Arkansas Business Litigation Lawyer & Attorney : Allen Law Firm : Serving Little Rock, Fort Smith, North Little Rock

A trademark infringement dispute involving university merchandise has taken an interesting turn. See Lloyd Sales Co., Inc. v. The Game, LLC, No. 07-1198 (E.D. Ark., filed 12/18/07). The Game sells merchandise of various universities by placing university logos on its own 3-bar logo. Lloyd Sales provides similar goods for the University of Arkansas and filed this suit to declare its use of a similar 3-bar pattern is not trademark infringement.

It is unclear what this lawsuit is meant to accomplish because The Game has already filed suit against Lloyd Sales in Georgia. See The Game, LLC v. Lloyd Sales Co., Inc., No. 07-2498 (N.D. Ga., filed 10/10/07). In that case, Lloyd Sales has filed a motion to dismiss for lack of jurisdiction, or alternatively, to transfer the case to Arkansas. The motion was submitted to United States District Court Judge Charles A. Pannell yesterday.

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The Arkansas Court of Appeals affirmed judgment in Bull Motor Company v. Murphy, No. 07-183 (12/19/07). A thief stole a truck from Bull Motor Company (BMC), but the police recovered it an hour later. The truck  had been driven 40 miles, and it had sustained no damage. BMC later sold the truck as new for $33,495 to Murphy. When he learned the truck was stolen, Murphy filed this suit.

BMC asked  the trial court to adopt the definition of "new" in the Arkansas Motor Vehicle Commission Act. That law defines a "new" vehicle as one whose title has not been transferred to a purchaser. See A.C.A. § 23-112-103(22). Using this definition, the truck was new. Murphy argued this was not the definition the parties used, and the trial court let the jury decide the definition of "new."

At trial, Murphy claimed his damages were $8,000 - $10,000 because the vehicle had been stolen. There was no damage to the truck, and he offered no expert testimony regarding damages. The jury decided the truck was not new and returned a verdict for Murphy for $7,000.

The court of appeals held that the generally understood definition of "new" did not comply with the AMVCA definition. The court noted that the AMVCA governs car dealers; it was not drafted to control automobile transactions. Additionally, the court held it is well established that the owner of personal property can give testimony as to the value of the property without having any professional qualifications. The court affirmed the jury award.

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The Western District of Missouri granted a preliminary injunction based on trademark infringement in Community of Christ Copyright Corp. v. Miller, 2007 WL 4333192 (W.D. Mo. 12/7/07).

Community of Christ holds federal trademark registrations for "RLDS" and "Reorganized Church of Jesus Christ of Latter Day Saints." Defendants' church is named South Restoration Branch, but they advertised themselves as members of RLDS. The court easily granted the preliminary injunction and rejected the defendants' fair use defense. Contrary to some public opinion, use of trademarks for worshiping God are not automatically fair use.

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The Eighth Circuit affirmed summary judgment, to both parties, in a unique case involving a noncompete agreement. See Guardian Fiberglass, Inc. v. Whit Davis Lumber Co., __F.3d__ (12/12/07). This is a long post because this brief opinion brings out some interesting points regarding noncompete agreements.  

The Parties and the Contract

Guardian Fiberglass holds a dominant market position in the insulation products market. Whit Davis Lumber is a lumber company in central Arkansas that sold insulation but never provided installation services to its customers. Guardian ran a program to assist companies like Whit Davis in providing installation services. The parties entered into a contract where Guardian shared information with Whit Davis, including a notebook containing extensive information about providing insulation services. Whit Davis agreed to purchase insulation exclusively from Guardian.

Additionally, the contract had a noncompete clause. If Whit Davis terminated the contract, it would not provide installation services for 2 years after termination. If Guardian terminated the contract, the noncompete provision would not apply. Note that the noncompete agreement only applied to installation services; it did not affect Whit Davis's other business operations.

The parties performed under the contract from 1998 - 2004, and Whit Davis purchased $2.2 million of insulation products from Guardian during this period. Then Whit Davis started purchasing insulation from other suppliers in breach of the contract. Guardian then terminated the contract and brought suit for breach of contract and breach of the noncompete agreement.

The District Court Opinion

The district court granted summary judgment to Whit Davis on the noncompete claim, holding that Guardian did not have a protectable interest to enforce the noncompete agreement. (Note: Michigan law applied, but its law of noncompete agreements is essentially the same as Arkansas) The district court also granted partial summary judgment to Guardian on the breach of contract claim.

The Eighth Circuit Decision

The Eighth Circuit affirmed. First, the court held the noncompete does nothing to protect Guardian's goodwill because Whit Davis never used the Guardian name to promote its installation services. Second, the information Guardian provided was not a trade secret. The court described the information as ordinary knowledge.

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The District Court of Minnesota transferred a copyright infringement case to the Northern District of Texas (Dallas division) in RMC Publications, Inc. v. Doulos PM Training, 2007 WL 4287670 (D. Minn. 12/4/07).

Gary Rechtfertig offers project management courses in Texas. He used exam-simulation software under a license from RMC Publications. However, he made illegal copies and violated the terms of the license, which amounts to copyright infringement. RMC filed this action in Minnesota.

Rechtfertig's only contacts with Minnesota were buying the software and negotiating with RMC's sales agents. The court held that Minnesota had neither personal jurisdiction over Rechtfertig nor was it the proper venue for the suit. The court transferred the case to the Northern District of Texas.

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The Arkansas Court of Appeals dismissed the appeal for failure to timely file the record in Murphy v. Michelle Smith Designs, No. 07-251 (12/5/07).

Murphy sold the assets of his embroidery business to Smith. He agreed to work for her as a manager and signed a noncompete agreement that he would not compete against her for 2 years after his employment ended. However, he opened a competing business immediately after his employment ended.

Smith obtained a preliminary injunction to prohibit Murphy from operating a competing business. After the trial was delayed, the trial court refused to dissolve the preliminary injunction on January 23, 2007. Murphy appealed that order and filed the record with the clerk on March 9, 2007. When a party appeals a refusal to modify a preliminary injunction in Arkansas, the record must be filed with the clerk within 30 days of the entry of the order. See Ark. R. App. P.--Civ. 5(a). In this case, Murphy had to file the record by February 22, 2007. The court dismissed the appeal for lack of jurisdiction.

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The Eastern District of Missouri permitted the subpoena of an internet service provider (ISP) in UMG Recordings, Inc. v. Does 1 - 24, 2007 WL 4205768 (E.D. Mo. 11/26/07).

UMG and other record companies brought this copyright infringement lawsuit against unknown infringers. Plaintiffs had the Internet Protocol (IP) addresses of the defendants. Charter Communications is the defendants' ISP, which maintains subscriber contact information in activity logs. These logs are kept for a short time and then permanently destroyed. The plaintiffs sought permission to subpoena Charter to match the IP addresses with the defendants' individual names.

The court granted the request, largely because the information is not available elsewhere, and the case cannot proceed without identifying the defendants.

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The Eastern District of Missouri denied summary judgment in St. Louis Cardinals, LLC v. Lewis, 2007 WL 4205798 (E.D. Mo. 11/26/07).

Douglas Lewis has attempted to obtain federal trademark registrations based on the St. Louis Cardinals' trademarks, such as this application for "Go Cards." He also obtained a number of state registrations. The Cardinals filed this action for trademark infringement, and  Lewis moved for summary judgment. In a one-page opinion, the court denied the motion without comment. It is likely the Cardinals will file their own motion for summary judgment before the trial.

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The District Court of North Dakota granted a temporary restraining order based on trade secret misappropriation in CDI Energy Services, Inc. v. West River Pumps, Inc., 2007 WL 4180581 (D.N.D. 11/20/07).

CDI Energy sells oilfield supplies and provides services to oil companies. The industry is specific an individualized, requiring detailed customer information. Three employees ran CDI's branch in Dickinson, North Dakota. On October 16, 2007, these employees resigned and opened West River Pumps, Inc. They took with them all CDI's customer information, and almost all CDI's customers transferred their business to West River.

The defendants chose October 16 because this was a time of year when CDI's customers had increased business. When the defendants resigned, CDI had no employees in Dickinson to meets its customers' needs. The customers had to transfer their business to West River to ensure their needs were met.

The court had no trouble issuing the temporary restraining order, finding CDI had established likelihood of success and irreparable harm on its trade secrets claim. CDI was not required to post a bond.

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The Eastern District of Missouri transferred a case involving trade secret misappropriation and breach of a Missouri noncompete agreement in Buckeye Int'l, Inc. v. Unisource Worldwide, Inc., 2007 WL 4178615 (E.D. Mo. 11/19/07).

The dispute centered around Craig Sasso. Sasso was a salesman and then manager for Buckeye International's facility in Georgia. He signed a noncompete agreement that was limited to his sales area. Unisource Worldwide hired Sasso, and he began selling products in Georgia. Buckeye filed this suit in Missouri. Unisource filed suit in Georgia and moved to transfer the Missouri case to Georgia.

The court transferred the case to Georgia because the witnesses and documents regarding this dispute are located in Georgia. Additionally, the dispute at issue is Sasso's contact of customers in Georgia. Although these are not the typical red flags stated by the Eighth Circuit, the court felt these were compelling circumstances to supersede the first-filed rule.

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