IP Law Daily Airline enjoined from using the name ‘Dynamic’ or ‘Dynamic Airways’
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Friday, March 25, 2016

Airline enjoined from using the name ‘Dynamic’ or ‘Dynamic Airways’

By Peter Reap, J.D., LL.M.

In a trademark dispute between two aviation companies, Dynamic International Airways (DIA) has been enjoined by the federal district court in Harrisonburg, Virginia, from using the name “Dynamic” or “Dynamic Airways,” during the pendency of the case, including the “DYNAMIC” and “DYNAMIC AIRWAYS” marks owned by plaintiff Dynamic Aviation Group (DAG) (Dynamic Aviation Group Inc. v. Dynamic International Airways, LLC, March 24, 2016, Urbanski, M.). The court did not enjoin, as DAG had requested, DIA’s use of the name “Dynamic International Airways,” “Air Dynamic,” or its “DYNAMIC INTERNATIONAL AIRWAYS” mark. Thus, DAG’s motion for a preliminary injunction was granted in part and denied in part.

DAG offers a range of services to its customers, including airborne intelligence gathering, surveillance, and medevac services. DAG also operates some passenger flights and intends to expand in that area. DIA operates a commercial passenger and transport service based out of Greensboro, North Carolina.

DAG claims use of the name “Dynamic” for at least twenty years, and holds two registered trademarks for the mark “DYNAMIC AVIATION.” DIA claims no registered mark but uses a stylized mark composed principally of the word “DYNAMIC” on DIA’s airplanes and marketing materials. DIA has also designed two other stylized marks, one using the company’s full name, “Dynamic International Airways,” and one uses the phrase “Dynamic Airways,” but there is little evidence that these marks are used in commerce, the court noted.

The dispute developed in 2014 when DAG sold Dynamic Airways, LLC. After the purchase, the company was renamed as the defendant, DIA. One of the primary purchase documents under dispute is a Membership Interest Purchase Agreement (MIPA) and that document specified, with a large degree of ambiguity, the names and marks that DIA would be entitled to use after the purchase, the court noted.

DAG filed its original complaint on August 28, 2015, alleging that DIA’s use of the names “Dynamic Airways,” “Dynamic International Airways,” and “Dynamic” infringed on DAG’s registered trademarks for “DYNAMIC AVIATION.” DAG filed a motion for a preliminary injunction that same day, and the court denied DAG’s motion because of factual disputes.

DAG filed an amended complaint on November 13, 2015, and its renewed motion for a preliminary injunction, seeking to enjoin DIA’s use of the “DYNAMIC” marks and the word “Dynamic” in any form, was before the court. In its request for equitable relief, DAG focused on its breach of contract and trademark infringement claims.

Likelihood of Success on the Merits on Breach of Contract

The breach of contract claim was fraught with ambiguity, the court observed. DAG showed that DIA continues to use the name “Dynamic Airways” in violation of subparagraph 7 (i) of the MIPA, and DAG suffered damages as a result of this breach. Thus, DAG made a clear showing that it is likely to succeed on this portion of its breach of contract claim. However, factual disputes remained on DAG’s allegation that DIA’s use of the name “Dynamic International Airways,” “Air Dynamic,” or “Dynamic” is a breach of subparagraph 7(ii) of the MIPA. As such, DAG did not show a likelihood of success as to this aspect of its contract claim.

Likelihood of Success on the Merits on Trademark Infringement

The analyzed the infringement claim only with reference to DAG’s registered trademarks in “DYNAMIC AVIATION.” DAG failed to offer evidence that it used a mark other than “DYNAMIC AVIATION” in its business.

Further, for several reasons, the court analyzed only DIA’s use of the “DYNAMIC” mark. Unlike the mark for “DYNAMIC INTERNATIONAL AIRWAYS,” there was strong evidence that DIA uses the “DYNAMIC” mark as its primary logo. Moreover, DAG’s ability to enjoin DIA’s use of “DYNAMIC” was not entangled with the contract dispute. There was no evidence that DAG surrendered its right to object to DIA’s use of “DYNAMIC” in subparagraph 7(ii) of the MIPA. The court therefore limited the scope of its confusion analysis to DIA’s use of the “DYNAMIC” mark alone. The court turned to an analysis of the relevant factors informing a likelihood of confusion analysis in the Fourth Circuit.

Strength of DAG’s marks. DAG’s “DYNAMIC AVIATION” marks are suggestive, and therefore entitled to a higher level of protection, the court held. The term “Dynamic” as applied to aviation services requires some operation of the imagination to connect it with the goods. With that said, DIA offered some evidence of third party use of “Dynamic.” This included a registered mark for “AERODYNAMIC PRIVATE JET MANAGEMENT” and common law marks like “AeroDynamic Aviation,” “Dynamic AeroSport,” “Dynamic Aviation-Helicopters,” and “Dynamic Jet Charter.” Accordingly, the DAG’s marks’ protection was somewhat weakened by third party use of similar marks.

In light of the fact that neither party submitted much evidence of tangible commercial strength in the way of consumer studies or sales reports, the court could draw no conclusions as to the commercial strength of the “DYNAMIC AVIATION” marks. Therefore, after balancing the conceptual strength of the marks with the minor evidence of third party use and the marks’ unknown commercial strength, the strength factor is either neutral or, at most, slightly favorable to DAG, the court decided.

Similarity factors. The next series of factors are often called the “similarity” factors, and consider the similarity of the marks to consumers, the similarity of the goods and services provided under those marks, and the similarity in facilities and advertising used by the markholders.

DIA argued that its use of a different color, font, and logo sufficiently distinguishes its mark from the “DYNAMIC AVIATION” marks. But these graphic dissimilarities did not overcome the identical use of the same dominant word in both marks, the court ruled. As such, the similarity between the marks favored a finding of a likelihood of confusion. In addition, DAG demonstrated that it intends to further expand into passenger markets. These plans for expansion, when considered alongside DAG’s prior passenger operations, showed that the similarity of services factor weighed in favor of DAG. As to any similarity in facilities and advertising, there was no evidence that either parties’ physical location plays a role in the current dispute and the court afforded little weight to this factor.

DIA’s intent. The rights afford by the MIPA were in dispute, and DIA pointed to evidence that DAG authorized use of some “Dynamic” names. On such a mixed record, the court could not conclude that DIA intended to induce consumer confusion when it adopted its current “DYNAMIC” mark. As such, this factor is neutral and played no role in the court’s analysis.

Actual confusion. DAG hanged its hat on evidence of confusion, the court commented. Most importantly, DAG cited significant confusion arising from an accident involving a DIA airplane. On October 29, 2015, a DIA passenger aircraft caught fire while taxiing for takeoff at the Fort Lauderdale-Hollywood International Airport. The plane prominently displayed DIA’s “DYNAMIC” mark, which was visible in the various news reports covering the accident. DAG pointed to multiple communications from industry insiders and at least one customer who believed the “DYNAMIC” plane burning in Fort Lauderdale was operated by DAG. In addition, DAG showed that confusion extended beyond the date of the accident. Based on this evidence, the confusion factor strongly favors DAG, the court reasoned.

Quality of DIA’s services. The record was replete with evidence of significant consumer dissatisfaction, regulatory concerns, and various financial blunders involving DIA. However, the quality of a defendant’s product is relevant only to the extent that it makes it more or less likely a consumer will mistake the origin of the relevant goods or services. Thus, the quality of DIA’s services did not support DAG’s claim for confusion.

Consumer sophistication. The evidence of actual confusion outweighed the relative sophistication of DAG’s consumers, which could otherwise have mitigated against a likelihood of confusion, the court said.

Summary. Based on a consideration of the above-discussed factors, DAG carried its burden to show that DIA’s use of the “DYNAMIC” mark infringes on its registered “DYNAMIC AVIATION” marks, the court held.

Irreparable Harm

DAG argued that DIA’s breach of subparagraph 7(i) of the MIPA and its use of the “DYNAMIC” mark is causing immeasurable harm to its customer goodwill and industry reputation. Because DIA’s breach of the MIPA and its use of similar marks caused consumers and industry insiders to associate DIA’s sub-par performance with DAG, DAG claimed it risked permanent loss of competitive strength in the aviation industry. The court agreed.

Balance of the Equities

The balance of equities weighed in favor of DAG. DAG’s control over its brand, its industry reputation, and customer goodwill are all threatened by its ongoing association with DIA’s operations, and DAG faced an actual risk of irreparable harm as consumers and others within the aviation industry continue to connect it with DIA’s problematic operational history.

In calculating the harm it would incur, DIA assumed that the court would order the full injunctive relief sought by DAG. This would include ordering DIA to change its corporate name, cease all use of any name containing “Dynamic,” and re-start operations under a new brand. However, the injunction the court would order was much more limited. DIA would not be enjoined from use of the name “Dynamic International Airways” or “Air Dynamic,” would not be required to change its corporate name, and may continue use of its “DYNAMIC INTERNATIONAL AIRWAYS” mark, the court held.

The limited scope of the injunction led to an equally limited risk of harm to DIA. Because DIA would not be enjoined from use of “Dynamic International Airways” and may continue operations under that corporate name, it need not cancel existing contracts, seek re-issuance of its FAA certificates, or incur the other administrative costs associated with a broader injunction.

Public Interest

The public is best served when courts enforce provisions of valid contracts and the protection of trademark rights is always in the public interest. Thus, DAG met its burden to show that a preliminary injunction would favor the public interest.

The case is No. 5:15-CV-00058.

Attorneys: Andrew S. Baugher (Lenhart Pettit) for Dynamic Aviation Group, Inc. and DA2, LLC. Francis H. Casola (Woods Rogers PLC) for Dynamic International Airways, LLC.

Companies: Dynamic Aviation Group, Inc.; DA2, LLC; Dynamic International Airways, LLC

MainStory: TopStory Trademark VirginiaNews

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