Articles Posted in Business Litigation

Published on: August 24, 2019

FLORIDA BUSINESS LITIGATION: EQUITABLE ESTOPPEL ONLY PERMITS A NON-SIGNATORIES TO COMPEL ARBITRATION UNDER AN AGREEMENT IN LIMITED CIRCUMSTANCES

Equitable estoppel is a legal doctrine that essentially prevents one party from taking unfair advantage of another party. Equitable estoppel allows a non-signatory to a contract to compel arbitration of a signatory’s claims against them, if the signatory raised allegations of concerted misconduct by both the non-signatory and one or more of the signatories to the contract. However, this application of equitable estoppel only applies when the signatory alleges substantially interdependent and concerted misconduct by both a non-signatory and one or more of the signatories to the agreement. Peter Mavrick is a Miami business litigation lawyer who represents clients in arbitration proceedings.

In Greene v. Johnson, 2019 WL 3675268 (Fla. 3d DCA 2019) Frederick Greene (“Greene”) and Cameron Grace (“Grace”) incorporated Oak & Cane Co. (“Oak”), which manufactured and sold Oak & Cane American Craft Rum. Greene and Grace also formed Oak & Cane Holdings, LLC (“Holdings”) as a separate entity to own the rum brand’s trademarks and other intellectual property. Jeffrey Johnson (“Johnson”) made two loans to Oak totaling $300,000. Johnson also provided $300,000 to Greene and Grace as an investment in Oak in exchange for seven and a half percent ownership in both Oak and Holdings.

A dispute arose regarding Greene’s business expenses. Johnson sent notices of default to Oak. Subsequently Johnson, Grace, Oak, and Holdings (and other parties) entered into a settlement agreement which gave Johnson full ownership of the assets and intellectual property owned by Oak and Holdings. Greene, however, did not sign this settlement agreement.

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Published on: August 10, 2019

FLORIDA TRADEMARK INFRINGEMENT LITIGATION: “LIKELIHOOD OF CONFUSION” MUST BE ESTABLISHED IN A COUNTERFEIT CLAIM WHERE MARKS ARE NOT “SUBSTANTIALLY INDISTINGUISHABLE”

By Mavrick Law Firm

Under the Lanham Act, a defendant may be liable for trademark infringement, if, without consent, he/she uses “in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark” which “is likely to cause confusion or to cause mistake, or to deceive.” 15 U.S.C. § 1114(1). The Act defines a “counterfeit” as a “spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127. However, the test for whether marks are “substantially indistinguishable” is not well-defined by the applicable case law. Peter Mavrick is a Miami business litigation lawyer who represents clients in trademark infringement and other unfair competition litigation.

In Coach, Inc. v. Chung Mei Wholesale, Inc., 2016 WL 7470001 (S.D. Fla. June 17, 2016), Plaintiffs, Coach, Inc. and Coach Services, Inc.’s (collectively “Coach”), was a luxury consumer goods company that specialized in the design, manufacturing, and sale of, among other things, handbags and wallets. Coach owned a variety of trademarks, which it used in connection with the advertisement and sale of its products. Shen Biao Huang (“Huang”) and his wife, Lian Xiao Fu (“Fu”) operated a business called Chung Mei Wholesale, Inc. (“Chung Mei”) out of a warehouse in Hialeah, Florida. Chung Mei imported goods from China and sold them to retailers and wholesalers. Huang primarily selected merchandise himself, but sometimes his friend, Hung Jain Ke (“Jain Ke”) ordered goods on Huang’s behalf. During the course of their dealings, Huang instructed Jain Ke not to send him any goods that might be counterfeit.

There were two shipments ordered by Jain Ke on behalf of Chung Mei that were seized by the U.S. Customs and Border Protection (“CBP”) seized two shipments imported by Chung Mei from China, which CBP determined contained about 3,000 “Coach Design Handbags,” identified as constituting “counterfeit copies” of the Coach Trademarks. A Coach employee trained to identify counterfeits, examined CBP’s photographs of these bags and concluded the pictured items were counterfeit and bore counterfeit representations of four registered Coach trademarks as well as trade dresses, and were substantially indistinguishable from the Coach trademarks and trade dresses.

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Published on: August 4, 2019

FLORIDA TRADE SECRET LITIGATION: COURTS SCRUTINIZE TRADE SECRET INFORMATION WHEN RULING ON PROTECTIVE ORDERS

By Mavrick Law Firm

Protection of trade secrets and proprietary information is critical when a business receives a subpoena for its business information and documents. Even when a business is not a party to a lawsuit, it can be compelled to produce sensitive information that can cause irreparable harm. It is often necessary to seek an order of protection and confidentiality from the court. The court, however, must first determine whether the disputed information is in fact a trade secret or proprietary information. Summitbridge Nat’l Invs. LLC v. 1221 Palm Harbor, L.L.C., 67 So.3d 448 (Fla. 2d DCA 2011). Peter Mavrick is an experienced trade secret attorney and business litigation attorney.

In Lake Worth Surgical Center, Inc. v. Gates, 266 So.3d 198 (Fla. 4th DCA 2019), the plaintiff filed a lawsuit against defendants for damages arising from a car accident. The plaintiff treated at Lake Worth Surgical Center, Inc. (“Center”), a non-party, and was billed for the Center’s services. Defendants served the Center with a subpoena that requested billing information that included, among other things, examples of reimbursement rates from unnamed insurers for the Center’s patients. The Center immediately moved for a protective order to prohibit disclosure of confidential financial information. The Center argued that insurance reimbursement rates and the makeup of the center’s patients are trade secret. The trial court denied the Center’s motion for protective and confidentiality order. The Center immediately filed a petition for certiorari review.

The Center contended that the trial court departed from the essential requirements of law by denying the request for a confidentiality of its proprietary and trade secret information. The appellate court granted the petition in part and denied it in part.

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Published on: July 19, 2019

FLORIDA TRADEMARK INFRINGEMENT LITIGATION: ACCOUNTING OF DEFENDANT’S PROFITS DEPENDS ON A SHOWING OF WILLFULL INFRINGEMENT

By Mavrick Law Firm

The Lanham Act provides that a successful plaintiff may recover: (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) costs of the action. 15 U.S.C. § 1117(a). In exceptional cases, a district court may award attorney fees to the prevailing party. The Lanham Act gives broad discretion to the district court to determine the proper relief due an injured party. See 15 U.S.C. § 1117(a); Burger King v. Weaver, 169 F.3d 1310 (11th Cir.1999). Peter Mavrick is a Miami business litigation lawyer who represents clients in trademark infringement lawsuits.

In Optimum Technologies, Inc. v. Home Depot U.S.A., Inc., 217 Fed.Appx. 899 (11th Cir. 2007), Optimum Technologies, Inc. (“Optimum”) sued Home Depot, Inc. (“Home Depot”) alleging that Home Depot committed trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1114, and false advertising in violation of 15 U.S.C. § 1125(a). Optimum sold a variety of floor related products, including the Lok–Lift Gripper (“Lok–Lift”). Lok-Lift was applied in strips to the back of rugs and mats to prevent slippage on hard floors and carpets. Optimum owned the Lok–Lift mark. Optimum sold the Lok–Lift product to Home Depot through a joint venture partnership between Optimum and Henkel Consumer Adhesives, Inc. (“Henkle”). Henkle purchased the Lok–Lift product from Optimum then distributed it to Home Depot, among other retailers.

Henkle later developed its own similar product called Hold–It for Rugs (“Hold–It”); however, the Hold–It product was only intended for use on floors, not on carpets. Henkle notified Home Depot that it intended to substitute its Hold–It product in the place of the Lok–Lift product. Henkle sent Home Depot the Hold–It product with the same product number and tracking information as the Lok–Lift product. Home Depot’s computer system did not reflect that the products had changed, so the cash register receipts showed Hold-It purchases to be Lok-Lift purchases. Home Depot also did not update its shelf tags, which still displayed the name Lok–Lift. The Hold–It product that was sold at Home Depot, however, was packaged and marked with the Hold–It name with no reference to Lok–Lift.

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Published on: July 13, 2019

FLORIDA BUSINESS LITIGATION: DEFENSE AGAINST CLAIMS ASSERTING “INTRACORPORATE CONSPIRACY”

By Mavrick Law Firm

Aggrieved litigants can claim they are victims of a conspiracy – that a group of persons has agreed to perform an unlawful act and damaged them. Such claims can expose multiple parties to liability for the same conduct by allegedly contributing to harm against the plaintiff. A “conspirator” can be found responsible for a harm that he did not personally cause, as long as he performed an “overt act” in the assistance of others in the “conspiracy.” Walters v. Blankenship, 931 So.2d 137 (Fla. 5th DCA 2006). Peter Mavrick has successfully represented clients in Palm Beach, Broward, and Miami-Dade business litigation and related arbitration proceedings.

Florida courts have carved out an exception to the broad reach of conspiracy claims in a legal doctrine called the “intracoporate conspiracy doctrine.” In general, when a party is involved in a conspiracy only because he was acting on behalf of another, such as when an employee does something for his company, he can evade liability for conspiracy under the intracorporate conspiracy doctrine. The philosophy behind this rule is that when someone is acting entirely on behalf of another, and not on his own behalf, that person is not really “conspiring” with anyone. After all, a company cannot exist without its agents, i.e., the people employed by the company.

The intracorporate conspiracy doctrine, however, does not shield an alleged conspirator if he has a sufficient personal stake in the conspiracy. Greenberg v. Mount Sinai Medical Center of Greater Miami, Inc., 629 So. 2d 252 (Fla. 3d DCA 1993). By contrast, an employee that is simply doing what his boss has directed him to do and is paid a salary for that work is not “conspiring” with his employer. Courts have also held that the mere fact that an employee would be paid a larger bonus if the conspiracy succeeded is not deemed a sufficient personal stake to form a conspiracy. HRCC, Ltd. v. Hard Rock Int’l (USA), Inc., 302 F.Supp.3d 1319 (M.D. Fla. 2016). The law is not clear how much of a “personal stake” must a person have in order for the intracorporate conspiracy to no longer operate as shield against liability for a conspiracy claim. Florida cases have historically been vague as to the degree of a personal stake that is necessary for a participant to be found to a conspirator.

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Published on: July 9, 2019

FLORIDA NONCOMPETE AGREEMENTS: STIPULATIONS TO IRREPARABLE INJURY IN NON-COMPETE CONTRACTS MAY NOT BE ENFORCEABLE

By Mavrick Law Firm

It has long been recognized that before injunctive relief can be granted a movant must show irreparable injury. Langford v. Rotech Oxygen & Medical Equipment, Inc., 541 So.2d 1267 (Fla. 5th DCA 1989). Many non-compete contracts will contain a provision that stipulates that a violation of the restrictive covenant not to compete would create an irreparable injury. Courts may not find that a stipulation or waiver of this burden of proof is sufficient to justify the entry of an injunction. Peter Mavrick is an experienced business litigation attorney who has substantial experience with non-compete agreements and cases seeking entry of an injunction.

In Spencer Pest Control Co. of Fla., Inc. v. Smith, 637 So.2d 292 (Fla. 5th DCA 1994), Spencer Pest Control Company (“Spencer”) sued for a temporary and permanent injunction to restrain Lewis E. Smith (“Smith”), its former manager, from violating a noncompete agreement when Smith resigned and accepted employment as a pest control technician with a competing company.

Spencer was in the business of termite control and lawn care. Smith was hired by Spencer, with no prior experience in pest control. Spencer fully trained Smith and promoted him to manager of the Sanford location. Smith was responsible for every aspect of Spencer’s business in Sanford, including its customer base. During his employment with Spencer, Smith executed an employment agreement containing a covenant not to compete which stated, among other things, that in the event of a breach, or threatened breach, of the provisions of the agreement by either party, the non-breaching party would be entitled to an injunction, without bond, to restrain the breaching party from continuing the improper conduct.

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Published on: June 29, 2019

FLORIDA NON-COMPETE LAW AND BUYING OR SELLING A BUSINESS: COURTS SCRUTINIZE THE CONTRACTUAL WORDING WHEN DECIDING THE MEANING OF A NON-COMPETE COVENANT

By Mavrick Law Firm

Purchasers of businesses and business assets often protect their investment by requiring the seller to sign a non-compete agreement. If the seller continued to engage in the same services, there would be little to no incentive for customers to buy from the Purchasers. The contract must specify the type of services that are prohibited by the contract or it may not be enforceable. It is not important that the parties meant the same thing, but that they said the same thing. Robbie v. City of Miami, 469 So. 2d 1384 (Fla. 1985). Peter Mavrick is an experienced business litigation attorney who has substantial experience with non-compete agreements and cases seeking entry of an injunction.

In Coastal Loading, Inc. v. Tile Roof Loading, Inc., 908 So.2d 609 (Fla. 2d DCA 2005) Matthew Garcia (“Garcia”) and Lucinda Burke (collectively the “Purchasers”) negotiated an asset sale and purchase agreement of Coastal Loading, Inc. with the Seller. Coastal Loading, Inc. provided the services of loading and hauling roof tiles. The Business Asset Sale and Purchase Agreement (the “Asset Purchase Agreement”) stated that states that Garcia purchased “all of SELLER’S assets and properties pertaining to the business known as Coastal Loading, Inc. [,]” including the name of the business. The Asset Purchase Agreement also provided that the Seller and its stockholders “shall agree at the closing not to compete with the business being sold” and that “Brett and Carolyn Williamson (collectively the “Williamsons”) [Seller’s principals] shall agree to not compete in the same business terms as SELLER.” The Asset Purchase Agreement did not provide any further description of the business.

At the closing, Purchasers and Seller entered into a non-compete agreement that specifically prohibited Seller and Williamsons from engaging in the business of “roof tile loading” for five years in the State of Florida. Purchasers later discovered that Williamsons engaged in hauling roof tiles for a Florida customer. The customer contacted Brett Williamson and requested his services. Purchasers filed a lawsuit against Seller and Williamsons for injunctive relief, breach of the non-compete agreement and breach of the Asset Purchase Agreement.

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Published on: June 21, 2019

FLORIDA NON-COMPETE AGREEMENTS: ACTIONS TAKEN IN RELATION TO AN OFFER OF EMPLOYMENT MAY BE CONSIDERED SOLICITATION

By Mavrick Law Firm

Florida employers often require employees to sign non-solicitation agreements to protect their business from having its employees poached. Non-solicitation agreements often fail to define the term “solicit.” Solicitation is defined in Black’s Law Dictionary (11th ed. 2019), as “[t]he act or an instance of requesting or seeking to obtain something; a request or petition.” Cases involving disputes over what constitutes solicitation often require examination of who initiated the contact. Peter Mavrick is a business litigation attorney who has extensive experience with non-compete agreements.

In the case of Convergent Techs., Inc. v. Stone, 257 So. 3d 161 (Fla. 1st DCA 2018) Convergent Technologies, Inc. (“CTI”), provided cyber-security training both as a prime contractor and subcontractor with the United States government. CTI entered into a subcontract with Telecommunications Systems, Inc. (“TCS”), to provide instructors for a Joint Cyber Analysis Course (“JCAC”), a beginner’s level cyber-security program for Navy personnel. CTI hired instructors for the JCAC job. Each instructor signed an employment contract with CTI that contained a non-solicitation clause. CTI’s non-solicitation clause stated, in pertinent part, that, “…I will not solicit employment with any other company associated with the JCAC contract during the customer review period, full-time employment period, or a six month post employment [sic] period.”

Under the terms of the contract between TCS and CTI, the companies agreed they would not solicit or hire each other’s employees who provided services under the JCAC contract. However, TCS also hired Epsilon, Inc. (“Epsilon”), another subcontractor for the JCAC contract. There was no non-solicitation agreement between CTI and Epsilon, or between it and any of the other subcontractors on the JCAC job.

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Published on: June 16, 2019

FLORIDA TRADE SECRET LAW: PROTECTING TRADE SECRETS DURING PUBLIC RECORDS COMPLIANCE

By Mavrick Law Firm

Businesses submitting licensing applications with state or local government agencies are often required to file confidential documents and financial records. The State of Florida has a broad public records policy requiring that “all state, county, and municipal records…[shall be]…open for personal inspection and copying by any person.” Florida Statute § 119.01(1). Businesses are often confronted with the challenge of protecting its trade secrets while complying with the obligation to disclose confidential information to a municipality. Peter Mavrick is a business litigation lawyer who has extensive experience with trade secret protection.

The Florida legislature created an exemption to the public records law for trade secrets. Pursuant to Florida Statute § 815.045, businesses may identify which confidential information furnished to a state agency should be excluded from public disclosure. However, failure to identify information as putatively exempt from public disclosure effectively destroys any confidential character it might otherwise have enjoyed as a trade secret. Sepro Corporation v. Florida Department of Environmental Protection, 839 So. 2d 781 (Fla. 1st DCA 2003) (a company must label a trade secret or specify in writing as such upon delivery to a state agency to invoke the exemption from disclosure).

Even when a trade secret owner has taken the necessary precautions to label its confidential information, the risk of disclosure remains because Florida courts liberally construe the Public Records Act and favor disclosure. Christy v. Palm Beach County Sheriff’s Office, 698 So.2d 1365 (Fla. 4th DCA 1997). Designating information furnished to a government agency as confidential does not automatically render the record exempt from disclosure. Instead the information must qualify as a trade secret pursuant to Florida law. The trade secret owner also must undertake reasonable measures to protect the information from disclosure.

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Published on: June 12, 2019

TRADEMARK INFRINGEMENT LITIGATION: PRODUCT DESIGNS THAT ARE FUNCTIONAL MAY NOT BE SUBJECT TO TRADE DRESS PROTECTION

By Mavrick Law Firm

The term ‘trade dress’ refers to the appearance of a product when that appearance is used to identify the creator of that product. Trade dress encompasses the total image of a product and may include features such as size, shape, color, texture, graphics, or particular sales techniques.” AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531 (11th Cir. 1986). The party seeking trade dress protection bears the burden of proving that the features of the trade dress sought to be protected are not functional in nature. The functionality doctrine prevents trademark law from inhibiting legitimate competition by allowing businesses to compete through imitation of a useful product feature. Peter Mavrick is a business litigation lawyer who represents clients in trademark infringement lawsuits.

In the case of Dippin’ Dots, Inc. v. Frosty Bites Distribution, LLC, Plaintiff Dippin’ Dots, Inc. (“DDI”) sued Defendant Frosty Bites Distribution, LLC (“FBD”) for trade dress infringement of DDI’s product and logo design, in violation of the Lanham Act, 15 U.S.C. § 1125. Plaintiff DDI sold brightly-colored, small beads of ice cream called “dippin’ dots.” DDI’s dippin’ dots were created through a six-step process involving, among other things, dripping, freezing and storing an ice cream composition into beads.

FBD was secretly started by a group of retail dealers who terminated their contracts with DDI. FBD sold a competing brightly-colored, small, popcorn-shaped and spherical-shaped ice cream product called “frosty bites.” FBD’s frosty bites were created, in part, by streaming and dripping an ice cream solution into liquid nitrogen where it freezes and forms beads and clusters of frozen ice cream.

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