Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 1 of 11 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) ) ARENA FOOTBALL LEAGUE, LLC, ) Case No. 09-29024 ) Debtor. ) Chapter 11 ) ) Hon. Susan Pierson Sonderby ) ARENA FOOTBALL LEAGUE, LLC, ) ) Plaintiff, ) ) Adv. Pro. No. __________ v. ) ) ARENA FOOTBALL ONE LLC, a ) Louisiana limited liability company, JERRY ) KURZ, GRIDIRON ENTERPRISES, INC., ) and Illinois corporation, and JOHN DOES ) 1 – 100, ) ) Defendants. ) COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Debtor and debtor-in-possession Arena Football League, LLC (the “Debtor” or “AFL”) for its complaint against Arena Football One, LLC, Gridiron Enterprises, Inc., Jerry Kurz, and John Does 1-100 hereby alleges as follows: Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 2 of 11 JURISDICTION AND VENUE 1. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1334(a) and §§ 157(a) and (b). 2. Venue is proper pursuant to 28 U.S.C. § 1409(a). 3. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A)and (O). 4. This is an adversary proceeding pursuant to F.R. Bank. P. 7001(7) and (9). 5. The issues in this Complaint present an actual controversy as provided in 28 U.S.C. § 2201. THE PARTIES 6. AFL, a Delaware limited liability company, is a professional indoor football league with its principal place of business in Chicago, Illinois. 7. AFL holds a 50.1% equity interest in af2, LLC (“af2”). af2 is a regional developmental indoor football league, incorporated in the State of Delaware. 8. Arena Football One, LLC is a Louisiana limited liability company. 9. Gridiron Enterprises, Inc. (“Gridiron”) is an Illinois corporation with its principal place of business in Chicago, Illinois. Gridiron is a Member of AFL and is a signatory to AFL’s operative documents, including its limited liability company agreement. 10. Jerry Kurz is an Illinois resident. Defendant Kurz is an owner and officer of Gridiron. 2 Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 3 of 11 11. John Does 1-100 are persons and entities who are acting in concert with Defendant Kurz and the Competing League (as defined herein) in connection with the matters asserted herein, and may include Members of AFL and af2. BACKGROUND 12. At the end of 2008, AFL had completed 22 consecutive seasons as the preeminent professional indoor football league in the nation, enjoying a significant fan base, advertisers, and media coverage. 13. AFL’s Limited Liability Company Agreement (the “AFL Agreement”) provides, among other things, that all AFL Members are bound by certain operative documents. One such document is AFL’s Operating Rules, which is a binding agreement by and among AFL and its Members. 14. The Operating Rules prohibit AFL Members and persons identified as “Controlled Affiliates” in the AFL Agreement (including the owners of the Members) from engaging in certain conduct, including, but not limited to: a. Directly or indirectly owning stock or a membership interest in, or directly or indirectly have any financial interest in, or participate in any way in the management of any indoor football league other than AFL or af2 or in any indoor football team not in AFL or af2. b. Loaning money to and/or become a surety or guarantor for any indoor football league other than AFL or af2 or to any team, player, coach employee, owner, stockholder, officer, director or partner therein, or to a holder of any interest in any indoor football league other than AFL or af2 or to any indoor football team not in AFL or af2. c. Publicizing and/or take part in the publication of any all- arena football league or all-opponents team not expressly authorized by AFL’s Commissioner and selected according to procedures that have been established by AFL’s Commissioner. 3 Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 4 of 11 d. Publicly making and/or publicly concurring with any statement that is not in the best interest of AFL. 15. Pursuant to the AFL Agreement, any action of a person (other than a player) over which a Member has or can exercise control (or that controls or is under common control with a Member) shall be considered the action of the Member. 16. AFL’s assets include its intellectual property (and associated goodwill) and its interest in af2. Included in its intellectual property are various registered common law and federally-registered trademarks, including ARENA FOOTBALL LEAGUE, ARENA FOOTBALL, and marks related to its Member teams (the “Team Marks”). 17. AFL has expended substantial time, effort and financial resources in the development and promotion to brand itself. As a result of these efforts, the distinctive ARENA FOOTBALL family of marks has attained strong secondary meaning. In addition, as a result of the participation of AFL’s Member teams in the league, the Team Marks have also attained strong secondary meaning. 18. af2, through its wholly owned subsidiary af2 Enterprises, LLC, owns registered marks in the name and logos of the af2 league and some of its member teams, including BOISE BURN, MILWAUKEE IRON, and STOCKTON LIGHTENING (the “af2 Team Marks”). 19. On or about September 16, 2009, Arena Football One LLC filed two trademark registrations with the United States Patent and Trademark Office seeking to register the ARENA FOOTBALL ONE and ARENA FOOTBALL 1 marks. 20. On September 28, 2009, Defendant Kurz (and possibly others) held a press conference to announce the formation of a new indoor arena football league under 4 Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 5 of 11 the name Arena Football One and/or Arena Football 1 (the “Competing League”) that would be based in Tulsa, Oklahoma. 21. On information and belief, at that press conference, Defendant Kurz was introduced as the Commissioner of the Competing League. Also on information and belief, Defendant Kurz publicly announced that “[w]e expect arena football fans both across the country and internationally to be extremely pleased with our new product” and that the Tulsa office would employ up to 12 people and will expand as the Competing League grows. 22. Upon information and belief, 16 teams are signed up to participate in the Competing League, including the following Members of AFL and af2: a. The Arizona Rattlers (an AFL team); b. The Orlando Predators (an AFL team); c. The San Jose Sabercats (an AFL team); d. The Utah Valley Thunder (an af2 team); e. The Iowa Barnstormers (an af2 team); f. The Oklahoma City Yard Dawgz (an af2 team); g. The Bossier-Shreveport Battle Wings (an af2 team); and h. The Tulsa Talons (an af2 team). 23. On information and belief, the Competing League is in negotiations with additional AFL and a2 Members, including the Tampa Bay Storm. 5 Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 6 of 11 COUNT I PRELIMINARY AND PERMANENT INJUNCTION 24. The Debtor incorporates by express reference each of the allegations set forth in paragraphs 1 through 23 hereof. 25. Pursuant to Section 541(a) of the Bankruptcy Code, the Debtor’s intellectual property is property of the Debtor’s bankruptcy estate (the “Estate”), including the ARENA FOOTBALL family of marks and Team Marks (each a “Trademark” and collectively, the “Trademarks”). 26. The Trademarks are valuable assets of the Estate because they are symbols of goodwill associated with the Debtor. 27. By forming an indoor football league under a substantially similar name, i.e., Arena Football One or Arena Football 1, the Defendants are unlawfully using and infringing upon the Debtor’s Trademarks in violation of state and federal law and in violation of the automatic stay under Section 362(a)(3) of the Bankruptcy Code. 28. Upon information and belief, some of the teams participating in the Competing League are using, or intend on using, the names and logos they previously used while participating in the AFL or af2. To the extent AFL owns marks in those names or logos, such usage will infringe upon the Debtor’s Trademarks in violation of state and federal law and in violation of the automatic stay under Section 362(a)(3) of the Bankruptcy Code. 29. The Debtor has no adequate remedy at law for the Defendants’ infringement of its Trademarks. 6 Case 09-00951 Doc 1 Filed 10/06/09 Entered 10/06/09 18:33:53 Desc Main Document Page 7 of 11 30. Unless the Court enjoins the Defendants from infringing upon the Debtor’s Trademarks, the Estate will suffer immediate irreparable harm by diminishing the value of the Debtor’s assets. WHEREFORE, the Debtor requests that the Court: A. Enter a preliminary injunction enjoining the Defendants from using any of AFL’s intellectual property, including its Trademarks, in connection with the Competing League or for any other purpose that violates the Debtor’s rights. B. Enter a final judgment permanently enjoining the Defendants from using any of AFL’s intellectual property, including its Trademarks, in connection with the Competing League or for any other purpose that violates the Debtor’s rights; and C. Granting AFL such other and further relief as is just and equitable. COUNT II DECLARATION THAT DEFENDANTS ARE VIOLATING THE STAY 31.