Facts

Steril-Aire, Inc. sells ultraviolet (UV) lamps, UV lamp fixtures, and related technologies for use in heating, ventilating, air-conditioning, and refrigeration systems in buildings and cruise ships. The technology improves indoor air quality by eliminating harmful contaminants in the air. From 1995 until 2002, Forrest Fencl was Steril-Aire's President and is a named inventor on several of Steril-Aire's patents. Fencl's departure from Steril-Aire in 2002 resulted in much hostility and litigation between the parties; however, they ultimately settled their respective claims against one another.

In 2005, Fencl started UV Resources LLC (UVR) with some partners to compete against Steril-Aire for UV sales in the marketplace.

In June 2008, Steril-Aire initiated a federal lawsuit against Fencl, UVR, and UVR's UV lamp manufacturer, First Light Technologies, Inc. In turn, all of the defendants filed counterclaims against Steril-Aire. UVR also filed a third-party complaint for express contractual indemnity against its UV lamp fixture supplier Dust Free, LP. Dust Free then filed a third-party counterclaim against UVR.

In December 2009, Steril-Aire and First Light entered into a confidential settlement agreement resolving their respective claims against one another. Thereafter, both parties dismissed their competing claims.

In February 2010, summary judgment was granted in Fencl's favor on all of Steril-Aire's claims. Summary judgment was also granted in UVR's favor on all of Steril-Aire's claims except for the trademark infringement claim. Steril-Aire's motion for summary judgment on the trademark infringement claim was denied.

Also, in February 2010, UVR and Dust Free filed competing motions for summary judgment on the issue of Dust Free's alleged indemnity of UVR. The court granted summary judgment in part and denied it in part, finding that Dust Free was liable for express contractual indemnity only on Steril-Aire's claim for false patent marking. The court permitted the case to proceed to trial separately on Dust Free's affirmative defense. If the claim was not barred, then the only remaining issue would be damages. A bench trial was scheduled to follow the jury trial.

In April 2010, the court granted Steril-Aire's motions in limine on UVR and Fencl's remaining claims against Steril-Aire, except on UVR's contractual interference claim.

On April 20, Steril-Aire proceeded to trial on its remaining claim for willful trademark infringement against UVR. UVR proceeded to trial on its fair use affirmative defense and intentional contractual interference counterclaim, as against Steril-Aire.

PLAINTIFF'S CONTENTIONS:
Steril-Aire alleged that all three defendants infringed Steril-Aire's trade dress in UV lamps and conspired to misappropriate Steril-Aire's confidential customer list and UV technologies in the manufacture of "knock-off" UV lamps. Steril-Aire further alleged that UVR and Fencl infringed Steril-Aire's trademark in advertising the lamps and falsely designated the origin of UV lamps and UV lamp fixtures through the unauthorized use of Steril-Aire's trademark and trade dress. Finally, Steril-Aire alleged that UVR and Fencl breached the Fencl settlement agreement.

COUNTERCLAIMANT'S CONTENTIONS:
UVR and Fencl denied all of Steril-Aire's claims and asserted that any use of the "Steril-Aire" trademark was a fair use. UVR and Fencl also asserted counterclaims of their own against Steril-Aire, including claims that Steril-Aire intentionally interfered with UVR's contracts with First Light and Dust Free.

COUNTERDEFENDANT'S

Damages

Steril-Aire sought damages consisting of UVR's profits from infringing sales and statutory attorney fees and costs.

Result

On April 20, 2010, during the first day of trial, UVR and Steril-Aire agreed to settle the remaining claims. Steril-Aire agreed to dismiss its remaining trademark infringement claim and to pay $75,000 to UVR in exchange for UVR's dismissal of its remaining contractual interference counterclaim. Steril-Aire also made other non-monetary concessions to settle the claim, including agreeing that UVR could continue to use the "Steril-Aire" trademark in advertising UVR's own products. In turn, UVR agreed that, if it were to sell UV lamps, manufactured to be compatible with Steril-Aire's UV lamp fixtures, then UVR would not describe the lamps as "Steril-Aire Replacement Lamps." Under the agreement, UVR would describe the UV lamps as "UV Resources-brand lamps manufactured to be compatible with Steril-Aire lamp fixtures." Furthermore, UVR agreed that any such product would include the disclaimer "These are not Steril-Aire lamps" on the same page and in a font that is the same size as, or larger than, the offer font.

Other Information

Dust Free and UVR subsequently reached a mutually satisfactory, confidential settlement.