Hetronic International Inc v. Hetronic Germany GMBH et al

Filing 465

ORDER granting 446 MOTION for Order to Show Cause for Violating the Permanent Injunction. Follows oral order of 5/29/2020. Signed by Honorable Stephen P. Friot on 6/2/2020. (llg)

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IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
HETRONIC INTERNATIONAL,
INC.,
Plaintiff,
-vsHETRONIC GERMANY GmbH,
HYDRONIC-STEUERSYSTEME
GmbH, ABI HOLDING GmbH,
ABITRON GERMANY GmbH,
ABITRON AUSTRIA GmbH, and
ALBERT FUCHS,
Defendants.

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Case No. CIV-14-650-F

ORDER
On April 29, 2020, plaintiff, Hetronic International, Inc., filed a Motion to
Require Defendants to Show Cause for Violating the Permanent Injunction (doc. no.
446). The motion has been fully briefed by the parties. Arguments on the motion were
heard by the court on May 29, 2020. At the hearing, the court granted plaintiff’s
motion, found defendants, Abitron Germany GmbH, Abitron Austria GmbH, ABI
Holding GmbH and Albert Fuchs, to be in civil contempt of the court’s April 22, 2020
permanent injunction order, and imposed, jointly and severally, against those
defendants, a coercive penalty, the penalty to cease at such time defendants bring
themselves in compliance with the permanent injunction. The court advised that a
written order would follow. This order memorializes the court’s ruling.
Background
On March 2, 2020, after an eleven-day trial, the jury returned a verdict in
plaintiff’s favor, finding that defendants had engaged in willful trademark infringement
and other wrongful conduct. Doc. no. 420. Thereafter, Hetronic filed a motion for

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permanent injunction. Doc. no. 423. After briefing and argument, the court entered a
permanent injunction order on April 22, 2020 permanently enjoining and restraining
defendants, among other things, from using plaintiff’s “HETRONIC, Product Marks
or Trade Dress or any variations or colorable imitations thereof on or in connection
with any websites owned or operated directly or indirectly by defendants (or controlled
by them).” Doc. no. 434, ECF p. 5, ¶ 3.
That same day, defendants filed a motion to stay enforcement of the permanent
injunction. Doc. no. 437. Defendants also requested an expedited ruling on their
motion, which the court denied. Doc. nos. 438 and 439. Shortly thereafter, defendants
filed with the Tenth Circuit an emergency motion to stay the injunction. On April 27,
2020, the Tenth Circuit denied the motion without prejudice to renewing if the court
denied their motion. Doc. no. 445.
During the pendency of the emergency motion before the Tenth Circuit,
defendants took down the Abitron website on which they had been selling infringing
products. The day after the Tenth Circuit’s ruling, plaintiff discovered that defendants
had reinstated the prior Abitron website which included selling infringing products.
Plaintiff’s counsel contacted defendants’ counsel by email demanding that defendants
“cease and desist violating the permanent injunction by offering for sale infringing
products” and provide an “explanation why the prior website has been reinstated” no
later than noon on April 29, 2020. Doc. no. 446-2. Defense counsel advised they
would look into the allegations and get back with plaintiff’s counsel. In the afternoon
of April 29th, defense counsel advised that they had no response to the inquiry. Id. On
that same day, Hetronic filed the instant motion. The court promptly set the motion for
hearing. Doc. no. 447.
Subsequently, on May 4, 2020, plaintiff responded to defendants’ motion to stay
enforcement of the permanent injunction. Doc. no. 448. That same day, the court
entered an order denying defendants’ motion to stay enforcement of the permanent
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injunction. Doc. no. 449. Defendants did not renew their stay motion with the Tenth
Circuit prior to the court’s May 29, 2020 hearing.
On May 12, 2020, defendants filed a notice to the court concerning the
permanent injunction order.

Doc. no. 453.

Along with the notice, defendants

submitted the Declaration of Reimer Bulling which reported defendants’ activities
relating to the injunction. Mr. Bulling reported that defendants had “geoblocked” their
websites, since May 8, 2020, so that they were not accessible to any person in the
United States, had taken steps to cancel their registrations of the “GR” and “GL”
trademarks in the United States and the that Abitron entities were not using the
“HETRONIC” name in any way or kind for the benefit of their business. He also
reported that defendants had sought and obtained counsel in Germany and Austria
regarding German and Austrian law and that defendants have concluded that the
injunction is not enforceable in Germany until declared so by a German court and is
not enforceable in Austria at all. Doc. no. 453-1, ¶ 8. Further, he reported that
“perceiv[ing] their choices as business suicide or survival,” defendants have “decided
to opt for survival” and “continu[e] business in Germany and Austria.” Id. at ¶ 9.
Discussion
I.
“The district court has ‘inherent power to enforce compliance with [its] lawful
orders through civil contempt.’” Acosta v. Paragon Contractors Corporation, 884 F.3d
1225, 1238 (10th Cir. 2018) (quoting Shillitani v. United States, 384 U.S. 364, 370
(1966)). “In exercising this power, the court enjoys broad discretion.” Id. (citing
Rodriguez v. IBP, Inc., 243 F.3d 1221, 1231 (10th Cir. 2001)).
The plaintiff, in a civil contempt proceeding, has the initial burden of proving,
by clear and convincing evidence, “that a valid order existed, that the defendant had
knowledge of the order, and that the defendant disobeyed the order.” Reliance Ins. Co.
v. Mast Const. Co., 159 F.3d 1311, 1315 (10th Cir. 1998) (citing Roe v. Operation
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Rescue, 54 F.3d 133, 137 (3d Cir. 1995)). Plaintiff need not show “wilfulness” on
defendant’s part. “The absence of wilfulness does not relieve [the defendant] from
civil contempt.” McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949).
Because the purpose of civil contempt is remedial, “it matters not with what intent the
defendant did the prohibited act.” Id.
The court finds that plaintiff’s proof of contempt as to defendants, Abitron
Germany, GmbH, Abitron Austria GmbH, ABI Holding GmbH and Albert Fuchs, is
clear and convincing. A valid order exists. The court entered a permanent injunction
order on April 22, 2020. As stated, the order enjoined and restrained defendants, in
pertinent part, from using plaintiff’s “HETRONIC, Product Marks or Trade Dress or
any variations or colorable imitations thereof on or in connection with any websites
owned or operated directly or indirectly by defendants (or controlled by them).” Doc.
no. 434, ECF p. 5, ¶ 3. Defendants had knowledge of the injunction and all its
requirements. Indeed, they filed motions with both this court and the Tenth Circuit
seeking to stay enforcement of the permanent injunction. Further, defendants have
disobeyed the order. They concede they are using the Abitron website to sell infringing
products in Germany and Austria.
As plaintiff met its initial showing, the burden shifts to defendants to “show that
[they] had complied with the order or that [they] could not comply with it.” United
States v. Ford, 514 F.3d 1047, 1051 (10th Cir. 2008). Defendants have not shown
compliance with the order or that their compliance is impossible. Although defendants
opine that it would be “business suicide” to comply with the order in Germany and
Austria, the order does not preclude the defendants from conducting their businesses.
As relevant to the present motion, it only precludes them from selling their infringing
products. Defendants are free to change the color and shape of the infringing products.
The injunction does not prohibit the defendants from engaging in the radio remote

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control business. Thus, defendants have the ability to comply with the court’s order.
They simply have opted not to comply.
In sum, the court finds that defendants, Abitron Germany GmbH, Abitron
Austria GmbH, ABI Holding GmbH and Albert Fuchs, to be in civil contempt of the
court’s April 22, 2020 permanent injunction order. The court does not find defendant,
Hetronic Germany GmbH, or defendant, Hydronic-Steuersysteme GmbH, to be in civil
contempt.
II.
Sanctions for civil contempt “may only be employed for either or both of two
distinct remedial purposes: (1) to compel or coerce obedience to a court order . . .; and
(2) to compensate the contemnor’s adversary for injuries resulting from the
contemnor’s noncompliance[.]” O’Connor v. Midwest Pipe Fabrications, Inc., 972
F.2d 1204, 1211 (10th Cir. 1992) (quoting Shuffler v. Heritage Bank, 720 F.2d 1141,
1147 (9th Cir. 1983), citing Shillitani, 384 U.S. at 370-371 and Gompers v. Bucks Stove
& Range Co., 221 U.S. 418, 448-449 (1911)). In its motion, plaintiff requests the court
to employ sanctions in the form of compensatory damages (disgorgement of
defendants’ profits). It also requests an award of attorneys’ fees and expenses incurred
in prosecuting the civil contempt motion. After consideration of the briefing and
argument, the court finds that, at this juncture, sanctions should be only be employed
to coerce obedience to the court’s permanent injunction order.
“Where the purpose of the sanction is ‘coercive,’ the court must consider ‘the
character and magnitude of the harm threatened by continued contumacy, and the
probable effectiveness of any suggested sanction in bringing about the result desired.’”
O’Connor, 972 F.2d at 1211 (quoting United States v. United Mine Workers, 330 U.S.
258, 304 (1947)). The “court must exercise ‘the least possible power adequate to the
end proposed.’” O’Connor, 972 F.2d at 1211 (quoting Spallone v. United States, 493
U.S. 265, 280 (1990)). “To be consistent with these principles, coercive civil sanctions
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may only continue ‘until terminated by compliance.’” O’Connor, 972 F.2d at 1211
(quoting U.S. v. Professional Air Traffic Controllers Organization, Local 504, 703 F.2d
443, 445 (10th Cir. 1983). “Thus, the sanctioned party must be able to immediately end
the sanction by complying with the court order.” Acosta, 884 F.3d at 1239.
Upon consideration of the above-stated principles, the court imposes the
following coercive penalty for defendants’ civil contempt:
$10,000 per day from May 30, 2020 to June 30, 2020, inclusive.
$15,000 per day from July 1, 2020 to July 31, 2020, inclusive.
$20,000 per day from and after August 1, 2020.
Liability for the coercive penalty is joint and several. The accrual of the penalty
will cease at such time as the defendants bring themselves into compliance with the
permanent injunction order. If defendants bring themselves into compliance with the
permanent injunction order before June 30, 2020, the court will entertain a motion for
remission of the accrued and unpaid penalty.
The court’s ruling is without prejudice to consideration of other relief, depending
on the degree of compliance by the defendants.
III.
In its reply and at the hearing, plaintiff requested the court not only to enter an
order of contempt, but also enlarge the permanent injunction order “to add the two
sections of [plaintiff’s] draft injunction that the Court provisionally denied: (a)
prohibiting defendants from using the ‘Abitron’ name due to the confusion they sowed
between the two companies; and (b) requiring defendants to provide corrective
[advertising] to their licensees, distributors, suppliers, partners, and customers
informing them that defendants are not connected in any way to [plaintiff].” Doc. no.
461, ECF p. 3. The court, however, declines to grant this requested relief. The
requested relief was raised for the first time in reply. Further, the court is not persuaded
that the requested relief at this time. As the court has previously made clear on more
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than one occasion in this case, the court is of the opinion that, sitting as a court of
equity, it should grant carefully calibrated relief, in the hope that more destructive
forms of relief will not become necessary.
Conclusion
Based upon the foregoing, Plaintiff’s Motion to Require Defendants to Show
Cause for Violating the Permanent Injunction (doc. no. 446) is GRANTED.
As stated in the order, the court FINDS that the following defendants to be in
civil contempt of the court’s April 22, 2020 permanent injunction order: Abitron
Germany GmbH, Abitron Austria GmbH, ABI Holding GmbH and Albert Fuchs. The
court does not find either defendant, Hetronic Germany GmbH, or defendant,
Hydronic-Steuersysteme GmbH, to be in civil contempt.
The court ORDERS imposition of the following coercive penalty for
defendants’ civil contempt of the April 22, 2020 permanent injunction order:
$10,000 per day from May 30, 2020 to June 30, 2020, inclusive.
$15,000 per day from July 1, 2020 to July 31, 2020, inclusive.
$20,000 per day from and after August 1, 2020.
The relief imposed against the civil contempt defendants is joint and several.
The accrual of the penalty will cease at such time as the defendants bring themselves
into compliance with the permanent injunction. If defendants bring themselves into
compliance with the injunction before June 30, 2020, the court will entertain a motion
for remission of the accrued and unpaid penalty.
The court’s ruling is without prejudice to consideration of other relief, depending
on the degree of compliance by the defendants.
IT IS SO ORDERED this 2nd day of June, 2020.

14-0650p103.docx

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