German trademark owner wins $1 million trademark infringement verdict in U.S. district court

After a bench trial, United States Federal District Court Judge Stefan Underhill ordered Voss Laundry Solutions to pay more than $1 million in attorney fees, attorney costs and penalties to the German trademark owner and former parent company. See Lavatec Laundry Tech. GMBH v. Voss Laundry Solutions (3:13-cv-00056-SRU). The defendant had at one time been a subsidiary of the plaintiff. After the two companies split, the defendant Voss Laundry continued to use the Lavatec name.

Interestingly, the vast majority of the $1 million award comes from attorneys fees. The district court awarded Lavatec Laundry $959,315.85 in attorneys’ fees, $41,602.90 in costs, and a nominal $100 in damages as compensation.

“This was an obvious attempt to hijack the Lavatec trademark under false pretenses,” said David Slossberg, co-lead counsel for the plaintiff Lavatec Laundry. “[The trademark infringement was] a clear case of trademark infringement and an ongoing attempt by the Naugatuck company to ignore a federal judge’s orders.”

The federal lawsuit, which was filed on January 11, 2013, lead to a five-day bench trial. At that time Judge Underhill determined that Lavatec Laundry was the first to use the trademark in the United States, and had controlled the use of the mark with respect to the quality of the goods and services offered. Lavatec has manufactured and sold industrial laundry equipment and spare parts, including tunnel washers, dry-cleaning machines, electric clothing presses, and irons, and has provided technical support, repair and installation services since 1986.

A preliminary injunction was issued that prohibited the defendant from using the Lavatec name or logo, or any variation thereof. The injunction also prohibited the defendant from engaging in any activity that would be likely to cause confusion. Still further, the injunction prohibited the defendant from using any domain name that included “lavatec.”

Voss moved for clarification of Judge Underhill’s preliminary injunction, among other things specifically asking whether e-mails forwarded from defendant’s old e-mail address would be a violation of the preliminary injunction. Voss also wanted to be able to identify themselves at an upcoming trade show using their name and the identification “formerly Lavatec, Inc.”

After a hearing on March 20, 2015, Judge Underhill predictably ordered the defendant to remove “formerly Lavatec, Inc.” from its trade show advertising because that would effectively allow the defendant to continue to trade off the name of the former German parent company. Judge Underhill permitted Voss to forward e-mails for up to seven days more, and to inform customers of the change of e-mail address, but to after that point cease forwarding e-mails.

Judge Underhill further clarified his original preliminary injunction for the defendant, but was not at that time prepared to rule whether the infringement had been a matter of bad faith that justified sanctions.

After time for discovery, several settlement conferences, and briefing from the parties, the court was notified on March 29, 2016, that the case had settled. This mooted Lavatec Laundry’s motion for sanctions.

On August 23, 2016, the parties notified the court that the settlement had fallen through. This lead to a damages hearing, ultimately held on March 15, 2017. After the damages hearing Lavatec Laundry also filed a motion for contempt, arguing that the defendant had violated the court’s injunction by shipping parts bearing the LAVATEC trademark.

In deciding whether the defendant should be sanctioned the district court noted that despite its early ruling on ownership of the trademark Voss “continued to pursue ‘frivolous’ counterclaims on the theory that — despite being the successor to Lavatec Germany and owning the Lavatec trademark — [Lavatec Laundry Tech.] had ‘no right to claim that it was the original Lavatec’ or ‘the only source of genuine Lavatec parts.'” The district court also found Voss’ arguments relating to the recovery of fees frivolous.

“In an effort to trade upon the goodwill associated with the German brand, Voss misappropriated the company’s name,” Slossberg said.  “All the while, Voss continued to violate court orders and make frivolous arguments, providing the basis for the judge to find the ‘extraordinary circumstances’ necessary to award attorney’s fees and costs under the Lanham Act and to hold Voss in contempt.  Because the Lanham Act violation constituted a per se violation of the Connecticut Unfair Trade Practices Act (CUTPA), our client had access to the damages remedies under CUTPA, including attorney’s fees and costs.”