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CLE-WARE RAYCO, INC. v. PERLSTEIN

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


June 11, 1975.

CLE-WARE RAYCO., INC., an Ohio Corporation, Plaintiff, against BRUCE J. PERLSTEIN, Defendant.

The opinion of the court was delivered by: DUFFY

MEMORANDUM AND ORDER

Plaintiff seeks a preliminary and permanent injunction against the defendant's use of the trade name, trademark and/or service mark "RAYCO" and directing the defendant to remove all RAYCO logo signs from its premises and from all bills and stationery and other materials in the possession of the defendant. In connection with its motion, plaintiff also requested that the trial of the action for the permanent injunction be advanced pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure. According to the teachings of the Court of Appeals for this Circuit, a hearing was held at which both parties put in evidence in the form of testimony and documents. Securities & Exchange Commission v. Frank, 388 F.2d 486 (2d Cir. 1968).

 It appears that the plaintiff Cle-Ware Rayco Inc. was an Ohio corporation and was the owner of the trademark, trade name and/or service mark "RAYCO", which is registered both federally and in the State of New York.

 The defendant Bruce J. Perlstein is an individual who entered into a Rayco Auto Service Center franchise agreement on or about February 16, 1970, and still operates an auto service business on West Route 59 in Nanuet, Rockland County, New York. The franchise agreement granted to Perlstein a limited right to use the name "RAYCO" in conjunction with the sale of Rayco products and services while the agreement remained in force. The agreement provided that the defendant would pay for merchandise sold to him, certain franchise fees and certain advertising expenses. In December 1974, the credit manager of the plaintiff approached the defendant with a view towards settling certain accounts which the plaintiff claimed remained open. No settlement was made and on January 6, 1975, plaintiff advised the defendant that his franchise would terminate on February 4, 1975, unless his alleged defaults had been cured prior to that date. The alleged defaults were not cured and, in fact, on February 4, 1975, the franchise was terminated. Since that time the defendant has continued to use the "RAYCO" logo on a sign outside of his auto service center and also on his bills and stationery.

 By this action plaintiff seeks to have the defendant cease using the trade name, trademark and/or service mark of the plaintiff corporation.

 In answer, the defendant admits that he entered into a franchise agreement with Rayco Inc. but disclaimed any knowledge of the plaintiff corporation Cle-Ware Rayco, Inc. The defendant also alleged that a "corporation known as FDI Inc.... also claims ownership of the name "RAYCO". The defendant alleged further that all his dealings were with "an entity known as RAYCO INTERNATIONAL, INC." The defendant contended that the proper entities therefore were not parties to this lawsuit and that the action ahd to be dismissed.

 It became clear at the hearing that Rayco Inc. went into bankruptcy in early 1971 and that through a reorganization and various corporate mergers the plaintiff CLE-WARE RAYCO, INC. was the survivor and the owner of the trademark, trade name and/or service mark "RAYCO", along with its distinctive logo. At the hearing, Donald E. Egan, Esq., Chicago counsel for the plaintiff, testified that the plaintiff Cle-Ware Rayco, Inc. was still the owner of the trademark, trade name and/or service mark "RAYCO". However, after the hearing was concluded, I was notified that Mr. Egan's testimony was in part inaccurate because as of April 30, 1975, Cle-Ware Rayco, Inc. was merged into FDI, Inc., a Delaware Corporation.

 Since FDI, Inc., the present owner of the rights in the name "RAYCO", is not a party-plaintiff, the motion for a preliminary and permanent injunction prohibiting the defendant's continued use of that name will be denied. If FDI, Inc. is joined as a plaintiff I will entertain a motion to reconsider upon the record already made.

 SO ORDERED.

 U.S.D.J.

19750611

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