accommodations described in the above statement?” The respondent was then given a choice of four grades ranging from “excellent name” to “poor name.” Over 40 of the respondents volunteered a written comment in response to that question suggesting an association with McDonald’s. Typical of the comments were: “Sounds like relationship to McDonald’s food chain,” or “Sounds cute but I thought it might be affiliated with McDonald’s,” or “Possibly owned by McDonald’s,” or “Reminds me of McDonald’s.”
When Mr. Charles Riter, president of the research firm, advised Mr. Hazard of the result some three to four weeks before the public announcement, Mr. Hazard agreed that it had occurred to him that “some people might associate or refer to or see in the name McSleep some relationships with McDonald’s.” He observed that the confusion, if any, associated the room with a “greasy hamburger” and that did not bother him, because the rooms were better.
In September 1987, at a meeting of Quality International’s sales force convened to announce the new McSleep Inn product, questions also were raised by salespersons of Quality International whether Quality International had the right to use the name McSleep.
Despite the persistent questioning by representatives of Quality International with respect to its rights to use McSleep Inn, Mr. Hazard proceeded with the public announcement on September 21, 1987. A press release was issued and Mr. Hazard also delivered a speech to the trade show in Chicago describing his new hotel. Prior to the public announcement, he invited interviews with the Washington Post and a trade magazine, Hotel and Motel Management. In the Washington Post article, Mr. Hazard is quoted as saying:
Obviously, [the name is] a takeoff on McDonald’s and quality at a consistent price. … We think we’re going to let McDonald’s continue to use their name.
Mr. Hazard admitted making that statement generally but stated he did not refer to the name of McDonald’s but rather the concept. He added that the final sentence in the quote was made in jest in response to the reporter’s persistent questioning about McDonald’s.
With respect to the interview given to Hotel and Motel Management, Mr. Hazard expressed complete confidence in the reporter, who was a long-time friend. Mr. Hazard acknowledged the accuracy of all the quotations made of him and does not fault the reporter for making any comments. That article reported as follows:
And yes, the not-so-subtle reference to fast-food giant McDonald’s is purely intentional.
“The concept is just like McDonald’s,” Hazard said. “A guy making $150,000 a year can eat there and feel comfortable and a guy making $10,000 a year can eat there and feel comfortable because he knows what he’s getting—consistent quality. And that doesn’t exist in the lodging industry.”
The inquiries about McDonald’s, that began with employees and continued with reporters, were repeated by the attendees at the conference in Chicago.
Quality International not only was aware of the risk that attended its adoption and use of the name McSleep Inn, a risk that it was infringing McDonald’s family of marks, but it also had good reason to believe that the public might be actually confused. It nevertheless proceeded with both the announcement and its plans to sell franchises for McSleep Inn.
Three days after the public announcement, McDonald’s wrote to Quality International complaining of its planned use of the words “McSleep” and “McSuite” and demanding the immediate discontinuance of those plans. There followed some telephone conversations between the parties, but before any issue was resolved, Quality International filed suit in this court, five days after McDonald’s sent its letter.
Beginning in June, 1987 Quality International began making changes in the presentation of McSleep Inn that were intended to emphasize McSleep Inn’s association with Quality International. Quality International’s four chain logo was to be pictured on a
