Bose trademark blocks internet reseller

Posted: 4 years ago in: Case Study, News, Trademark InfringementPosted By admin

trademark settlement contract denied

BOSE trademark blocks internet reseller

Salman Ejaz traded in buying certain electronic goods in one country, where they were less expensive, and selling them online in other countries where they were more expensive.  He started selling Bose products in 2005 (via eBay).  He did not have authority from Bose to act as a reseller or a distributor of their goods.

 Bose sought €250,000 for trademark infringement and took court action

An Appeal Court in 2013 heard that in late 2006, Bose threatened legal action against Ejaz.  It sought $250,000 for trademark infringement, and filed a trademark infringement legal action in the UK.  Ejaz felt the tactics used were “very pressurizing, very intimidating” and the threat of jail was implicitly suggested, according to Ejaz.

 Parties negotiated a settlement agreement

In January 2007, Ejaz and Bose reached a settlement agreement.

Firstly, the parties signed a settlement agreement with the following agreed:

  • Ejaz was prohibited from selling Bose products anywhere in the world.
  • Bose would release Ejaz from Bose’s trademark infringement claims and court action.
  • Ejaz would owe Bose $50,000 in liquidated damages for each breach of the settlement agreement.

Secondly, the parties signed a Consent Order, for filing in the British High Court.  The Consent Order ended the UK legal action in exchange for Ejaz consenting to stop selling Bose products in the European Union.

 Settlement agreement breached – Bose took US District court action – favoured Bose trademark

Shortly after, Ejaz breached the Settlement Agreement by selling goods in Australia.  Bose sought damages from Ejaz for breaching the agreement on seven occasions, and commenced proceedings against him in the USA.

The District court granted summary judgment in favour of Bose for trademark infringement and breach of contract.  Ejaz lodged an appeal before the United States Court of Appeal.

 Reseller appeal – a contract is binding when signed

In the appeal, Ejaz argued his case on several grounds.  He denied the settlement agreement was a valid contract.  The court stated that an individual “who signs a written agreement is bound by its terms whether he reads and understands them or not”.

 Bose’s most important assets

Bose argued that Ejaz’s actions threatened its goodwill and brand integrity, which it argued was its “most important asset”.  Bose showed that damage to goodwill and brand integrity is inherently difficult to quantify. The judgment stated that “The law supports Bose.   See Societe Des Produits Nestle, S.A. v.Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 1992) (“By its very nature, trademark infringement results in irreparable harm because the attendant loss of profits, goodwill, and reputation cannot be satisfactorily quantified and, thus, the trademark owner cannot adequately be compensated.”). The liquidated damages provision does not fail on this ground.”

The judge also said “There is no dispute over the first element in this case.  Bose’s trademarks are registered on the Principal Register of the United States Patent and Trademark Office. Registration serves as prima facie evidence that the trademarks are entitled to protection”.

The Appeals Court in October 2013 upheld the original decision in favour of Bose.

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