The B & F Sys. Inc. v. Leblanc
| Decision Date | 14 September 2011 |
| Docket Number | Civil Action No. 7:07-CV-192 (HL) |
| Court | U.S. District Court — Middle District of Georgia |
| Parties | THE B & F SYSTEM, INC., Plaintiff, v. LLOYD J. LEBLANC JR., et al., Defendants. |
This case is before the Court on Defendants' Motion for Summary Judgment (Doc. 152) and Plaintiff's Motion for Summary Judgment (Doc. 159). After consideration of the briefs, exhibits, and pleadings submitted by the parties, the Court grants, in part, and denies, in part, both Motions.
This case is can best be compared to a contested divorce with child custody issues and both parties fighting over the dog.1 In essence, it is a business divorce. The parties are well versed in the facts surrounding their claims, so the Court will not endeavor to address all 519 allegedly material facts set forth by the parties, especially as many of them are not material. The Court will, however, set out the general facts underlying the parties' claims and counterclaims. In addition, before getting into thefacts, the Court believes it prudent to set out the various acronyms and abbreviations mentioned in this Order, along with a citation to where they first appear.
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¦The B & F System, Inc. ¦B & F ¦p. 2 ¦
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¦United States Patent and Trademark ¦ ¦ ¦
¦ ¦USPTO ¦p. 3 ¦
¦Office ¦ ¦ ¦
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¦Maxam Independent Distributorship Agreement ¦MIDA ¦p. 4 ¦
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¦Service Mark License Agreement ¦SMLA ¦p. 4 ¦
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¦Maxam Wholesale of Atlanta, Inc. ¦MWA ¦pp. 4-5 ¦
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¦Productos Mexicanos Don Jose, Inc. ¦PMDJ ¦p. 7 ¦
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¦Direct Source Imports, Inc. ¦DSI ¦p. 8 ¦
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¦Maxam Independent Distributor ¦MID ¦p. 21 ¦
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¦Anticybersquatting Consumer Protection Act ¦ACPA ¦p. 50 ¦
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¦Georgia Uniform Deceptive Trade Practices Act¦GUDTPA¦p. 50 n. 14¦
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¦Georgia Trade Secrets Act ¦GTSA ¦p. 56 ¦
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¦Georgia Fair Business Practice Act ¦GFBPA ¦p. 83 ¦
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Plaintiff, The B & F System, Inc. ("B & F"), is a wholesale distributor of more than 200 different imported products, including electronics, cookware, cutlery, jewelry, and clothing apparel. Various manufacturers in China mass-produce certain products which B & F imports and distributes wholesale.
B & F owns trademarks for the words "MAXAM USA" and "MAXAM," and those trademarks are registered on the Principal Register of the United States Patent and Trademark Office ("USPTO").2 B & F also owns a design-only trademark which consists of "a configuration of a round pot or pan lid knob having a button thereon for opening a steam control valve that is part of the lid knob" (the "lid knob trademark").3
Defendant Lloyd J. LeBlanc Jr. ("Lloyd") began selling B & F's products out of his Tifton home in the 1970s. He was so successful that he built a showroom and warehouse in Tifton in 1981. Lloyd's distribution center was the first branch of B & F, albeit independently owned. Thereafter, Lloyd, doing business as Maxam Wholesale of Georgia, operated the Tifton warehouse as a distribution center and branch office of B & F throughout the first half of the 1980s. Lloyd is married to Defendant Edna LeBlanc ("Edna"), who kept the books for Lloyd. Defendants Jeffrey LeBlanc ("Jeff") and Lloyd J. LeBlanc III ("Jody") are their children.
On November 21, 1986, the Tifton branch of B & F formally became an independent distributor, as Lloyd d/b/a Maxam Wholesale of Georgia entered into a Maxam Independent Distributorship Agreement ("MIDA") with B & F. Bill Meyer was the president of B & F at that time. The MIDA was drafted by B & F.
Also on November 21, 1986, B & F and Lloyd d/b/a Maxam Wholesale of Georgia entered into a Service Mark License Agreement ("SMLA") for the service mark "MAXAM." Through the SMLA, Lloyd d/b/a Maxam Wholesale of Georgia was given a license to use the "MAXAM" mark for retail and wholesale sales services, to use the "MAXAM" mark as part of his business title, and to otherwise enjoy the goodwill associated with the mark. The SMLA was also drafted by B & F.
In 1991, Lloyd and Edna purchased all of the assets of another B & F distributor, Maxam Wholesale of Atlanta. For the next few years, Lloyd did business in Atlanta as Maxam Wholesale of Atlanta, and separately did business at the Tifton warehouse as Maxam Wholesale of Georgia. Eventually Maxam Wholesale of Georgia was merged into Maxam Wholesale of Atlanta, with the combined operation located at the Tifton warehouse being known as Maxam Wholesale of Atlanta. Both Maxam Wholesale of Georgia and Maxam Wholesale of Atlanta were operated by Lloyd as sole proprietorships. In December of 2004, Lloyd incorporated Defendant Maxam Wholesaleof Atlanta, Inc. ("MWA").4 He was MWA's sole shareholder. The MIDA and SMLA were never transferred or assigned from Lloyd d/b/a Maxam Wholesale of Georgia to MWA.
Jeff and Jody have both worked for Lloyd's business for a number of years, with Jody being in sales and business management, and Jeff being in general sales management and computer operations. Neither Jeff nor Jody ever entered into a distributorship agreement or service mark license agreement with B & F.5
Lloyd, Jody, and Jeff split the profits from Maxam Wholesale of Georgia, Maxam Wholesale of Atlanta, and MWA equally between themselves. Jody left the business for a five year period between 1996 and 2001, when he started a company called Productos Mexicanos Don Jose, which imported Mexican pastries. After ending the pastry business in 2001, Jody returned to work for Maxam Wholesale of Atlanta.
In May of 1999, Jeff registered the domain name maxamwholesale.com. Shortly thereafter, he created a website at www.maxamwholesale.com with an online shopping cart for the customers of Maxam Wholesale of Atlanta to visit, view available products, and place orders. On February 15, 2005, Jeff registered the domain name maxamwholesale.net, and thereafter created a website at www.maxamwholesale.netwhich served as a shadow site for www.maxamwholesale.com so that anyone visiting www.maxamwholesale.net would be linked directly to the www.maxamwholesale.com website.
Jeff contacted search engines like Google and informed them of the websites. Certain metatags were used on the websites, including "maxam," "wholesale," "clocks," "knives," and "waterless cookware." 6 The search engines used the metatags in performing searches and displaying results. By 2005, assisted by the two websites, Maxam Wholesale of Atlanta had expanded its customer base to customers all over the United States and Canada, and revenues had grown from about $1 million per year to $5 million per year.
In 2005, John Meyer, Bill's son, took over as president of B & F. According to Defendants, John's ascendancy to the presidency triggered the dissolution of the marriage. B & F began hosting the www.maxamwholesale.com website, whereas the website was previously hosted on the computer server at the Tifton warehouse and was maintained by Jeff. John proposed the use of a new computer system and software, and also proposed a change in the business relationship between B & F and MaxamWholesale of Atlanta such that Maxam Wholesale of Atlanta would become a customer of B & F, rather than an independent distributor.
The gross sales figures for Maxam Wholesale of Atlanta held steady for 2002 through 2004, but began to fall in 2005 and steadily declined thereafter. The sales for 2002, 2003, and 2004 were $4,377,873.36, $4,260,749.45, and $4,364,119.88, respectively. The sales for 2005, 2006, and 2007 were $3,536,416.07, $2,851,312.74, and $889,101.74, respectively.
Because of the declining sales figures and concerns over changes in business practices, in the spring of 2006 Jody began researching the possibility of importing products from China, with which Jeff and Jody could establish a wholesale business of their own to compete with B & F. In August of 2006, Lloyd and Edna decided to financially back their sons in establishing the business. Lloyd and Jody traveled to China to find suppliers and pick out products to import. In October of 2006, Lloyd and Jeff went back to China to attend the Canton Fair, a large trades fair where Chinese manufacturers exhibit available products. During this time, Lloyd was still serving as a distributor for B & F.
In November of 2006, Jody and Jeff placed an order for a shipment of leather products from a Chinese manufacturer, Shanghai Hundred Trust. This order was placed through Defendant Productos Mexicanos Don Jose, Inc. ("PMDJ") d/b/a Direct Source Imports. PMDJ was incorporated on January 24, 2002, administratively dissolved in 2005, and reinstated on August 22, 2006. Jody initially owned thecorporation, and gave a 50% interest in PMDJ to Jeff in 2006, though no stock certificates have been formally issued. During the next six months, Jeff and Jody, through PMDJ d/b/a Direct Source Imports, accumulated additional Chinese...
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