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Grizzly Industrial and Woodstock International Prevail in Seven-Month Battle with WMH Tool Group Over Release of Machinery Detained by U.S. Customs

Monday, February 25, 2008

Court raises possibility that trademark registration that led to seizures may be in jeopardy.

Chicago, IL -- The good guys can still wear white. Welsh & Katz, Ltd. clients, Grizzly Industrial, Inc. and Woodstock International, Inc., successfully countered WMH Tool Group’s alleged product seizure tactics when U.S. District Court Judge John W. Darrah ordered that WMH consent to the immediate release of Grizzly and Woodstock’s woodworking and metal working machines seized and detained by the U.S. Customs and Border Protection (CBP).

Grizzly, Woodstock and WMH are manufacturers of woodworking and metal working machines and equipment. Chicago-based WMH Tool Group is the U.S. subsidiary of Swiss conglomerate Walter Meier Holding AG.

The detention was part of an ongoing federal trademark dispute between the three companies. WMH's federal trademark registration claims exclusive rights in the color white for rectangular bases for metal and woodworking machines and equipment. Based on its registered trademark, WMH urged CBP to seize and detain Woodstock's off-white and Grizzly’s green and tan machines, according to Joseph F. Schmidt of Welsh & Katz, who served as lead counsel for Grizzly and Woodstock.

Judge Darrah raised the possibility that WMH’s trademark registration may be in jeopardy. In his ruling, Judge Darrah found that Grizzly and Woodstock, "… have sufficiently demonstrated a likelihood of success on the merits of its claim that [WMH's] [Trademark] Registration is subject to cancellation for fraud on the PTO in the procurement of the registration."

Schmidt, along with Michele S. Katz, also of Welsh & Katz, contested the basis for WMH’s seizure tactics. "Overly aggressive would be putting it mildly," Schmidt explains. "WMH convinced CBP to seize our clients' off-white -- and even their green and tan -- machines directly from our clients' exhibits during a major trade show in Las Vegas, based on a U.S. trademark registration that is likely to be found invalid."

The same day that the machines were seized at the Las Vegas trade show, Grizzly and Woodstock applied for emergency relief in federal court in Chicago, and the District Court issued an order temporarily restraining WMH and CBP from seizing Woodstock's and Grizzly's machines at the trade show. However, according to Schmidt, WMH persisted in its efforts, and in October 2007 CBP began detaining Grizzly and Woodstock machinery at U.S. ports of entry. Woodstock and Grizzly filed a motion for a preliminary injunction seeking an order requiring WMH to consent to the release of Woodstock's and Grizzly's products which have been detained or which, in the future are seized or detained by CBP during the pendency of this case.

The dispute started in July 2007, when WMH filed suit against Woodstock and Grizzly alleging trademark infringement and a host of other charges. Grizzly and Woodstock claimed that WMH Tool Group could never have acquired trademark rights in the color white because of prior third-party uses of white/off-white colors on woodworking and metal working machines. Moreover, Grizzly and Woodstock claimed that WMH's TM Reg is invalid and subject to cancellation for fraud on the U.S. Patent and Trademark Office (USPTO) in the procurement of the registration.

According to the evidence, WMH claimed first use of the color white in 1996, but at the hearing in federal court in Chicago on January 17, 2008, WMH's own witnesses admitted that WMH did not use white on woodworking machines until 1998; that WMH did not use white on at least two machines that it alleged use on, contrary to USPTO rules; and that WMH failed to disclose competitors’ prior uses of white as required by the USPTO. Mr. Schmidt suggested that these missteps may cost WMH its trademark registration. The case is WMH Tool Group, Inc., v. Woodstock International, Inc. and Grizzly Industrial, Inc., No. 07-C-03885 (N.D. ILL 2008). Judge Darrah’s order was entered February 21, 2008.

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