April 08, 2026|Franchise Frontlines
April 8, 2026 | U.S. District Court, Western District of Tennessee | Order Granting Default Judgment
Executive Summary
In a default judgment decision, the Western District of Tennessee granted a permanent injunction in favor of The Reinalt-Thomas Corporation (“Discount Tire”) after finding that a local competitor’s use of the name “Shelby Discount Tire & Auto” infringed Discount Tire’s registered trademarks. The plaintiff argued that the defendant’s use of a confusingly similar name in the same geographic market would mislead consumers and damage its brand. The defendant failed to appear or defend the action. Accepting the well-pleaded allegations as true, the court concluded that the defendant’s conduct was willful, likely to cause confusion, and warranted injunctive relief and attorneys’ fees under the Lanham Act.
Relevant Background
Discount Tire is a nationwide retailer of tires and wheels and has used the “DISCOUNT TIRE” mark for decades. It operates multiple locations in Tennessee, including several within close proximity to the defendant’s store. The defendant, Shelby Discount Tires & Auto, Inc., opened a retail location in Memphis using the name “Shelby Discount Tire & Auto” and offered the same goods and services.
After discovering the use, Discount Tire sent multiple demand letters explaining the alleged infringement and requesting that the defendant cease using the marks. The defendant refused to comply and continued operating under the challenged name. Discount Tire then filed suit asserting claims under the Lanham Act, common law trademark infringement, and the Tennessee Consumer Protection Act.
The defendant never responded to the complaint or appeared in the action, and the clerk entered default. Discount Tire moved for default judgment, seeking injunctive relief and attorneys’ fees.
Decision
The court granted default judgment, first addressing liability. Accepting the complaint’s allegations as true, the court found that Discount Tire owned valid trademarks, that the defendant used a confusingly similar mark in commerce, and that such use was likely to cause consumer confusion. The court emphasized that the defendant operated in the same market, offered identical services, and incorporated the core “Discount Tire” mark into its business name. The addition of the geographic term “Shelby” and the descriptive phrase “& Auto” did not meaningfully distinguish the marks or eliminate the likelihood of confusion.
The court also found the infringement to be willful. The defendant had received multiple cease-and-desist communications and continued using the marks. Its failure to appear in the litigation further supported an inference of willfulness. These facts weighed heavily in favor of granting relief.
Turning to remedies, the court concluded that a permanent injunction was warranted. The court found that Discount Tire faced irreparable harm through loss of goodwill and consumer confusion, that monetary damages would be inadequate, and that the balance of equities favored the plaintiff because the injunction would simply require the defendant to cease unlawful conduct. The court also determined that an injunction would serve the public interest by preventing confusion in the marketplace.
The court entered a broad injunction prohibiting the defendant from using the “Discount Tire” mark or any confusingly similar variation, including “Shelby Discount Tire & Auto,” and from suggesting any affiliation with Discount Tire. The court also required the defendant to file a compliance report detailing its adherence to the injunction.
Finally, the court held that the case was “exceptional” under the Lanham Act and that Discount Tire was entitled to seek attorneys’ fees. The court relied on the defendant’s continued infringement after notice and its failure to participate in the litigation.
Looking Forward
This decision illustrates a straightforward but important principle for brand owners: minor variations on established trademarks—particularly the addition of geographic identifiers or descriptive terms—may not be sufficient to avoid liability where the core mark remains intact and the businesses operate in overlapping markets.
For franchisors and other brand-driven systems, the case reinforces the importance of consistent enforcement. The plaintiff’s repeated pre-suit communications and subsequent litigation posture supported a finding of willfulness and helped justify both injunctive relief and attorneys’ fees. Courts may view continued use after notice as particularly probative of intent.
The decision also highlights the practical consequences of failing to respond to enforcement actions. Default judgments can result in sweeping injunctive relief and fee exposure without the benefit of a developed defense. From a system perspective, prompt action against infringing or unauthorized operators—whether competitors or former affiliates—remains a key component of protecting brand integrity.
More broadly, the ruling reflects the continued willingness of courts to protect established marks against close variations that trade on brand recognition. Even in the absence of a contested record, courts will apply traditional likelihood-of-confusion principles to prevent consumer deception and preserve the value of registered trademarks.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
