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Chicagoland Aviation, LLC v. Richard R. Todd

November 27, 2012


The opinion of the court was delivered by: Judge Ronald A. Guzman


Chicagoland Aviation, LLC filed suit against Richard Todd and Chicago Premier Boat Rental and Leasing d/b/a/ Chicago Premier Flight Training ("CPFT") after Todd resigned from Chicagoland Aviation and started CPFT. Plaintiff's complaint alleges, among others, claims under the Lanham Act, 15 U.S.C. § 1125(a), and the Illinois Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 510/1 et seq. ("IDTPA"), as well as common law claims for breach of a confidentiality agreement, service mark infringement and unfair competition, and breach of fiduciary duty.*fn1 After obtaining a temporary restraining order from this Court, Plaintiff filed a motion for preliminary injunction, which the Court referred to the magistrate judge.

On June 8, 2012, the magistrate judge issued a Report and Recommendation ("R&R") recommending that Plaintiff's motion for a preliminary injunction be denied and the temporary restraining order be dissolved. Plaintiff timely filed objections to the R&R, which are currently before the Court. For the reasons set forth below, the Court adopts the R&R in full and denies Plaintiff's motion for a preliminary injunction.

I. Background

Plaintiff operates a flight school that provides training to both novice and experienced pilots. (R&R, Dkt. # 105, at 1.) Plaintiff also runs a flying club for its customers, which provides discounts and other promotions to its member pilots. (Id. at 11.) Plaintiff has been in business for two years. (Id. at 2.) Matthew Zahora is the Plaintiff's president and manages all of its operations. (Id. at 1.) Defendant Richard Todd worked as a flight instructor, and then employee, for Plaintiff from May 2010 to approximately December 21, 2011. (Id. at 2.) After leaving Plaintiff's business, Todd began a rival business called CPFT. (Id. at 2.) Both Plaintiff and CPFT provide similar flight training services out of the same small airport. Todd did not sign a non-compete agreement with Plaintiff when he left. (Id.) Although Todd asked to sign a confidentiality agreement while employed by Plaintiff in order to gain access to client information, Plaintiff did not sign the agreement. (Pr. Inj. Hr'g Tr. 189:3-21.)

Soon after CPFT was established, Plaintiff filed the instant suit, which alleges that Todd breached his fiduciary duty by establishing his business while an employee of Plaintiff and by misappropriating confidential information. Additionally, Plaintiff claims that Todd's use of the name "Chicago Premier Flight Training" violates the Lanham Act and the IDTPA because it is similar to the Plaintiff's slogan "Chicago's Premier Flight Training Provider." According to Plaintiff, the similarity between the slogans has caused confusion among customers and hurt Plaintiff's business. As noted above, Plaintiff filed timely objections to the magistrate judge's recommendation that the motion for preliminary injunction be denied. For the reasons stated below, the Court overrules the objections.

II. Discussion

A district court reviews de novo any portion of a magistrate judge's report and recommendation to which written objections have been made. See Fed. R. Civ. P. 72(b). Plaintiff makes several objections to the R&R. First, Plaintiff asserts that it has a valid claim under the Lanham Act because the company's slogan is a protectable trademark and there was actual confusion. (Pl.'s Obj. R&R, Dkt. # 107, at 12.) Second, Plaintiff contends that Todd breached his fiduciary duty to Plaintiff by misappropriating confidential information and starting a competing business while still employed by Plaintiff. (Id. at 3-9.) Additionally, Plaintiff claims the magistrate judge incorrectly determined that it will not be irreparably harmed absent the injunction. (Id. at 7.) Finally, Plaintiff asserts that the magistrate judge should have determined the enforceability of the confidentiality agreement between Plaintiff and Todd. (Id. at 8.)

Generally, a party seeking a preliminary injunction must show: (1) some likelihood of success on the merits; (2) no adequate remedy at law; and (3) irreparable harm to the plaintiff if the relief is not granted. Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 811 (7th Cir. 2002). If the moving party is able to meet these three conditions, then the court must weigh the possibility of irreparable harm to the non-moving party if the injunction is issued, balancing this harm against the irreparable harm the moving party will suffer if the relief is denied. Ty, Inc. v. Jones Grp., Inc., 237 F.3d 891, 895 (7th Cir. 2001). The Seventh Circuit has described this as a "sliding scale" analysis. Christian Legal Soc'y v. Walker, 453 F.3d 853, 859 (7th Cir. 2006). The more likely Plaintiff is to succeed on the merits, the less the balance of harms needs to weigh in its favor. Id. The Court should also consider the public interest in granting or denying the injunction. Ty, Inc., 237 F.3d at 895.

A. Likelihood of Success

1. Lanham Act

Plaintiff claims that Todd's use of the name "Chicago Premier Flight Training" for his business violates its trademark "Chicago's Premier Flight Training Provider." For Plaintiff to state a claim under the Lanham Act, it must show that (1) its trademark is protected and (2) the relevant group of purchasers of the product or service in question is likely to confuse the alleged infringer's product or service with those of Plaintiff. Forum Corp. of N. Am. v. Forum Ltd., 903 F. 2d 434, 439 (7th Cir. 1990).

The first issue before the Court is whether Plaintiff's slogan, "Chicago's Premier Flight Training Provider" is a protected trademark. The parties appear to agree that "Chicago's Premier Flight Training Provider" is a descriptive mark, which means "it does more than merely name a brand; it describes the product category to which the name belongs." Custom Vehicles, Inc. v. Forest River, Inc., 476 F.3d 481, 483 (7th Cir. 2007). Generally, a descriptive mark cannot be protected unless the mark acquires secondary meaning, which happens when: the name . . . come[s] to be uniquely associated with the original seller, and . . . the term can be appropriated as a trademark because it has come to denote a single brand, not the entire product, so that its use by other sellers of the product would confuse consumers about the source of what they were buying.

Id. Secondary meaning "can be established through direct consumer testimony, consumer surveys, length and manner of use, amount and manner of advertising, volume of sales, place in the market and proof of intentional copying." ...

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