against PPS for liquidated damages of $37,800 (Counts 3 & 4) and recurring fees of $16,353.84!
(Count 5), and on its claims against Patel and Shah for these same amounts pursuant to their
guaranty of PPS’s obligations (Count 6). We cannot discern from defendants’ memorandum any
genuine dispute regarding the legitimacy of the liquidated damages provision or regarding THI’s
calculations of the amounts of liquidated damages and recurring fees that are due. Count 2, a
claim for an accounting, is not addressed in THI’s papers, and thus its determination (if THI is in
fact pursuing the claim) will have to await trial. Summary judgment is denied as to Count 1, the
Lanham Act claim. However, the Court finds pursuant to Fed. R. Civ. P. 56(d) that THI has
established that it has protectible marks and that, assuming defendants are proven to have used
those marks without authorization, their use of the marks falsely designated the origin of their
goods and services and created a likelihood of confusion regarding the origin of those goods and
services. Trial on the Lanham Act claim will thus be limited to the issues surrounding whether
defendants in fact used the Travelodge name and logo without authority following the
termination, and the question of damages.

THI has also moved to strike the defendants’ jury demand. The license agreement
between PPS and THI included a provision in bold faced type stating that “[t]he parties waive the
right to a jury trial in any action related to this Agreement or the relationship between the
licensor, the licensees, any guarantor, and their respective successors and assigns.” Lic. Agr. J

17.6.4, In their guaranty, Patel and Shah specifically acknowledged that the “Waiver of Jury

' It is likely that this amount has increased somewhat since the submission of THI’s
motion, as the recurring fees continue to accrue. THI is directed to provide, at the time of trial on
the Lanham Act claims, a brief submission updating the amount of recurring fees through
September 18, 2003.



would be rescinded and that PPS’s franchisee status would be reinstated. Defendants’ materials
suggest that after this meeting, PPS may have once again begun to hold the hotel out as a
Travelodge facility. But defendants concede that they were advised in February 2002 that the
termination notice remained in effect, and they represent that after that date they once again
removed all indicia of Travelodge affiliation from the hotel and reopened it in April as the
Morton Grove Inn.

Defendants do not contend in their papers that Travelodge waived PPS’s pre-December
12, 2001 breach of the license agreement, and thus the alleged post-termination discussions do
not warrant denial of THI’s summary judgment motion with respect to its breach of contract
claims. But there are genuinely disputed material facts concerning THI’s Lanham Act claims,
which are premised on PPS’s alleged use of the Travelodge name and logo following the
termination. Defendants have submitted sworn affidavits in which they state that they ceased use
of the Travelodge name immediately upon receipt of the termination letter; that they were
effectively given permission to resume use of the name in January 2002; and that when the
alleged permission was revoked in February 2002 they again immediately ceased using the
Travelodge name. Defendants contend that these allegations lack credibility, but that is a
determination that can be made only after a trial. We also note that the photographs submitted by
THI purporting to show Travelodge logo items in a hotel room in January 2003 are not
authenticated in THI’s summary judgment papers and thus cannot be relied upon at this stage in
any event.

For these reasons, THI is entitled to entry of summary judgment in its favor on its claims



Trial [in Section 17 of the Agreement] applies to this Guaranty.” These provisions are
sufficiently specific, clear, and unambiguous to establish a knowing waiver of defendants’ right
to a jury trial, and the waiver plainly applies to the Lanham Act claims, which involve an “action
related to ... the relationship between the licensor, the licensees, [and] any guarantor.” THI’s
motion to strike the jury demand is therefore granted.
Conclusion

For the reasons stated above, the Court grants plaintiff's motion for summary judgment as
to Counts 3-6 but otherwise denies the motion (docket #8-1]. The Court grants plaintiff's motion
to strike defendants’ jury demand [docket #7-1]. Trial is currently set for September 8, 2003. On
the Court’s motion, that date is reset to Thursday, September 18, 2003 at 10:00 a.m. Because the
trial will be a bench trial limited to relatively narrow issues, the Court does not anticipate that it
will take more than one day. Lists of witnesses and exhibits are to be filed and served by THI on
August 19, 2003 and by defendants on August 29, 2003. The case is set for a final pretrial

conference on September 4, 2003 at 4:00 p.m.

United States District Ju

Date: August 7, 2003



’ ’
Minute Order Form (0697)

United States District Court, Northern District of Illinois

Namestasie’ wie | Matthew F. Kennelly | SWlnenarvoue

CASE NUMBER 02 C 3913 DATE 8/7/2003

CASE Travelodge Hotels vs. PPS Development, LTD.

TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the mation being presented.]
DOCKET ENTRY:
(1) Oo Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) oO Answer brief to motion due__. Reply to answer brief due.
(4) QO Ruling/Hearingon___setfor__at
(5) Oo Status hearing[held/continued to} [set for/re-set for] on setfor_ sat
(6) o Pretrial conference[held/continued to] [set for/re-set for]on__setfor__—at__—
(7) Oo Trial[set for/re-set for]on___at
(8) o [Bench/Jury trial] [Hearing] held/continued to__at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to)
OOFRCP4(m) OLocal Rule 41.1 CIFRCP41(aX(1) CFRCP41(a)(2).

qo) [Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,

the Court grants plaintiff's motion for summary judgment as to Counts 3-6 but otherwise denies the
motion (8-1). The Court grants plaintiff's motion to strike defendants’ jury demand (7-1). Jury trial of
9/8/03 is vacated . One-day bench trial set to 9/18/03 at 10:00 a.m. Lists of witnesses and exhibits are
to be filed and served by THI on 8/19/03 and by defendants on 8/29/03. Pretrial conference set to 9/4/03
at 4:00 p.m.

a1) [For further detail see order attached to the original minute order.]
No notices required, advised in open court.

Document
: Number

No notices required. 2

umber of notices

AUG R 2 2003

Notices mailed by judge's staff.

Notified counse! by telephone.

wv | Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge. tung fatsiG ‘sn
oR demu GzZ:6 Wd 11 onved
initials + ann
One snoaaNod UF



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
TRAVELODGE HOTELS, INC, )
)
Plaintiff, )
)

vs. ) Case No. 02 C 3913

)

PPS DEVELOPMENT, LTD.; SHAILESH _—+) DOCKETED
PATEL; and HARESH SHAH. )

) AUG 1 2 2003
Defendants. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Travelodge Hotels, Inc. has sued PPS Development, Ltd., Shailesh Patel, and Haresh
Shah for breach of a license agreement dated June 14, 2000 and for violations of the Lanham
Act, 15 U.S.C. §§ 1114 & 1125(a) & (c), THI has moved for summary judgment pursuant to
Fed. R. Civ. P. 56, arguing that there are no genuinely disputed material facts and that THI is
entitled to judgment as a matter of law on each of its claims. In considering the motion, the
Court views the facts in the light most favorable to the defendants.

THI is a provider of hotel services and operates a nationwide hotel franchise system. The
June 14, 2000 agreement licensed PPS to operate a Travelodge Hotel in Morton Grove, Illinois.
Patel and Shah guarantied PPS’s obligations under the agreement. After a series of inspections
during 2001 in which THI documented significant deficiencies in the hotel’s facilities and
advised PPS of defaults in its performance under the agreement, THI terminated the agreement
effective December 12, 2001 due to PPS’s failure to meet THI’s minimum standards. The letter

of termination advised PPS that as provided by the agreement, PPS was required to “completely

o2-


deidentify the [hotel] from its appearance as a Travelodge guest lodging facility within ten days”
and was required to “discontinue the further use of the Travelodge tradename and service
marks,” including the removal of all Travelodge logo items. The letter also advised PPS that due
to the premature termination, it was responsible under the agreement to pay liquidated damages
of $37,800, and that it was also responsible for “recurring fees” under the agreement of
$15,277.62 through that date and continuing to accrue. PPS did not pay these sums, and THI
contends that PPS also failed to “deidentify” the hotel as a Travelodge facility and continued to
use Travelodge logo items through at least January 2003.

Defendants do not genuinely dispute THI’s contentions regarding the inspections and the
deficient condition of the hotel. They contend, however, that prior to the execution of the license
agreement, THI made promises to provide financing for renovations and improvements to the
hotel and agreed to defer inspections until renovation work could be done. They contend that
THI did not live up to these promises and that this “breach” excuses their defaults under the
agreement. The agreement specifically provided, however, that it superseded all prior
Tepresentations, agreements, and understandings, and stated that THI had made no
Tepresentations or promises on which PPS was relying to enter into the agreement. Lic. Agr. 4]
17.7.2, 17.7.3. For this reason, defendants cannot rely on THI’s prior representations to excuse
PPS’s breach.

Defendants contend, however, that upon receipt of the termination letter, they covered up
the Travelodge sign on the hotel, removed all logo items from guest rooms, and ceased holding
the hotel out as a Travelodge facility. They also contend that in January 2002, they met with

Travelodge representatives at its New Jersey offices and were advised that the termination notice