Court Rejects Credibility of Skincare Spa Franchisee

<p>Kalologie, a franchisor of day spas, sought a preliminary injunction preventing Defendants, who formerly operated under a franchise agreement with Kalologie, from continuing to use Kalologie&#39;s registered trademark and unregistered trade dress. Kalologie had entered into a franchise agreement with Dr. David Hopp (&quot;Hopp&quot;) in September 2009. Hopp and Dr. Julian Girod (&quot;Girod&quot;), who also had a franchise agreement with Kalologie, subsequently entered into a general partnership called Kalologie Skincare Medical Group of California (&quot;KSMG&quot;).</p>

<p>In March 2013, Kalologie gave Hopp and Girod written notices of default in relation to the agreements. This led to third-party litigation between Girod and Hopp and an interim agreement between the franchisees was reached under which Hopp would take over management of a spa located at 317 Robertson Boulevard, Los Angeles, California 90048, while Girod would manage a separate location in the Studio City area of Los Angeles. On December 17, 2013, Kalologie gave notice to Hopp and Girod of termination of the franchise agreements. Kalologie claimed that Hopp and Girod had violated the agreements by preventing Kalologie from accessing the point-of-sale software used by the Robertson Boulevard facility; failing to pay royalties contractually owed to Kalologie; disseminating marketing communications without obtaining Kalologie&#39;s approval; and selling unauthorized products. The notice also instructed Hopp and Girod to immediately cease their use of the &quot;Kalologie&quot; trademark in connection with any business activity.</p>

<p>Kalologie claimed that thereafter the Defendants nonetheless continued to use Kalologie&#39;s trademark and trade dress at the Robertson Boulevard facility. Among other conduct, on December 31, 2013, the Defendants allegedly sent a mass email advertising the Robertson Blvd. spa as a &quot;Kalologie Med Spa,&quot; which was copied from an advertisement used by an another franchise in the area. In response, Hopp acknowledged that the Robertson facility used Kalologie-branded items for an unspecified time following the December 17, 2013 termination of the franchise agreement, but without elaborating, stated: &quot;[a]lthough I dispute Plaintiff&#39;s claims that I improperly used the Kalologie mark in advertising or voicemails, as alleged in the Complaint, if any such use occurred it was unintentional.&quot; This ambiguous statement by the franchisee did not stop the Court from concluding that &quot;the Robertson Boulevard facility continued to use Kalologie&#39;s mark following the termination of the franchise agreement&quot; and that accordingly &quot;the court finds that Kalologie is likely to succeed on the merits of its trademark infringement claim.&quot;</p>

<p>Next, the court considered whether Kalologie had shown that it was likely to suffer irreparable harm if a preliminary injunction was not granted. In finding that Kalologie had borne this burden, the Court stated that &quot;A plaintiff&#39;s loss of control over its business reputation resulting from a defendant&#39;s alleged unauthorized use of its protected mark during the pendency of an infringement action can constitute irreparable harm justifying injunctive relief.&quot; In this regard, Kalologie had contended that &quot;it will suffer such loss of control over its business reputation, as well as loss of trade and good will due to Defendants&#39; use of its mark.&quot;</p>

<p>Despite the above rulings, the Court was concerned about the question &quot;whether such [imminent] harm had ceased, precluding a finding of irreparable harm absent injunctive relief.&quot; Defendants contended that they were no longer using Kalologie branded items or marks and do not intend to do so in the future. Further, the franchisees contended, without offering supporting evidence, that their use of the Kalologie mark through the point-of-service system has ended. And, the franchisees alleged that they had notified Kalologie of their intent to replace the sign Kalologie contended infringed its trade dress in violation of the franchising agreement with a new sign that had been pre-approved by Kalologie.</p>

<p>The Court rejected the franchisees&#39; evidence, however, in favor of Kalologie&#39;s evidence that its mark continued to be used by Defendants&#39; facility through the online point-of-sale system and associated website. In this regard, specifically, the franchisor, at the March 10, 2014 hearing, offered a current print-out of Defendants point of sale website showing the use of Kalologie four times. Balancing the evidence, the Court ruled that Kalologie was entitled to an injunction: &quot;Kalologie has shown that injunctive relief is likely necessary to prevent irreparable harm going forward.&quot;</p>
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<p>Kalologie Franchising LLC v. Kalologie Skincare Medical Group of California, United States District Court, C.D. California. March 11, 2014 Not Reported in F.Supp.2d 2014 WL 953442</p>