Full opinion text
FINDINGS OF FACT AND CONCLUSIONS OF LAW BRENNEMAN, United States Magistrate Judge. I. Introduction. This trademark infringement action was tried without a jury on April 23 through April 26,1996. Near the close of defendants’ proofs on April 26, plaintiff raised an objection to the testimony of defendants’ final witness, a damages expert. The issue was ultimately resolved by permitting the parties to conduct additional discovery with regard to damage issues and the parties submitted additional damage proofs by way of deposition transcripts. The court heard final closing arguments on November 18,1996. The issues subject to trial, as narrowed by the court’s April 16, 1996, opinion regarding defendants’ motion for summary judgment (docket no. 89) and the joint final pretrial order (docket no. 91), include the following: 1. Whether defendant Donald Hale (“Hale”) is liable for breaching the franchise agreement annexed to the amended complaint as Exhibit 1 by failing to pay certain fees and royalties to plaintiff Hair Associates, Inc. (“Hair Associates”). 2. Whether defendants Hale or National Hair Replacement Services, Inc. (“National”) are liable for infringement of trademarks, owned by Hair Associates, in violation of the Lanham Act. 3. Whether defendants Hale and National are liable for unfair competition based on infringement of Hair Associates’ common law trademark rights. • 4. The amount of damages and/or nature of injunctive relief, if any, to which Hair Associates may be entitled. Pursuant to Federal Rule of Civil Procedure 52(a), the court’s findings of fact and conclusions of law with regard to these issues are set forth below. II. Findings of Fact. The court notes at the outset that resolution of this dispute requires analysis of a series of complex transactions between the parties. The parties, in some instances, entirely failed to document the transactions; in other instances, the documentation prepared by the parties is simply incomplete. As a result, the court has been forced to reconstruct in some detail events which the parties, at the time the events occurred, did not consider sufficiently important to justify memorializing on paper, and now recall in contradictory ways. This posture frequently requires the court to pick one party’s version of the events over the other party’s, though neither is fully compelling nor internally consistent. A. Background. Jules Borenstein, president of plaintiff and plaintiffs principal witness, started Monte Carlo Hairpieces, Inc. (“Monte Carlo”) in 1969 as a manufacturer of men’s hairpieces. (I 22). In 1980 Monte Carlo brought together its best customers for the purpose of jointly developing the hair replacement business. Monte Carlo invited these customers to jointly contribute funds to develop uniform advertising, education and training, under the name “Hair Replacement Systems”. (I 22-23; III 8-9; Smith 10). A hair replacement is a specially manufactured hairpiece. The custom hair replacements made by Monte Carlo require making a plaster of parts mold of the customer’s head. A counter mold, which is a duplicate of the customer’s head, is made from the first mold and sent to the factory. At the factory, base materials are made to conform to the counter mold and the hair is woven into the foundation. The resulting hair replacement is attached to the customer’s head using a vai’iety of methods. The customer must come in periodically to have the hair replacement serviced or replaced. Some customers’ heads have a sufficiently regular shape and hair color to use premade stock hair replacements. (I 27-29, III 35-36). Several entities compete with Monte Carlo as manufacturers of hair replacements. On June 4, 1980, Monte Carlo filed an application in the United States Patent and Trademark Office (“USPTO”) to register the mark “Hair Replacement Systems” on the principal register for the provision of hair replacement services. (EX 14, B). The application was rejected by the USPTO because of the prior registration on the supplemental register of “Hair Replacement Centers” and because the mark was merely descriptive. (EX C). Accordingly, Monte Carlo amended the application to request registration only on the supplemental register. (EX C). The mark was registered on the supplemental register (Reg. No. 1,80,-704) in accordance with the amended application. (EX 14). The mark shall be referenced herein as “the registered words.” A copy of the registered words mark is annexed hereto as Attachment A. Plaintiff Hair Associates was established as a Delaware corporation in 1984. Its officers included Jules Borenstein, Edward Smith and Leo Benjamin. In 1984, the corporation applied for and received authority to transact business in Florida. (JFPO). Monte Carlo then assigned the Hair Replacement Systems mark to Hair Associates. (I 67). Hair Associates converted the advertising cooperative of Hair Replacement Systems, initiated by Monte Carlo, into a franchising system. Hair Associates served as the franchisor, doing business as Hair Replacement Systems. The customers who were members of the advertising cooperative were offered the opportunity to become Hair Replacement Systems franchisees. (E. Smith 11-12). By way of example, Hair Additions of Nashville, Inc., a corporation then owned by defendant Hale, was initially a member of the advertising cooperative and thereafter a Hair Replacement Systems franchisee. (Ill 7-9). On October 24, 1985, Hair Associates filed an application with the USPTO to register a trademark on the principal register consisting of the stylized letters “HRS” for hair and scalp products. (EX D). Hair Associates amended the application, changing the identification of goods from “hair and scalp products” to “cosmetics, namely hair shampoo, hair conditioner, hair lotions, hair spray and preparations for the scalp.” (EX E). The mark was registered on the principal register on January 27,1987 (Reg. No. 1,426,178) (EX 16). The mark shall be referenced herein as “the registered letters.” A copy of the registered letters mark is annexed hereto as Attachment B. On December 9,1991, Hair Associates filed an application with the USPTO to register a service mark on the principal register consisting of the stylized letters “HRS” accompanied by the words “Hair Replacement Systems” arranged in a particular design for services, namely, procurement, sales, sizing, affixation, stylization and maintenance of hair pieces and related maintenance products for men and women. (EX F). Hair Associates amended the application, changing the identification of services to “retail store services featuring hair pieces and styling of same for men and women,” and disclaiming the wording “hair replacement systems” apart from the mark as shown (EX G; I). The mark was registered on the principal register on December 8, 1992 (Reg. No. 1,738,805). (EX 15; I). The mark shall be referenced herein as “the registered logo.” A copy of the registered logo mark is annexed hereto as Attachment C. In 1986, Hair Associates of Michigan, Inc, was incorporated with Leo Benjamin as president, Jules Borenstein as secretary and David Bonaroti as manager. Hair Associates of Michigan, Inc., filed an assumed name certificate in April of 1986 as “Hair Replacement Systems.” (JFPO). Hair Associates of Michigan, Inc. was formed as an alternative means to develop the Hair Replacement Systems franchise market. The corporation opened a Hair Replacement Systems studio in Grand Rapids, Michigan. The goal was to establish the studio as a successful business and then sell it. Mr. Borenstein intended to follow that model to open up studios all over the country. (143-44). In 1987, Jules Borenstein asked Hale to help with the studio owned by Hair Associates of Michigan, Inc. in Grand Rapids. Hale worked at the studio for a period of two weeks in June of 1987 to investigate and remedy problems at the studio. When the old problems subsequently resurfaced later that year, Borenstein asked Hale to return permanently to Grand Rapids and manage the studio. Hale agreed and moved his family to Grand Rapids in late 1987. (JFPO). B. Hale’s purchase of the Grand Rapids studio, and the signing of the franchise agreement. Between the time he moved to Grand Rapids, and May 1, 1988, when he executed a franchise agreement for the Grand Rapids studio, Hale purchased the studio. However, the parties dispute how this was done. Hale contends he purchased the corporation Hair Associates of Michigan, Inc. (Ill 15). Boren-stein contends he sold only the assets of the corporation to Hale (I 47-48). Since the nature of this transfer impacts the formation of the subsequent franchise agreement, and the parties cannot agree as to what type of transfer occurred, it is necessary for the court to decide. Unfortunately, there is no documentation of the sale (III 16). Although the sale transaction was not memorialized in any document, subsequent documents in the record support Hale’s contention. For example, Exhibit K is a federal tax return for Hair Associates of Michigan, Inc. for its fiscal year beginning February 1, 1988, and ending January 31, 1989. The return was prepared by Hale’s tax professional at Hale’s request. (IV 37-39, 62-64). The federal employer identification number is the same as that used by the corporation prior to the purchase. (EX 2). If Hale purchased only the assets, he would not have filed a tax return for the corporation. Moreover, if Hale purchased only the assets, the corporation should have filed a different tax return reflecting the income from the sale of the assets. No such return was offered into evidence. Additionally, in July of 1989, Hale and Borenstein signed a sales agreement (EX 5) whereby Hale sold 100 shares of stock representing ownership of - Hair Associates of Michigan to another corporation, Advanced Hair Studios of Miami, Florida, d/b/a Hair Replacement Systems, represented by Bor-enstein. Hale could only sell the stock if he had purchased it from Borenstein in the first place. Accordingly, for all these reasons the court finds that Hale purchased the stock of Hair Associates of Michigan, Inc. rather than the assets. On May 1, 1988, the franchise agreement that is the subject of this lawsuit was signed (JFPO). The franchise agreement was a standard pre-printed franchise agreement prepared by counsel for Hair Associates, Inc. (I 116), with certain names filled in on the blank spaces. The agreement provides that it shall not be modified or amended except in writing, and signed by the parties (EX 3). The agreement (EX 3) identifies Hair Associates, Inc. as the franchisor and “HRS of Michigan” as the franchisee (FOF 11/11). The agreement includes among other things the following pertinent provisions: ¶ 1. Franchisee has the exclusive franchise to operate an HRS studio in Kent County, Michigan. Franchisee may use franchisor’s marks. Franchisee acknowledges the validity of the marks. ¶2. The term of the agreement is five years. ¶4. Franchisee shall pay in initial franchise fee of $10,500.00. ¶ 5. Franchisee shall pay a monthly royalty fee of $500.00. Franchisee must pay a supplemental royalty, determined by a formula, if it fails to purchase a certain number of hair replacements each month. ¶ 6. Franchisee shall pay a monthly advertising fee of $100.00. ¶ 10. Franchisee shall purchase all hair replacements, accessories, and grooming products from franchisor or approved vendors. Monte Carlo is an approved vendor of hair replacements. ¶ 11. Franchisor may terminate the agreement for a number of reasons, including consistent failure to pay dues and fees or repeated failure to comply with the franchise agreement. ¶ 12. The franchise and franchise agreement may be assigned with the written consent of the franchisor. ¶ 13. The franchisee shall cease doing busi- . ness as an HRS studio, cease using all HRS marks and return all materials to the franchisor upon termination of the franchise agreement. ¶ 16. Neither the franchisee nor its principals shall compete for a period of time in a defined area following termination of the franchise. ¶ 20. The agreement shall not be amended except in writing, signed by the parties. ¶ 21. The agreement benefits and binds the franchisee, his successors, hems and assigns. ¶ 24. The agreement shall be construed and interpreted under the laws of the state of Michigan. The agreement was hand signed for the franchisor, Hair Associates, Inc., by Jules Borenstein. The agreement was hand signed for the franchisee by Don Hale as follows: “Don Hale, President.” (FOF 12/11). Beneath the signature line for the franchisee, the word “Individually” was preprinted. There was an additional signature line for another franchisee signature, which also had the word “Individually” preprinted below it, but this line was left blank (EX 3). Boren-stein contends it was his intent that Hale be individually bound by the franchise agreement. (I 48). Hale testified that he signed as president of Hair Associates of Michigan, Inc. (III 17-18, 93), although he was never formally elected to that office (III 90-91). Borenstein contends that only assets were sold, accordingly, he contends that the reference to “HRS of Michigan” as the franchisee simply designates the Grand Rapids studio, the assets of which belonged to Hale individually after the purchase. (I 45,113). Boren-stein’s testimony, however, was not entirely consistent, While he initially indicated that “HRS of Michigan” was an assumed name of Hair Associates of Michigan, Inc. (I 44), he thereafter indicated that the assumed name was “Hair Replacement Systems” and not “HRS of Michigan” (I 45), and then he indicated that the names were interchangeable (I 45). Hale contends that “HRS of Michigan” was an assumed name of Hair Associates of Michigan, Inc. “HRS of Michigan” was the name on the checking account transferred to Hale in connection with the sale (III 13, 15-17). Moreover, Exhibit 5, the sales/security agreement mentioned above, which was signed by both Hale and Borenstein, includes the following language: “Hair Assoc, of Michigan D.B.A. — H.R.S. of Michigan”. Hale also testified that he had never filed an assumed name certificate for or conducted business individually as “HRS of Michigan” (111 16). The court finds that HRS of Michigan was an assumed name of Hair Associates of Michigan, Inc., the corporation which was sold to Hale. Accordingly, the franchisee in the agreement is Hair Associates of Michigan, Inc., and not Hale individually. C. Advanced Hair Studios, Inc. purchases the Grand Rapids studio. In June of 1989, Louis Brooks and Jules Borenstein formed Advanced Hair Studios, Inc. (“Advanced”). Don Hale subsequently became a shareholder and officer of Advanced. (JFPO). Jules Borenstein was the secretary and treasurer of Advanced from 1989 to 1991. (RFA5). On July 1, 1989, Advanced and Hale executed the previously mentioned sales/security agreement in which Hale sold to Advanced one hundred shares of stock, representing his ownership interest in Hair Associates of Michigan, Inc. JFPO; EX 5, III 190. Thus, Advanced became the owner of Hair Associates of Michigan, Inc. Each of the three principals of Advanced, Borenstein, Hale and Brooks, denied preparing the document (I 195, III 21,179). Advanced continued to operate the studio in Grand Rapids as a hair replacement studio and continued to use the letters “HRS” and the words “Hair Replacement Systems.” (JFPO). Advanced also operated studios in Ft. Lauderdale, Florida and Miami (Kendall), Florida. (JFPO). Hale moved his family to Florida in 1989 where he worked for Advanced (JFPO), but the business of Advanced was not successful. In early 1991, Hale returned to Grand Rapids to manage the Grand Rapids studio. (JFPO). The monthly royalties and advertising fees, billed by plaintiff for the Grand Rapids studio pursuant to the franchise agreement, were paid by Advanced through April of 1990. (I 52; III 24-26; EX 12). Through the rest of 1990 and the first six months of 1991, the monthly royalties and advertising fees were billed, but not paid. (EX 12). On May 16, 1991, after Hale had returned to Grand Rapids, Borenstein sent Hale a letter (EX 13) demanding payment of dues and quota owed under the franchise agreement for the Grand Rapids studio. (I 54; III 34). Hale contacted Borenstein to discuss the issue, informed Borenstein that he could not pay the dues and quota and that he was willing to change the name of the studio. (Ill 34-35). Hale testified that Borenstein agreed to forego the dues and quota obligations. (Ill 34-35). Borenstein acknowledged that he reached some accommodation with Hale as to the fees; however, Boren-stein’s testimony was not entirely consistent with Hale’s in that Borenstein claimed it was an agreement to reduce rather than eliminate the fees and the timing was different. (Ill 34-35; I 54-55). Hale’s account is supported by Exhibit 12 which discloses that the Grand Rapids studio was not billed for any royalties or fees for the entire twelve month period after Hale alleges Borenstein agreed to forego them, and by the testimony of Edward Smith, a fifty percent shareholder of Hair Associates, Inc. (Smith 28-29). D. Hale takes back the assets of the Grand Rapids studio. On January 21, 1992, Advanced, through its president, Hale, assigned and transferred all the non-inventory assets of the Grand Rapids studio to Hale. (JFPO). The assignment, Exhibit 7, states that it is an “assets only” assignment and that all liabilities continue to be the sole obligation of Advanced. Neither of the other principals, Brooks and Borenstein, objected to the assignment and both understood that Hale was taking back the Grand Rapids studio. In February of 1992, Hale incorporated Hair Additions, Inc. under the laws of the state of Michigan. (JFPO; FAC 7). Hale was an officer and resident agent of Hair Additions, Inc. (FACIO). On April 1, 1992, Hale executed a written transfer of the non-inventory assets of the studio in Grand Rapids to Hair Additions, Inc. (JFPO; Ex 26). Hair Additions, Ine., operated the Grand Rapids studio thereafter. The parties do not agree as to whether plaintiff or Borenstein were ever made aware of this fact. During the spring of 1992, Hale contacted Borenstein, informed him that the Grand Rapids studio was doing better financially, and offered to begin paying three hundred dollars a month for the use of the Hair Replacement Systems name. (Ill 44). Bor-enstein agreed. (Ill 44). The Grand Rapids studio was billed the three hundred dollar fee for the first and only time in June of 1992. (EX 12). The three hundred dollar fee was not billed again (EX 12); however, the Grand Rapids studio paid the fee for June, July, August and September of 1992. (EX N). E. Termination of the “franchise.” By letter dated October 26, 1992, Boren-stein informed Hale that his franchise was being terminated for consistent failure to pay royalties.and fees. (EX 9). Borenstein requested that Hale, pursuant to the terms of the franchise agreement, pay all debts to his vendors, pay all debts to the franchiser, return all H.R.S. materials and cease using the name. (EX 9). Hale, or employees of the Grand Rapids studio, either returned or destroyed all HRS materials (except for a few forms and some brochures) within a few days after receiving the October 26, 1992 letter. (Ill 49, 51; Nugent 8; II 101-102, 117, 125, 127, 130, 138, 144-146). Moreover, on or near the date Hale received the termination letter, he met with the studio employees and informed them that the studio could no longer use the Hair Replacement Systems or HRS names and that the new name would be National Hair Replacement Services (“National”). (Ill 47, II 93-94, 116-117, 127, 137-140, 150, Nugent 7). James Denny, a graphic artist and a customer of the studio, was contacted and asked to develop a new logo for National. (Ill 47-49, 51-53, 11 139-140, Denny -9). Denny developed a logo which consisted of the letters “nHRS” and the words “national Hair Replacement Services”. (Denny 8-13, Denny EX 4, III 48-49). Either these letters or the letters along with the words were then used by the studio on forms, signs, letterhead, envelopes, business cards, signs and advertising. (Denny EXS 2, 4, II 139-MO, 150, EXS 19, 20, 23, X, Y, Z, WW). Copies of the logos are annexed hereto as Attachment D. In February of 1993, Hair Additions, Inc. amended its articles of incorporation and changed its name to “National Hair Replacement Services, Inc.” (“National”) and filed an assumed name certificate of “Hair Replacement Services.” (JFPO). Hale is an officer and resident agent of National. (F & C 11). On at least two occasions approximately two years after the franchise was terminated, during September of 1994, the Grand Rapids studio ran advertisements in the Grand Rapids Press which used a modified version of National’s logo. This logo used the letters “HRS” without the small “n” and the words “Hair Replacement Services” without the “National.” (EX 23). The 1993 Ameriteeh Yellow Pages advertisement for the Grand Rapids studio includes the Hair Associates trademarked letters “HRS.” (EXS 20, W). This advertisement was purchased before the termination of the franchise and could not be changed after the termination. (II 156). Subsequent Yellow Pages advertisements used the National logo (EXS 20, X and Y); however; the 1994 Ameriteeh Business White Pages, under the listing Hair Replacement Systems referred readers to National. (EX X, III 67, 159, 170-172). On at least one occasion after the franchise was terminated, employees of National answered the telephone using the letters “HRS.” (I 59, II117,124-125). During the fall of 1994, the Grand Rapids studio inadvertently sent out brochures that included the letters “HRS” and the words “Hair Replacement Systems.” (Ill 62-63). The letters in this instance however, were not stylized in the same manner as the letters registered by Hair Associates. (EX 21). The brochures had been purchased from a studio in Atlanta which was an initial member of the old advertising cooperative. (Ill 61-62, Smith 20-21). The Atlanta studio used the letters “HRS” and the words “Hair Replacement Systems” before they were registered by Monte Carlo or Hair Associates. (I 23,163-165, Smith 20-21). Despite National’s efforts to change their signage to eliminate references to “HRS” or “Hair Replacement Systems,” a sign displaying the words “Hair Replacements Systems” remained as part of a larger composite street sign, which advertised all of the businesses in National’s building, until some time in 1995. (EX 18, III 59-60). F. The Hair Transplant Business. Plaintiff does not sell surgical hair transplant services, nor does it license its marks for use in connection with the sale of such services. During 1993, defendant National began operating a surgical hair transplant business under the name “Hair Replacement Clinic,” in an office next door to its hair replacement studio. Mr. Denny developed a logo for the surgical hair transplant business which consisted of the letters “HRC” in a particular stylization and the words “Hair Replacement Clinic.” Copies of these logos are annexed hereto as Attachment E. Either the letters or the letters along with the words were used by the transplant business on forms, signs, letterhead, envelopes, business cards, signs and advertising. In April of 1994, National filed an assumed name certificate for “Hair Replacement Clinic.” (JFPO). By the end of 1995, National conducted all of its business, the hair replacement business as well as the surgical transplant business under the “Hair Replacement Clinic” name and letters. G. Plaintiffs Response to Defendants’ Actions. By letter dated December 10,1992, Boren-stein informed Hale that the HRS materials had not been received and that Hair Associates was advertising for a new franchisee in the Grand Rapids area. (EX 10). To date, Hair Associates claims it has been unsuccessful, in its attempt to find a new franchisee in the Grand Rapids area By letter dated January 15, 1993, Boren-stein again requested return of the HRS materials and payment of all royalties and fees. (EX 11). On February 3, 1993, Hale’s counsel sent Borenstein a letter (EX 17) informing him that Hale was not using the “HRS” name and that Hale’s new corporate name was National Hair Additions, Inc. Shortly thereafter, Borenstein sent Hale a handwritten letter dated February 10, 1993 (EX R). in which Borenstein suggested that the parties let “bygones be bygones.” When Borenstein ultimately discovered the names under which defendants were conducting business, including the inadvertent uses of plaintiffs marks and the purposeful uses of defendants’ new marks, he filed this lawsuit. III. Conclusions of Law A. Hale’s liability under the franchise agreement. The court concludes that Hale is not personally liable for failure to pay royalties or fees required by the franchise agreement. The franchise agreement identifies HRS of Michigan as the franchisee and was signed by Hale as “Donald Hale, President.” If the agreement said nothing more, it would bind HRS of Michigan and not Hale individually because in signing the document as he did, Hale was acting as the agent of a disclosed principal. Where a contract is signed by the agent of a disclosed principal, it binds the principal and not the agent. Whitney v. Wyman, 101 U.S. 392, 396, 25 L.Ed. 1050 (1879); Hall v. Encyclopaedia Britannica, Inc., 325 Mich. 35, 37 N.W.2d 702 (1949); Riddle v. Lacey & Jones, 135 Mich.App. 241, 246-47, 351 N.W.2d 916 (1984); Restatement (Second) of Agency § 320 (1979). The agreement in this instance, however, says something more. Under the signature line for Hale’s name, the word “Individually” appears. The word is in the same type face as the rest of the agreement and was clearly on the agreement before Hale signed it. Thus, the court is called upon to construe the meaning of an agreement in which the signature block contains the words “FRANCHISEE” “Don Hale, President” and “Individually.” In so doing, the court’s primary task is to give effect to the. parties’ intention. Central Jersey Dodge Truck Center, Inc. v. Sightseer Corp., 608 F.2d 1106, 1109 (6th Cir.1979). Both parties have provided testimony as to their intent; and, not surprisingly, the intentions they expressed at trial were at odds. Hale contends he signed as president for the corporation (III 93), while Bor-enstein testified he intended to bind Hale individually (148). The parties’ after-the-fact statements of their respective intentions, however, are not controlling. The initial source of the parties’ intention is the language of the agreement and, “[i]t is a cardinal principle of construction that a contract is to be construed as a whole; that all its parts are to be harmonized so far as reasonably possible; and that no part is to be taken as eliminated or stricken by some other part unless such a result is fairly inescapable.” Associated Truck Lines, Inc. v. Baer, 346 Mich. 106, 110, 77 N.W.2d 384 (1956) (quoted with approval in Sightseer, 608 F.2d at 1109-10). Here, to construe the agreement, including the signature line, in such a way that Hale signed only as the agent of HRS of Michigan is to eliminate the word “Individually.” Similarly, to construe the agreement in such a way that Hale is only personally liable effectively strikes the identification of HRS of Michigan as the franchisee on the first page of the agreement. Unfortunately, to construe the agreement in such a way that Hale and HRS of Michigan both enjoy all benefits and bear all burdens of the agreement eviscerates the ultimate purpose of the agreement: the establishment of an exclusive franchise. Although this might seem to eliminate all of the possibilities, there remains a reasonable reading of the agreement which harmonizes the apparent inconsistency in the signature blocli and retains the exclusivity of the franchise. With one notable exception, the agreement outlines the rights and duties of the franchisor, Hair Associates, Inc., and the franchisee, HRS of Michigan. In paragraph 16, however, the agreement expressly creates a duty for someone else: “the Principals of the Franchisee.” Specifically, paragraph 16 provides that in the event of termination, the principals of the franchisee shall not engage in a business similar to the franchise in a defined area for two years. For this language to bind the principals of the franchisee, they must necessarily sign the agreement. Thus, the agreement, including the signature block, can be construed harmoniously by concluding that the parties intended Hale’s signature as president of the franchisee to bind the franchisee and Hale’s signature individually to bind him personally, as a principal of the franchisee, to the noncompet-ition provisions of paragraph 16. - The court construes the agreement accordingly. Absent this construction, the signature block is inherently ambiguous and inconsistent. Hale’s only personal liability on the franchise agreement relates to the non-competition covenant in paragraph 16 of the agreement. All such claims have_been dismissed on defendants’ motion for summary disposition. Any claims for fees and royalties due under the franchise agreement are available only against Hair Associates of Michigan, Inc., which was dissolved by opera-, tion of law at a time when Advanced was the sole shareholder. In short, the court concludes that Hale is not liable to Hair Associates, Inc. on Count I of the first amended complaint, regarding breach of the franchise agreement. B. Trademark Infringement and Unfair Competition. The remaining counts of plaintiffs first amended complaint, counts II, III, and IV, allege that National and'Hale are liable for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. §§ 1114(l)(a) and 1125(a), and the common law. Resolution of these claims depends on one test: is there a likelihood of confusion. See Chrysler Corp. v. Newfield Publications, Inc., 880 F.Supp. 504, 509 (E.D.Mich.1995) (“The test for unfair competition under § 1125(a) is identical to that for trademark infringement under 15 U.S.C. § 1114, whether there is a likelihood of confusion.”); Carson v. Here’s Johnny Portable Toilets, Inc., 698 F.2d 831, 833 (6th Cir.1983) (“[T]he test for equitable relief under both [15 U.S.C. § 1125(a) ] and Michigan common law is the ‘likelihood of confusion’ standard.”). Under the “likelihood of confusion test,” the same factors are considered under both sections of the Lanham Act and the Michigan common law. Wynn Oil Co. v. American Way Serv. Corp. 943 F.2d 595, 604-05 (6th Cir.1991) (herein Wynn Oil II). Plaintiff must also establish ownership of the marks. Homeowners Group v. Home Marketing Specialists, 931 F.2d 1100, 1105 (6th Cir.1991). 1. Ownership of the marks. As to ownership, plaintiffs registration of the registered letters and registered logo marks constitutes prima facie evidence of ownership as well as the exclusive right to use the marks. Id.; 15 U.S.C. §§ 1057(b), 1115(a). Defendants have presented no evidence to refute plaintiffs claim to ownership of these marks. Plaintiff is not entitled to this presumption, however, with regard to the registered words mark as it is registered only on the supplemental register. 15 U.S.C. § 1094. Ownership of this mark must be proven under the common law. The Lanham Act does not create property rights; it merely provides a means of registering and enforcing in the federal courts rights otherwise recognized under the common law. In re Trade-Mark Cases, 100 U.S. 82, 25 L.Ed. 550 (1879); Campbell Soup Co. v. Armour & Co., 175 F.2d 795 (3d Cir.1949). In Michigan, ownership of a trademark is established by showing appropriation and use of the mark: Trademark rights arise out of appropriation and use. Generally, the right belongs to one who first appropriates and uses the mark, [citation omitted]. But mere adoption of a particular mark is inadequate. Rights grow out of usage, [citations omitted]. Interstate Brands Corp. v. Way Baking Co., 79 Mich.App. 551, 555, 261 N.W.2d 84 (1977) rev’d on other grounds, 403 Mich. 479, 270 N.W.2d 103 (1978). It is undisputed that plaintiff adopted and used the words “Hair Replacement Systems” in Michigan. Thus, plaintiff has established its ownership of this mark. 2. Likelihood of confusion under the eight factor test. When determining whether there is a likelihood of confusion between trademarks, the court must consider eight factors: (1) the strength of plaintiffs mark; (2) the relatedness of the products or services; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the marketing channels used; (6) the likely degree of purchaser care and sophistication; (7) the intent of the defendant in selecting its mark; and (8) the likelihood of expansion of the product lines using the mark. Daddy’s Junky Music Stores, Inc. v. Big Daddy’s Family Music Center, 109 F.3d 275, 279-80 (6th Cir.1997) (herein Daddy’s Junky Music) Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100 1106 (6th Cir.1991); Countrywide Funding Corp. v. Countrywide Fin. Corp., 879 F.Supp. 771, 773 (W.D.Mich.1994). The numerical listing of these factors does not imply any mathematical precision. The factors “are simply a guide ... and a plaintiff need not show that all, or even most, of the factors listed are present in any particular case to be successful.” Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186 (6th Cir.1988) (herein Wynn Oil I). Consideration of the eight factors is intended to serve no purpose other than assisting in the resolution of the “ultimate” question: “whether relevant consumers are likely to believe that the products or services offered by the parties are affiliated in some way.” Homeowners Group, 931 F.2d at 1107. a. The Strength of Plaintiff’s Marks. “[T]he strong mark enjoys greater protection while the weak mark is afforded little support.” Hindu Incense v. Meadows, 692 F.2d 1048, 1050 (6th Cir.1982). Consideration of a mark’s strength requires a determination of the mark’s “distinctiveness and degree of recognition in the marketplace.” Homeowners Group, 931 F.2d at 1107. A mark is strong “if it is highly distinctive, i.e., if the public readily accepts it as the hallmark of a particular source; it can become so because it is unique, because it has been the subject of wide and intensive advertisement, or because of a combination of both.” Id. Put differently, “distinctiveness” may be inherent or acquired. Id.; Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769, 112 S.Ct. 2753, 2757-58, 120 L.Ed.2d 615 (1992). To determine the inherent distinctiveness of a mark, courts routinely classify the mark as falling in one of five categories: “(1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful.” Two Pesos, 505 U.S. at 768, 112 S.Ct. at 2757; see also Champions Golf Club, Inc. v. The Champions Golf Club, Inc., 78 F.3d 1111, 1116-17 (6th Cir.1996); Aero-Motive Co. v. U.S. Aeromotive, Inc., 922 F.Supp. 29, 36-37 (W.D.Mich.1996). The Sixth Circuit has described these categories as follows: A generic term is the weakest type of mark; it is a term used to commonly describe the relevant type of goods or services ... Descriptive terms come next in the hierarchy: “ ‘A merely descriptive term specifically describes a characteristic or ingredient of an article.’ ” ... The third type of term is “suggestive,” which, as the word implies, “‘suggests rather than describes an ingredient or characteristic of the goods and requires the observer or listener to use imagination and perception to determine the nature of the goods.’ ” ... “An ‘arbitrary’ mark has a significance recognized in everyday life, but the thing it normally signifies is unrelated to the product or service to which the mark is attached,”... “A ‘fanciful’ mark is a combination of letters' or other symbols signifying nothing other than the product or service to which the mark has been assigned,”.... Champions, 78 F.3d at 1117 (citations omitted). Generic marks receive no protection because they are not registrable as trademarks. Two Pesos, 505 U.S. at 768, 112 S.Ct. at 2757. Marks classified as “descriptive” are not considered inherently distinctive and will not receive protection unless the mark’s holder proves that the mark has acquired a “secondary meaning” in the marketplace thereby making it distinctive. Id. at 769, 112 S.Ct. at 2757-58. Suggestive, arbitrary and fanciful marks, however, are considered inherently distinctive and, therefore, are entitled to protection. Id. at 768, 112 S.Ct. at 2757. Rather than relying on either inherent or acquired distinctiveness, plaintiff contends its marks are strong by virtue of their incontestability, The Sixth Circuit has concluded, based upon the Supreme Court’s decision in Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985), that incontestable marks “must be considered strong and worthy of full protection.” Wynn Oil I, 839 F.2d at 1187. Subsequently, the Sixth Circuit acknowledged that the Park ‘N Fly decision did not equate incontestability with strength. Wynn Oil II, 943 F.2d at 600. Nonetheless, the Wynn Oil II panel followed Wynn Oil I as “controlling authority.” Wynn Oil II, 943 F.2d at 600. A trademark will be considered incontestable after it has been in continuous use for five consecutive years following federal registration if: (1) there has been no adverse final decision regarding the registrant’s ownership or right to register or retain registration of the mark; (2) there is no proceeding pending in the USPTO or in a court regarding ownership or registrations rights; (3) the mark is not a generic name for the goods or services for which it is registered; and (4) an affidavit is filed with the Commissioner within one year after expiration of the five year period which (a) sets forth the goods and/or services in connection with which the mark has been in continuous use for the five consecutive years and (b) sets forth the factual allegations necessary to support (1) and (2) above. 15 U.S.C. § 1065. Once established, incon-' testability relates only to those goods or services for which the mark was initially registered. 15 U.S.C. § 1065; Aero-Motive Co., 922 F.Supp. at 37. Plaintiffs claims that its marks are incontestable must fail. As to the registered words, plaintiffs claim fails because that mark is registered only on the supplemental register and, thus, cannot become incontestable. 15 U.S.C. § 1065; Clairol, Inc. v. Gillette Co., 389 F.2d 264, 267 n. 6 (2d Cir.1968). As to the registered logo, plaintiffs claim fails because the logo, registered on December 8, 1992, has not been registered and in continuous use for five years. 15 U.S.C. § 1065. As to the registered letters, plaintiffs claim fails because it has failed to show that the affidavit required by the Lanham Act was ever filed. 15 U.S.C. § 1065. Even if the required affidavit had been timely filed with the USPTO, the registered letters mark would only be incontestable with regard to those goods or services for which it was initially registered. The mark was registered for “cosmetics, namely hair shampoo, hair conditioner, hair lotions, hair spray and preparations for the scalp.” (EX E). Plaintiff has not offered any evidence that defendants used the mark or a confusingly similar mark on such goods. Accordingly, incontestability of the registered letters mark would not improve plaintiffs claim of infringement. Put simply, there is insufficient evidence in the record to establish that any of plaintiffs marks are incontestable. Even though plaintiffs marks are not incontestable, they might still be strong if they enjoy either inherent or acquired distinctiveness. (i). The strength of the registered words mark. The words “Hair Replacement Systems” are certainly not arbitrary or fanciful. Nor are they suggestive; they do not “suggest] rather than describe[] an ingredient or characteristic of the good and require[] the observer or listener to use imagination and perception to determine the nature of the goods.” Champions, 78 F.3d at 1117. Indeed, the evidence offered at trial supports the conclusion that the words “hair replacement system” are “used to commonly describe the relevant type of goods or services.” Id. Numerous witnesses referred to the relevant type of goods as “hair replacements,” “hair systems,” or “hair replacement systems” (See e.g. I 26-27, 29, 62-63, 89-90, 93-94, 173, 188, 190; II 25, 29, 153-156, 160; III 7, 150; IV 25, 33). The exhibits offered into evidence also suggest that these terms are simple references to products or services (See e.g. EX 3, 14, 30, B, F, Q, T, V-Y, NN, and MMM). At best, the registered words are merely descriptive and, thus, have no inherent distinctiveness. Moreover, the fact that the parties and other witnesses routinely used these terms in describing the goods of various manufacturers and sellers precludes a finding that the registered words have taken on any secondary meaning which might indicate source; accordingly, they have no acquired distinctiveness. In short, the registered words are a weak mark. (ii). The strength of the registered letters mark. The registered letters, however, are neither generic nor descriptive. Instead, they appear to be fanciful in that they are “a combination of letters ... signifying nothing other than the product or service to which the mark has been assigned.... ” Id. Accordingly, the registered letters, particularly in light of their unique stylization, are inherently distinctive, and entitled to strong protection. Defendants, nonetheless, suggest that the marks have been rendered weak by third party usage. Defendants suggestion is not supported by record evidence. They have not identified any significant third party usage of the letters “HRS” with the unique stylization registered by plaintiff. (iii). The strength of the registered logo mark. Finally, the registered logo, which consists of the stylized letters “HRS” and the words “Hair Replacement Systems” displayed in a particular configuration, has sufficient strength to warrant trademark protection. Although the mark includes the words “Hair Replacement Systems,” which are at best merely descriptive, plaintiff expressly disclaimed the exclusive right to use the words, apart from the way the words in combination with the stylized letters are presented in the logo. Put differently, plaintiff registered the stylization of the words in combination with the stylized letters. The letters are, at a minimum, suggestive; and, the stylization of the letters and the words is, at a minimum, arbitrary. Accordingly, the logo is entitled to protection as a strong mark. b. The relatedness of the products or services offered. “The more closely related the plaintiffs and defendant’s goods are, the more probable it is that buyers are likely to be misled or confused into believing that the goods are either from the same source, or even that the two products are one and the same.” Chrysler Corp. v. Newfield Publications, Inc., 880 F.Supp. 504, 509 (E.D.Mich.1995). The Sixth Circuit has acknowledged that there are three possible categories of relationship between plaintiffs and defendant’s goods or services: “(1) direct competition of services, in which case confusion is likely if the marks are sufficiently similar; (2) services are somewhat related but not competitive, so that likelihood of confusion may or may not result depending on other factors; and (3) services are totally unrelated, in which case confusion is unlikely.” Homeowners Group, 931 F.2d at 1108; see also Daddy’s Junky Music, at 282. In the instant case, defendants argue that the products and services offered by the litigants are completely unrelated because National sells ham replacement services (and surgical hair transplant services) while plaintiff licenses hair replacement franchises. Defendants correctly note that plaintiff does not sell hair replacements nor does it sell products or services to consumers relating to hair replacements. Despite this surface lack of relationship, the court concludes that the relationship factor favors plaintiffs position. Indeed, to conclude otherwise in this instance would afford no trademark protection to plaintiff as a li-censor of the trademarks. There can be no question that plaintiffs-licensees (the franchisees) provide goods and services in direct competition with defendants. Plaintiff, as their licensor, is entitled to rely upon that direct competition in establishing the relationship between the goods and services offered by the parties to the public. See Chrysler Corp., 880 F.Supp. at 507, 509-10 (Court held that collectible cards licensed by plaintiffs, who were manufacturers of cars but mere licensors of various products' displaying the names of the cars, were related to collectible cards produced by defendant). c. Similarity of the marks. “[Will] the mark ‘... be confusing to the public when singly presented.! ” Wynn Oil I, 839 F.2d at 1187. The Sixth Circuit set forth the standard for determining the similarity of the marks in Homeowners: [I]n evaluating similarity of marks, “ ‘[i]t is axiomatic in trademark law that “side-by-side” comparison is not the test.’ ” ... Instead, the marks must be viewed in then-entirety and in context. “[A] court must determine, in the light of what occurs in the marketplace, whether the mark ‘will be confusing to the public when singly presented.’ ” ... It is the overall impression of the mark, not an individual feature, that counts. Homeowners, 931 F.2d at 1109 (citations omitted). “A proper analysis of similarity includes examining the pronunciation, appearance, and verbal translation of the conflicting marks.” Wynn Oil I, 839 F.2d at 1188. (i). The words. The court concludes that the registered words, “Hair .Replacement Systems,” are similar to the words “national Hair Replacement Services.” Although there are variances in pronunciation, appearance, and verbal translation, the marks are sufficiently similar that it may confuse consumers who do not have both marks before them but who may have a ‘“general, vague, or even hazy, impression or recollection’ of the other party’s mark.” Wynn Oil I, 839 F.2d at 1188. The court notes that this level of similarity may simply be a fact of life in the hair replacement marketplace. . Based on the testimony offered by the parties and the exhibits, it is apparent that the marketplace is replete with persons and entities conducting business under assumed names which reflect the finite number of combinations of words which accurately represent the service and product provided. Put simply, a number of competitors in the industry conduct business under names which include two or more of the registered words. Perhaps for that reason, a number of plaintiffs competitors use stylized designs or unusual presentations of the words to differentiate themselves from the rest of the market. As to the words mark, plaintiff has not availed itself of this opportunity to differentiate itself from the rest of the market. Thus, although the marks are similar, there is a significant question as to whether consumers in this market would find the similarity confusing. See Champions, 78 F.3d at 1119 (“[Similarity alone does not compel a determination that marks are likely to be confused.”). (ii). The letters. The registered letters mark, “HRS” with its unique stylization, is similar to defendants’ stylized “nHRS.” As to these marks, it is the similarity in appearance which is most noticeable; however, there are also striking similarities in pronunciation and verbal translation. The tiny lower case “n” does little to distinguish the marks when they are viewed and also seems to disappear when the marks are verbally translated. It is readily apparent that, even considering the unusual marketplace, consumers may find defendants’ marks confusingly similar to the registered letters, because of the significant similarity in stylization. (iii). The logos. The registered logo is really nothing more than a combination of the stylized registered letters, with the registered words; except, in the logo, the words also enjoy a unique stylization. The logo used by defendants include the letters “nHRS” with a stylization similar to plaintiffs and the words “national Hair Replacement Services” with a stylization dissimilar to plaintiffs. In the registered logo, the words are comprised of all capital letters, they are stacked on top of each other and set apart by lines, the word “HAIR” is printed using white lettering on a black background, and the word “SYSTEMS” is preceded and followed by small black boxes. In National’s logo, only the first letters are capitalized, the type is conspicuously different, the words are arranged to be read left to right, and all of the words are black on a white background. If the court were to reduce the logos to their respective components, it would find the letters components strikingly similar and the words components similar in content, perhaps unavoidably so, and dissimilar in stylization. The court is not at liberty, however, to so reduce the logos. In Homeowners, 931 F.2d at 1100, the Sixth Circuit stated that “the marks must be viewed in their entirety and in context ... [i]t is the overall impression of the mark, not an individual feature that counts.” Id. at 1109 (emphasis added); see also Daddy’s Junky Music, at 283-84. Reviewing the logos in their entirety and in context, the logos differ from the words marks and the letters marks in that they are not something that would likely be pronounced or verbally translated by consumers. Instead, they are something that consumers would probably only visualize; thus, appearance is of critical concern. Since the letters component is so similar and catches the eye first, and the words component is similar in content if not appearance, and does little to reduce the impression made by the letters component, the overall impression left by the logos leads the court to conclude that they are similar. The court notes, however, that this is a close question. (iv). Miscellaneous marks. In addition to the words, letters, and logos identified above as marks used by defendants, defendants have used other marks which are the subject of plaintiffs complaint. Specifically, plaintiff claims that defendants have used the letters “HRS” in printed material (the brochures inadvertently sent out and the September 1994 Grand Rapids Press advertisements) and when answering the phones. Plaintiff also claims defendants have used the words “Hair Replacement Services” without the “national” (the September 1994 advertisements) and the words “Hair Replacement Systems” (the brochures, an exterior sign, and a cross reference in the Yellow Pages). The court finds that such marks are similar to plaintiffs registered marks. d. Evidence of actual confusion. “Evidence of actual confusion is undoubtedly the best evidence of likelihood of confusion.” Wynn Oil I, 839 F.2d at 1188. The Sixth Circuit has recognized that “evidence of actual confusion is difficult to produce. ...” Wynn Oil I, 839 F.2d at 1188. Despite the inherent difficulty in producing such evidence, plaintiff has provided evidence that consumers were actually confused as a result of defendants’ use of the marks identified above. Thomas Radecki, a client of defendants, testified that he carefully researched providers of hair replacement services (Radecki 8-15). Eventually, Mr. Radecki determined that he wanted to obtain a hair replacement from one of two entities that provided such services nationally: HRS or Hair Club for Men (Radecki 18-19). Mr. Radecki ultimately purchased his first hair replacement through defendants in 1993, based on his belief that defendants operated an HRS studio (Radecki 17, 20). Though Mr. Ra-decki’s research regarding hair replacement may have taken place while the Grand Rapids studio was legitimately an HRS studio (Radecki 11-12, 14-17), his actual purchase of the .hair replacement and subsequent servicing of the hair replacement occurred after defendants began using the new marks (EX U; Radecki 19-27). Indeed, despite nearly twenty trips to the Grand Rapids studio (EX U), Mr. Radecki never realized he was dealing with an entity other than HRS until the operator of another HRS studio in another city informed him there was no HRS studio in Grand Rapids (Radecki 26-28). In addition to Mr. Radecki, Terry Drillich, the operator of the HRS franchise in Ann Arbor, testified that several Grand Rapids studio customers came to his studio claiming to be customers of “HRS of Grand Rapids” (II 18, 28-31). Since the Ann Arbor franchise did not open until 1994 (II 29), it appears that'these customers were confused as to the “HRS” affiliation status of the Grand Rapids studio after defendants began using their new marks in late 1992. Finally, Hale himself testified that a customer came to the Grand Rapids studio expecting the studio to honor a coupon which appeared in a brochure with the letters “HRS” and the words “Hair Replacement Systems” (III 118). The brochures were sent out by the Grand Rapids studio after the break with plaintiff (III 118). e. Marketing channels used. “The greater degree in which the parties use the same or similar marketing channels, the greater is the likelihood of confusion.” Blockbuster Entertainment Group v. Laylco, Inc., 869 F.Supp. 505, 514 (E.D.Mich.1994) Under this factor, the court must consider “how and to whom the respective goods or services, of the parties are sold.” Homeowners, 931 F.2d at 1110. Where there is overlap “in the media used to communicate with [the parties’] respective target markets ..." Homeowners, 931 F.2d at 1111, or “[wjhere the parties’ customers are similar ...Chrysler Corp., 880 F.Supp. at 510, confusion is more likely. Given the identity between the goods and services offered by the parties, there can be little question that they are trying to reach the same potential customers. Moreover, the parties use the same media to reach these customers. By way of example, Terry Drillich testified that the Ann Arbor HRS franchise, using materials supplied by plaintiff advertised through television, radio and newspapers, as well as the Yellow Pages (11 13-14). The trial exhibits reveal that defendants used all of these media, with the exception of radio (EX 20, 22,23, X-Z). f. The likely degree of purchaser care and sophistication. “In general, the less care that a purchaser is likely to take in comparing products, the greater the likelihood of confusion.” Wynn Oil II, 943 F.2d at 602. In Homeowners Group, 931 F.2d at 1100, the Sixth Circuit provided a detailed explanation of this factor: Generally, in assessing the likelihood of confusion to the public, the standard used by the courts is the typical buyer exercising ordinary caution. However, when a buyer has expertise or is otherwise more sophisticated with respect to the purchase of the services at issue, a higher standard is proper. Similarly, when services are expensive or unusual, the buyer can be expected to exercise greater care in her purchases. When services are sold to such buyers, other things being equal, there is less likelihood of confusion. Id. at 1111 (emphasis added); see also Daddy’s Junky Music, at 285-86. In this ease, the goods and services are extremely personal as well as expensive and unusual. Hale testified that a hair replacement system might cost close to two thousand dollars (III 100, 139). Once attached, the system must be styled every few months and the attachments tightened (Radecki 25). Moreover, the system has to be periodically reconditioned at the factory, and, within a few years, replaced (Radecki 19-20). Indeed, to avoid any interruption in the benefit of hair replacement as a result of recondi-' tioning, it is recommended that a customer purchase two systems (Radecki 28). Put simply, the expense of and recurring care for a hair replacement system is a significant burden and suggests that consumers would exercise a high degree of care in their purchases. Though this factor definitely weighs in favor of defendants, the court notes that this high degree of care does not preclude a finding of likely confusion. See Homeowners Group, 931 F.2d at 1111 (“[T]he expertise of purchasers does not necessarily preclude a finding that confusion is likely_”); Champions, 78 F.3d at 1121 (“ ‘[T]he sophistication of buyers cannot be relied on to prevent confusion’....”); Daddy’s Junky Music, at 286 (“[C]onfusingly similar marks may lead a purchaser who is extremely careful and knowledgeable about the [goods] that he is buying to assume nonetheless that the seller is affiliated with or identical to the other party.”). Indeed, the fact that Mr. Radecki was confused despite his care suggests a strong likelihood of confusion even where care is taken. g. Defendants’ intent in selecting their marks. “Although intentional infringement is not necessary for a finding of likely confusion, the presence of that factor strengthens the likelihood of confusion.” Wynn Oil II, 943 F.2d at 602. It would certainly be unusual for a defendant to acknowledge an intent which might subject him to a potential treble damage remedy. It is undoubtedly for that reason that courts have routinely held “[an] intent to infringe may be shown by circumstantial evidence.” Wynn Oil I, 943 F.2d at 603 (citing cases); see also Champions, 78 F.3d at 1121. One such circumstance which might reveal intent is mere knowledge of another’s prior use of the mark. See Wynn Oil II, 943 F.2d at 603 (“[U]se of a mark with knowledge of another’s prior use of the mark supports an inference of intentional infringement. ... Moreover, where ‘trade-marks [have] been ... long in use and ... widely advertised, it is presumed that [the infringer] had knowledge of [the marks].’ ”); Daddy’s Junky Music, at 286 (“[T]he use of a contested mark with knowledge of the protected mark at issue can support a finding of intentional copying.) Aero-Motive Co., 922 F.Supp. at 44. In this case, defendants simply cannot deny longstanding knowledge of plaintiffs use of the marks. Hale participated in the advertising cooperative which initially used the marks, he also used the marks for years as a principal of plaintiffs licensees in Nashville, Grand Rapids and Florida. To suggest that defendants selected their marks with no knowledge of plaintiffs marks would be absurd. James Denny, the graphic artist who designed defendants’ new marks, testified that Hale instructed him to retain the letters “HRS” in the new logo. (Denny 15; Denny Ex. 4). The court infers from defendants’ intimate knowledge of plaintiffs marks, and its selection of similar marks, that defendants intended to use marks which were as similar' as permitted to plaintiffs marks. h. Likelihood of expansion of the product lines using the mark. “[A] ‘strong possibility’ that either party will expand his business to compete with the other or be marketed to the same consumers will weigh in favor of finding that the present use is infringing.” Homeowners, 931 F.2d at 1112 Where the parties are already direct competitors with regard to the products and services they offer, as are plaintiff and defendants here (see § III.B.2.b. infra), the possibility of expansion to bring about direct competition is already a reality. See Chrysler Corp., 880 F.Supp. at 511; Blockbuster Entertainment Group, 869 F.Supp. at 515; Countrywide Funding Corp. v. Countrywide Fin. Corp., 879 F.Supp. 771, 773 n. 2 (W.D.Mich.1994). Nonetheless, to the extent this factor includes geographic expansion, see Homeowners Group, 931 F.2d at 1112 (“[P]lans for