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Country Inns & Suites By Carlson, Inc. v. 3 Am, LLC

United States District Court, D. Minnesota

October 24, 2014

COUNTRY INNS & SUITES BY CARLSON, INC., a Minnesota corporation, Plaintiff,
v.
3 AM, LLC, a Maryland corporation; KIRAN PATEL, a Virginia resident; and MANJULA PATEL, a Virginia resident, Defendants.

Kirk W. Reilly, Craig P. Miller and Richard Landon, Gray, Plant, Mooty, Mooty & Bennett, P.A., Counsel for Plaintiff.

ORDER FOR PRELIMINARY INJUNCTION

MICHAEL J. DAVIS, Chief District Judge.

This matter is before the Court on Plaintiff's unopposed motion for preliminary injunctive relief.

I. Background

Plaintiff Country Inns & Suites By Carlson, Inc. franchises mid-scale hotels that are defined by their commitment to consistently high quality accommodations and hospitality. Plaintiff owns the trademarks Country Inn & Suites By Carlson, Country Inns & Suites and other marks and trade dress displayed throughout its licensed Country System Hotels. (Mark Owens Decl. ¶ 8, Ex. A.) Plaintiff obtained federal trademark registration for the words "Country Inn & Suites By Carlson" and "Country Inn & Suites" and for distinctive signage. (Id.)

Plaintiff asserts its Country System Hotels are characterized by a unique system that includes a distinctive exterior and interior design, decor, color scheme and furnishings. (Id. ¶ 11.) Since 1992, Plaintiff has spent $185 million promoting and advertising its Country System Hotels. (Id. ¶ 13.) Plaintiff asserts that as a result of advertising and the number of hotels it operates throughout the country, the Country System Hotels have become associated in the minds of consumers with hotels of high quality. (Id. ¶ 15.)

Plaintiff and Defendant 3 AM LLC entered into a license agreement effective February 3, 2004 (the "License Agreement") granting 3 AM LLC the non-exclusive license to construct and operate a guest lodging facility located at 8850 Hampton Mall Drive North, Capitol Heights, MD 20743 (the "Hotel") using Country Marks and Business Systems for a period of 15 years. Around this time, Defendants Kiran and Manjula Patel entered into a Personal Guaranty of License Agreement pursuant to which they each guaranteed, in part, that they would timely perform all of 3 AM LLC's post-termination obligations upon termination or expiration of the License Agreement. (Id. ¶ 17, Ex. C.)

Plaintiff asserts that on June 18, 2013, after Defendants repeatedly failed to cure a number of monetary and system standard defaults under the License Agreement, Plaintiff and 3 AM LLC entered into a Termination Agreement pursuant to which they mutually agreed to terminate the License Agreement on September 30, 2013. (Id. ¶¶ 18-19, Ex. D.) The Termination Agreement was later amended to terminate on February 28, 2014. (Id. ¶ 20, Ex. D.)

Plaintiff sent 3 AM LLC a letter dated April 16, 2014 to remind Defendants that the License Agreement had been terminated and to demand payment of past due fees in the amount of $90, 033.32 and liquidated damages of $302, 661.48. (Id. ¶ 24, Ex. E.) Plaintiff also informed Defendants that an inspection of the Hotel revealed that 3 AM LLC was still displaying and using Plaintiff's marks and had failed to comply with its post-termination obligations. (Id. ¶ 25.)

Plaintiff claims that Defendants have still not complied with its post-termination obligations. (Id. ¶ 27.) During visits to the Hotel in July and August 2014, a representative of Plaintiff found that Defendants are still displaying and using Plaintiff's marks and have failed to perform the de-identification requirements set forth in the License Agreement. (Id. ¶¶ 28-29, Exs. F-H.)

Plaintiff argues that as the Hotel operated as a Country Inn & Suites for 11 years, the public is confused when it sees the Country marks on the Hotel, believing that the Hotel continues to be sponsored by Plaintiff. Plaintiff further argues it will suffer irreparable harm to its Hotel System and customer goodwill each day that Defendants wrongfully suggest an association between their Hotel and Plaintiff's County System Hotels.

II. Standard for Preliminary Injunctive Relief

The law is well-settled that in order to obtain preliminary injunctive relief, a plaintiff must show a likelihood of irreparable harm in the absence of the injunction. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22 (2008). The Court also considers the balance between such harm and the injury that granting the injunction will inflict on other parties, Plaintiff's likelihood of success on the merits, ...


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