After a jury found Nov. 23 that the defendant ceramics manufacturer willfully injured the plaintiff by infringing on its trademarked phrase, it made its damages award — $1.
According to the judgment, based on the facts before the jury, the court held that the infringement did not constitute unfair and deceptive trade practices and unfair competition within the prohibitions of North Carolina law.
An attorney for Hendersonville, North Carolina-based plaintiff SELEE Corporation, John Perkins Jr. of Greenville, South Carolina, attributed the nominal award and the jury not having all the facts to a “determined foe who refuses to cooperate in discovery.”
But he added that while monetary damages would have been nice, the suit — filed in June 2015 after SELEE learned that Pennsylvania-based McDanel Advanced Ceramic Technologies was using the phrase “Engineered Ceramics” to drive customers to its website and boost its sales — was more about stopping the infringement.
“Our primary goal in fighting the case was to stop the infringement and get an actual adjudicated verdict of infringement,” Perkins said. “If damages was the priority, we would have pursued them harder.”
According to Perkins, McDanel was one of about a dozen companies discovered using the trademarked phrase in relation to the “sales, advertising and importation” of related products. Engineered Ceramics, Inc. is a division of SELEE and the name has been in continuous use in commerce since the 1960s, the plaintiff says. It was trademarked in 1993.
Upon being notified of the infringement, Perkins said, most companies agreed to stop using the phrase.
“But for some reason the defendant in this case not only didn’t stop using it, but when they found out that ‘Engineered Ceramic’ used to sell competing products was an infringement … they basically said ‘screw you’ and added the exact trademark … to their mission statement and placed it on the four web pages that displayed their directly competing products,” Perkins said.
In its 11-page complaint, SELEE alleged trademark infringement and unfair competition and false advertising.
McDanel denied infringing on any of the plaintiff’s valid rights, contending, among other things, that the term had become generic in the ceramics industry.
Heard in the U.S. District Court for the District of North Carolina, the jury agreed that there was infringement and, further, that it was willful.
In the judgment, Judge Martin Reidinger ordered the defendants to stop using the mark and term “Engineered Ceramic,” or any similarly confusing mark, and to correct any erroneous impressions created by use of the term.
But the court also found that the infringement did not constitute unfair and deceptive trade practices and unfair competition under state law.
Played ‘dirty pool’
According to Perkins, he dealt with a “great deal of discovery abuse” over the course of the litigation.
“Those abuses not only prevented us from getting information we needed … but also prevented us from getting any of their damages information,” Perkins said. “Frankly the other side played dirty pool pretty much the entire case.”
Robert Deutsch of Deutsch and Gottschalk in Asheville served as local counsel for the defendants. He declined to comment at this “delicate phase of the case,” citing pending post-verdict motions.
Perkins added that Deutsch is a “stand-up guy” and that he operated on the up and up.
One of McDanel’s out-of-state attorneys, Frederick Tolhurst of Pittsburgh, wanted to make clear that the court hasn’t awarded the plaintiff any amount of money yet but declined further comment.
“I don’t want to get into this too much because that’s not going to help us at all,” Tolhurst said.
Records show that SELEE filed a motion to compel in June, alleging shortcomings in written responses and document production. According to the motion, defendants destroyed relevant information and failed to search for requested information.
Reidinger agreed with that part of the motion, finding that SELEE had requested all documents — defined as “things and electronic data” — previously referencing “engineered ceramics.” He noted that while McDanel searched its paper files, it did not search its electronic files and in fact argued in its opposition to the motion that the reason it did not search those files is because the plaintiffs did not specify that they should be searched.
“To the contrary, the Plaintiff did tell the Defendant specifically to search both ‘things and electronic data,’” Reidinger wrote. “Regardless, even if the Plaintiff had not so specified, ‘[i]t is by now well established that electronically stored information is subject to discovery.’”
On Aug. 31, the court compelled McDanel to search all electronic data in its possession for prior use of the term by it or any third party.
Not leaving empty-handed, maybe
Perkins said that while the plaintiff could not prove with the information it had the amount of its lost profit or McDanel’s gained profit, awards will most likely exceed $1.
On Sept. 19, SELEE filed a motion requesting sanctions “…for discovery abuses which have long been suspected, but have now been established by the partial information produced” by the defendant in response to the Aug. 31 order.
According to Perkins, Reidinger on Oct. 28 — several days before the trial started — issued a bench order granting the motion. Perkins said that he has submitted a bill for more than $80,000 related to discovery abuses and will be requesting full attorneys’ fees.
“It depends on how you want to spin it, but we’ve got more than $82,000 coming … and we have the potential for about 10 times that amount coming for attorneys fees,” Perkins said. “And we got infringement and willful infringement, and that’s hard to do.”
Each side expects post-trial motions to be heard in January.
Follow Heath Hamacher on Twitter @SCLWHamacher