Summary
holding that plaintiff failed to demonstrate substantial threat of irreparable injury due to confusion of trademarks because defendant had exited market and was undergoing liquidation
Summary of this case from TRAVELHOST, INC. v. FIGGOpinion
Civil Action No. 3:99-CV-2477-D
September 14, 2001
MEMORANDUM OPINION AND ORDER
Defendant-counterplaintiff Legend Tours, Inc. ("Tours") seeks a preliminary injunction restraining plaintiff-counterdefendant Legend Airlines, Inc. ("Airlines") from infringing the marks LEGEND TOURS and LEGEND AIR. For the following reasons, the court denies the motion.
As permitted by Fed.R.Civ.P. 52(a), the court sets out its findings of fact and conclusions of law in this memorandum opinion and order.
I
Tours is a travel and tour operator that owns the rights to the trademark LEGEND TOURS. Tours has been using this mark since October 3, 1988. On February 13, 1990 Tours obtained a United States Trademark Registration, No. 1,582,982, for LEGEND TOURS. It asserts that this registration is now incontestable. See D. App. 36, 25. Tours has used the mark on its brochures, its website, and in advertisements throughout the United States. See id. at 26. In connection with its travel and tour operations, Tours has several business relationships with commercial airlines. See id. at 27-28. To identify its services for discount airfares, Tours began using the trademark LEGEND AIR in 1994. Among other efforts to promote the LEGEND AIR mark, Tours maintains an Internet website at www.legendair.com. See id. at 26. Tours asserts that during the past ten years, it has spent in excess of $2 million to promote its marks, resulting in widespread industry recognition.
Airlines is a start-up airline that began offering service from Dallas, Texas on April 5, 2000. On February 10, 1997 Airlines applied to the United States Patent and Trademark Office ("PTO") to register the mark LEGEND AIRLINES. See P. App. 120. When the PTO denied the application on the basis that it is too similar to a Florida company's mark, FLY A LEGEND, Airlines purchased the rights to FLY A LEGEND. During the period before April 5, 2000, Airlines invested millions of dollars to promote the LEGEND AIRLINES mark by prominently placing it on structures and items ranging from an $18.5 million terminal to napkins. This promotion also included extensive advertising by radio, television, billboards, and print media.
On October 13, 1999 counsel for Tours sent a letter to Airlines demanding that Airlines cease using the marks LEGEND AIR or LEGEND AIRLINES in connection with the sale of travel and air transportation. Airlines filed suit against Tours on October 29, 1999 seeking inter alia a declaration that the LEGEND AIRLINES and FLY A LEGEND marks do not infringe the LEGEND TOURS mark. On December 8, 1999 Tours counterclaimed. On September 15, 2000 defendant Tours brought this motion for preliminary injunction.
Shortly after briefing on the motion concluded, Airlines filed a chapter 11 bankruptcy petition and the court deferred a ruling on the application due to the automatic stay. On December 8, 2000 the court administratively closed Tours' action against Airlines. On April 2, 2001 Tours notified the court that the bankruptcy court had lifted the automatic stay in Airlines' bankruptcy, and it requested that the court reopen its counterclaim and consider its motion for preliminary injunction. On April 26, 2001 the court advised the parties by order that Airlines had notified the court that its chapter 11 case has been converted to a chapter 7 proceeding. The order stated that, unless, no later than May 4, 2001, Airlines filed a written response that established a legal impediment to the court's doing so, the court would reopen the case statistically and decide Tours' motion for preliminary injunction on the briefing already on file and in accordance with the procedural order filed in this case on September 15, 2000. From May 4, 2001 until September 6, 2001 Tours and Airlines jointly requested that the court defer a decision on the motion for preliminary injunction due to a possible settlement. The court has now been advised, however, that the parties no longer request that the court defer its decision, and it turns to the motion.
II A
A preliminary injunction is an extraordinary remedy that should be granted only when the movant clearly demonstrates: (1) a substantial likelihood of prevailing on the merits; (2) a substantial threat of irreparable injury if the injunction is not granted; (3) that the threatened injury outweighs any harm that may result from the injunction to the nonmovant; and (4) that granting the injunction will not disserve the public interest. See Jones v. Bush, 122 F. Supp.2d 713, 718 (N.D. Tex.) (Fitzwater, J.) (citing Ruscitto v. Merrill Lynch, Pierce, Fenner Smith, Inc., 777 F. Supp. 1349, 1353 (N.D. Tex.) (Fitzwater, J.), aff'd, 948 F.2d 1286 (5th Cir. 1991) (per curiam) (table)), aff'd, 244 F.3d 134 (5th Cir. 2000) (per curiam) (table), cert. denied, 531 U.S. 1062 (2001). "A preliminary injunction `is an extraordinary and drastic remedy, not to be granted routinely, but only when the movant, by a clear showing, carries the burden of persuasion.'" Id. (quoting White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir. 1989); Holland Am. Ins. Co. v. Succession of Roy, 777 F.2d 992, 997 (5th Cir. 1985)).
B
Even if the court assumes arguendo that Tours can meet the other three elements required for a preliminary injunction, it has failed to demonstrate a substantial threat of irreparable injury. On April 23, 2001 Airlines' bankruptcy was converted from a chapter 11 reorganization to a chapter 7 liquidation. The basis for Tours' allegation of a substantial threat of irreparable injury is its contention that it has made a "strong showing of likelihood of confusion[.]" D. Br. at 22 (citing Hasbro, Inc. v. Lanard Toys, Ltd., 858 F.2d 70, 73 (2d Cir. 1988), for proposition that showing likelihood of confusion is sufficient to establish irreparable harm). Whatever was the strength of this showing during the time that Airlines operated as a viable business, there is minimal likelihood of confusion now that Airlines has exited the air travel market and is undergoing liquidation. The record does not support the finding that customers or the public will confuse Tours with the failed airline, or vice versa.C
Tours also relies on Tex. Bus. Com. Code Ann. § 16.29 (Vernon 2001) as an additional basis to establish a right to a preliminary injunction. Section 16.29 provides, in pertinent part:
A person may bring an action to enjoin an act likely to injure a business reputation or to dilute the distinctive quality of a mark registered under this chapter or Title 15, U.S.C. or a mark or trade name valid at common law, regardless of whether there is competition between the parties or confusion as to the source of goods or services.
Tours contends that the Texas anti-dilution statute makes injunctive relief available even absent a showing of a strong likelihood of confusion. See D. Br. at 24 (citing Pebble Beach Co. v. Tour 18 I, Ltd., 942 F. Supp. 1513 (S.D. Tex. 1996), aff'd as modified, 155 F.3d 526 (5th Cir. 1998)). Pebble Beach held that the "dilution" for which § 16.29 provides a remedy may take two forms: "blurring" or "tarnishment." Pebble Beach, 942 F. Supp. at 1567. Tours asserts that blurring is the form of dilution at issue in this case. See D. Br. at 24. Pebble Beach holds that "[d]ilution by blurring occurs when `[c]ustomers or prospective customers . . . see the plaintiff's mark used on a plethora of different goods and services.'" Pebble Beach, 942 F. Supp. at 1566 (citing Hormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497, 506 (2d Cir. 1996)). The harm at issue under an anti-dilution statute is not consumer confusion, but is instead "the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product." Deere Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir. 1994).
For the reasons discussed above, the disappearance of Airlines from the air-travel market and its present status as a company undergoing chapter 7 liquidation all but eliminates this possibility. Tours' fundamental argument is that "[u]nder Texas law, one making significant use of another's service marks to sell its own services to the public violates the anti-dilution statute." D. Br. at 24. Because such significant use is now unlikely to take place, Tours is not entitled to preliminary injunctive relief based on § 16.29.
There is no indication in the record that the chapter 7 trustee intends to sell or has sold Airlines' purported rights to the LEGEND mark to another entity. If this were to occur, the court's reasoning would be affected and Tours might be able to obtain injunctive relief on a renewed application or by separate lawsuit.
Because Tours has failed to establish a substantial threat of irreparable injury, or a right to an injunction under § 16.29, its September 15, 2000 motion for a preliminary injunction is denied.
SO ORDERED.