Do you have to buy the IP to buy the "company"?

A.Hak Industrial Services BV v. TechCorr USA, LLC, 2014 WL 7272796, No. 3:11–CV–74 (N.D. W. Va. Dec. 18, 2014)

 

Berkeley Springs Instruments (BSI) sold certain IP rights in robotic tank inspection and cleaning technology to A.Hak. TechCorr argued that the sale shouldn’t have occurred because TechCorr had a right of first refusal to the IP and a perpetual license to the associated trademarks; A.Hak counterclaimed for violations of the Lanham Act.

 

The relevant technology allows inspection of tanks in service, eliminating the need to drain them for inspection. Associated trademarks were InTANK, OTIS for the robot probe, and a non-robotic probecalled  SCAVENGER, owned in 2006 by Praxair/AST.  Praxair sought a buyer and negotated with TechCorr, resulting in a non-binding letter of intent to Praxair indicating TechCorr’s desire to buy “the physical assets for the above ground storage tank inspection business.”  In 2007, Praxair/AST and TechCorr entered into an asset sale and purchase agreement; Praxair/AST also entered into a transfer agreement with BSI, transferring the IP, including trademarks, to BSI.  TechCorr alleged that, as a precondition for the closing, BSI  gave TechCorr a right of first refusal in any future sale of the IP by BSI. BSI sent a letter indicating that BSI granted TechCorr “a perpetual right to use the Intellectual Property and registered brand name of ‘In–Tank®’ for the ‘In–Tank® Robotic Assets’ being acquired by TechCorr from AST Services, LLC.”  BSI also agreed to “support” the acquisition.  The parties disputed the license’s scope and relevance.

 

In 2010, TechCorr found that BSI was now competing in the tank inspection market under the name InTANK.  Internally, a TechCorr principal wrote that BSI “owns the patents and trademark but we have a separate letter agreement attached saying we have ‘... perpetual right to use the Intellectual Property and registered brand name of ‘In–Tank’ robotics assets ...’ So we can not stop [BSI] from using the name to compete with us.” 

 

A.Hak then bought the IP, including the relevant marks, from BSI.  TechCorr objected, based on its alleged right of first refusal.

 

TechCorr argued that, because A.Hak admitted the existence of a license, it couldn’t state a claim for trademark infringement.  A.Hak argued that TechCorr exceeded the scope of the license by claiming to own the marks, by virtue of (1) references on TechCorr’s website to “the TechCorr inTANK® system,” “TechCorr’s Scavenger XT® 2000,” and OTIS®; a press release titled “TechCorr USA, LLC Announces Completion of Multi Tank In Service Inspection with New Robot Added to the Wholy [sic] Owned ‘In–Tank’ Inspection Robotics Program”; and (3) statements in a proposal issued to the TVA using terms such as “TechCorr’s InTANK In–Service Inspection services.”  In addition, statements such as “We acquired the company in 2007” and “[W]hat is the relation between ‘inTANK’ and ‘TechCorr’?”/“TechCorr purchased the In Tank company 3 or 4 years ago” allegedly suggested that TechCorr bought the marks.

 

TechCorr argued that (1) some of the statements weren’t actionable because they weren’t made to customers; (2) they were true, because TechCorr bought the InTank operations and assets and had a license to use the marks for those assets; (3) they were within the scope of the license; and (4) any difference in the scope of the purchase was immaterial.

 

The court denied A.Hak’s motion for summary judgment on the trademark/false designation of origin claims.  On summary judgment, TechCorr’s position that it could use its name as a possessive (“TechCorr’s”) in connection with the mark and that its reference to “wholly owned” referred to the physical assets was not unreasonable under the terms of the license agreement.

 

In addition, A.Hak argued that TechCorr’s claims that its OTIS® robot was “intrinsically safe” misled customers because it lacked the necessary third-party certification to call it “intrinsically safe,” as certain internal documents indicated.  TechCorr argued that it bought an intrinsically safe robot from AST.  It also restated its trademark claims as false advertising claims.

 

TechCorr argued that its statements via email weren’t made to customers and thus weren’t commercial advertising or promotion.  The court agreed with respect to one statement, made to a potential provider of services, not to a potential customer.  Another statement was made to a middleman vendor rather than an ultimate customer; this could support a false advertising claim because statements don’t have to reach the ultimate consumer to be actionable (though the court doesn’t address the question of whether one email is sufficient dissemination to the relevant purchasing public under Gordon & Breach).

 

The court then found a genuine issue of material fact as to whether statements that allegedly claimed ownership of the trademarks or “full” ownership of InTANK were literally false.  (I’m not a fan of the literal/implicit distinction, but I don’t get this.  If there are two reasonable meanings, one of which is concededly true, shouldn’t that be only potentially implicitly false?  I guess the theory is that claiming to have bought the “the whole InTANK operation” and “the In Tank company” could have only one reasonable meaning, thus literal falsity.)

 

On the “intrinsically safe” robot/associated claim to have “each component certified,” A.Hak argued that TechCorr never had an operational intrinsically safe OTIS robot, while TechCorr responded that it bought an intrinsically safe OTIS robot from AST.  These statements were arguably ambiguous about what “each component” and “certified” meant—if each separate component was separately certified as intrinsically safe, then this could be true.  Thus, summary judgment for A.Hak was inappropriate.

 

Other claims for breach of contract and tortious interference were trimmed down.

 

The court also rejected TechCorr’s false advertising counterclaim based on A.Hak’s statement that  “Our third-generation OTIS inspection robots can be found nowhere else in this world.” “Third-generation” was not shown to be a statement of fact capable of being falsified; I omit discussion of some other claims.