A manufacturer’s campaign to collect a $26 million copyright infringement judgment against a Chinese competitor is headed for the U.S. Court of Appeals for the Second Circuit—marking the company’s second trip to a federal appeals court in the case.
In oral arguments set for Oct. 11, lawyers for Tire Engineering & Distribution LLC will try to wrest money out of the defendant’s foreign bank—a strategy unsettled by the courts.
Lawyers for Tire Engineering are expected to ask the Second Circuit to order Bank of China to turn over assets it holds for China-based Shandong Linglong Rubber Co. Ltd. and Dubai-based distributor Al Dobowi Ltd. A jury in Virginia federal court three years ago slapped the foreign companies with a $26 million infringement judgment. The judge awarded Tire Engineering about $632,000 in fees.
The case started in 2009, when Sarasota, Fla.-based Tire Engineering claimed that the defendants infringed its tire designs for underground mining vehicles. After the Virginia verdict, the defendants appealed. In June 2012, the U.S. Court of Appeals for the Fourth Circuit affirmed the verdict and vacated the fee award.
In December, Tire Engineering, still having not received its award from the defendants, turned to the Southern District of New York to collect money from the Bank of China. Judge Andrew L. Carter Jr. granted the defendants’ motion to dismiss in April, finding that the court was barred from seizing assets from bank branches outside of New York. Tire Engineering & Distribution v. Bank of China, 12 Civ. 9208.
Tire Engineering then appealed to the Second Circuit.
There’s a “big split in authority” between New York federal and state courts over whether judges can order banks to turn over judgment debtors’ assets that the banks are holding outside the United States, said William Copley, an attorney at Weisbrod Matteis & Copley representing Tire Engineering. “Now the issue is going to be decided for the first time by a New York federal court.”
Bank of China’s lawyers on the Second Circuit case in the New York office of London’s Allen & Overy did not respond to requests for comment.
Morgan, Lewis & Bockius recently represented Shandong in the collections issues in the Virginia federal case, but earlier this month Magistrate Judge Ivan D. Davis granted Morgan’s motion to withdraw because of “irreconcilable differences.” The firm declined to comment, and the defendants have no lawyers of record on that case.
It’s generally difficult to collect damages from a Chinese company from U.S. litigation because China often won’t enforce the judgment, said Melissa Nott Davis, a Boston intellectual property litigation partner at McDermott Will & Emery, who isn’t involved in the case.
The outcome of the case is important because U.S. companies must increasingly protect intellectual property rights against foreign companies, she said.
“We’ll be watching what opportunities we have to do that using courts in the United States,” Davis said.
@|Sheri Qualters, a reporter for The National Law Journal, an affiliate of the New York Law Journal, can be contacted at firstname.lastname@example.org.