LAUGHLIN, LLC MCCARTHY & SORIERO LLC

1720 Highway 34 North 11S. Finley Avenue

Wall, NJ 07719 Basking Ridge, NJ 07920

Counsel for Plaintiff Choice Hotels Counsel for Defendants AMBA Corporation

International, Ine. and Kamlesh Patel

WILLIAMS, District Judge:

L INTRODUCTION

Plaintiff Choice Hotels International, LLC (Plaintiff) brings this action against

Defendants AMBA Corporation and Kamlesh Patel (collectively, “Defendants’”) for trademark

infringement and unfair competition in violation of the Lanham Act, as well as for related statutory

and common law claims under New Jersey law. Defendants are former franchisees that operated

an ECONO LODGE® brand hotel pursuant to a Franchise Agreement from 2003 to 2021. Plaintiff

alleges that Defendants continued to use its marks after termination of the Agreement and seeks

permanent injunctive relief and monetary damages.

Discovery is complete, and Plaintiffnow moves for summary judgment under Federal Rule

of Civil Procedure 56. The Court has considered the parties’ written submissions, finds oral

argument unnecessary, and decides the motion on the papers. For the reasons set forth below,

Plaintiff's motion is GRANTED.

Ii. BACKGROUND

The facts of this case are straightforward. Plaintiff is a lodging franchisor with more than

7,100 franchised hotels worldwide. (ECF No. 108-4 at J 1.!) On December 4, 2003, Defendants

entered into a Franchise Agreement (“Agreement”) with Plaintiff authorizing them to operate an

ECONO LODGE® brand hotel and use the ECONO LODGE® Family of Marks? in connection

with the hotel at 301 S Black Horse Pike, Bellmawr, NJ 08031 (hereinafter “the Subject Property”).

(id, 5; ECF No 1 €22; ECF No 108-16 p. 2.°) Plaintiffalleges that in September 2020 Defendants

defaulted on their payment obligations under the Agreement. (ECF No. 180-4. at $6). On January

6, 2021, Plaintiff terminated the Agreement and issued a Notice of Termination directing

Defendants to cease and desist use of the ECONO LODGE® Family of Marks. (/d. at 4] 7-8).

Plaintiff alleges that after termination Defendants continued to use the ECONO LODGE®

Family of Marks. Gd. at 9.) Prior to filing this action, Plaintiff sent Defendants two separate

notices of infringement instructing them to cease and desist their unauthorized use. (See fd. at 99]

10-16.) Defendants continued to display the marks on exterior and interior signage, to use the

marks in advertising and marketing materials, and to orally identify the Subject Property to the

public as “Econo Lodge.” (ECF No. 108-9; ECF No. 108-11; ECF No, 108-12.) Thereafter,

Plaintiff filed this suit asserting federal and state claims for trademark infringement and unfair

1 Statement of Undisputed Material Facts (“SMF”) (ECF No, 108-4.)

2 The ECONO LODGE® Family of Marks includes the following: ‘642 Registration, ‘518 Registration, ‘530

Registration, ‘688 Registration, ‘065 Registration, ‘067 Registration, and ‘199 Registration,

3Compl. (ECF No. | at 722); Franchise Agreement (ECF No, [08-16 at p. 2.)

* See Pl. Notice of Infringement Letter to Defendants (ECF No. 108-93; Declaration of Gabriel Wilmes and

Investigative Report (ECF No, 108-11); Declaration of Dean Smith and Investigative Report (ECF No. 108-12.)

competition. (See ECF No. 1.°)

The procedural background of this case, however, is a little less than straight forward.

Plaintiff commenced this action on July 27, 2022 (ECF No. 1.) Defendants did not initially appear

and on October 22, 2022, Plaintiff requested and obtained a Clerk’s entry of default (ECF No. 8.°)

Subsequently, on January 31, 2023, Plaintiff filed a Motion for Default Judgment (ECF No. 10.’)

Defendants appeared the next day. (ECF No. 12.°)

The case was, at one point, administratively terminated (ECF No. 247) to allow for

settlement discussions, which ultimately failed. The Court then reopened the case, set aside the

Clerk’s Entry of Default, and directed Defendants to Answer the Complaint. (ECF No. 27.'°) On

August 18, 2023, shortly after the Defendant filed its Answer, Plaintiff filed a Motion for

Preliminry Injunction (ECF No, 30"), which Defendants did not oppose (see ECF No. 35!”), and

the Court granted, (ECF No, 42,13)

Plaintiff later moved for contempt of the preliminary injunction, alleging that two months

after the Order issued, Defendants still continued to infringe on Plaintiffs marks. (ECF No. 48 at

11.'4) Defendants did not file opposition papers in response to Plaintiff's Contempt Motion.

pap P

Instead, Defendants’ counsel submitted a “Certification in Opposition” explaining that he could

not respond to Plaintiff's Motion because Defendants were nonresponsive despite repeated

5 Compl. (ECF No. 1.)

® Request for Default by Choice Hotels International, Inc. (ECF No. 8.)

? Motion for Default Judgment as te AMBA Corp. and Kamlesh Patel by All Plaintiffs. (ECF No. 16.)

8 Notice of Appearance by Kenneth L. Leiby, Jr on behalf of AMBA (ECF No, 12.)

? Order Administratively Terminating Action — 60 Day, Pending Constunmation of Settlement (ECF No. 24.)

Order Granting Plaintiff’s Motion to Reopen Case; Setting Aside the Clerk’s entry of default as to Defendants

AMBA Corporation and Kamlesh Patel; Directing Defendants to file an answer to the complaint, (ECF No. 27.)

'! Motion for Preliminary Injunction by All Plaintiffs (ECF No. 30.)

Letter from Kenneth L Leiby Jr, Esq stating that the letter was submitted “to confirm that Defendants have not

opposed Plaintiff's motion for a preliminary injunction,” (ECF No, 35.)

Order Granting Plaintiff's Motion for Preliminary Injunction. (ECF No. 42.)

4 See Motion to hold Defendants AMBA Corporation and Kamlesh Patel In Contempt re Order on Motion for

Prelimimary Injunction, by All Plaintiffs (ECF No. 48 at €11.)

attempts to communicate with them. (See ECF No. 55.'°) Counsel’s Certification indicated that,

as a result of Defendants’ failure to communicate, he had submitted a Motion to Withdraw. (ECF

No. 54.!7)

Thereafter, the Court granted Plaintiff's Contempt Motion finding that Defendants had not

complied with the preliminary injunction, (ECF No. 69,'*) The Court’s Contempt and Seizure

Order imposed a daily coercive penalty and directed the U.S. Marshals Service to seize and

impound all items at the Subject Property bearing any of the ECONO LODGE® Family of Marks.

(See Id.) Pursuant to the Order, the U.S. Marshals removed exterior signage, interior signage, and

paraphernalia that bore the marks. (ECF No. 108-4 at 423.)

For the next eleven months the parties continued litigating issues specifically related to

Defendants’ compliance with the injunction. On March 27, 2025, seventeen months after the

injunction issued, the Court entered an Order stating that Defendants were finally in compliance,

though the precise date of compliance could not be determined. (See ECF No. 105.!). Immediately

thereafter Plaintiff filed this Motion for Summary Judgment (ECF No. 106), which Defendants

opposed (ECF No. 108).”°

STANDARD OF REVIEW

15 Certification in Opposition filed by AMBA Corporation, Kamlesh Patel re Motion to hold Defendants AMBA and

Kamlesh Patel In Contempt (ECF No. 55.)

16 Counsel later withdrew his Motion to Withdraw as Attorney. However, three months after that motion was

withdrawn, Defendants’ counsei submitted a second Motion to Withdraw (ECF No, 85), this time citing Defendant’s

failure to pay its legal fees as its justification. Three months after that counsel was substituted, which necessitated

reopening and extending the discovery pericd.

17 See Motion to Withdraw as Attorney for Defendants by AMBA Corporation and Kamlesh Patel (ECF No, $4).

18 See Contempt and Seizure Order (ECF No. 69.)

19 See Memorandum Gpinion and Order Denying Plaintiffs Motion to Hold Defendants in Contempt (ECF No,

105).

20 Plaintiff did not file a reply to Defendants’ Opposition.

Motion for Summary Judgment

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R, Civ. P.

56(a). “A fact is ‘material’ under Rule 56 if its existence or nonexistence might impact the

outcome of the suit under the applicable substantive law.” Santini vy, Fuentes, 795 F.3d 410, 416

(3d Cir, 2015) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)); see also ALS.

by & through Hall v. Susquehanna Twp. Sch. Dist., 969 F.3d 120, 125 (3d Cir. 2020) (“A fact is

material if—taken as true—it would affect the outcome of the case under governing law.”).

Moreover, “[a| dispute over a material fact is ‘genuine’ if ‘a reasonable jury could return a verdict

for the nonmoving party.’” Santini, 795 F.3d at 416 (quoting Anderson, 477 U.S. at 248).

The moving party bears the burden of identifying portions of the record that establish the

absence of a genuine issue of material fact. /d. (citing Cefofex Corp. v. Catrett, 477 U.S, 317, 323

(1986)). The burden then “shifts to the nonmoving party to go beyond the pleadings and come

forward with specific facts showing that there is a genuine issue for trial.” /d, (quoting Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) Gnternal quotations omitted)).

To survive a motion for summary judgment, the nonmeving party must identify specific facts and

affirmative evidence that contradict those offered by the moving party. Anderson, 477 US. at

256-57. “A nonmoving party may not ‘rest upon mere allegations, general denials or... vague

statements...” Trap Rock Indus., Inc. vy. Local 825, Int'l Union of Operating Eng’rs, 982 F.2d

884, 890 (3d Cir. 1992) (quoting Quirega v. Hasbro, Inc., 934 F.2d 497, 500 (d Cir. 1991)).

When considering a motion for summary judgment, the court views the facts and all reasonable

inferences drawn from the facts in the light most favorable to the nonmoving party. Matsushita

Elec. Indus. Co., 475 U.S. at 587.

IV. DISCUSSION

Plaintiff moves for summary judgment on liability for all five claims, as well as for its

entitlement to the relief sought, and a fudgment awarding monetary damages. Regarding the

requested relief, Plaintiff seeks a permanent injunction, disgorgement of Defendants’ profits,

compensation for Plaintiffs damages, which it argues should be trebled, costs of the action, and

an award of attorney’s fees based on an exceptional case designation, Finally, Plaintiff sets forth a

monetary damages calculation and requests the Court adopt it.”!

1. Federal Trademark Infringement and Unfair Competition

Infringement of a federally registered trademark is governed by the Lanham Act. To

establish a claim of trademark infringement under the Act, a plaintiff must “demonstrate that 1) it

has a valid and legally protectable mark; 2) it owns the mark; and 3) the defendant’s use of the

mark to identify goods or services causes a likelihood of confusion.” 4 & H Sportswear, Inc. v.

Victoria's Secret Stores, Inc., 237 F.3d 198, 210 Gd Cir, 2000).

Plaintiff also brings a claim under Section 43(a) of the Lanham Act for Federal Unfair

Competition — False Designation of Origin. 15 U.S.C. § 1125(a). Courts measure both trademark

infringement and unfair competition under the Lanham Act by “identical standards.” A&A

Sportswear 237 F.3d at 210; See also Prime Hookah inc. v. FCM Online LLC, No. 2:21-cv-13915

(WIM), 2022 U.S, Dist. LEXIS 69544, at *5 (D.N.J. Apr. 14, 2022); Checkpoint Sys. v. Check

Point Software Techs. Inc., 269 F.3d 270, 279-80 (3d Cir, 2001); Fisons Horticulture, Ine. v.

Vigoro Indus., Inc., 30 F.3d 466, 472-73 (3d Cir. 1994); Chanel, Inc. v. Gordashevsky, 558 F.

21 The Court notes that Defendants’ Opposition does not substantively oppose Plaintiff's motion for summary

judgment as to liability for any of Plaintiff's claims and it, explicitly, does nol oppose a permanent injunction.

Instead, Defendants oppose Plaintiff's request for monetary relief, the damages calculation Plaintiff sets forth, and

Plaintiffs assertion that the Court should award attorney’s fees based on an exceptional case designation under the

Lanham Act.

Supp. 2d 532, 536 (D.N.J. 2008), As such, the Court need not engage in a separate analysis of the

federal trademark infringement and unfair competition claims and will analyze both claims

together,

A certificate of registration of a mark that was issued by the United States Patent and

Trademark Office is considered “prime facie evidence of the validity of the registered mark

and...the owner’s exclusive right to use the registered mark in commerce.” 15 U.S.C, § 1057(b).

Further, when a mark is incontestable under the Act “registration shall be conclusive evidence of

the validity of the registered mark...and of the registrant’s ownership of the mark and,.,exclusive

right to use the registered mark in commerce,” 15 U.S.C. § 1115(b). As such, the first two elements

of trademark infringement are satisfied when “the mark was federally registered and has become

‘incontestable’ under the Lanham Act.” Fisons 30 F.3d at 472.

As to the third element, the likelihood of confusion exists when “consumers viewing the

mark would probably assume that the product or service it represents is associated with the source

of a different product or service identified by a similar mark.” Jd. (citing Dranoff—Perlstein Assoc.

v. Sklar, 967 F.2d 852, 862 3d Cir.1992)). That said, proof of actual confusion is not required to

establish the third element. The Third Circuit has found that a “great likelihood of confusion

exists when the infringer uses the exact trademark,” United States Jaycees v. Phila. Jaycees, 639

F.2d 134, 142 (3d Cir. 1981), as is the case when a hold-over franchisee continues to use the

franchisor’s marks, See Burger King Corp. vy. Mason, 710 F.2d 1480, 1492 (11th Cir. 1983)

(“Common sense compels the conclusion that a strong risk of consumer confusion arises when a

terminated franchisee continues to use the former franchisor's trademarks... Because of this risk,

many courts have held that continued trademark use by one whose trademark license has been

cancelled satisfies the likelihood of confusion test and constitutes trademark infringement”).

In this case, Plaintiff provides certificates of registration issued by the U.S. Patent and

Trademark Office for each of the trademarks associated with the ECONO LODGE® Family of

Marks. (ECF No. 108-6). It is undisputed that these marks are incontestable under the Act. 23

(ECF No. 108-4 at 94; ECF No. 111 at §4.74) As such, Plaintiff has established the first and second

elements of Trademark Infringement under the Lanham Act. Defendants are terminated

franchisees that continued to use Plaintiffs exact marks. This satisfies the third element of

trademark infringement. Therefore, the Court grants Plaintiff's motion for summary judgment as

to Claims I and II.

2. New Jersey Trade Infringement and Unfair Competition

Plaintiff also asserted New Jersey statutory and common law claims of trademark

infringement and unfair competition. The Lanham Act is “derived generally and purposefully from

the common law tort of unfair competition, and its language parallels the protections afforded by

state common law and statutory torts...the Act federalizes a common law tort.” Am. Tel. & Tel.

Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421, 1433 Gd Cir. 1994). Given this, Courts

have found that “the elements for a claim for trademark infringement under the Lanham Act are

the same as the elements. .for claims of trademark infringement and unfair competition under New

Jersey statutory and common law.” J & J Snack Foods Corp. v. Earthgrains Co,, 220 F. Supp. 2d

358, 374 (D.N.J. 2002). See also Prime Hookah 2022 U.S. Dist. LEXIS 69544, at *7; Castrol, Ine.

v. Pennzoil Quaker State Co., 169 F, Supp. 2d 332, 340 (D.N.J. 2001). Thus, the Court will extend

its analysis of the federal claims to Plaintiffs state claims, Therefore, the Court grants Plaintiff's

22 MSJ Br. Ex. 1 (ECF No. 108-6.)

23 While the Defendants’ Response to the Statement of Undisputed Material Facts does not admit this fact, it also

does not dispute it. No where in its papers do Defendants dispute the validity of the ECONO LODGE® Family of

Marks or its incontestable status. Thus, the Court has deemed this fact admitted,

4 Compare Pl.’s SMF at [4 (ECF No. 108-4) with Def.’s Response to Plaintiffs Statement of Facts “RSUMF”) at {

4 (ECF No.

motion for summary judgment as to Claims III, IV, and V.

3. Requested Relief

Plaintiff seeks both injunctive and monetary relief, (ECF No. 108-1 at pp.118-25,?°)

Plaintiff requests a permanent injunction enjoining Defendants from using the ECONO LODGE®

Family of Marks as well as all monetary relief available under the Lanham Act. Jd. The Court will

first address Plaintiff's request for a permanent injunction and then proceed to monetary damages.

a, Permanent Injunction

First, the Court notes that, Defendants explicitly do not oppose the grant of a permanent

injunction, (ECF No, 111 at 7.76)

A permanent injunction may issue when the movant demonstrates that 1) it has suffered

irreparable damage, 2) the remedies available at law are inadequate, 3) an equitable remedy is

warranted when considering the balance of hardships between the plaintiff and the defendant, and

4) the public interest is not disserved by the issuance of a permanent injunction. eBay Inc. v.

MercExchange, L.L.C., 547 U.S. 388, 391 (2006), The Lanham Act specifically authorizes the

grant of injunctions and provides that “a plaintiff seeking any such injunction shall be entitled to

a rebuttable presumption of irreparable harm upon a finding of a violation.” 15 U.S.C. § 1116(a).

Since the Court has found that Defendants have violated the relevant section of the Act

with regard to trademark infringement and unfair competition, Plaintiffis entitled to a presumption

of irreparable harm, which Defendants do not rebut. In balancing the hardships between Plaintiff

and Defendants, the Court finds that the Plaintiff’s interest in maintaining ownership, control, and

the integrity of its marks outweighs the Defendant’s interest in using such marks unauthorized.

There is no public interest served in permitting an infringer to continue unauthorized use of

25 See Pi.’s Br. Motion for Summary Judgment (ECF No. 108-1 at pp. 118-25.)

% See Def,’s Opp. at p. 7 (ECF No. 111.)

intellectual property, Conversely, the public interest is served by protecting the intellectual

property rights of legitimate owners. Prime Hookah 2022 U.S. Dist. LEXIS 69544, at *9. Thus,

the public interest is not disserved by issuing an injunction.

As all four factors weigh in favor of Plaintiff the Court grants the Plaintiff's request for a

permanent injunction.

b. Monetary Damages

Under the Lanham Act, a successful plaintiff may recover 1) defendant’s profits, 2)

plaintiff's damages, and 3) the costs of the action. 15 U.S.C. § 1117(a). It is the Court’s

responsibility to assess the profits and damages or to order such an assessment to be supervised by

the Court. /d. In the course of such assessment, the plaintiff is only required to prove defendant’s

sales, whereas the defendant must prove “all elements of costs or deduction claimed.” Jd.

i. Disgorgement of Defendants’ Profits

As the Lanham Act provides for multiple remedies, and monetary damages are available

“subject to the principles of equity,” disgorgement of profits does not follow as a matter of course

once a plaintiff has established infringement. Kars 4 Kids Ine. v. Am. Can!, 8 F.4th 209, 223 Gd

Cir. 2021). Instead, the Court must apply a six-factor test to balance the equities of the parties and

determine whether disgorgement is appropriate. /d. (citing Banjo Buddies, Inc. v. Renosky, 399

F.3d 168, 175 (3d Cir. 2005)), The balancing factors include: “(1) whether the [infringer] had the

intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other

remedies, (4) any unreasonable delay by the plaintiff in asserting his rights, (5) the public interest

in making the misconduct unprofitable, and (6) whether it is a case of palming off.” /d. The Court

finds that all six factors weigh in favor of the Plaintiff and thus the Court grants Plaintiff's motion

for summary judgment entitling it to a disgorgement of Defendants’ profits.

16

1) ‘Intent to Confuse or Deceive

Knowing or willful infringement exists when there is either “an intent to infringe or a

deliberate disregard of a mark holder’s rights.” SecuraComm Consulting Inc. vy. Securacom Inc.,

166 F.3d 182, 187 (3d Cir. 1999); See also WE. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 662 (2d

Cir. 1970)(helding that intentional infringement occurs when “[defendant’s] actions and

contentions ate surrounded by an aura of indifference to plaintiff's rights and a smug willingness

to determine unilaterally that the good will plaintiff had sought to foster could safely be treated as

a nullity. These elements amount to a species of bad faith and wrongful intent. Defendant,

deliberately and unnecessatily duplicating plaintiff's mark, acted in a way that was calculated to

appropriate or otherwise benefit from the good will plaintiff had nurtured.”) Infringement of this

nature is indicative of the infringer’s intent.

In this case, Defendants’ rights to use Plaintiff's marks ceased upon termination of the

Agreement on January 6, 2021. In the termination notice Defendants were advised that they must

cease and desist use of the ECONO LODGE® Family of Marks. However, upon investigation,

Plaintiffs discovered that Defendants continued to use its marks unauthorized. Despite having been

directed to cease and desist use of Plaintiff's marks in March 2022 and again in May 2022,

Defendants continued to use Plaintiff's marks, which prompted Plamtiff to file the instant suit in

July 2022. It wasn’t until after issuance of a preliminary injunction, followed by a Seizure and

Contempt Order, which resulted in the U.S. Marshals seizing all infringing signage and

paraphernalia, and Plaintiff filing additional subsequent Motions for Contempt that Plaintiff finally

confirmed on March 27, 2025, that Defendants were no longer infringing on Plaintiff's marks.

This series of events clearly demonstrates that Defendants knowingly and continuously

showed a deliberate disregard for Plaintiff's rights, acting in a way that was calculated to benefit

11

from the good will Plaintiff had nurtured. Thus, this factor weighs in favor of Plaintiff.

2) ~~‘ Diverted Sales

Next, the Court must determine “whether there have been any diversion of the plaintiff's

sales due to the infringing mark.” Sabinsa Corp. v. Creative Compounds, LLC, No, CIV.A. 04-

4239 DMC, 2011 WL 3236096, at *3 (D.N.J. July 27, 2011). Plaintiff is only entitled to recover

the portion of Defendants’ profits that can be “demonstrably attributable to the unlawful use of

[its] mark.” /d. (citing Mishawaka Rubber & Woolen Mfg. v. SS. Kresge Co., 316 U.S, 203, 206,

(1942).) Diversion of sales can be shown by evidence of instances of actual confusion. Banjo

Buddies, 399 F.3d at 175-76. However, failure to produce evidence of actual confusion will not

per se defeat an assessing of profits. Sabinsa Corp., 2011 WL 3236096, at *3. (citing Banjo

Buddies, 399 F.3d at 175-76). Additionally, even when the plaintiff does not show evidence of

actual confusion, a successful claim of infringement leads to a rebuttable presumption of diversion

of sales in favor of plaintiff. Jd at *4.

Here, Plaintiff has provided no evidence of actual confusion. However, Plaintiff

successfully established trademark infrimgement, entitling it to a presumption of diverted sales.

Moreover, Defendants have provided no substantive argument to rebut the presumption of diverted

sales. The only rebuttal that can be construed in Defendants’ Opposition is Defendants’ claim that

Plaintiff has “not shown...that the defendant’s alleged infringement was ‘material in that it is likely

to influence purchasing decisions.” (ECF No. 111 at p. 9.) However, Defendants do not expound

on this claim. Instead, they make a blanket statement quoting caselaw that, as explained further

below, is inapplicable to the facts and issues in this case, This is not sufficient to successfully

overcome Plaintiff's presumption of diverted sales. Therefore, this factor weighs in Plaintiff's

favor.

12

3) Adequacy of Other Remedies

The Lanham Act authorizes both equitable and monetary forms of relief. See 15 U.S.C. §

1116, 1117. Plaintiff has fully availed itself of the equitable relief provided under the Act but

contends that equitable remedies are not sufficient to compensate it for Defendants’ infringement.

Thus, Plaintiff argues, it is entitled to monetary damages. Defendants do not rebut this assertion.

However, the Supreme Court has indicated that in cases where Defendants attempt to comply with

cease-and-desist orders, and where there is no showing of fraud or palming off, equitable remedies

are sufficient. Champion Spark Plug Co. vy. Sanders, 331 U.S. 125, 132 (1947). In this case,

Defendants did not even attempt to comply with multiple cease and desist orders from Plaintiff

and from the Court. Further, even after the U.S. Marshals effectuated a seizure warrant, Defendants

continued to use Plaintiff's marks in their online advertising. Given the circumstances of this case,

this factor weighs in favor of Plaintiff.

4) _ Plaintiff’s Unreasonable Delay

Nothing indicates that Plaintiff delayed asserting its rights. Plaintiff made several attempts

to resolve this matter prior to litigation but was ultimately forced to file this suit. Plaintiff has

timely litigated at each stage of the process. Any delay in the adjudication of this case has come at

the efforts of Defendants, As such, this factor weighs in favor of Plaintiff.

5) Public Interest

While trademark law was developed to protect trademark owners, it was also crafted to

protect the public. Sabinsa, 2011 WL 3236069 at *6. As such, the Court must consider whether

the public interest is served by making Defendants conduct unprofitable. Jd. There is a public

interest in discouraging infringers from “interfere[ing] with the consumer’s ability to make

informed purchasing decisions.” Banjo Buddies, 399 F.3d at 176.

13

In this case, Defendants are holdover franchisees who continued, without authorization, to

use Plaintiff's exact marks not only in physical signage and branding merchandise, but also in

marketing and advertising, and direct representation to the public by referring to themselves as

“Feono Lodge” in conversations, This obviously creates confusion and interferes with the public’s

ability to make informed purchasing decisions. This factor weighs in favor of Plaintiff.

6) Palming Off

“Palming off’ occurs when an alleged infringer “misrepresents [their] own goods or

services as someone else’s.” Dastar Corp, v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28

n.1, (2003), Palming off necessarily requires that the alleged infringer engage in conduct with a

culpable intent. Sabinsa, 2011 3236096 at *7. In this case, Defendants wholly represented to the

public that Defendants’ services were provided under the umbrella of Choice Hotel’s ECONO

LODGE® services despite knowing that it was not authorized to do so. In doing so, Defendants

misrepresented their own services as Plaintiff's services. Here, Defendants’ conduct represented a

clear case of palming off. Therefore, this factor weighs in favor of Plaintiff.

As all factors weigh in favor of Plaintiff, the Court orders a disgorgement of Defendants’

profits.

ii, Damages Suffered by the Plaintiff

In addition to disgorgement of profits, the Lanham Act provides that the successful plaintiff

may recover its actual monetary damages, 15 U.S.C. § 1117(a). The Court also has discretion to

order damages in excess of the actual damages “not exceeding three times such amount.” /d, When

a Defendant is liable for continued use of a trademark after termination of authorization, courts

have determined that damages may be based on the amount of royalties or monthly fees that a

plaintiff would have been entitled to during the period of infringement. Super 8 Motels, Inc. v.

14

Amba LLC, No. CIV.A. 05-2767 (ICL), 2006 WL 3041084, at *7 (D.N.J. Oct. 26, 2006) @elying

on A & A Sportswear Co., 166 F.3d at 208.)

Defendants argue first that, based on Warner-Lambert, Inc. , 204 F.3d 87, 91 (3d Cir. 2000),

Plaintiff has not established its right to recover damages. Defendants then argue that Plaintiff's

damages calculation cannot be adopted because the Franchise Agreement does not clearly establish

the percentage used to calculate monthly fees. The Court addresses these arguments in turn.

1) Defendants’ Reliance on Warner-Lambert

Defendants’ reliance on Warner-Lanbert is misplaced. In their opposition, Defendants rely

on Warner-Lambert for the proposition that it establishes the elements a plaintiff must satisfy when

seeking damages under the Lanham Act. (ECF No. 111 at p. 8.)

However, a fair reading of Warner-Lambert reveals that the Court stated: “To establish a

Lanham Act claim based on false or misleading representation of a product the plaintiff must

show...” Warner-Lambert Co. v. Breathasure, Inc., 204 F.3d at 91, (emphasis added). It is beyond

cavil that the elements necessary to establish a claim differ from those required to establish

damages, The Warner-Lambert Court addressed the threshold requirements for liability—not the

evidentiary showing necessary to recover monetary relief. fd. Moreover, the plaintiff in Warner-

Lambert sought only injunctive relief. Jd. at 90. Nothing in the opinion indicates that monetary

damages were at issue, See Id. Accordingly, Defendants misapply Warner-Lambert by importing

the elements of liability into their analysis of Plaintiff's entitlement to monetary damages.

Further, Warner-Lambert is distinguishable from this case. The claim at issue in Warner-

Lambert concerned false or misleading representations revolving around allegations of false

advertising.”” Here, by contrast, the claims involve trademark infringement and unfair competition

27 ‘The Warner-Lambert Court stated in full: “To establish a Lanham Act claim based on a false or misleading

representation of a product the plaintiff must show: 1) that the defendant has made false or misleading statements as

15

arising from a holdover franchisee’s continued use of Plaintiff's marks despite their knowledge

that use was no longer authorized. It is axiomatic that the elements required to establish one type

of Lanham Act violation are not necessarily identical to those to establish another.”® Suffice it to

say, the elements of the false advertising claim in Warner-Lambert are distinct from those

governing the trademark infringement and unfair competition claims in this case, which is also

distinct from the requirements to establish Plaintiff's entitlement to damages.

2) Monthly Fee Based Damages

Plaintiff calculated its damages based on the Monthly Fee Rate (“Monthly Fees’)

established in the Franchise Agreement. According to Plaintiff, pursuant to the Agreement,

Defendants were obligated to pay 7.5% of the preceding month’s gross room revenues each month,

(ECF No. 108-1 at p. 22.) Defendants dispute this calculation, arguing that “The Franchise

Agreement speaks to increases in the Marketing/Reservations Fee, which is part of the alleged

7.5% gross room fee, but there is no evidence how much that increase was, or if it ever happened.”

(ECF No, 111, at p. 3935.7”)

Under Section 4(b) of the Franchise Agreement, which is titled “Fees and Reports”, the

Monthly Fees included “(1) A monthly Royalty Fee of 4% of the preceding month’s Gross Room

Revenues” and “(2) A monthly Marketing/Reservations Fee of 3.5% of the preceding month’s

Gross Room Revenues, [Plaintiff] may increase the Marketing/Reservation Fee for mecreases in

inflation or costs of advertising, publicity, public relations or marketing and for increases in

[Plaintiff's] cost of providing the reservation system so long as the increases apply to all or most

to his own product for another’s]; 2} that there is actual deception or at least a tendency to deceive a substantial

portion of the intended audience; 3) that the deception is material in that it is likely to influence purchasing

decisions; 4) that the advertised goods traveled in interstate commerce; and 5) that there is a likelihood of injury to

the plaintiff in terms of declining sales, loss of good will, etc.” Warner-Lambert 204 F.3d at 91-92.

8 The Court has already undertaken an element-by-element analysis of the claims asserted here, see supra Part

IV.A-B, but will not reiterate that discussion.

2° Def.’s RSUME at p. 3 735 (ECF No. 111.)

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of the U.S. hotels in the System unless we get your approval to a greater amount.” (ECF No. 108-

16 at p, 2.3%)

Defendants correctly assert that Plaintiff has not provided any evidence regarding whether,

or to what extent, the Marketing/Reservations Fee has ever been increased during the life of the

Agreement?! This creates a factual dispute regarding the monthly fee used to calculate Plaintiff's

damages. The question, then, is whether this dispute is material to the damages calculation. “A

fact is material if—taken as true-—it would affect the outcome of the case under governing law.”

Susquehanna Twp. Sch. Dist., 969 F.3d at 125. Moreover, “[a] dispute over a material fact is

‘gemuine’ if ‘a reasonable jury could return a verdict for the nonmoving party.’” Santini, 795 F.3d

at 416 (quoting Anderson, 477 US, at 248).

Therefore, the relevant inquiry for the damages calculation in this case, is whether the

Plaintiff's discretion to increase the monthly fee percentage creates a factual dispute that could

affect the outcome of the case. Specifically, the Court must determine whether a reasonable jury

could return a verdict adverse to the Plaintiff's damages calculation. Here, because any variability

in the monthly fees could only increase the monthly fee rate, and thus increase the Plaintiff's

potential damages award, no reasonable jury could find in a manner that would decrease the

monthly percentage used to calculate Plaintiffs damages.**

Accordingly, the Court finds that there is no genuine dispute of material fact regarding the

30 Franchise Agreement (ECF No. 108-16 at p. 2.)

Defendants do not contend that any such increase actually occurred at ary point throughout the almost twenty

years the Agreement was in effect.

32 The Court notes that if the Agreement permitted, in any respect, a downward adjustment to the monthly

percentage used to calculate the Marketing/Reservations Fee, Plaintiff's current submissions might be insufficient to

establish the 7.5% monthly fee rate as a matter of law. In that scenario, a reasonable jury could find a lower rate

favorable to Defendants and adverse to the Plaintiff. Such a finding would give rise to a genuine dispute of material

fact which, if resolved in Defendants’ favor, as Rule 56 requires, would preclude summary judgment for Plaintiff on

the issue of the applicable monthly fee rate. However, the Agreement unambiguously contemplates only upward

adjustments to the rate, not reductions.

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percentage used to calculate the Plaintiff's damages. Therefore, the Court concludes, as a matter

of law, that the applicable monthly fee percentage under the Agreement is 7.5%.

3) Treble Damages

Plaintiff argues that, because of Defendants’ willful infringement, its actual damages

should be trebled as a deterrent. Plaintiff contends that an award of actual damages is inadequate

because it “contains no deterrent component” which is necessary to disincentivize infringers. In

Plaintiff’s view, awarding actual damages alone would incentivize infringers to “take their chances

and infringe” because “the cost of infringement was simply paying the franchise fee that would

otherwise be due.”

Under the Lanham Act, when assessing damages “the court may enter judgment, according

to the circumstances of the case, for any sum above the amount found as actual damages, not

exceeding three times such amount.” 15 U.S.C, § 1117(a). The Act gives courts considerable

discretion to analyze the circumstances of the case and assign damages accordingly. Courts have

found that a plaintiff’s damages may be trebled when there is willful infringement. See Travelodge

Hotels, Inc. v. Elkins Motel Assocs., Inc., No. CIV. 03-799 (WHW), 2005 WL 2656676, at *12

(D.N.J. Oct. 18, 2005) (holding that damages be trebled when defendant hotel did not remove

signage containing plaintiff's trademark despite numerous notices of the violation following a

termination of the defendant’s franchise agreement); Ramada Worldwide Inc. v. Sayo, Inc., No.

CIV.A. 05-5506, 2007 WL 7754199, at *12 (D.N.J. July 10, 2007) (holding that treble damages

was justified when defendant hotel continued to display plaintiff's marks for eleven months after

termination of the license agreement); La Quinta Corp. v. Heartland Props. LLC, 603 F.3d 327,

341 (6th Cir. 2010) (holding that the district court did not abuse its discretion by awarding treble

damages when the defendant hotel continued to use plaintiffs trademarks following the

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termination of a license agreement).

However, the Third Circuit has made clear that while willfulness is a factor in determining

enhanced damages, it is not necessarily sufficient on its own to establish an award of enhanced

damages. Kars 4 Kids, 8 F.4" at 225 n.22 (“While ‘willful infringement is central,’ to the decision

whether to enhance damages, we have not held that willful infringement is alone sufficient to

support an enhanced award.”) (citation omitted), The Kars 4 Kids Court also cautioned that since

deterrence is not a compensatory justification for damages, it cannot serve as the basis for an

enhanced award. Jd. The Court explained that the Lanham Act remains remedial, despite it being

designed to deter wrongful conduct, only as long as the purpose of the damage calculation is to

compensate a plaintiff for its actual injuries. fd. (relying on Getty Petroleum Corp. v. Bartco

Petroleum Corp., 858 F.2d 103, 113 (2d Cir, 1988)), The Court may use its discretion to increase

the damages award in situations where an award of actual damages undercompensates the plaintiff

in some way. 15 U.S.C. § 1117(a). In most cases though, an award of actual damages will be

sufficient to compensate the plaintiff for its injuries. See Kars 4 Kids., 8 F.Ath at 224; See also

Fifty-Six Hope Rd. Music, Lid. v. AVELA, Ine, 778 F.3d 1059, 1077 (9th Cir, 2015)

(Generally, actual, proven profits will adequately compensate the plaintiff.)

Here, Plaintiff's justification for requesting treble damages rests on willful infringement

and deterrent effect. This is not sufficient. Plaintiffs argument that infringers would be

incentivized to infringe if the only consequence was to pay their preexisting contractual obligations

ignores the fact that under the Lanham Act the cost of infringement is not constrained to paying

actual damages. If a defendant is found liable for infringement it may be required to 1) disgorge

all of the profits it gained from its wrongful conduct, 2) compensate the plaintiff for their actual

damages, and 3) foot the bill for the suit. In exceptional circumstances, which the Court will

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discuss in more detail below, the infringer may be required to cover the costs of plaintiff's attorney

fees. Plaintiff fails to take into account the cumulative nature of the available monetary damages

under the Lanham Act, and thus the deterrent effect those cumulative damages impose.

Therefore, while the Court agrees that Plaintiff is entitled to its actual compensatory

damages, the Court declines to award enhanced damages.

iit, Costs of the Action

The Lanham Act permits a successful plaintiff to recover the costs of the action. 15 U.S.C.

§ 1117(a). Plaintiff sets forth the costs incurred in connection with this suit as follows:

1. District Court filing fee: $402

2. Pro Hac Vice fee: $150

3. Service of Process fee: $109.60

4, US Marshal fee: $594.65

Plaintiff has incurred a total of $1,256.25 in costs associated with this action. Already having

determined that Defendants are liable for all asserted claims, the Court awards Plaintiff its costs of

this action in the amount of $1,256.25.

iv. Damages Calculation

Once entitlement to monetary relief is established, a court may award damages even when

the amount is not susceptible to a precise calculation. Elkins Motel, 2005 WL 2656676, at *11;

Eastman Kodak Co. of New York v. 8S. Photo Materials Co., 273 U.S. 359, 379 (1927), Such

damages are not rendered uncertain because they are not calculated with absolute exactness.

Eastman Kodak, 273 U.S. at 379. A reasonable basis of computation, even if approximate, is

sufficient. Id.

A plaintiff bears the initial burden of proving the defendant’s sales, after which the burden

3 Plaintiff's Motion provides that the costs incurred in this action equal $1,106.25. Plaintiff then lists the costs

enumerated above. The Court notes that the sum in Plaintiff's Brief is mathematically incorrect and that the sum of

the fees outlined in Plaintiff's brief equals $1,256.25.

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shifts to the defendant to show deductible costs or that profits are not attributable to the

infringement. Sabinsa Corp, 2011 WL 3236096 at *3. Circumstantial evidence of the amount of

damages may be competent to “sufficiently show the extent of damages, as a matter of just and

reasonable inference,” /d. But still, the plaintiff must prove damages to a “reasonable certainty,”

and the Court need not accept an estimation where more reliable evidence could have been, but

was not, produced. Banjo Buddies, 399 F.3d at 178.

Additionally, the Court is mindful that “a defendant whose wrongful conduct has rendered

difficult the ascertainment of the precise damages suffered by the plaintiff, is not entitled to

complain that they cannot be measured with the same exactness and precision as would otherwise

be possible.” Eastman Kodak Co., 273 U.S, at 379,

Here, the Court has determined that Plaintiff is entitled to monetary relief under § 1117(@).

Therefore, Plaintiff must establish Defendants’ sales. 15 U.S.C. § 1117(a). Plaintiff asserts that

precise calculations are impossible because Defendants refused to participate in discovery. As an

approximation, Plaintiff relied on the Subject Property’s reported revenue from the most recent

year for which Plaintiff had data—January through December 2020. Plaintiff's calculations show

that the Subject Property’s average monthly gross room revenue for 2020 was $54,212.13, Plaintiff

caiculated Defendants’ overall gross room revenue for the infringing timeframe by multiplying

that figure by forty, which represents the alleged infringing timeframe. Plaintiff contends that

Defendants estimated overall gross room revenue during the infringing timeframe was

$1,301,105,.52.

Plaintiff calculated its damages by applying the 7.5% monthly fee to the estimated monthly

revenue ($54,212.13), resulting in an estimated monthly fee of $4065.95. Plaintiff then multiplied

the estimated monthly fee by forty months to determine that its total damages equal $97,582.80.

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Defendants argue that Plaintiff's damages calculation is based on double hearsay, which

the Court cannot consider in a motion for summary judgment. Specifically, Defendants argue that

the Declaration of Stuart M. Kreindler is hearsay, and that Mr. Kreindler based his damages

calculation on “records maintained by Plaintiff...the Plaintiffs records are hearsay and Mr.

Kreindler’s Declaration is hearsay; both are out of court statements submitted for the truth of the

assertions contained therein.” (ECF No. 111 at p. 7.) Thus, Defendants argue, the Court cannot

properly adopt Plaintiff's damages calculation by relying on double hearsay.

Defendants fundamentally misunderstand both Rule 56 and the Federal Rules of Evidence

as they relate to hearsay. Rule 56 explicitly addresses when a court may consider a Declaration at

the summary judgment stage. It says, “An affidavit or declaration used to support or oppose a

motion must be made on personal knowledge, set out facts that would be admissible in evidence,

and show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P.

56(c)(4). In this case, Mr. Kreindler’s Declaration 1) states that it is made on his personal

knowledge, 2) sets out facts that explain how Plaintiff arrived at its damages calculations, and 3)

establishes that Mr. Kreindler is Assistant General Counsel for Choice Hotels International and his

job duties include reviewing corporate records and ensuring compliance with franchise

agreements, rendering him competent to testify about the subject matter of the Declaration, Thus,

for the purposes of summary judgment, the Declaration is admissible.

As to Mr, Kreindler’s reliance on Plaintiff’s records, which are hearsay, Defendants fail to

acknowledge that hearsay is admissible if it falls within a proscribed exception. See Fed. R. Evid.

803, One such exception permits the admission of business records if the records were made in the

course of a regularly conducted activity, near the time of the activity, as part of a regular business

practice, and the opposition has not shown that the record lacks trustworthiness. See Fed. R. Evid.

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803(6). The only potential element of the business records exception that is not met on its face in

this case is whether Defendants have shown that the record lacks trustworthiness.

Defendants argue that that Plaintiff's records do not explicitly reference the Defendants,

implying that the record cannot conclusively be attributed to the Subject Property. However, upon

inspection of the records, the Court notes that the upper lefthand corner of the records states:

Property ID: NJ059 Bellmawr. (ECF No. 108-14 at p.7.°") The Franchise Agreement, on the top

right hand of the first page indicates NJO59R. (ECF No, 108-16 at p. 2.) The Court is satisfied that

the Property ID on the records identifies the Subject Property. Therefore, the Court finds that the

Plaintiffs records fall within the business records exception and are admissible evidence. Since

the Court has determined that both alleged levels of hearsay are independently admissible, the

Court may consider the Declaration for the purposes of summary judgment.

Defendants further argue that the Court should reject Plaintiff's damages estimates because

even though Defendants refused to comply with discovery demands, Plaintiff did not compel

discovery under Rule 37(a}. As such, Defendants argue, Plaintiff should not benefit from

Defendants’ failure to respond when they could have employed procedural mechanisms to force a

response.

The record, however, reflects Defendants’ repeated noncompliance with discovery

obligations and court orders (as well as multiple withdrawals by Defendants’ counsel based on

Defendants’ failure to cooperate with its own counsel), and a persistent refusal to participate

meaningfully in the litigation. Defendants cannot now invoke the consequences of their own

failure to cooperate in the litigation to complain that damages “cannot be measured with the same

exactness and precision as would otherwise be possible.” Eastman Kodak, 273 U.S. at 379.

44 Declaration of Stuart M. Kreindler, Esq,, Oracle business records (ECF No. 108-14 at p. 7.)

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Therefore, the Court finds that the Plaintiff has proven Defendants’ sales with reasonable

certainty. Defendants have not submitted any evidence of deductible costs, nor have they provided

evidence that any profits were not attributable to their infringement. Therefore, the Court accepts

Plaintiff's profits calculations and finds that Plaintiff is entitled to Defendants’ profits in the

amount of $1,301,105.52.

Further, as the Court has accepted Plaintiff's damages calculation, and determined that the

monthly fees must be calculated at a rate of 7.5%, the Court finds that Plaintiff is entitled to its

damages in the amount of $97,582.80.

ce. Exceptional Case Designation

The Lanham Act permits an award of attorney’s fees to the prevailing party in “exceptional

cases.” See 15 U.S.C. 8 1117(a). To determine whether a case is exceptional, the Court applies a

two-step inquiry. Green v, Fornario, 486 F.3d 100, 103 Gd Cir. 2007). First, the Court considers

whether the defendant engaged in culpable conduct such as bad faith, fraud, malice, or knowing

infringement. /d. (citing Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 3d Cir.1991),

In making that determination, the Court is permitted to consider not only the conduct that relates

to the Lanham Act violation, but also “the way the losing party handled himself during the

litigation.” fd. (citing SecuraConmn, 224 F.3d at 282), If culpable conduct is shown, the Court then

considers whether the circumstances render the case sufficiently exceptional to justify a fee award.

Id.

Here, the Court has already found that Defendants’ infringement was willful. Defendants

were notified on three separate occasions prior to the filing of this lawsuit to cease and desist use

of Plaintiff’s marks and made no attempt to comply. After suit was filed, Defendants ignored the

Court Ordered preliminary injunction, which compelled Plaintiff to move for contempt to obtain

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a seizure order, which was executed by the U.S, Marshals. Even then, Defendants persisted in

advertising online using images containing the Plaintiff's marks. Not until March 27, 2025-—more

than four years after termination of the Franchise Agreement--was the Court able to say

definitively that Defendants were no longer infringing. This conduct squarely qualifies as willful

infringement and bad faith. This is precisely the type of culpable conduct that constitutes the

exceptional case designation,

Defendants’ conduct throughout litigation does nothing to help their cause. They failed to

appear until after Plaintiff moved for default judgment and then appeared the very next day. Even

then they participated only intermittently and obstructively. They ignored discovery obligations,

violated court orders, caused repeated extensions, and forced multiple motions to withdraw by

their own counsel for non-communication and non-payment. Discovery was extended to

accommodate Defendants’ new counsel, which was ultimately pointless given that Defendant

never responded to discovery requests, produced discovery documents, issued any discovery

requests, or even appeared for depositions. Nothing about Defendants’ conduct in the course of

this litigation gives the Court a reason to believe they litigated in good faith. Their disregard for

this Court’s orders and for the litigation process has been consistent and deliberate.

In sum, the Defendants knowingly and willfully infringed on Plaintiff's trademarks while

blatantly disregarding the Court’s Orders and engaging in bad faith litigation tactics that have

needlessly prolonged what should have been a straightforward case. Defendants’ conduct has been

egregious in every aspect. Under the circumstances, it is clear that this case falls within the

parameters of the “exceptional case.” Therefore, the Court awards Plaintiff its reasonable

attorney’s fees.

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Vv. CONCLUSION

For all of the reasons set forth above, Plaintiff's Motion for Summary Judgment (ECF No.

108) is GRANTED.

Dated: Novemben!S, 2025 □□

I EN M. WILLIAMS

United States District Judge

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