Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Alaska: Manufacturer doesn’t have to buy back commercially used heavy equipment, (May 9, 2016)

By Greg Hammond, J.D.

Following termination of a sales agreement, a manufacturer of heavy equipment in Alaska was not required to buy back three pieces of equipment that were commercially used, the federal district court in Anchorage has concluded. The equipment dealer’s motion for summary judgment was denied with regard to the three pieces of equipment because renting the equipment out for even “minor demonstrations,” resulted in commercial use (Miller Construction Equipment Sales, Inc. v. Clark Equipment Co., May 6, 2016, Holland, H.).

Plaintiff Miller Construction Equipment Sales, Inc. was an authorized dealer of Doosan equipment from 2006 through 2014. Miller filed suit against equipment manufacturer Clark Equipment Co., doing business as Doosan Infracore Construction Equipment of America, alleging in part that after the parties’ sales agreement terminated, Doosan was required to purchase back unused equipment, including three pieces of heavy equipment, stock attachments and a shoe assembly track. Doosan filed counterclaims, alleging breach of contract, Lanham Act claims for unfair competition and trademark infringement, and violation of Alaska’s Unfair Trade Practices and Consumers Protection Act. Miller moved for summary judgment on its claim for the repurchase of equipment and three of Doosan’s counterclaims.

Repurchase. The court first rejected Miller’s argument that Doosan was required to repurchase the equipment from Miller because the equipment had less than 300 hours of use, rendering the equipment “unused” under Alaska law. Rather, the court predicted that the state Supreme Court would interpret “unused” to be merchandise that has not been commercially used, in instances where there was never any packaging. Because the three pieces of heavy equipment were rented out, resulting in commercial use, Doosan was not required to purchase that equipment back. Nevertheless, Miller’s motion for summary judgment was partially granted with regard to the stock attachments and shoe assembly track, to the extent those pieces of equipment were still in their original packaging or were not commercially used.

Breach of contract. Summary judgment also was granted to Miller on Doosan’s breach of contract counterclaim. The court determined that Doosan’s failure to use the contract’s express notice and cure provisions precluded Doosan from subsequently suing Miller for breaching the agreement.

Lanham Act. Next, the court granted summary judgment with regard to the trademark infringement counterclaim for injunctive relief, finding that six weeks of infringement was insufficient to show Doosan suffered irreparable harm. Summary judgment was denied, however, with regard to Doosan’s trademark infringement counterclaim for damages. Doosan had presented evidence that it potentially lost $1.8 million because Miller was not a Doosan dealer in 2015. The court reasoned that some of these losses could have been sustained during the six week period Miller was allegedly infringing Doosan’s trademarks.

Lastly, the court denied Miller’s motion for summary judgment with regard to the Unfair Trade Practices and Consumers Protection Act counterclaim, which was based on trademark infringement. Because the infringement counterclaim for damages survived, the unfair trade practices counterclaim also survived, the court determined.

The case is No. 1:15-cv-0007-HRH.

Attorneys: Garth A. Schlemlein (Schlemlein Goetz Fick & Scruggs, PLLC) for Miller Construction Equipment Sales, Inc. Megan J. Costello (Hoffman & Blasco, LLC) and Michael J. Lockerby (Foley & Lardner LLP) for Clark Equipment Co.

Companies: Miller Construction Equipment Sales, Inc.; Clark Equipment Co.

Cases: FranchisingDistribution StateUnfairTradePractices AlaskaNews