M1 Holdings Inc. v. Members 1st Fed. Credit Union
| Decision Date | 07 December 2022 |
| Docket Number | 22-cv-01162 |
| Parties | M1 HOLDINGS INC., Plaintiff, v. MEMBERS 1ST FEDERAL CREDIT UNION, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiff M1 Holdings Inc. (M1 Holdings) brings this action against Defendant Members 1st Federal Credit Union (Members 1st) seeking a declaratory judgment that M1 Holdings' trademarks and brand identifiers do not infringe Members 1st's design mark bearing Registration No. 3,055,347. Members 1st has filed a counterclaim against M1 Holdings and Lincoln Savings Bank (Lincoln Savings) (collectively Counter-Defendants[1]) for trademark infringement, false designation of origin, unfair competition, and deceptive acts and practices pursuant to the Lanham Trademark Act of 1946 (the Lanham Act), 15 U.S.C. § 1051, et seq. and Pennsylvania and Illinois law. Before the Court is Members 1st's motion for a preliminary injunction pursuant to Federal Rule of Civil Procedure 65(a), asking the Court to order Counter-Defendants to cease any use of their allegedly infringing marks in connection with financial products and services similar to those offered by Members 1st. R. 13, Mot. For the following reasons, the motion for preliminary injunction [13] is denied.
Background[2]
Counter-Plaintiff Members 1st is a member-owned financial institution and credit union located in South Central Pennsylvania. R. 14, Memo. at 7. With over $6 billion in assets, it is the 47th largest credit union in the nation and the 3rd largest in Pennsylvania. Id. It has 53 full-service branches, serves over 500,000 members, and offers investment and banking products and services, including checking, savings, and credit and debit cards. Id. at 6. Counter-Defendant M1 Holdings is a Chicago-based financial company formed in 2016 that offers mobile and web-based digital financial goods and services. R. 30, Resp. at 3. According to M1 Holdings, its name is a reference to a term for a measure of the money supply which is well-known throughout the financial industry. Id.
Since 2003, Members 1st has marketed its credit union services with its design trademark bearing Registration No. 3,055,347, primarily in the following stylized format of a letter “M,” wherein the right-hand portion of the letter resembles a numeral “1”:
(Image Omitted) (the Mist Mark). Memo. at 7-8. Members 1st owns two valid U.S. Trademark Registrations for the M1st Mark, one for charitable services and one for credit union services. Id. at 8 (citing R. 14-1, Reimer Decl. ¶¶ 8-9). It has used the M1st Mark continuously and extensively for approximately 20 years, expending substantial time and millions of dollars to develop, market, advertise, and promote its products and services with the mark. Id. at 6, 8. Members 1st claims that its mark signifies the high quality of its products and services, which have acquired incalculable distinction and reputation. Id. at 8.
According to Members 1st, in or around 2016, M1 Holdings began (1) advertising investment services at the domain name www.m1finance.com and (2) using the composite phrase “M1: THE FINANCE SUPER APP” for website and mobile investment applications. Memo. at 6, 8. On August 31, 2020, M1 Holdings filed trademark applications for that phrase in connection with providing a website and mobile application for investment services. Id. at 8. In October 2020, Members 1st learned of M1 Holdings' use of that phrase, and exchanged letters with M1 Holdings objecting to M1 Holdings' use of the phrase with regard to financial products and services. Id. at 8-9. On October 29, 2020, M1 Holdings responded to Members 1st, arguing that the phrase was distinguishable from the M1st Mark because (1) it used the additional words “THE FINANCE SUPER APP” and (2) the M1st Mark was not used in conjunction with investment services like those offered by M1 Holdings. Id. at 9. Members 1st maintains that, as a result of its exchange with M1 Holdings, Members 1st understood that M1 Holdings would continue to focus its branding on the full phrase “M1: THE FINANCE SUPER APP” and would only offer financial investment services under any mark using the text “M1”-not banking services. Id. at 6, 9.
However, M1 Holdings later filed additional trademark applications that did not use the full phrase. On November 18, 2020, M1 Holdings filed three new trademark applications seeking to register the following designation:
(Image Omitted)
(the M1 Mark). Memo. at 9. In May and July 2021, M1 Holdings filed five additional applications seeking to register the following designation:
(Image Omitted)
(the M1 Plus Mark) (collectively, the M1 Marks). Id.
Members 1st claims that it first learned of M1 Holdings' three trademark applications for the M1 Mark on or about June 9, 2021, when the applications were published for objection by third parties. Memo. at 9. Members 1st responded by filing for an extension to object to the application. Id. The parties subsequently began settlement discussions. Id. Further, says Members 1st, after it had been working with M1 Holdings in a good faith attempt to resolve the matter, M1 Holdings told Members 1st in November 2021 that M1 Holdings was actively offering banking services-in addition to investment services-under the M1 Marks. Id. at 10.
Members 1st then began further investigation into M1 Holdings' use of the M1 Marks. Memo. at 10. On January 17, 2022, M1 Holdings ran a nationally televised advertisement on the ESPN television network using the M1 Marks. Id. In the weeks after that advertisement, Members 1st learned that M1 Holdings had partnered with Lincoln Savings to provide M1 Holdings' customers with traditional banking services, including checking accounts and credit and debit cards, under the M1 Marks. Id. Finally, in February 2022, M1 Holdings began using the M1 Marks through a new website, www.m1.com. Id.
Due to these developments, on February 11, 2022, Members 1st sent demand letters to Counter-Defendants as a final attempt to come to an amicable solution. Memo. at 10. M1 Holdings thereafter filed its complaint in this action, seeking declaratory judgment of non-infringement. Id. Approximately 20 days later, Members 1st filed the present motion for preliminary injunction.
A preliminary injunction is “an extraordinary and drastic remedy” to be granted only if the movant carries the burden of persuasion “by a clear showing.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). As an equitable, interlocutory measure, it involves the “exercise of a very far-reaching power, never to be indulged in except in a case clearly demanding it.” Impact Networking, LLC v. Impact Tech. Sols., Inc. 2018 WL 1469004, at *4 (N.D. Ill. Mar. 26, 2018) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008); Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S. of Am., Inc., 549 F.3d 1079, 1085 (7th Cir. 2008)). In addition, mandatory preliminary injunctions are “ordinarily cautiously viewed and sparingly issued.” Mays v. Dart, 974 F.3d 810, 818 (7th Cir. 2020).
A party seeking a preliminary injunction is required to demonstrate (1) a likelihood of success on the merits, (2) that it has no adequate remedy at law, and (3) that it will suffer irreparable harm if the relief is not granted. Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 811 (7th Cir. 2002), as amended (Oct. 18, 2002). The Seventh Circuit recently clarified how likely success on the merits must be in order to satisfy the standard. Illinois Republican Party v. Pritzker, 973 F.3d 760, 762 (7th Cir. 2020). There, the court explained that a “possibility of success is not enough” and “[n]either is a better than negligible chance.” Id. (internal citations and quotations omitted). But the moving party “need not show that it definitely will win the case.” Id. at 763. “A strong showing” of a likelihood of success on the merits thus “normally includes a demonstration of how the applicant proposes to prove the key elements of its case.” Id. (internal citations and quotations omitted).
If a movant Piekosz-Murphy v. Bd. of Educ. of Cmty. High Sch. Dist. No. 230, 858 F.Supp.2d 952, 961-62 (N.D. Ill. 2012) (citing Schlosser v. Commonwealth Edison Co., 250 F.2d 478, 480-81 (7th Cir. 1958); 11A Charles A. Wright et al., Federal Practice & Procedure § 2949; 13 James Wm. Moore et al., Moore's Federal Practice-Civil § 65.21)).
If the moving party meets this three-element threshold showing, the Court “must weigh the harm that the plaintiff will suffer absent an injunction against the harm to the defendant from an injunction.” GEFT Outdoors, LLC v. City of Westfield, 922 F.3d 357, 364 (7th Cir. 2019) (). “Specifically, the court weighs the irreparable harm that the moving party would endure without the protection of the preliminary injunction against any irreparable harm the nonmoving party would suffer if the court were to grant the requested relief.” Girl Scouts of Manitou Council, 549 F.3d at 1086 (citing Abbott Labs. v Mead Johnson & Co., 971 F.2d 6, 11-12 (7th Cir. 1992)). The Seventh Circuit has described this balancing test as a “sliding scale”: “if a plaintiff is more likely to win, the balance of harms can weigh less...
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