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Impact Networking, LLC v. Impact Technology Solutions, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 26, 2018

IMPACT NETWORKING, LLC, Plaintiff,
v.
IMPACT TECHNOLOGY SOLUTIONS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          JOHN ROBERT BLAKEY, UNITED STATES DISTRICT JUDGE.

         Plaintiff Impact Networking, LLC has sued Defendant Impact Technology Solutions, Inc., alleging, among other things, that Defendant's logo infringes Plaintiff's trademarks. Along with its complaint, Plaintiff filed a motion for preliminary injunction, seeking to bar Defendant from using the allegedly infringing logo. This Court held an evidentiary hearing on October 4 and 19, 2017, and the parties then filed post-hearing briefs, along with proposed findings and conclusions. This opinion constitutes the Court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a)(2).

         I. Background and Procedural History

         Plaintiff Impact Networking, an Illinois company with offices in Illinois and Indiana, was formed in 1999 to sell and service office equipment; the business as initially formed “entailed printers and copiers and managed IT support, which is helping people with their IT infrastructure.” Tr. of Proceedings of 10/4/17 [51], at 12-13. The company also offered desktop PC support (including project management, office automation, desktop apps, and graphic imaging), as well as internet support (including connectivity, email, and website support). Id. at 14.

         In connection with its business, Plaintiff registered two service marks. The first, Reg. No. 2, 425, 077, issued June 30, 2001, and appears as follows:

         IMPACT NETWORKING

         See Plaintiffs Exhibit 2. The registration indicates two uses: for Distributorship in the Field of Office Equipment and Supplies, in Class 35 (with a first use date of 8-0-1999), and for “Maintenance and Repair of Office Machinery, in Class 37” (with a first use date of 8-0-1999).[1] Id. The second mark, Reg. No. 2, 428, 340, issued February 13, 2001, covers the company's logo and looks like this:

         IMPACT NETWORKING

         See Plaintiffs Exhibit 3. This registration similarly indicates two uses: for “Maintenance and Repair of Office Machinery, in Class 37” (with a first use date of 9-0-1999), and for “Distributorships in the Field of Office Equipment and Supplies, in Class 39” (with a first use date of 9-0-1999).[2] Id.

         Plaintiffs current logo (the unregistered mark) looks like this:

         IMPACT

         Defendant Impact Technology Solutions, an Indiana company located in Valparaiso, Indiana, was formed in December 2011. Tr. of Proceedings of 10/19/17 [53], at 157. Since its inception, Defendant has operated as a managed service provider for small businesses; it provides managed IT services, desktop support, service support, backup and disaster recovery, email, cloud services, and virtualization. Id. at 158-59. The company has one office, in Valparaiso, Indiana, and six employees (including the three founding partners). Id. at 160. The company has about 75 customers (the vast majority of which are in Northwest Indiana) and turns a small profit (about $5, 000) each year. Id. Its logo looks like this:

         IMPACT SOLLUTIONS

         On July 14, 2017, Plaintiff sued Defendant, alleging trademark infringement in violation of 15 U.S.C. § 1114; unfair competition in violation of 15 U.S.C. § 1125 and under common law; violation of the Illinois Uniform Deceptive Trade Practices Act; and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. See [1]. Plaintiff filed a motion for preliminary injunction [17] on July 20, 2017. In response to the complaint, Defendant filed a counterclaim [49], seeking cancellation of Plaintiff's marks and a declaratory judgment that Plaintiff has abandoned its rights in the “Impact Networking” mark.

         This Court held an initial hearing in the case on July 27, 2017, and, by agreement, set the matter for an evidentiary hearing on the preliminary injunction motion on August 31, 2017. [25]. Thereafter, the parties requested limited expedited discovery, which the Court allowed, and the evidentiary hearing was reset for October 4, 2017. [32]. At the hearing, which was continued by agreement to October 19, 2017, both sides presented live witness testimony and documentary evidence, as well as arguments. [50, 52].

         Plaintiff first presented Dan Meyer, Impact Networking's president and founding partner, who testified that he and Frank Cucco formed the company in the fall of 1999. [51] at 12. At that time, the company's business purpose was “office equipment, which entailed printers and copiers and managed IT support, which is helping people with their IT infrastructure.” Id. at 13. From its inception, the company offered desktop PC support, including project management, office automation, desktop applications, graphic imaging and internet support. Id. at 14. Meyer testified that his company has been using and offering the same services continuously since its inception. Id. at 15. Meyer testified that the company has offered the services it offers today-namely, backup and disaster recovery service, cloud solutions, network monitoring, virtualization, spam protection, server support, and network security-continuously as they became available and by at least 2011. Id. at 24-26. Meyer conceded, however, that none of these services are listed in the company's trademark registrations. Id. at 48-49.

         Meyer testified that Plaintiff operates primarily in Illinois, Indiana, Wisconsin, and California-though it began operating in California only a week prior to the hearing. Id. at 28. It has operated in northwest Indiana and the Chicagoland area since late 1999. Id. Plaintiff has two offices in Indiana: one in Indianapolis, opened in 2008, and one in Hammond, opened in January 2017. Id.

         Meyer testified that Plaintiff advertises through radio and TV, billboards and vehicles, and at sporting venues (including major league teams' venues, such as Chicago Blackhawks games at the United Center, Chicago Cubs games at Wrigley Field, and Milwaukee Brewer games at Miller Park, and minor league teams' venues, including the Chicago Wolves, the Indianapolis Indians, the Kenosha Kingfish and the Madison Mallards). Plaintiff distributes and mails literature, cold calls prospective clients, hosts PowerPoint presentations and “lunch-and-learns, ” and markets through social media including LinkedIn, Facebook, Instagram, Twitter and Pinterest. Id. at 29, 30-31, 33. Plaintiff owns an office building in Lake Forest, Illinois, with signage visible from the expressway, and it recently reached a deal for signage and naming rights for the new home of the Chicago Dogs (an independent baseball team), which is being built now in Rosemont, Illinois. Id. at 34. Plaintiff targets signage on buildings near busy expressways to build brand and name recognition. Id. at 36. Meyer testified that Plaintiff puts its name on “just about everything from cell phone covers to shirts to you name it.” Id. at 29.

         Plaintiff had total revenues of over $58 million in 2016. Id. at 59. In 2012, Plaintiff spent $580, 000 on advertising; in 2016, it spent $1.76 million; and in the first half of 2017 it spent $1.2 million. Id. at 39. Meyer testified that Plaintiff employs approximately 180 people just in sales and marketing, id. at 29, each of whom has a “minimum target” of 500 telemarketing calls and 300 cold calls per month. Id. at 31-32. Meyer testified that Plaintiff's sales force targets “C-level employees” at target companies-that is, CEO, CFO, and other high-ranking officers-because it wants buy-in and authorization at that level. Id. at 57. Meyer testified that the process of securing a customer takes time and involves several meetings, an assessment, and the execution of a written agreement. Id. at 57. With this process, Plaintiff's employees “would make sure the customer knows who [they] are.” Id. at 57-58. Meyer testified that the contracts Plaintiff ultimately executes with its customers are mostly long term (five years); although the company has some contracts that ...


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