Next, here are some reports on recent case decisions in our area. Please stop by again. Thank you for your interest!

Quality Systems, Inc. v. Permacrete Sys., Ltd., U.S. District Court, Bowling Green (Jun. 16, 2006).  Contempt for Violating Injunction Over Concurrent Use of Trademark.  

Both parties have registered the mark “Permacrete.”  Quality hold a U.S. registration, and Permacrete has its name registered in Canada.  Based on an agreed order, Permacrete was enjoined from using the mark in the U.S., but it could use the mark on its website, and on marketing “directed inside Canada.”  Quality wanted to assure that the injunction was being honored, so it arranged for individuals in the U.S. to request promotional materials from Permacrete.  Some of those materials, sent from Canada, had the Permacrete trademark on them, but other pages of the materials stated that their products were sold in the U.S. under the trademark “Perma-Dry.”

The legal standard for civil contempt is clear and convincing evidence that a definite and specific order was violated.  Also considered is whether compliance was impossible, and if all reasonable steps to comply were taken.  In view of the pages sent into the U.S. that bore the mark “Permacrete,” the Court ruled that the injunction has been violated.  It found no evidence of an inability to comply, or of all reasonable steps being taken “to ensure that” the injunction was not violated. 

The plaintiff wanted damages, but the Court found that no financial injury had resulted from the violation.  To ensure future compliance, the Court required Permacrete to post a performance bond for $25,000, and also, “attorney’s fees and expenses” were awarded to the plaintiff.

Bowers v. FIA and Formula One GP teams, S. Dist. of Indiana, Indianapolis, (June 15, 2006). Michelin Did Not Tortiously Interfere With Spectators' Contract To Enjoy 2005 U.S. Grand Prix.

Every Grand Prix fan expected 22 Formula One cars to race at the 2005 U.S. Grand Prix at Indianapolis. Disbelief and disgust took hold of the crowd when 16 of those cars dropped out less than a lap into the race. Just before the start, those teams had been told by Michelin that they "safety" of their tires "could not be guaranteed." After all the shouting and tossing of beer, some of the spectators filed suit against the FIA, who sanctioned the event, and against the 8 teams that withdrew, and against Michelin. Their claims were pleaded around the contract represented by their purchase of tickets upon the offer of a F1 race.

In her opinion dismissing the case, Judge Barker ruled (a) that the disclaimer on the back of the ticket barred claims due to foreseeable risks of racing and sport, and (b) that the spectators lacked privity with, and were not third party beneficiaries of contracts between the promoters, teams and Michelin.

Since I am just a spectator to the case, I can respectfully disagree with the Hon. Judge Barker on this one. Each part of her opinion relies on facts and defenses pertinent to the governing body, the FIA, or to the race promoters at the Indy Speedway, or to the teams that are members of the Formula One series. What that overlooks is that Michelin, the real culprit, is essentially outside that group, and so, Michelin should not get to benefit from their defenses. For example, the disclaimer on the ticket covers the organizers and participants in the race, but Michelin is not among those named in the disclaimer. The ruling relies on cases where those responsible for an event were held not liable when the participants, or coaches, or referees spoiled the spectators' expectations. Again, Michelin did not put on the race, or participate in, or referee it. Thus, those cases, such as where Tyson bit off Lewis's ear, have no real bearing on a claim against a non-participant, non-promoter whose interference ruins an event. The fiasco that Michelin caused was not a force majeure, or anything like incidents where spectators do not get to see key players bacause they are hurt or suspended.

Judge Barker might have exercised comity, and given great weight to the ruling of the World Motor Sport Council of the FIA, which after a post-race investigation and hearing ruled the Michelin teams were "guilty of wrongfully refusing" to race. That decision goes unmentioned in the federal district court's opinion.  Perhaps this suit was a publicity stunt, but Michelin should not have walked.

CCA Global Partners, Inc. v. CarpetMax Flooring Center, U.S. Dist. Court, Owensboro (Mar. 6, 2006). Personal Liability for Unintentional Trademark Infringement. 

Paul Fuller believed Ken Crandall's statement that he had a CarpetMax franchise license for part of Southern Indiana. Together they formed a corporation, KP Investments, which operated a CarpetMax store in that locale, which Fuller ran day-to-day. Turned out that Crandall was not a licensee, and the use of the CarpetMax trademark was unauthorized.  Once this became known, Fuller changed the store name, and bought out Crandall.  Still, the owner of the trademark sued for infringement.  Fuller relied on the defense that every businessperson thinks they have - - no liability because the infringing actions were done by the corporation.  CCA pressed for personal liability against Fuller, and won.  The Court ruled that whether Fuller "knew the use of the mark was unauthorized is of no import."  His day-to-day operation of the CarpetMax store "were not simply actions of a corporate officer."  Thus, Fuller was held personally liable for trademark infringement.

Gardner Denver Drum LLC v. Goodier, and Tuthill Vacuum, U.S. Dist. Court, Louisville (Apr. 17, 2006).  Covenant to Not Compete Enforced by Injunction.

Peter Goodier worked for Drum Industries from 1987 to 2004, and resigned when Gardner Denver acquired Drum.  When he had accepted a promotion in 1993, Goodier signed a covenant to “not work for …any business that competes with Drum.”  As the VP of Operations in 2003, Goodier had a staff of around 40 at Drum’s U.S. headquarters in Louisville.  Once Drum was acquired in early 2004, that staff was reduced substantially, most of the production workforce was laid off, and all but one product line was shifted away from the Louisville operation.  By July 2004, Goodier was demoted, his company car revoked, and he presumed he soon would be terminated.  He took a job with Tuthill, and no concerns were expressed by his former employer.  Apparently, the 1993 non-compete agreement was not recalled.  For 15 months, Goodier and Tuthill tried reasonably to not use information from his prior employment, and designed a new product so that it did not copy a Drum product.

Once Gardner Denver discovered the non-compete, they filed suit to enjoin Goodier and Tuthill from competing with the former business of Drum.  After expedited discovery, the Federal Court in Louisville ruled that the covenant was enforceable.  It granted an injunction against Goodier and his employer Tuthill, even though it was “a somewhat harsh result.”