Luxury fitness chain Equinox recently announced that it will be debuting its first fitness-oriented hotel in New York City in 2019, with additional sites planned for Los Angeles and other major cities. Certainly aware of this announcement was the San Francisco-based hotel company Equinox Hotel Management Inc., which already has existed in the hotel industry for years under its EQUINOX-formative trademarks.  Equinox Hotel Management sued Equinox under the Lanham Act and California state consumer protection laws for trademark infringement, false designation of origin, false advertising, and unfair competition, and moved for a preliminary injunction to prevent Equinox “from using EQUINOX or similar marks in a manner that causes confusion with Plaintiff or its mark.”

Equinox Hotel Management’s case rests on a theory of reverse confusion, i.e., that its admittedly smaller—but senior—market space would be overwhelmed by Equinox’s massive advertising and branding power if the fitness chain were allowed to enter the hotel industry under EQUINOX trademarks. The complaint and preliminary injunction motion characterize it as “a classic David and Goliath situation.”  Whether the court will side with the purported David or Goliath here remains to be seen; the preliminary injunction hearing is set for January 16.

Takeaway: Larger brands expanding into goods and services unrelated to their usual market spaces may present a risk of reverse confusion trademark infringement actions.