## Facts

- Quality Inns International, Inc., a hotel franchisor, announced a new economy hotel chain to be marketed as “McSleep Inn.”
- McDonald’s Corporation owned and heavily advertised a “Mc” family of trademarks formed by combining the “Mc” prefix with generic terms for goods and services.
- Shortly after the announcement, McDonald’s objected and asserted that “McSleep” infringed its marks.
- Quality filed an action seeking a declaratory judgment of noninfringement and no false designation of origin; McDonald’s counterclaimed for Lanham Act infringement and unfair competition and for dilution under an Illinois statute.
- The case was tried to the court without a jury; the record included testimony, surveys, and other evidence regarding consumer perception.
- Survey evidence showed substantial consumer association between “McSleep” and McDonald’s, including results exceeding 30% in one survey and 16.3% in another that displayed Quality’s name with the brand.
- The court found Quality adopted “McSleep” with awareness that consumers would associate the name with McDonald’s and that the name could trade on McDonald’s goodwill.

## Issues

1. Whether McDonald’s use of “Mc” with generic terms constituted a protectable family of marks.
2. Whether “McSleep Inn” created a likelihood of confusion as to source, sponsorship, or affiliation under the Lanham Act.
3. Whether use of “McSleep” diluted the distinctive quality of McDonald’s famous “Mc” marks under the Illinois Anti-Dilution Act.
4. Whether McDonald’s was entitled to injunctive relief and attorney’s fees.

## Decision

- The court found McDonald’s “Mc” family of marks was strong and protectable.
- The court held Quality’s use of “McSleep Inn” was likely to cause confusion as to sponsorship or affiliation and therefore infringed and constituted unfair competition under the Lanham Act.
- The court held “McSleep Inn” diluted the distinctiveness of McDonald’s “Mc” marks under the Illinois Anti-Dilution Act.
- The court permanently enjoined Quality from using “McSleep” and similar confusing “Mc + generic term” branding.
- The court denied McDonald’s request for attorney’s fees, finding the case was not “exceptional” for Lanham Act fee-shifting.

## Legal Principles

- A “family of marks” is protectable when a common formative (here, “Mc” + generic term) is used and advertised so consistently that consumers recognize the pattern as indicating a single source.
- Likelihood of confusion under the Lanham Act includes confusion as to sponsorship, affiliation, or approval, not only confusion about direct source.
- A famous and strong mark (or mark family) may receive broader protection, including against uses in different but plausibly related markets where consumers could believe an expansion or affiliation exists.
- Consumer survey evidence may be used to prove likely confusion; substantial association rates support injunctive relief.
- Dilution statutes can prohibit uses that lessen a famous mark’s distinctiveness even without direct competition or proof of actual confusion.
- Attorney’s fees under the Lanham Act require an “exceptional” case; prevailing alone is insufficient.

## Conclusion

The court concluded that McDonald’s had established a protectable “Mc” family of marks and that “McSleep Inn” both created a likelihood of consumer confusion about affiliation and diluted the distinctiveness of the “Mc” marks, warranting a permanent injunction but not an award of attorney’s fees.


Quality Inns Int'l, Inc. v. McDonald's Corp., 695 F. Supp. 198 (D. Md. 1988)