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Hipple v. Hipple

United States District Court, E.D. Pennsylvania

December 18, 2017




         Presently before the court is Plaintiff's Motion to Declare the Registration of the “Steel Seal” Trademark by Hipple to Have Been Fraudulently Obtained (Doc. 211) (the “Motion”). In response to the Motion, defendant Clement Hipple (“Hipple”), proceeding pro se, filed a Motion to Dismiss (Doc. 215). Plaintiff filed a Response in Opposition to the Motion to Dismiss (Doc. 216). On December 15, 2017, the court held a hearing on the motions.

         For the reasons explained below, the court grants plaintiff's Motion insofar as the court finds that on May 24, 2013, when Hipple filed an application to register the trademark “Steel Seal” in the name of BBB Management Group, LLC (“BBBM”), neither BBBM nor Hipple was the owner of the trademark “Steel Seal.” See Doc. 211, Exh. A. Rather, in May, 2013, that trademark was owned by SCIX, LLC (“SCIX”), which adopted the trademark and used it since 1999. Because Hipple knowingly misrepresented on the trademark application that the trademark “Steel Seal” was owned by BBBM, the court finds based on clear and convincing evidence that the registration of the trademark with the U.S. Patent and Trademark Office (the “PTO”) was obtained fraudulently. Accordingly, the plaintiff's Motion (Doc. 211) will be GRANTED and Hipple's Motion to Dismiss (Doc. 215) will be DENIED.

         In support of this conclusion, the court makes the following Findings of Fact and Conclusions of Law:


         1. Plaintiff, Teresa Hipple and defendant, Clement Hipple, were married in 2001 and divorced in 2010. Hipple operated SCIX, a company founded in 1999 under the laws of the State of Delaware. The exclusive business of SCIX was the sale of “Steel Seal, ” an automotive repair product used to seal blown head gaskets. Hipple v. Hipple, 2016 WL 320216 at *1-2 (E.D. Pa. Jan. 27, 2016). SCIX adopted and used the trademark “Steel Seal” when selling its product. (Doc. 126, Stipulation of Facts at ¶ 5) (hereinafter “Stip. Facts”).

         2. In 2002, at the request of her then husband, plaintiff lent SCIX a total of $350, 000, funds she received from the settlement of a car accident claim. The parties executed promissory notes. In February 2003, pursuant to such notes, plaintiff received judgments in the aggregate amount of $354, 159 in favor of plaintiff and against SCIX. The judgments were recorded in the Court of Common Pleas for Bucks County, Pennsylvania (Case Nos. 2003-00972; 2003-0974) (Stip. Facts at ¶ ¶ 24-26).

         3. After the parties divorced, SCIX stopped making payments to plaintiff pursuant to the promissory notes. In September, 2010, plaintiff commenced garnishment proceedings against SCIX and recovered $53, 524.14 from the company's bank accounts. Hipple, 2016 WL 320216, at *3. This action prompted Hipple to foreclose on certain tangible assets of SCIX pursuant to a security agreement to satisfy a judgment he obtained against SCIX. Id. at *5. In October, 2010, Hipple seized certain assets of SCIX (hereinafter, the “Repossessed Assets”), in satisfaction of the loans. See Trial Exh. P-15, Exh. A. Three patents and SCIX's trademark “Steel Seal” were not included in the list of Repossessed Assets that were seized by Hipple. Id.; N.T. 7/27/2015 at 196; N.T. 7/31/15 at 40-41, 51; Trial Exh. D-6. See also Hipple, 2016 WL 320216, at *5 (listing of assets taken by defendant); Trial Exh. P-25 at ¶ 46 (Hipple Affidavit which states, “The assets listed in the Inventory are the only assets of SCIX that I took in satisfaction of the Hipple loans”); Id. at ¶ 51 (“I also did not enter into any agreement with SCIX which provided me the exclusive right to advertise, market and/or sell the product or its logos or which precluded SCIX from continuing to market or sell the product.”).[1] On October 18, 2010, Hipple sold the Repossessed Assets to a newly created company called “Complete Group” in exchange for a 50% interest in that company. (Trial Exh. P-15.) Hipple's significant other, Emily Dominguez, held the other 50% ownership interest in Complete Group. Hipple, 2016 WL 320216, at *5.

         4. On October 29, 2010, Complete Group entered into a Licensing Agreement with Steel Seal Pro, LLC, a new company formed by defendant's son, Brian Hipple, to market and sell Steel Seal. (Trial Exh. P-14.) Brian Hipple was the sole owner and operator of Steel Seal Pro, LLC. (Stip. Facts at ¶¶ 45-47.) Pursuant to the terms of the Licensing Agreement, Steel Seal Pro would be paid $10, 000 per month, and the remainder of the proceeds from sales of Steel Seal would be paid to Complete Group. See Trial Exh. P-14; see also Hipple, 2016 WL 320216, at *5.

         5. Steel Seal Pro, LLC used the same website, phone number, logo, assets and means of business used by SCIX. Hipple, 2016 WL 320216, at *7.

         6. On March 12, 2012, plaintiff filed a complaint in the present case alleging that Hipple made a fraudulent conveyance of the tangible assets of SCIX to prevent plaintiff from recovering on her judgments against SCIX. (Doc. 1.)

         7. After Brian Hipple's death in September, 2012, Hipple purported to transfer the right to manufacture, market, and sell, Steel Seal from Complete Group to BBBM, an entity which was owned entirely by Hipple. Hipple, 2016 WL 320216, at *7.

         8. On May 24, 2013, Hipple filed an application with the PTO to register the trademark “Steel Seal.” (Doc. 211, Exh. A.) In the application, Hipple stated that the “owner of the mark” was “BBB Management Group, LLC.” The application further stated that the mark was first used “at least as early as February 28, 1999.” 9. Pursuant to default judgment proceedings, on March 1, 2016, the court entered judgement in favor of plaintiff Teresa Hipple and against defendant SCIX, LLC in the amount of $556, 530.99. (Doc. 174.) In addition, after a non-jury trial held in July, 2015, this court entered a judgment order, dated March 1, 2016, entering judgment in favor of Teresa Hipple and against defendant Clement Hipple in the amount of $427, 507.09. (Doc. 175.)

         10. Plaintiff commenced post judgment execution proceedings pursuant to Fed.R.Civ.P. 69. On April 13, 2016, the court appointed Gerald S. Berkowitz, Esq., counsel for ...

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