A court-ordered assessment of sports financial large Nike Inc.’s do in , copycatting , Norristown, Pennsylvania-based Lontex , Corp. ‘s , Sweat It Out , knit garments for pro , athletes ‘ damaged muscles has found that” Nike knew” it was violating the many smaller company’s trademark rights” but simply did not care”.
Lontex, founded by , Efraim Nathan , in 1989 and work from his office and workroom on the second floor of a previous general shop in , Norristown, won a national jury verdict against Nike for trademark violations in 2021, but Nike appealed rules on how much the company should give the professionals who defended Nathan.
The document and recommendations by Judge , Jane Cutler Greenspan, a retired , Pennsylvania Supreme Court , Justice, if adopted by the judge, could result in a transaction of millions of dollars — unusual in a legal trademark case — to Sweat It Out’s lawyers in , Philadelphia , and , California.
Greenspan claimed that Nike tried to deter Nathan from taking the case by burying Lontex in thorny litigation that cost him millions in legal fees.
Nike’s “reckless indifference” to trademark-protected Sweat It Out sleeves and other products offering” Cool Compression” to help ease athletes ‘ practice and recovery justifies an “exceptional” award to the lawyers who convinced the , Philadelphia , jury in 2021 that Nike had unfairly copied technology used in Lontex’s products, Greenspan wrote in the report, filed last Wednesday in federal court in , Philadelphia.
” In the world of sports apparel, with the same customer base, Lontex’s trademark was an edge that Nike did not see fit to respect”, Greenspan added.
” Nike’s incivility, bad behavior, blatant willful infringement, and recklessly indifferent conduct” once it was warned it was infringing on trademarked designs “are rare qualities” that justify more than the usual modest penalties, she found.
Nike spokespeople and six lawyers from national corporate law firm , DLA Piper , plus one for , Philadelphia-based , Saul Ewing, all of whom represented Nike, did n’t respond to inquiries seeking comment on the decision or whether Nike plans to object to Greenspan’s findings.
” Lontex appreciates” Greenspan’s report,” and looks forward to bringing a close to this long-standing dispute”, said , Ben L. Wagner, a lawyer at the Troutman Pepper firm who represents Lontex.
Reached at his office and workshop in Norristown ‘s , Schuylkill , riverside industrial district, founder , Efrain Nathan, 76, said he could n’t comment on the case pending its final outcome.
Nathan, a native of , Israel , who studied engineering at , Philadelphia College of Textiles , &, Science, has lined the stone walls with posters celebrating endorsements from Sixers stars , Charles Barkley , and Eagles , Brian Dawkins , and , Randall Cunningham, a long list of head trainers, and other famous clients.
Judge , Michael Baylson , had ordered Nike to pay the lawyers$ 4.6 million, plus an inflation adjustment that could bring it to nearly$ 7 million, after the jury upheld Lontex’s trademark infringement complaint. Nike appealed the lawyers ‘ payment. It’s significantly more than the$ 791, 000 in actual and punitive damages Nike paid into escrow pending the case’s conclusion. It costs a lot of money to fight a big corporation, Baylson noted in his decision.
In a damages claim, the award to Lontex is even more significant than the estimated$ 100 million in knockoff sales that Nike reported, according to briefs filed in the case.
Greenspan noted in her report that Nike had shown “reckless indifference in its refusal to cease” selling confusingly similar clothing even when confronted with its illegality and that the jury had determined that it had committed “willful infringement.”
Baylson had chosen to add additional damages, which was unusual. The Third Circuit appeals court upheld the larger-than-usual payments to Lontex “because of Nike’s willful and reckless conduct”. That supported an award of “punitive” damages as punishment, she added.
Because Baylson had n’t adequately justified that unusually large payment, the Third Circuit also recommended that a” special master” be appointed to review the larger cash award for attorney’s fees in its July ruling. Greenspan was appointed to make recommendations.
To justify millions in lawyer fees in such cases, it’s not enough, the appeals court noted, that the guilty company is much larger and wealthier than its victim.
Greenspan in her decision said:” Nike would not even speak with Lontex, much less negotiate, in order to find a reasonable compromise to avoid the expense of a trial”, she wrote. A small competitor would have a difficult time paying for Nike’s “lack of civility” because it “goes to the heart of the attorney fee expense and signals an improper desire to simply cause increased attorney costs.”
Indeed, evidence showed Nike” threatened’ to kill Lontex’s business’ with litigation”, according to Greenspan’s report. Such a threat” by the larger company to ruin the smaller” meets the standard for a higher payout, she added. Overall, Nike’s “bad behavior” is what “makes this case exceptional”.
In the 2000s, Nathan employed as many as 60 garment makers at a plant in , Perkasie, along with his , Norristown , office and design center. He now operates a smaller plant in , Allentown. He says his garments, while more expensive, are of better quality than Nike’s, incorporating a large proportion of DuPont Lycra thread and other high-quality materials.
Besides Nike mass-producing unauthorized versions of his garments, copying his claims ( including the” Cool Compression” description ), and undercutting sales, Nathan has said the company’s deals with pro and college teams have made it harder for him to get access to the coaches, trainers and players who bought Sweat It Out products in the past. These transactions did not appear to be among the problems enacted in the trademark case.
Nathan said he still has customers among the NFL’s Raiders, Saints, Buccaneers and , Steelers, and the NHL’s Islanders, among others.
The two sides have until mid-October to respond to Greenspan’s findings. The lawyers will then be able to enforce or modify Baylson’s original award in federal court.
___
© 2024 The Philadelphia Inquirer, LLC
Distributed by Tribune Content Agency, LLC.