Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D. Ohio: Former gutter dealer willfully and maliciously infringed trademark, (Nov 20, 2014)

By Greg Hammond, J.D.

The president of a terminated gutter dealership was personally and individually liable for willful and malicious infringement of the Gutter Topper® trademark. The federal district court in Cincinnati determined that the president, who formerly distributed Gutter Topper products, voluntarily and intentionally developed a competing gutter cover and used the Gutter Topper mark to attract customers to his competing, often cheaper product (Gutter Topper Ltd. v. Sigman and Sigman Gutters, Inc., November 18, 2014, Dlott, S.).

Background. Gutter Topper Ltd. (GTL) is an Ohio company that manufactures gutter covers for private residences throughout the country under the Gutter Topper mark. Sigman and Sigman Gutters, Inc. (SSGI) entered into multiple dealer agreements with GTL, beginning in 2001, and the company’s president, William H. Sigman, sent a letter to GTL, promising to “never use the Gutter Topper Ltd trademark to promote any product other than Gutter Topper.” However, after SSGI fell behind in payments, GTL terminated the dealer agreements and sent a cease and desist letter to SSGI, demanding that the company stop its use of the Gutter Topper trademark. SSGI continued to use the Gutter Topper mark.

GTL was previously awarded summary judgment for its trademark infringement, unfair competition, and breach of contract claims. The company then moved the court to make various findings regarding Sigman’s conduct. Specifically, GTL requested that the court find Sigman willfully engaged in infringement and unfair competition, so that the case qualifies for an award of enhanced damages and attorney fees under the Lanham Act.

Willful, malicious conduct. The court found that GTL provided sufficient evidence to demonstrate Sigman’s conduct was willful, deliberate, fraudulent, and that Sigman acted with intent to cause willful and malicious injury. Specifically, it determined that Sigman knew he was prohibited from selling a competing gutter cover product under the dealer agreements, but nevertheless chose to create a competing product. Instead of being open with its gutter cover, Sigman authorized a letter, stating that SSGI was developing a gutter cover that would not compete with Gutter Topper. The court found that Sigman intended to injure GTL by using the Gutter Topper mark to attract customers, but then diverting profits to his own company through the sale of its often cheaper cover. The court therefore held Sigman liable for his personal involvement in the Lanham Act violations, finding the case to be “exceptional,” and noting that his acts of secrecy and misdirection indicated knowledge of wrongdoing.

The case number is 1:05-cv-149.

Attorneys: David Louis Barth (Cors & Bassett LLC) for Gutter Topper Ltd. Charles Black (Bannister & Black) for Sigman and Sigman Gutters, Inc.

Companies: Gutter Topper Ltd.; Sigman and Sigman Gutters, Inc.

Cases: FranchisingDistribution StateUnfairTradePractices OhioNews