New York, NY, October 13, 2016
-- Stroock & Stroock & Lavan LLP has secured, on behalf of its client PODS Enterprises, LLC. (PODS), a $41.4 million settlement, one of the largest trademark settlements on record, in its long running litigation with U-Haul International, Inc. (U-Haul). In addition to paying PODS $41.4 million, U-Haul agreed that the broad permanent injunction imposed by the District Court remains in full effect, and that it would not directly or indirectly challenge the validity of the PODS trademarks. The settlement ends more than four years of contentious litigation, which culminated in a two-week jury trial in Federal Court in Tampa, Florida, and an award that set new precedent for the scale of corrective advertising amounts for the purpose of correcting the public’s misconception or confusion resulting from U-Haul’s improper conduct.
The jury found in PODS’ favor on all counts and awarded PODS more than $60 million in damages in a 2014 trial. Attempts by U-Haul to overturn the jury verdict and secure a new trial were unsuccessful, and the District Court later granted PODS’ motion for a permanent injunction over U-Haul’s use of the word “pod” and “pods” and added nearly $5 million more in costs and interest, for a final judgment of over $65 million — one of the largest trademark verdicts of all time, and the largest trademark verdict in 2015. U-Haul filed a notice of appeal, and the parties were scheduled to deliver oral arguments in mid-September. The $41.4 million settlement concludes the litigation between PODS and U-Haul and the permanent injunction remains in place.
While the size of the verdict, and settlement, are themselves remarkable, what has garnered much attention to brand owners and the trademark bar at large, is the fact that the bulk of the award, $45 million, was for corrective advertising, an available remedy that to-date has been largely unnoticed and under-utilized in trademark infringement actions. Corrective advertising is one of the most severe penalties that can be imposed on an infringer that knowingly fabricates misleading information to the public, and it is intended to redress injury to a competitive brand. The scale of the corrective advertising award and its impact on future trademark infringement cases are likely to change.
“This was one of the largest trademark verdicts ever and the settlement reflects that. In addition, the permanent injunction entered by the court remains in place. In the end this was a complete victory for our client, and we are proud of Stroock’s efforts in securing the outcome,” said Charles E. Cantine, a partner in Stroock’s Intellectual Property practice. Additional Background on the Matter
PODS is a pioneer in the portable moving and storage business. The organization started in the late ‘90s, and quickly grew to become the market leader. PODS spent considerable time, money and effort to promote and protect its brand, one of the company’s most valuable assets, including obtaining numerous trademark registrations that each included the PODS name. By the time of trial, the PODS brand was the overwhelmingly dominant brand in the portable moving and storage business.
U-Haul entered the portable moving and storage business about 10 years after PODS, with a product it initially called a U-Box container. U-Haul spent several years trying to market its “U-Box container,” but sales proved disappointing. Recognizing that PODS was the dominant brand and knowing that most potential customers begin their search for these types of products online, PODS alleged that in 2012, U-Haul revamped its website and started calling its product a “U-Box pod.” PODS immediately asked U-Haul to cease use of the word “pod,” but it refused. By the time of trial, there were nearly 600,000 uses of “pod” and “pods” on U-Haul’s website. Thus, customers searching online for PODS were misled when landing on the U-Haul website.
There were two aspects of damages Stroock sought at trial: disgorged profits and corrective advertising. While the facts may have been contested, the methodology for proving disgorged profits is fairly straightforward: are there profits, and if so, what portion is attributable to infringement. U-Haul claimed there were no profits to disgorge, and that it has lost money on the U-Box business. Stroock was able to prove otherwise, and the jury agreed awarding PODS $15.7 million in disgorged profits.
Prior to this case there was no established methodology for determining an appropriate corrective advertising award in today’s search engine-based marketing world. Establishing such a methodology formed the basis for much of the case. Working with its client and appropriate experts, Stroock was able to establish at trial that 113 million people had visited U-Haul’s site and had seen its misuse of the PODS marks. Stroock also established an appropriate corrective advertising campaign to reeducate those people and correct the misimpressions formed by U-Haul’s misuse. Finally, Stroock was able to establish the costs of such a campaign. This groundbreaking work resulted in the $45 million corrective advertising portion of the jury’s award, the largest award of its kind, which was later upheld by the District Court.
Stroock’s trial team consisted of partners Charles E. Cantine and Joseph Diamante, and special counsel Jason Sobel
. Stroock & Stroock & Lavan LLP
is a law firm providing transactional, regulatory and litigation guidance to leading financial institutions, multinational corporations, investment funds and entrepreneurs in the U.S. and abroad. With a rich history dating back 140 years, the firm has offices in New York, Washington, DC, Los Angeles and Miami.