Recently in Unfair or Deceptive Acts and Practices Category

October 2, 2014

No Lost Profits Damages in Trade Secret Misappropriation Case

The Massachusetts Supreme Judicial Court ("SJC") recently analyzed the use of expert testimony regarding "lost profits" damages in a case from Suffolk Superior Court's Business Litigation Session, and provided some guidance relative to the appropriate measure of damages in cases involving misappropriation of trade secrets.

In LightLab Imaging, Inc. v. Axsun Technologies, Inc., LightLab Imaging, Inc. ("LightLab") filed suit in Suffolk Superior Court, alleging that a competitor, Volcano Corporation ("Volcano"), was using its trade secrets relative to certain laser technology after a joint venturer, Axsun Technologies, Inc., ("Axsun") secretly offered itself for sale to Volcano and divulged LightLab's specifications for that technology. At the outset of the case, the court granted a preliminary injunction. Later, a jury returned a favorable verdict for LightLab, concluding that Axsun had violated the confidentiality provision of its contract with LightLab. The jury also found that Volcano tortiously interfered with LightLab's contract and business relationship with Axsun, and that Volcano had misappropriated LightLab's trade secrets. On a separate count under M.G.L. c. 93A, the court found that Axsun and Volcano acted knowingly and willfully, thus entitling LightLab to $400,000 in damages plus attorney's fees totaling $4,500,000.

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August 25, 2014

SJC Clarifies Statutory Duty to Defend as Between Car Manufacturers and Car Dealers

The Massachusetts Supreme Judicial Court (SJC) recently interpreted a statute under M.G.L. c. 93B, section 8(a), which requires a car manufacturer, under certain circumstances, to defend a car dealer against a claim "predicated upon the negligent design or manufacture of a new motor vehicle, or any part or component thereof." While a "duty to defend" often arises based on the terms of contractual relationships between parties, it is less common that a duty to defend arises in a statutory context.

In Ferreira v. Chrysler Group, LLC, the plaintiff had purchased a new Jeep Wrangler from the car dealership, Somerset Auto Group ("Somerset"). The vehicle was manufactured by Chrysler Group LLC, and came with a standard limited warranty, which covered all costs of parts and labor necessary to repair any defects on the vehicle for a period of thirty-six months or 36,000 miles, whichever came first. The plaintiff alleged that after he purchased it, the vehicle underwent six separate repairs, and was out of service for up to forty-two days at a time. In a demand letter to Chrysler and Somerset, the plaintiff alleged that Chrysler's inability to repair the vehicle constituted a breach of warranty, a violation of M.G.L. ch. 93A (unfair and deceptive acts and practices), and the Massachusetts Lemon Law, while Somerset's inability to repair the vehicle was a breach of warranty and a violation of 93A.

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May 22, 2014

Ruling Emphasizes Punitive Nature of Attorney's Fees Award Pursuant to M.G.L. c. 93A

In Holland v. Jachmann, the Massachusetts Supreme Judicial Court (SJC) considered whether the attorney's fees attributable to the plaintiff business's in-house counsel are recoverable as part of assessed damages in a successful claim under M.G.L. c. 93A (Chapter 93A). There, the dispute arose out of a complicated business transaction that effectively split the plaintiff company in two. The defendants were found to have violated Chapter 93A on eight counts, including flagrant breaches of contract and deceptive business practices.

Chapter 93A gives a court discretion to award attorney's fees incurred in connection with an action for unfair and/or deceptive acts or practices in violation of the statute, as well as recovery of double or treble damages. As the SJC observed, the legislative purpose of the statute is to deter misconduct, making the multiple damages and attorney's fee awards punitive in nature.

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May 8, 2014

"GRONK" Trademark Claim Lives On

Last month, the United States District Court, District of Massachusetts ruled that New England Patriots player, Rob Gronkowski, and his two brothers sufficiently alleged claims of trademark infringement against the defendant, Sully Tees, LLC, allowing the football players to proceed with the case.

In Gronk Nation, LLC v. Sully's Tees, LLC, brothers Rob, Christopher, and Daniel Gronkowski - all professional football players - alleged that one or more of them have been well known for their athletic achievements since at least the fall of 2005, and are associated with the word or nickname "Gronk." The brothers established Gronk Nation LLC, and assigned their intellectual property rights in the use of their names, nicknames, images, pictures, likenesses, and trademarks to Gronk Nation. Gronk Nation received Federal Trademark Registrations from the United States Patent & Trademark Office for "GET GRONK'D," "GRONK NATION," and "GRONK" in December 2012. The LLC sells t-shirts in interstate commerce that use these trademarked phrases and derivatives thereof, and donates its profits to a charitable organization that supports youth activities.

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April 10, 2014

Business Disputes in Automotive Industry Can Present Unique Issues

A recent decision from the United States District Court in Massachusetts illustrates how business disputes in the automotive industry may be subject to specific laws that can have an effect on substantive claims as well as the enforcement of arbitration agreements to resolve such disputes. In Aston Martin Lagonda of North America, Inc. v. Lotus Motorsports, Inc., laws specific to automotive business disputes led the federal court to dismiss various claims brought by dealership franchisee Lotus Motorsports, Inc. (Lotus) against franchisor Aston Martin Lagonda of North America, Inc. (Aston Martin).

After entering into an automobile dealership franchise agreement with Aston Martin in 1996, Lotus served as the only Aston Martin dealer in New England, except for southern Connecticut. Around 2003, Aston Martin advised Lotus that the showroom at Lotus's dealership was insufficient for the anticipated increase in volume, and assured Lotus that it would sell 75 to 100 units per year when Aston Martin's new volume model was released. Based on these statements and encouragement from Aston Martin, Lotus moved its dealership to a larger facility in which it invested more than $700,000, and passed on other business opportunities. In 2013, Lotus learned that another Aston Martin authorized dealership would be opening 8.7 miles from Lotus's new location.

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