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Axion Power Battery Manufacturing, Inc. v. T&L Sales

February 13, 2009

AXION POWER BATTERY MANUFACTURING, INC., PLAINTIFF,
v.
T&L SALES, INC.; BATTERYXPRESS, INC.; TURBOSTART MIDWEST, TURBOSTART BATTERYXPRESS, AND WILLIAM STOUT, DEFENDANTS.



The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM OPINION AND ORDER OF COURT

Presently before for the Court for disposition are the following:

* MOTION FOR PARTIAL SUMMARY JUDGMENT, with brief in support, filed by Defendants William Stout and BatteryXpress, Inc. (Document Nos. 39 and 40), and the Memorandum of Law in Opposition filed by Plaintiff, Axion Power Battery Manufacturing, Inc. (Document No. 49); and

* MOTION FOR SUMMARY JUDGMENT, with brief in support, filed by Plaintiff, Axion Power Battery Manufacturing, Inc. (Document Nos. 45 and 46); the Memorandum of Law in Opposition filed by Defendants (Document No. 50), and the REPLY MEMORANDUM filed by Axion Power Battery Manufacturing, Inc (Document No. 55).

For the reasons that follow, the motions will be denied.

Background

Plaintiff, Axion Power Battery Manufacturing, Inc. ("Axion"), is a corporation engaged in the business of manufacturing and selling batteries and battery products. Axion is the owner of three Registered Trademarks which cover the word TURBOSTART and design elements (collectively referred to as the "TurboStart Marks").

Prior to October of 2004, Defendant William Stout, the President of Defendant T&L Sales, Inc., was an authorized distributor of the TurboStart Marks, by agreement with an entity known as New Castle Battery Manufacturing Co. ("NCB"). Defendants T&L Sales, Inc., t/d/b/a/ TurboStart Midwest and TurboStart BatteryXpress, were permitted by NCB to sell batteries labeled with the TurboStart Marks.

In October 2004, T&L Sales, Inc., had an outstanding account balance of $89,013.82 owed to NCB. On October 8, 2004, NCB sent the following notice to T&L Sales, Inc., regarding the use of the TurboStart Marks:

By this correspondence, NCB demands that TM make immediate payment to NCB in the amount of $89,013.82.

NCB also reminds TM that, without NCB's authorization, TM may not market and/or sell goods bearing, utilizing and/or referencing the TurboStart trademark, the rights to which are exclusively owned by NCB. As long as TM is delinquent on its account, NCB cannot extend such authorization. This correspondence shall serve as official notice to TM that it does not currently have NCB's authorization to, in any way, utilize the TurboStart trademark. Furthermore, NCB is not willing to consider any further trademark use authorization until TM's outstanding account balance is paid in full to NCB. . . . .

Pl's Exhibit 5 (emphasis added).

At the time Defendants received the demand letter, NCB owed warranty claims to T&L Sales that equaled at least as much as, if not more than, the outstanding balance on the NCB invoices. After receiving the demand letter for the outstanding balance, William Stout called the owner of NCB, Steve Hoye, to discuss how to cover the outstanding warranty issues. Ryan Stout also had a conversation with Steve Hoye on how NCB intended to cover warranty claims if NCB ceased operation of its business. According to the deposition testimony of William Stout, T&L Sales paid $10,000 to NCB "as good faith to start negotiations on trying to get this taken care of." Wm. Stout Deposition, at 66.

In November 2004, NCB declared bankruptcy. Defendants contend that William Stout had multiple conversations with Paul Rennie, the attorney "attempting to collect the money on behalf of NCB" and that Mr. Rennie told Stout not to "pay the money if T&L Sales had outstanding warranty claims and that NCB was not going to pursue further action to collect the money." According to Defendants, William Stout also spoke with a representative of National ...


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