Toyo Tire Loses $110M Verdict In Dispute With Rival

An Illinois federal court found Toyo Tire Corp. liable for a laundry list Wednesday including: defamation, unfair competition, unjust enrichment, deceptive trade practices and tortious interference with a rival’s contracts. The jury awarded the rival, Atturo Tire Corp., $10 million in compensatory damages and $100 million in punitive damages.

ToyoPhoto Credit: Shutterstock

The trial stemmed from settlement agreements Toyo negotiated in an action that it brought before the U.S. International Trade Commission in 2013.

In the 2013 action, Toyo asked the ITC to investigate foreign tire manufacturers for design patent infringement. Atturo, nor its products, were named in the action, but as Toyo executed other settlement agreements with various companies, it included a line stating “Toyo is aware of additional tires that it believes infringe other Toyo intellectual property not asserted in the ITC action,” and listed one of Atturo’s tires.

Atturo claims that the accusation destroyed their relationships with those Toyo settled with, many of which were vital customers.

Toyo did bring litigation against Atturo in 2014, claiming the latter infringed its trade dress. Atturo filed its counterclaims related to the ITC settlements in that same suit.

In February of this year, U.S. District Judge Mary M. Rowland granted Atturo a summary judgment win as to the trade dress claims and rejected a summary judgment bid from Toyo directed at throwing out the counterclaims.

In its 2014 complaint, Toyo alleged Atturo was deliberately ripping off the design of Toyo tire treads under its Open Country brand. Judge Rowland ruled in February that the design couldn’t be protected.

But Judge Rowland also said Toyo’s arguments ran afoul of trademark law’s functionality doctrine.

“Testimony, from Toyo’s own witnesses, establishes that the asserted trade dress, both in its individual elements and as a whole, serves a utilitarian purpose and impacts the quality of the tire,” Judge Rowland wrote.

“Toyo’s focus on what is ‘necessary for the tire’ is misplaced,” she added.

Judge Rowland noted the Seventh Circuit had clarified the functionality doctrine as recently as last year when it tossed a machine parts manufacturer’s trade dress claims over conveyor belt fasteners.

In 2017, a federal judge assigned to the case, U.S. District Judge John Z. Lee, rejected Toyo’s efforts to assert favorable ITC rulings in the case, describing the efforts as an “anti-competitive weapon” and a “sham,” because they did not directly involve Atturo as a party.

In her February ruling, Judge Rowland wrote that Judge Lee’s criticism of Toyo’s conduct only “further underscores why the purpose of the litigation privilege would not be served in this case.”

In a statement to Haute Lawyer, Toyo said, “Toyo Tire is disappointed and respectfully disagrees with the jury’s verdict in this trial. We remain confident in our position and look forward to receiving the judge’s final ruling. At this time, we are unable to comment further on this matter.”

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