Streamline Production Systems, Inc. (SPSI) was established in 1993 by Michael Renick in Beaumont, Texas. SPSI initially began as an oilfield services company. In 1997, SPSI began custom fabricating pressure vessels, and today, it produces a range of custom fabricated natural gas processing equipment, such as gas separators, heat exchangers, re-boilers, and pressure vessels, and sells that equipment to customers nationwide, in addition to continuing to provide oilfield services and repair.<\/p>\n
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Later on, Renick founded three other companies that all use \u201cStreamline\u201d in their names and share staff with and operate in the same region as SPSI but do not manufacture custom fabricated natural gas processing equipment. SPSI\u2019s 2013 sales exceeded $27 million. According to Renick, his company has been successful over the years because it is \u201cwell-known in the oil field.\u201d<\/p>\n
Streamline Manufacturing, Inc. (SMI) was founded in 2009 in Houston by Luis Morales and Bob Tulio. SMI also fabricates natural gas processing equipment, including pressure vessels, boilers, heat exchangers, skids, and separators, and sells them to customers nationwide. But unlike SPSI, it does not do any oil field servicing or repair work.<\/p>\n
Initially, all of SMI\u2019s business came from customers with whom Morales and Tulio had preexisting relationships through their prior work at RCH Industries, and those customers have continued to comprise the majority of SMI\u2019s business. Some of these customers are equipment resellers who sell SMI\u2019s equipment to end-market users. Relying on this customer base, SMI reached over $1 million in sales in its first full year of business, and between 2009 and 2014, it had over $20 million in total sales.<\/p>\n
In February 2013, Renick submitted an application to the United States Patent and Trademark Office (PTO) for trademark registration of the mark \u201cStreamline Production Systems,\u201d and the PTO issued the trademark for this phrase on October 29, 2013. On November 26, 2013, SPSI sent a cease and desist letter to SMI, demanding that SMI \u201cimmediately cease and desist the use, display, and distribution of any materials bearing the phrase STREAMLINE MANUFACTURING.\u201d SMI\u2019s counsel responded in a letter on January 14, 2014, disclaiming any infringement of SPSI\u2019s trademark. In March 2014, Renick signed an agreement with SPSI assigning his \u201centire right, title and interest in and to\u201d his trademark in \u201cStreamline Production Systems\u201d to SPSI.<\/p>\n
On May 9, 2014, SPSI filed suit against SMI, alleging, in relevant part, infringement of its trademark under the Lanham Act and Texas common law and seeking damages as well as injunctive relief. In its answer, SMI denied all claims. Nevertheless, SMI ultimately stipulated to a preliminary injunction on August 28, 2014. Pursuant to the injunction, SMI agreed to, within 120 days, change its name and discontinue all use of \u201cStreamline Manufacturing\u201d on its marketing and communications materials, and within 30 days, discontinue its use of the domain name \u201cstreamlinetx.com.\u201d SMI eventually changed its name to Strongfab Solutions, Inc.<\/p>\n
SPSI\u2019s suit proceeded to a five-day jury trial on the issues of trademark infringement and damages, commencing on November 16, 2015. The jury returned its verdict on November 23, 2015. The jury further found that this infringement was the proximate cause of damages to SPSI. However, the jury found that SPSI failed to prove it was entitled to any profit that SMI had earned that was \u201cdirectly attributable\u201d to its infringing use of the trademarks and that SMI had earned \u201czero\u201d profit through its infringing use of the trademarks. Nevertheless, the jury awarded SPSI $230,000 as a \u201creasonable royalty\u201d for SMI\u2019s use of the trademark, another $230,000 for unjust enrichment to SMI through its infringing use, and a final $230,000 as exemplary damages, for a total damages award of $690,000.<\/p>\n
The only evidence of intent to confuse identified by SPSI is SMI\u2019s conduct after learning about SPSI\u2019s existence and SMI\u2019s failure to change its name until SPSI filed suit. SPSI did not allege that SMI had bad faith in choosing its name, and the evidence was that, when choosing the name, SMI\u2019s principals were entirely unaware of SPSI\u2019s name, length of time in business, degree of success, customers, and even its mere existence; nor did they know Renick.<\/p>\n
Further, SPSI\u2019s trademark was not registered at the time SMI chose its name in 2009. The evidence indicated that SMI did not learn of SPSI\u2019s existence until 2011, and even then it did not know any details about SPSI\u2019s business, its location, its customers, or its degree of success. The only testimony on intent at trial was from SPSI\u2019s principals who merely stated that they had a \u201cfeeling\u201d and a \u201cbelief\u201d that SMI\u2019s use of the mark was intentional but admitted they could not point to any objective evidence of this intent.<\/p>\n
The majority rule amongst jurisdictions is that a defendant\u2019s continued use of a mark even after it receives a cease and desist letter cannot be construed as evidence of intent to confuse. This is because \u201ca party may have considered that plaintiff\u2019s contention was without a legally supportable basis and made a rational business decision to continue use until a court stated otherwise.\u201d<\/p>\n
Not all confusion counts: evidence of actual confusion must show \u201cmore than a fleeting mix-up of names\u201d; rather it must show that \u201cthe confusion was caused by the trademarks employed and it swayed consumer purchases.\u201d SMI argued that the \u201cinnocuous and isolated\u201d events that SPSI offered as proof of actual confusion are insufficient to establish that a significant number of people were likely to be confused.<\/p>\n
SPSI\u2019s examples of actual confusion satisfy the requirement that the confusion result from the mark, rather than a \u201cfleeting mix-up of names\u201d or some other source. Two of the instances of confusion were directly attributable to SMI\u2019s use of a plate on its equipment that included the word \u201cStreamline,\u201d thus demonstrating that the mark, rather than some other source, caused the confusion. SPSI\u2019s evidence of actual confusion is not entitled to any less weight by virtue of its source. This digit of confusion thus weighs in favor of finding a likelihood of confusion.<\/p>\n
The appeal court vacated the royalty, unjust enrichment, and exemplary damages awards. Otherwise, the judgment of the district court has been affirmed<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Streamline Production Systems, Inc. (SPSI) was established in 1993 by Michael Renick in Beaumont, Texas. SPSI initially began as an oilfield services company. In 1997, SPSI began custom fabricating pressure vessels, and today, it produces a range of custom fabricated<\/p>\n