Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Composite truck body maker allegedly filed sham trade dress suit to suppress competition, (Oct 24, 2014)

By Linda O’Brien, J.D., LL.M.

A manufacturer of composite truck bodies engaged in anticompetitive conduct by filing sham trade dress litigation against a competitor in order to suppress competition for the manufacture and sale of composite truck bodies and maintain its monopoly in the composite truck body market, according to a complaint filed in the federal district court in Chicago (Industrial Models, Inc. v. SNF, Inc., October 23, 2014).

Industrial Models manufactures machined components for use in a variety of industries and related engineering services. SNF, Inc., doing business as Brand FX Body Company, is the largest manufacturer in the United States of lightweight composite truck bodies, inserts, and related equipment.

The complaint states that, in January 2012, Industrial Models entered the market for fiberglass utility bodies for trucks (FUBs) in order to diversify its business. The company invested substantial resources on the development of a FUB product line and preparations to manufacture and sell such products in the United States. As part of such steps, Industrial Models purchased a set of unique and valuable molds for manufacturing FUBs from Badger Truck, an entity which had used the molds but elected to stop its manufacturing activities. In February 2013, Industrial Models received communications from Brand FX, stating its awareness that Industrial Models had entered the FUBs market and expressed interest in purchasing its FUBs molds.

After Industrial Models informed Brand FX that it had made substantial investments to enter the FUBs market, Brand FX responded by alleging infringement by the FUBs molds on its trade dress, copyright, and patents, and demanded that Industrial Models cease using the molds. In March 2013, Brand FX filed suit in Texas, alleging infringement of its trade dress rights by Industrial Model’s use of the FUBs molds. Brand FX continued to prosecute the suit until it filed a notice of non-suit in August 2014, the complaint alleged.

To date, Brand FX has not identified any cognizable trade dress right, copyright, or patent that could form the basis of any reasonable, good faith claim by Brand FX for infringement in relation to Industrial Models’ use of the FUBs molds. Industrial Models incurred substantial costs in the defense of such bad-faith suit in Texas, including vacating a default judgment and permanent injunction for absence of proper service, the complaint stated.

According to the complaint, Brand FX tried to give the filing and prosecution of the Texas lawsuit against Industrial Model the appearance of the intent to serve a lawful purpose. However, Brand FX had no such intent since its Texas lawsuit was objectively meritless, lacked any lawful purpose, and was a mere sham to cover Brand FX’s predatory purpose and intent.

Brand FX has acquired and maintained monopoly power in the domestic market for FUBs, with a market share of over 80 percent. The purpose and intent of its conduct was to (1) suppress and eliminate existing and foreseeable lawful competition for FUBs; (2) interfere with the business activities and relationships of Industrial Models; (3) monopolize the market for FUBs; and (4) maintain its monopoly power in the market for FUBs, the complaint charged.

The plaintiff asserts claims for tortious interference with prospective economic advantage, and violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:14-cv-08340.

Attorneys: Peter N. Jansson and Molly H. McKinley (Jansson Munger McKinley & Shape Ltd.) for Industrial Models, Inc.

Companies: Industrial Models, Inc.; SNF, Inc.

News: Antitrust IllinoisNews