Covertech Fabricating Inc v. TVM Building Products Inc, No. 15-3893 (3d Cir. 2017)Annotate this Case
Covertech manufactures and sells reflective insulation under its rFOIL brand—its U.S. trademark, registered since 2001. The umbrella rFOIL brand includes ULTRA. In 1998, TVM, a distributor, and Covertech entered into a verbal agreement, designating TVM as the exclusive U.S. marketer and distributor of Covertech’s rFOIL products. In 2007, Covertech terminated the agreement. TVM was consistently late with payment; Covertech discovered TVM had been purchasing comparable products from Reflectix, and passing off some of them as Covertech’s. The parties entered a new agreement, under which Covertech manufactured products for TVM to sell under the TVM brand name; Covertech also continued to sell TVM rFOIL products for resale using Covertech’s product names. TVM violated its agreement to refrain from buying competitors’ products. After Covertech learned of TVM’s illicit purchases, the parties terminated their relationship. Covertech began to sell its products directly in the U.S. Covertech unsuccessfully tried to persuade TVM to stop using rFOIL brand names. The Canadian Intellectual Property Office registered the ULTRA mark in 2010. In 2011, TVM registered ULTRA as its U.S. trademark. Covertech filed an adverse petition with the PTO and filed suit. The district court granted Covertech judgment and awarded damages, 15 U.S.C. 1117(a), (c), applying the “first use test,” and rejecting a defense of acquiescence. The Third Circuit affirmed as to ownership, citing the rebuttable presumption of manufacturer ownership that pertains where priority of ownership is not otherwise established, but vacated as to damages. The district court incorrectly relied on gross sales unadjusted to reflect sales of infringing products to calculate damages.