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Re/Max of New England, Inc. v. Prestige Real Estate, Inc.

United States District Court, D. Massachusetts

July 7, 2014



GEORGE A. O'TOOLE, Jr., District Judge.

I. Background

For fifteen years, the defendants, Prestige Real Estate, Inc., and Stacey Alcorn and Andrew F. Armata (collectively "Prestige"), operated thirteen real estate offices under franchise by the plaintiffs, RE/MAX of New England, Inc. and RE/MAX, LLC ("RE/MAX"). Each franchised office had a separate franchise agreement with RE/MAX with separate expiration dates. The agreements for three offices expired by their terms, but the franchise relationship continued on a month-to-month basis under a provision in the agreements. The other ten offices were operating under active agreements at the time this controversy erupted.

On April 14, 2014, the defendants sent a letter to the plaintiffs purporting to terminate Prestige's relationship with RE/MAX for reasons spelled out in the letter, and asserting unfair business practice claims against RE/MAX pursuant to Massachusetts General Laws chapter 93A. The defendants started to do business as LAER Realty Partners ("LAER").

The plaintiffs commenced this action; the defendants have answered and counterclaimed. The plaintiffs have moved for a temporary restraining order, followed by a preliminary injunction, requiring: (1) that the defendants cease and desist all use of RE/MAX's trademarks; (2) specific performance of the in-term and post-termination covenants against competition; and

(3) specific performance of the defendants' obligation to assign telephone numbers and domain names to RE/MAX. The defendants contend that they are not using the plaintiffs' trademarks, the non-compete provisions are either inapplicable or unenforceable, the phone numbers do not belong to the plaintiffs, and the domain names have already been deactivated.

II. Legal Standard

A preliminary injunction is "an extraordinary and drastic remedy." Peoples Fed. Sav. Bank v. People's United Bank , 672 F.3d 1, 8-9 (1st Cir. 2012). Courts assess four factors when determining whether a temporary restraining order is appropriate: "(i) the likelihood that the movant will succeed on the merits; (ii) the possibility that, without an injunction, the movant will suffer irreparable harm; (iii) the balance of relevant hardships as between the parties; and (iv) the effect of the court's ruling on the public interest." Coquico, Inc. v. Rodriguez-Miranda , 562 F.3d 62, 66 (1st Cir. 2009). The first factor is generally considered the most important. Waldron v. George Weston Bakeries Inc. , 470 F.3d 5, 8 (1st Cir. 2009). Indeed, "if the moving party cannot demonstrate that he is likely to succeed in his quest, the remaining factors become matters of idle curiosity." New Comm Wireless Servs., Inc. v. SprintCom, Inc. , 287 F.3d 1, 9 (1st Cir. 2002). Where a likelihood of success on the merits exists, the other factors need to be carefully assessed. See Ross-Simons of Warwick, Inc. v. Baccarat, Inc. , 102 F.3d 12, 19 (1st Cir. 1996) (analyzing risk of harm after finding a likelihood of success on the merits).

III. Discussion

A. Trademarks

In order to demonstrate that trademark infringement has occurred, the plaintiffs "must establish (1) that its mark is entitled to trademark protection, and (2) that the allegedly infringing use is likely to cause consumer confusion." Boston Duck Tours, LP v. Super Duck Tours, LLC , 531 F.3d 1, 12 (1st Cir. 2008). The alleged infringer's continued use of the trademark is central to the inquiry. Boston Duck Tours , 531 F.3d at 34.

In this case there is no serious trademark controversy. The defendants have made clear that they do not wish to continue using the plaintiffs' trademarks. Boston Duck Tours established that use is a critical component of a claim for trademark infringement. The undated photographs submitted by the plaintiffs are unreliable evidence that the defendants are continuing to use the RE/MAX name and marks. The defendants, on the other hand, have invested in rebranding to a name and logo that bears no resemblance to RE/MAX. The plaintiffs have demonstrated neither a likelihood of success on the merits nor a prospect of irreparable harm.

B. Non-Compete Covenants

A covenant not to compete is enforceable if it (1) is necessary to protect a legitimate business interest; (2) is reasonably limited in time and space; and (3) is consonant with the public interest. Boulanger v. Dunkin' Donuts Inc. , 815 N.E.2d 572, 577 (Mass. 2004). Courts will not enforce non-compete provisions if their sole purpose is to limit ordinary competition. Lombard Medical Technologies, Inc. v. Johannessen , 729 ...

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