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Consumers Digest, Inc. v. Consumer Magazine

FEBRUARY 7, 1968.

CONSUMERS DIGEST, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLEE,

v.

CONSUMER MAGAZINE, INC., AN ILLINOIS CORPORATION, AND LOUIS WEBER, DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County, Chancery Division; the Hon. WALKER BUTLER, Judge, presiding. Affirmed.

MR. PRESIDING JUSTICE MCCORMICK DELIVERED THE OPINION OF THE COURT.

This appeal is taken from an order entered in the Circuit Court of Cook County on March 10, 1967, issuing a preliminary injunction against the defendants which enjoined the defendants during the pendency of the action from:

"a) directly or indirectly owning, managing, operating, joining, controlling, or participating in the ownership, management, operation or control of or being involved in any manner with any business, trade or occupation similar to, or in competition with, the business of the plaintiff; and

"b) printing, publishing, distributing, selling or soliciting subscriptions or renewal subscriptions for any book, magazine, periodical, directory or catalog of the type heretofore distributed by defendants under the names and titles "Consumer Magazine" and "Consumer Magazine Price Guide."

On July 12, 1966, Consumers Digest, Inc., as plaintiff, filed a complaint in three counts, asking for a temporary and permanent injunction and damages for alleged infringement of plaintiff's rights in the name and title of Consumer Magazine Price Guide and Consumer Magazine; and upon alleged violation by the defendant, Louis Weber, of a restrictive covenant in the contract of sale of corporate shares.

On August 16, 1966, the plaintiff moved for a summary judgment as to Count I, which count prayed for a temporary and permanent injunction restraining the defendants from publishing, advertising, selling or otherwise distributing any directories, magazines or other publications under the name or title "Consumers Magazine" or any other name or title imitating or confusingly similar to plaintiff's name and title "Consumers Digest Price Buying Guide" or "Consumers Digest Magazine."

Affidavits and exhibits were filed in support of plaintiff's motion. After considering the affidavits, exhibits and all of the pleadings and briefs, the court denied plaintiff's motion for summary judgment on December 16, 1966, finding ". . . that there is a genuine issue as to material facts and that the plaintiff is not entitled to a judgment or decree as a matter of law."

On January 20, 1967, plaintiff filed its motion for a preliminary injunction. On February 14, 1967, defendants filed a motion asking the court to deny the issuance of a preliminary injunction. On March 10, 1967, the court entered an order issuing the preliminary injunction prayed for.

The case grew out of the following facts appearing in the record. From 1960 to 1963, two brothers, Arthur Weber and defendant Louis Weber, were the owners of all the issued and outstanding stock of three related companies; Van Leer Corporation, Consumers Digest, Inc., and American Sales Company. Consumers Digest, Inc., the plaintiff in this suit, was formed in 1963. Defendant Weber worked for these three companies. During this period Van Leer Corporation published and distributed Consumers Digest Magazine and annual and semiannual issues of Consumers Digest Price Buying Directory.

Defendant Weber left the employ of plaintiff during December 1963, after which disputes arose between the defendant and his brother, Arthur Weber, culminating in a lawsuit. In settlement of this litigation and to settle other disputes, Louis Weber, his brother Arthur, and the three corporations entered into an agreement dated June 18, 1964, which provided for the sale of Louis Weber's stock and interest in the corporations, and for Louis Weber's specific covenant not to compete, in consideration of the sum of $190,000, which sum was paid to Louis Weber. His attorney was present at the time of the execution of the agreement.

On September 1, 1965, fifteen months after the execution of the agreement, defendant Louis Weber formed an Illinois corporation called Consumer Magazine, Inc., of which he is president and sole stockholder. The new corporation, which is also a defendant in the instant case, promptly began to solicit subscriptions to Consumer Magazine and a Consumer Magazine Price Buying Guide.

Plaintiff contends that the format of the price buying guide published by defendants and plaintiff's annual and semiannual price buying directories are almost identical, and that defendants' magazines contain exactly the same type of information and appeal to the same sort of reader, and that defendants' promotional material is strikingly similar to plaintiff's. Plaintiff further contends that the defendants used the same type of direct mail solicitation to obtain subscribers; that plaintiff presently has over 400,000 active subscribers throughout the United States, and some foreign countries; that plaintiff had 225,000 members a year ago; and that at the time of the hearing the defendants had over 40,000 subscribers. Since the restrictive contract was signed the plaintiff spent over $3,000,000 in soliciting subscriptions.

The covenant entered into between plaintiff and defendant Louis Weber provided as follows:

Louis Weber agrees that for a period of seven years from the date of the signing of this Agreement, he will not directly or indirectly own, manage, operate, join, control or participate in the ownership, management, operation or control of or be involved in any manner with any business anywhere in the United States in any business, trade or occupation similar to or in competition with the business of the Van Leer Corporation, Consumers Digest, Inc., or American Sales Company, nor will he disclose any information learned in his capacity as an officer, director or employee of said corporations to any unauthorized persons. The parties agree that this covenant is designed to protect the current business of the Van Leer Corporation, Consumers Digest, Inc., and American Sales Company and that it should be limited so as to apply only to the extent necessary to protect such business. In the event that any court of competent jurisdiction determines that the restrictions as herein set forth, are too broad so as to construe any unreasonable restrictions, the parties hereto authorize any judge sitting in such court to modify this covenant to provide that the restrictions herein contained shall apply and be enforceable to the maximum extent permitted by law for such restrictions, and, further, upon such determination, to enforce the covenant as so modified. Louis Weber hereby agrees that in the event the remedies at law for the breach of this covenant are inadequate, the corporations may seek and obtain injunctive relief from a court of equity for a ...


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