Dynamic Aviation Grp. Inc. v. Dynamic Int'l Airways, LLC, Case No. 5:15-CV-00058

Decision Date24 March 2016
Docket NumberCase No. 5:15-CV-00058
CourtUnited States District Courts. 4th Circuit. United States District Court (Western District of Virginia)


Case No. 5:15-CV-00058


March 24, 2016

By: Michael F. Urbanski United States District Judge


This matter is before the court on the renewed motion for preliminary injunction filed by plaintiffs Dynamic Aviation Group, Inc. and DA2, LLC (collectively "DAG"). ECF No. 45. DAG seeks an Order enforcing provisions of a Membership Interest Purchase Agreement dated October 9, 2014 and precluding the defendant Dynamic International Airways, LLC ("DIA") from infringing certain "DYNAMIC AVIATION" trademarks. The matter has been fully briefed, and the court held an evidentiary hearing on February 10—11, 2016. For the reasons stated below, the court finds that: (1) DAG is likely to succeed on the merits of some portion of its breach of contract and trademark infringement claims; (2) DAG is likely to suffer irreparable harm in the absence of a preliminary injunction; (3) the balance of the equities supports a preliminary injunction; and (4) a preliminary injunction is in the public interest. Accordingly, DAG's renewed motion for preliminary injunction is GRANTED in part and DENIED in part, and DIA is PRELIMINARILY ENJOINED from using the name "Dynamic Airways" and using the "DYNAMIC AIRWAYS" and "DYNAMIC" marks as specified below and in the accompanying Order.

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This is a trademark and breach of contract dispute between two aviation companies. Both DAG and DIA provide airline services in a variety of domestic and international markets. DAG has been in operation for nearly eighty years, and is currently managed by Michael Stoltzfus, Chief Executive Officer, and his father Karl Stoltzfus, Chairman of the Board. Am. Compl., ECF No. 26 at ¶ 9. Based in Bridgewater, Virginia, DAG offers a range of services to its customers, including airborne intelligence gathering, surveillance, data acquisition, fire management, insect sterilization, passenger charters, and medevac services. Id. at ¶¶ 4, 8. As of 2009, DAG had facilities in Virginia, California, Florida, and Panama. Id. at ¶ 15. DAG also operates passenger flights between New York and Boston through its partnership with Beacon, a third party aviation company. ECF No. 55, at 7; Pl. Ex. 35, ECF No. 56-35. It plans to expand those passenger operations in the near future. Zook Aff., ECF No. 46-1, at ¶ 3.

In contrast, DIA operates a commercial passenger and transport service based out of Greensboro, North Carolina. ECF No. 31, at ¶¶ 5, 27-28. DIA serves markets in the United States, Asia, and South America, including Orlando, Fort Lauderdale, Guyana, Palau, Hong Kong, and Brazil. Paul Kraus and Kenneth Woolley are alleged to be the current owners of DIA.

A. The Relevant Trademarks

DAG claims use of the name "Dynamic" for at least twenty years, and holds two registered trademarks for the mark "DYNAMIC AVIATION." Federal Trademark Registration ("FTR") No. 3316437 was registered on October 23, 2007 and is a standard character mark for the phrase:

Image materials not available for display.

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Ex. A, ECF No. 26-1. Federal Trademark Registration No. 4532409 was registered on May 20, 2014 and is a mark with the phrase "Dynamic Aviation" placed next to a revolving globe as shown below:

Image materials not available for display.

Ex. B, ECF No. 26-2. Color is not claimed as a feature of FTR No. 4532409, though DAG often displays this mark with the phrase "Dynamic Aviation" in red font, and the revolving globe as either white or blue:

Image materials not available for display.

Donoian Aff., ECF No. 55-3, at 2; Pl. Ex. 34, ECF No. 56-34. DAG argues that these marks and the word "Dynamic" are now associated with its operations in the aviation industry. Am. Compl., ECF No. 26, at ¶¶ 11, 14. Moreover, DAG alleges it has spent several million dollars developing its "DYNAMIC AVIATION" brand, and claims to have acquired significant goodwill and public recognition for the quality of its services. Id.

For its part, DIA claims no registered trademarks. However, DIA uses the primary logo show below:

Image materials not available for display.

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See, e.g., Pl. Ex. 46, ECF No. 58-7, at 5-7. This "DYNAMIC" mark is used on DIA's airplanes, its main website www.airdynamic.com, and its advertising and marketing materials. See id.; Pl. Ex. 29, ECF No. 56-29; Pl. Ex. 31, ECF No. 56-31.

In addition to its "DYNAMIC" mark, DIA designed two similar marks. The first uses the company's full name, "Dynamic International Airways:"

Image materials not available for display.

Donoian Aff., ECF No. 55-3, at 2; Pl. Ex. 26, ECF No. 56-26. However, there is little evidence that DIA uses its "DYNAMIC INTERNATIONAL AIRWAYS" mark in commerce.

DIA's second similar mark uses the phrase "Dynamic Airways," as shown below:

Image materials not available for display.

Pl. Ex. 47, ECF No. 58-8. As with DIA's "DYNAMIC INTERNATIONAL AIRWAYS" mark, there is little evidence DIA uses the "DYNAMIC AIRWAYS" mark on its planes or in its marketing materials. However, the "DYNAMIC AIRWAYS" mark appeared on a second website operated by DIA, www.fly-dynamic.com, as recently as February 11, 2016. Id. The www.fly-dynamic.com website links to DIA's main www.airdynamic.com website. Id.

B. Sale of Dynamic Airways, LLC

The dispute between DAG and DIA arises out of the sale of Dynamic Airways, LLC in 2014. Dynamic Airways, LLC was formed in 2008 by Michael and Karl Stoltzfus as a passenger carrier service. Am. Compl., ECF No. 26, at ¶ 9. In 2010, Dynamic Airways, LLC acquired a "Part 121" certification from the Federal Aviation Administration ("FAA"), and began passenger flights

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using a fleet of McDonnell Douglas ("MD") 80 series and Boeing 767 aircraft. Id. at ¶¶ 16-17. These flights served several locations in the Eastern United States, as well as Brazil and Guyana. Id. Although Dynamic Airways, LLC operated the flights under the FAA certificate issued to it, the service was marketed to consumers under the "EasyJet" name. Two years later, the Stoltzfuses took steps to sell Dynamic Airways, LLC and its associated Part 121 certificate to Kraus and Woolley. Id. at ¶ 17.

Between approximately January 2013 and October 2014, the Stoltzfuses negotiated the sale of Dynamic Airways, LLC to Kraus and Woolley. Id. at ¶¶ 18-22. As part of this negotiation, the parties discussed whether the company would keep the name Dynamic Airways, LLC after the sale. Id. DAG claims it told Kraus and Woolley they could not use the name "Dynamic" in any form after they acquired the company. Kraus disagrees.1 He concedes that he was required to change the company name from Dynamic Airways, LLC, but argues he could use other "Dynamic" names, including "Dynamic International Airways" or "Air Dynamic."

The Stoltzfuses sold their interest in Dynamic Airways, LLC in two stages. The first transaction took place in July 2013 when the Stoltzfuses transferred 80% of their interest in Dynamic Airways, LLC to Kraus and Woolley. Id. at ¶ 18. In relevant part, the 2013 Purchase Agreement stated:

Name: For a period of up to ninety days after the Closing (the "Name Change Date"), the name of the Company will remain Dynamic Airways LLC; provided, however, the Company shall conduct all business operations under a fictitious name effective immediately following the Closing Date. Buyers agree to change the name of the Company on or prior to the expiration of the Name Change Date.

Ex. C, ECF No. 55-8, at § 7.04. However, Kraus failed to change the name from Dynamic Airways, LLC as required by the July 2013 Purchase Agreement.

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As a result, the parties began to dispute the name issue. Starting in January 2014, Kraus exchanged emails with Merle Zook, a senior executive at DAG, and other DAG executives. See, e.g., Pl. Ex. 6, ECF No. 56-6; Pl. Ex. 9, ECF No. 56-9; Pl. Ex. 10, ECF No. 56-10. In these emails, Kraus agreed that the 2013 Purchase Agreement required that he cease use of the name "Dynamic Airways, LLC." However, Kraus requested permission to use two related names—"Air Dynamic" or "Dynamic International Airways"—in order to avoid disruptions to DIA's passenger operations. Pl. Ex. 10, ECF No. 56-10. DAG agreed to cooperate with the name change proposal, subject to written confirmation. Pl. Ex. 11, ECF No. 56-11. DAG sent Kraus a draft trademark license agreement on July 21, 2014. Kraus Aff., ECF No. 55-1, at ¶ 20. The licensing agreement allowed DIA to use the names "Air Dynamic" or "Dynamic International Airways" for 180 days, subject to an optional extension. Pl. Ex. 17, ECF No. 56-17. The parties discussed the terms of the license agreement for several weeks, but could not reach a final agreement. Pl. Ex. 18, ECF No. 56-18. The trademark license agreement was never signed.

During the same time period, the parties were negotiating the second stage of the sale of Dynamic Airways, LLC. Between approximately June 2014 and October 2014, the parties exchanged drafts of a Membership Interest Purchase Agreement ("MIPA") that would transfer the Stoltzfuses' remaining 20% interest in Dynamic Airways, LLC to Kraus and Woolley. See, e.g., Pl. Ex. 12, ECF No. 56-12; Pl. Ex. 19, ECF No. 56-19; Pl. Ex. 21, ECF No. 56-21. DAG employed a third party broker, Michael Wayshner, to help with the final negotiation. Kraus communicated primarily with Wayshner until a final agreement was reached in October 2014.

Various drafts of the MIPA addressed name usage, alternating between language allowing Kraus to use the names "Dynamic International Airways" and "Air Dynamic" and language forbidding use of these same names absent a separate licensing agreement. Compare Def. Ex. O,

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ECF No. 55-26, at ¶ 7 with Def. Ex. S, ECF No. 55-30, at ¶ 7; Def. Ex. T, ECF No. 55-31, at ¶ 7; Pl. Ex. 40, ECF No. 56-40, at ¶ 7. The final MIPA was signed on October 9, 2014, and stated:

7. Company Post-Closing

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