Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D.N.Y.: Affiliates of terminated distributor may continue selling supplier’s printing products, (Jan 29, 2016)

By Greg Hammond, J.D.

A printing equipment supplier was not entitled to a temporary restraining order that would prohibit a distributor from violating the non-compete provision of the parties’ distribution agreement, the federal district court in New York City has concluded. In denying the motion for temporary restraining order, the court concluded that the distributor’s affiliates remained authorized to use the supplier’s trade names because the supplier failed to prove a parent-subsidiary relationship or that the affiliated companies are commonly owned (Baldwin Technology Co., Inc. v. Printers’ Service, Inc., January 27, 2016, Daniels, G.).

Baldwin Technology Co., Inc. and Baldwin Americas Corp. manufacture and supply equipment for the printing industry, including cleaning rolls and fabrics used in printing presses. Similarly, Printers’ Service, Inc. (PRISCO) is a manufacturer and distributor of printing industry supplies. Baldwin and PRISCO entered into a distribution agreement in 2009, allowing PRISCO to market, sell, and distribute certain Baldwin products.

The non-compete provision at issue states that “during the term of this Agreement and any Renewal Term and for a one (1) year period thereafter, [PRISCO] will not make or sell any Directly Competitive Cleaning Rolls for a one (1) year period starting from the date of expiration of the Initial Term or any subsequent Renewal Term.”

After the distribution agreement expired, some PRISCO affiliates continued to sell cleaning rolls under the “Prisco Proclean” trade name. Baldwin alleges that the affiliates can therefore be enjoined under the 2009 distribution agreement with PRISCO. The court rejected this argument, however, noting that Baldwin failed to submit evidence that PRISCO and its affiliates have a parent-subsidiary relationship or that they are commonly owned. Instead, Baldwin provided evidence of overlapping management, shared premises, and centralized ordering. Such evidence of “connections,” however, did not support a finding of an agency relationship that would make PRISCO liable for the affiliates’ conduct, the court concluded. Baldwin therefore failed to make a sufficient showing that PRISCO is now competing with Baldwin.

Because there was no showing of a likelihood of success on the merits, an imminent likelihood of irreparable injury in the absence of an injunction, or that the balance of hardships tips in Baldwin’s favor, the motion for temporary restraining order was denied.

The case is No. 15 Civ. 07152 (GBD).

Attorneys: Arnold Henry Pedowitz for Baldwin Technology Co., Inc. Marisa Haley Warren (Pedowitz & Meister, LLP) for Baldwin Americas Corp. Leo William Fraser, III (Mendes & Mount, LLP) for Printers’ Service, Inc.

Companies: Baldwin Technology Co., Inc.; Baldwin Americas Corp.; Printers’ Service, Inc.

Cases: FranchisingDistribution NewYorkNews