A federal jury in Alexandria has returned a $26 million verdict for a Florida-based designer and distributor of underground mining tires.
Jordan Fishman and his companies – Tire Engineering & Distribution LLC and Alpha Tire Systems – alleged that their former top salesman, a Chinese tire manufacturer and a tire distributor from Dubai conspired to steal their trade secrets and infringed on their copyrights and trademarks.
The case is In Re: Outsidewall Tire Litigation (VLW 010-3-359). Judge T.S. Ellis III presided over the trial.
The jury returned verdicts on all counts against all defendants on July 15, and judgment was entered the following Monday. Washington lawyer August J. Matteis Jr., the lead attorney for the plaintiffs, said he expects post-trial motions to be filed.
Francesca Morris, the New York attorney who represented Shandong Linglong Rubber Co. Ltd. and related companies, said she would have no comment on the case.
An effort to reach John H. Barr Jr., the Houston attorney who represented Al Dobowi Ltd. and related companies, was unsuccessful.
The salesman, Sam Vance, was not named as a defendant in the federal case, but a Florida state court judge awarded the plaintiffs in the federal case a default judgment of $59 million in damages for essentially the same course of alleged conduct.
Vance did not respond to the Florida suit and contended that the court there lacked jurisdiction over him.
A Florida appellate court agreed recently and reversed the judgment.
The defendants in the federal case were not defendants in the Florida action, but federal pleadings allege that discovery in the Florida case produced much of the information on which the federal case is based.
According to the federal complaint, such major tire manufacturers as Goodyear and Michelin abandoned the market for underground mining tires, and Fihman and his companies stepped into the niche.
Fishman copyrighted and trademarked designs for tires for the market and distributed the tires. A China-based joint venture partner and tire manufacturer, Guizhou Tire Co. (GTC), made the tires that the company distributed, typically at prices of $3,500 to $6,000 apiece.
The plaintiffs hired Vance, whom Fishman had known for more than 20 years, in 1997 and entrusted him with access to information that only Fishman and one other employee had access to.
In early 2005, Vance began working with GTC to cut the plaintiffs out of the business by encouraging Fishman’s customers to cancel their orders with Alpha and place them directly with the manufacturer.
By April 2005, GTC had received such trade secrets as manufacturing specifications and customer and pricing information and had stopped shipping tires on behalf of Alpha. Alpha had pending orders totaling $4 million that were never filled, according to the complaint.
During discovery in the Florida case, the plaintiffs discovered that Vance had met with principals of Al Dobowi at the Jefferson Hotel in Richmond in 2005.
Al Dobowi had not been involved in the underground mining tire business, and Vance offered to provide Alpha’s customer lists, pricing information and the blueprints for molds of the tires.
The Dubai company accepted the offer and subsequently provided the blueprints to Linglong to manufacture the tires after GTC refused to sell it the tire molds built from Fishman’s proprietary drawings.
Within a year, Al Dobowi was distributing an almost full line of tires from Fishman’s designs.
Alpha’s business declined from 25 employees and 14 large distributors to five employees and three distributors, according to the complaint.
The defendants contended that the Alexandria federal court lacked jurisdiction, but the plaintiffs alleged three bases for it: diversity, federal copyright- and trademark-infringement claims, and the furtherance of the conspiracy in Richmond and through an office Vance maintained in Tazewell.
The defendants contended that trademarks and copyrights were invalid and that what the plaintiffs alleged were trade secrets and confidential information were in the public domain.
They also challenged the factual basis for the allegations of wrongdoing between them and Vance and disputed the amount of their profits from the tires, which were the basis for the damages claim.
“This case should serve as a bellwether for foreign multinational corporations that believe they can steal intellectual property from small U.S. businesses and then avoid the reach of our judicial system,” Matteis said.
“In this case, the court correctly exercised jurisdiction over the defendants, and the jury reached an appropriate verdict to compensate Fishman and his company for this blatant theft and misappropriation of his life’s work.”