Page:Quality Inns v. McDonald's.pdf/7

 Inn, is the brainchild of its CEO, Robert C. Hazard, Jr. At trial he described how he thought of the name at 2 o’clock one morning in November or December 1986 and jotted down notes of his ideas at bedside. He wanted a name that conveyed thrift and consistency, and from a list of several names that he considered, he selected “McSleep.” He said that the “Mc” from the Scottish surname conveyed thrift. The notion of “consistency” was the new generic meaning of the prefix “Mc” in the English language. He denied that his selection was an imitation of McDonald’s or that McDonald’s occurred to him at the time that he selected the name McSleep. For the reasons given, the Court does not credit this testimony.

When Mr. Hazard first developed his five-year plan for Quality International, which he issued on January 1, 1983, he identified nine corporations whose values he emulated. One of the nine was McDonald’s, and the values that he attributed to McDonald’s, which he did not attribute to any of the other eight, were “quality, cleanliness and value” (actually McDonald’s corporate philosophy was Q.S.C.V. or quality, service, cleanliness and value). Those are the very values that later became the values of Quality International for its new McSleep Inn product in a slightly different form.

In presenting his idea of McSleep Inns to the Board of Directors of Quality International in June, 1987 for approval, Mr. Hazard described the new product in terms not only suggestive of McDonald’s advertising but openly modeled on the McDonald’s concept:

"The marketing promise of McSleep is “a consistent, convenient, quality product at a low price.”

The marketing hook is the name “McSleep;” not McSleep Motor Inn or McSleep Motel—just “McSleep.” The name McSleep should help consumers instantly identify the product for what it is—a consistently clean, quality product at a low price.

McSleep is aimed at the entire travel market. Like McDonald’s, it is acceptable for the upscale traveler who wants only a good night’s sleep and for the economy traveler who wants to save money."

Yet, when questioned at trial whether the promise of a consistent, convenient and quality product at a low price brought to mind McDonald’s, Mr. Hazard said it never occurred to him, though it was possible “it might remind some folks of McDonald’s.” He added, however, “it didn’t remind me of McDonald’s.”

Around the time that the McSleep concept was being presented to the Board, an early draft of the franchise brochure describing a McSleep Inn referred to the name as “instantly recognizable.” This characterization was considered “wrong” by a number of management of Quality International and was deleted from the final published version. Nevertheless, the draft evidenced a perception at Quality International at that time that the McSleep Inn would enjoy instant recognition, much as Mr. Hazard had promised to his Board when he said, “the name McSleep should help consumers instantly identify the product.”

In addition to his overtly expressed admiration for McDonald’s and its method of doing business, which appears to be the same course that Mr. Hazard pursued for Quality International, the possibility of actually working with McDonald’s in a joint venture involving an inexpensive, quality hotel with a fast-food restaurant was on the Quality International agenda at the time Mr. Hazard selected “McSleep.”

Years before, McDonald’s had adopted and used the name McStop in connection with a traveler’s plaza for the long distance traveler. The plaza by concept included a McDonald’s fast-food restaurant, a convenience store, gas station, lodging, and related businesses. While McDonald’s would only own the restaurant, it would supervise the development and quality of the entire plaza and thus call it “McStop.”

In the summer of 1986, Mr. James H. Nelms, a regional manager of Quality