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PORSCHE CARS NORTH AMERICA, INC. v. MANNY'S PORSHO

June 9, 1997

PORSCHE CARS NORTH AMERICA, INC., a Delaware corporation, and DR. ING. h.c.F.PORSCHE AG, a German corporation, Plaintiffs,
v.
MANNY'S PORSHOP, INC., an Illinois corporation, and EMMANUEL SHOSHOO, an individual, Defendants.



The opinion of the court was delivered by: CONLON

 Porsche Cars North America, Inc. ("Porsche NA") and Dr. Ing. h.c.F. Porsche AG ("Porsche AG") (collectively "plaintiffs") sue Manny's Porshop ("Manny's") and Emmanuel Shoshoo ("Shoshoo") (collectively "defendants") for trademark infringement (Count I), false designation of origin (Count II), and trademark dilution (Count III) under the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), 1125(c). Plaintiffs also sue for common law trademark infringement (Count VI), breach of contract (Count VII), and violations of the Illinois Anti-Dilution Act, 765 ILCS 1035/15 (Count IV) and the Illinois Deceptive Trade Practices Act, 815 ILCS 510/2 (Count V). On April 3, 1997, the assigned magistrate judge recommended denial of plaintiffs' motion for a preliminary injunction against defendants. Plaintiffs now object to the magistrate's proposed findings. Defendants fail to respond to plaintiffs' objections.

 BACKGROUND

 The court adopts the magistrate's description of the parties and procedural history of this case. Porsche NA is the United States licensee and distributor for Porsche AG, a German corporation, and has the exclusive authority to import Porsche motor vehicles, parts, and accessories. Porsche NA is also the franchisor of authorized Porsche dealers in the United States. Porsche NA serves the sales and service needs of retail consumers through approximately two hundred independent authorized Porsche dealerships.

 Porsche NA is the owner of a number of trademarks and service marks. Porsche NA and its dealers/franchises and certain sub-licensees are the only authorized providers of vehicle maintenance services under the Porsche marks. Plaintiffs have spent millions of dollars in developing the Porsche marks in the United States and elsewhere. As a result of these expenditures, plaintiffs have established goodwill in the Porsche marks. The Porsche marks have become widely known and recognized throughout the world as symbols of high quality automotive products and services.

 Manny's, which is owned and operated by Shoshoo, is in the business of repairing and rebuilding Porsche 911 air-cooled race cars manufactured in or before 1989. Shoshoo has been a mechanic since 1965. After working for a Porsche dealership, Shoshoo went into business for himself in 1978. Between 1978 and the incorporation of Manny's on June 15, 1982, Shoshoo operated a sole proprietorship known as Manny's Por-Shop.

 At all times, Shoshoo has operated his business out of a tin shack located in an industrial park in South Holland, Illinois. The facility has no windows, one door, and two garage doors. Shoshoo uses car jacks instead of hydraulic lifts. Shoshoo accepts no drive-in business; he sees customers only by appointment. Shoshoo maintains no display space or showroom. He does not sell new or used cars. The only parts Manny's sells are those installed during a repair. Except for one year, there have only been two employees at Manny's, Shoshoo and Colleen Campbell.

 In 1987, Manny's ran several advertisements in a Porsche club publication. Subsequently, Porsche NA sent a series of letters demanding that Manny's immediately stop using the name "Porshop" or any confusingly similar imitation of the Porsche marks. Since then, Porsche NA has made follow-up demands and defendants have given indications of their intent to cease use of the name "Porshop." However, since 1987 Manny's has run four congratulatory advertisements at the request of Manny's customers that display the name "Porshop.".

 In 1990, Porsche NA learned that defendants had ceased use of the name "Porshop" and had changed the name to "Manny's Proshop." However, in 1992, Porsche NA learned that defendants had once again resumed use of the name "Manny's Porshop." Porsche NA then sent another series of letters informing defendants that their name infringed plaintiffs' trademark rights.

 Subsequently, plaintiffs and defendants entered into a settlement agreement. Pursuant to the agreement, Porsche NA granted defendants eighteen months to cease using the name "Manny's Porshop," and Porsche NA agreed to pay defendants $ 750 for expenses incurred in changing the name of their business. Manny's did not change its name, and Porsche NA did not pay the money.

 On September 16, 1996, plaintiffs filed this suit along with a motion for preliminary injunction. The assigned magistrate judge recommended denial of the motion for a preliminary injunction.

 DISCUSSION

 A party seeking a preliminary injunction must demonstrate some likelihood of prevailing on the merits and must show that denial of preliminary relief will result in irreparable harm for which there is no adequate remedy at law. If these two conditions are met, the court must balance the irreparable harm to the movant if the injunction is not issued against the irreparable harm to defendants if it is issued. The balancing involves a "sliding scale" analysis -- the more likely the movant will succeed on the merits, the less the balance of irreparable harms need weigh in its favor; the less likely the movant will succeed on the merits, the more the balance of irreparable harms need weigh in its favor. The balancing process also takes into consideration the consequences to the public interest of granting or denying preliminary relief. See, e.g., Mil-Mar Shoe Co., Inc. v. Shonac Corp., 75 F.3d 1153, 1156 (7th Cir. 1996); Roth v. ...


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