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Turn And Bank Holdings, LLC v. Avco Corp.

United States District Court, M.D. North Carolina

September 30, 2019

TURN AND BANK HOLDINGS, LLC, and PRECISION AIRMOTIVE, LLC, Plaintiffs,
v.
AVCO CORPORATION and AVSTAR FUEL SYSTEMS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          Catherine C. Eagles, District Judge.

         Plaintiffs Turn and Bank Holdings, LLC, and Precision Airmotive, LLC, ask this Court for a preliminary injunction barring defendants Avco Corporation and AVStar Fuel Systems, Inc. from selling fuel injection servos, a component of aircraft engines, bearing trademarks the plaintiffs contend are confusingly similar to their own. The plaintiffs have shown a likelihood of success on the merits. To the extent the plaintiffs seek to prevent the defendants from selling servos with the infringing marks while this litigation is pending, they have met the other requirements for a preliminary injunction, and the motion will be granted. To the extent the plaintiffs seek a broader preliminary injunction, they have not met their heavy burden, and the motion will be denied.

         The Court, having reviewed the motions, the supporting documents, all matters of record, and the briefing, makes the following findings of fact and conclusions of law for the purpose of this Order only.

         FINDINGS OF FACT

         1. Plaintiff Turn and Bank holds trademark rights over marks used on fuel injection servos, which control the delivery of a combustible fuel-air mixture to aircraft engines. Doc. 1 at ¶¶ 13, 17; AVCO Corp. v. Turn & Bank Holdings, LLC, No. 4:12-CV-01313, 2018 WL 1706359, at *2, *9 (M.D. Pa. Apr. 9, 2018); see also Doc. 1-1 (USPTO registrations). Turn and Bank bought this servo line in 2012 and licensed its intellectual property rights to Precision for servo production. Doc. 1 at ¶ 17. For ease of reading, the Court will refer to the plaintiffs Turn & Bank and Precision collectively as Precision.

         2. Precision's predecessor, the Bendix Corporation, developed fuel injection servos in the 1960s and affixed the marks at issue to identify its servos. Doc. 1 at ¶ 14; Doc. 7-1 at ¶ 5. The marks have been used on servos consistently, exclusively, and prominently for years by Precision and its predecessors. AVCO Corp., 2018 WL 1706359, at *8.

         3. Precision's servo marks consist of the prefix “RSA” followed by a series of numbers and letters. Doc. 1 at ¶ 15; Doc. 7-1 at ¶ 5. “All of the RSA model numbers consist of (1) the letters ‘RSA,' (2) a dash, (3) a one- or two-digit number, (4) two more letters, and (5) a one-digit number-in that order (e.g., ‘RSA-5AD1,' ‘RSA-10ED2').” AVCO Corp., 2018 WL 1706359, at *3; see also Doc. 1 at ¶ 15.

         4. While there is not complete consensus over the precise meaning of these model numbers, in the past the parties have agreed that the numbers and letters after the dash indicate different functional or structural aspects of the servos. AVCO Corp., 2018 WL 1706359, at *3. Each model number represents not a specific servo but rather a “family” of servos sharing certain general functional characteristics. Id. at *4.

         5. The marks are more akin to general model numbers than part numbers. Numerous servos may share the same model number, but a part number is required to ensure it is compatible with a specific engine. Id. at *4.

         6. Precision's RSA marks appear on servo “data tags” affixed to the servos. Doc. 29-3 at ¶ 13.

         7. Precision has registered both the RSA prefix and three of the full model numbers at issue here on the USPTO's Principal Register, and it has registered the remainder on the Supplemental Register. Doc. 1-1.

         8. Servo buyers have used the RSA marks for decades to identify the Bendix/ Precision line of servos. Doc. 1 at ¶ 20; Doc. 7-1 at ¶ 8; Doc. 7-6 at ¶ 5; Doc. 7-13 at ¶ 8; Doc. 7-14 at ¶ 6.

         9. Even without the prefix RSA, some in the servo industry recognize the suffixes “5AD1, ” “10AD1, ” and “10ED1” as originating from the Precision line of servos, Doc. 7-2 at ¶ 7, and use these suffices as a “shorthand” for the entire RSA mark. Doc. 7-12 at ¶ 5; Doc. 7-13 at ¶ 10; Doc. 7-14 at ¶¶ 6-8; Doc. 7-15 at ¶ 6.

         10. In previous trademark litigation between these same parties, the Middle District of Pennsylvania found there was “overwhelming evidence showing that, in [the] minds of the relevant consumers, the primary significance of the RSA marks is to refer to Bendix and its successors-in-interest.” AVCO Corp., 2018 WL 1706359, at *7. The marks are not generic but are descriptive and have acquired secondary meaning. Id. at *7-8.

         11. Precision's RSA marks are valid and protected trademarks. Id. at *11.

         12. Defendant Avco purchased servos from Precision's predecessors for decades. Doc. 1 at ¶ 24; Doc. 7-6 at ¶ 13.

         13. Around 2002, Avco began pressuring Precision to reduce its servo pricing. Doc. 1 at ¶ 24. When that company refused, Avco contracted with defendant AVStar to reverse-engineer the servos and sell them to Avco. Id. at ¶¶ 24-26, 28; see Doc. 29-3 at ¶ 3.

         14. As early as 2010, AVStar and Avco began selling reverse-engineered servos bearing RSA marks identical to Precision's RSA marks. Doc. 29-3 at ¶ 8; Doc. 1 at ¶ 30.

         15. No. other company besides Precision and its predecessors had used the RSA marks, with or without the suffixes, e.g., “5AD1, ” until AVStar and Avco started using identical marks. AVCO Corp., 2018 WL 1706359, at *8; Doc. 7-13 at ¶ 8.

         16. AVStar has and is directly competing with Precision in the servo market for the same customers. AVCO Corp., 2018 WL 1706359, at *10.

         17. AVStar intentionally copied Precision's RSA trademarks in full. Id. at *8 (finding “comprehensive” evidence that AVStar intentionally copied the RSA marks).

         18. AVStar's use of identical RSA marks on its servos infringed on Precision's trademark rights. Id. at *11.

         19. Avco induced AVStar's infringement. Id.

         20. For ease of reading hereafter, and because the defendants have acted collectively as is relevant here, the Court will refer to defendants Avco and AVStar collectively as AVStar.

         21. AVStar's infringement caused consumer confusion. AVCO Corp., 2018 WL 1706359, at *10.

         22. In the previous litigation, Precision prevailed at summary judgment on liability against AVStar arising out of AVStar's use of the RSA trademarks. See generally AVCO Corp., 2018 WL 1706359. In April 2018, the Pennsylvania court found that the RSA marks were valid trademarks and that AVStar was infringing the marks. Id. at *11.

         23. Soon after the Pennsylvania decision, AVStar began the process of obtaining approval from the Federal Aviation Administration (“FAA”) to sell and use the same servos with a new mark. The new mark replaced the “RSA” prefix with “LFC” but retained the same model numbers as suffixes, i.e., “LFC-5AD1, ” “LFC-10AD1, ” and “LFC-10ED1.” See Doc. 1 at ¶ 33; Doc. 7-7 at 10-11; Doc. 29-3 at ¶¶ 17-18; Doc. 29-2 at ¶ 9.

         24. In using the suffixes and simply changing the three-letter prefix, AVStar intentionally copied the letter/number combinations originally used by Precision.

         25. AVStar first mentioned in court filings in May 2018 that it was seeking FAA approval for the LFC servos. See Doc. 7-7 at 14.

         26. It took about four months to obtain FAA approval, see Doc. 29-2 at ¶¶ 9-10; Doc. 29-3 at ¶ 17, and Avco and AVStar began selling servos and engines with LFC servos in July 2018. Doc. 29-3 at ¶ 17.

         27. In order to obtain FAA approval to use the LFC servos in Lycoming engines, [1]AVStar had to demonstrate the functional design of its LFC servos was “at least equal” to Precision's RSA servos. Doc. 29 at 28; Doc. 29-5 at 16.

         28. It cost more than $8500 for the defendants to switch from the RSA marks to the LFC marks. Doc. 29-2 at ¶ 16.

         29. AVStar sells its servos to another engine manufacturer, Continental Motors, with an entirely different mark, “CFC-370, ” which does not use the Precision suffixes. Doc. 1 at ¶ 41; Doc. 1-2; Doc. 7-12 at ¶ 8. These sales had begun by early 2019. Doc. 7-12 at ¶¶ 7-8.

         30. In early 2019, Precision began hearing that AVStar was selling servos with another mark to Continental Aerospace Technologies, but its president learned that the mark on those servos did not use the RSA suffixes. Doc. 7-12 ¶ 7-8.

         31. In April 2019, Precision obtained emails from AVStar employees confirming that AVStar-produced servos would bear a new LFC mark but retain the previous RSA mark's suffix. Doc. 7-12 at ¶ 9.

         32. There is evidence of at least one sale of an engine with an LFC servo in North Carolina as of July 2019. Doc. 15-4 at ¶ 19; Doc. 34-1. The customer ordered the engine containing an LFC servo in late 2018. Doc. 34-1 at ¶ 4. Otherwise, no party has provided any evidence about the number of LFC servos sold. See Doc. 34-3 at ¶ 4 (indicating all parties have this information). It is likely that the number sold has been fairly small, since Precision did not learn its only competitor had entered the market with the LFC servos until April 2019.

         33. It is not necessary for safety, for functionality, or for regulatory reasons that AVStar use the RSA-associated suffixes. AVCO Corp., 2018 WL 1706359, at *3, *8. There is no evidence that the FAA requires AVStar to use the LFC marks on servos.

         34. The servos made by Precision and by AVStar differ somewhat in appearance, see Doc. 29-3 at ΒΆ 12, and have variations in their maintenance ...


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