The Mexican luxury hotel chain Quinta Real would violate the trademark of the U.S. mid-tier motel chain, La Quinta, a federal appeals court ruled Wednesday, but sent the injunction against Real back to the trial court for refinement.
The 9th U.S. Circuit Court of Appeals upheld a finding of likely confusion by consumers between the two companies, if Quinta Real opened a franchise in the U.S., which planned to do in Tucson, according to the court.
La Quinta, which opened in 1968, has more than 800 motels in 80 major cities in the U.S. and about half are operated as franchises, according to the court.
Quinta Real first opened in 1986 in Guadalajara, Mexico and operates eight luxury hotels throughout Mexico. Rooms average $183 per night and are considered some of the most luxurious in Mexico, the court said. Nearly 40 percent of its guests are from the U.S.
Although its 2007 letter of intent to build a hotel in Tucson come to nothing, La Quinta, by contrast, has already opened several hotels in Mexico.
La Quinta sued in 2009 fearing the competition with a so similar a name in the U.S. would confuse consumers. The trial court agreed after a bench trial and granted La Quinta a permanent injunction against Quinta Real.
But the 9th Circuit panel ordered the trial judge to reconsider terms of the injunction.
“We are concerned that the district court’s analysis does not discuss a fact we think relevant to weighing the equities in this case: That a permanent injunction in favor of La Quinta here would bar Quinta Real from opening a hotel in the United States under its own name, while at the same time La Quinta would remain free to open hotels and do business in Mexico as ‘La Quinta,’” wrote Judge Ronald Gould.
“We do not decide that this fact is determinative and we express no opinion on whether the district court should issue a permanent injunction after having taken account of all the relevant facts. But to our thinking this consideration is pertinent to whether a permanent injunction here against Quinta Real operation through its name in the United States is fair and equitable relief in light of the La Quinta hotel operations in Mexico,” Gould said.
The injunction is vacated and the case sent back to U.S. District Judge Raner Collins in Arizona to reconsider the balance of hardships on each side.
Case: La Quinta Worldwide v. Quinta Real, No. 12-15985