Yokohama Tire Corp. and St. Louis-based distributor Zisser Tire Co. have reached a settlement agreement in a patent infringement case for Zisser to stop marketing and selling the Chinese-made Wanli S-1099 high-performance tire.
Zisser Tire also agreed to pay $100,000 to Yokohama-a payment that Yokohama called ``damages'' but Zisser Tire insisted was just the sum ``equal to the nuisance value of the suit.'' Zisser Tire also noted that it stopped selling the Wanli S-1099 several months ago in a business decision unrelated to any action taken by Yokohama.
In a Sept. 22 press release, Zisser Tire blasted Yokohama for issuing what the St. Louis distributor called a ``grossly inaccurate'' press release about the court case and the settlement.
``Because Zisser was a U.S. company that could be served first with the lawsuit sooner than could a Chinese company, the case against Zisser matured first,'' Zisser said in the press release. ``In order to avoid litigation costs, Zisser settled the case and agreed to, was not forced to, be enjoined from selling any further S-1099s.''
No evidence of any kind has been presented in any court regarding this case and won't be until the case begins against the manufacturer of the Wanli tire, Zisser added. ``Zisser is quite flattered that Yokohama feels threatened by a small, family-owned Missouri business,'' it continued.
The U.S. District Court for the Central District of California-Western Division approved the settlement Sept. 15, 13 days after Yokohama and Zisser Tire completed it.
With this settlement finished, Yokohama said it will now pursue its patent and trade dress infringement case against South China Tire & Rubber Co. Ltd. of Panyu/Guangzhou, China. Yokohama claims that South China Tire deliberately copied the design, look and tread pattern of the Yokohama AVS Sport tire in making the Wanli S-1099. In a Sept. 20 press release, South China Tire denied Yokohama's charges and called the lawsuit meritless.
``South China Tire & Rubber will vigorously defend its global reputation,'' the company said.
Zisser Tire announced in November 2002 that it would carry the Wanli S-1099, an economy-priced line of Z-rated, high-performance tires aimed at young owners of the restyled import and compact cars known as ``tuners.''
In its lawsuit, Yokohama stated that the design of the AVS Sport tire, which it introduced in 1999, is covered by a ``valid and enforceable'' U.S. patent.
``The AVS Sport tire is now widely known and recognized by its unique, ornamental and distinctive appearance, which identifies to consumers and members of the trade that the source of origin of the AVS Sport trade dress is Yokohama Tire,'' the company stated in a court brief.
The agreement between Yokohama and Zisser Tire covers only Zisser Tire and no other tire distributor that might carry the Wanli 1099-S, the parties noted. R. Emmett McAuliffe, an attorney with the St. Louis firm of Thompson Coburn who serves as legal counsel for Zisser Tire, also noted that the settlement with Yokohama is null and void if South China wins against Yokohama in the patent infringement case.
``Then Zisser could go right back to selling the Wanli tire, if it wanted to,'' he told Tire Business.
Mr. McAuliffe claimed Yokohama uses the term ``patent'' loosely in its court case. `` `Design patent' is the proper term,'' he said. He also took exception to Yokohama's statement in a press release that Zisser Tire agreed to pay ``damages'' to the Japanese tire maker.
``This is just a simple settlement, and we settled it for the nuisance value of the suit,'' he said. ``We didn't want to pay hundreds of thousands of dollars defending it. Yokohama is making more of this than was really there.''
Stephen M. Lobbin, an attorney for the Los Angeles firm of Foley & Gardner, which represents Yokohama in this case, said a design patent has the same force in law as a utility patent. ``A very important part of the design is how it looks,'' Mr. Lobbin said. ``To all intent and purposes, it's a patent.''
As for whether the $100,000 payment should be called damages, he said, ``They paid us, and we consider it damages.''
Besides South China Tire and Zisser Tire, Yokohama also filed suit against another tire dealership with which it reached a settlement in May.
Both Yokohama and Zisser Tire declined to name the dealership that settled, noting it was chosen more or less randomly out of many dealerships that sell the Wanli tire. A copy of the settlement obtained from the Los Angeles court, however, identifies that dealership as Turbo Wholesale Tires Inc. of Irwindale, Calif.
The settlement with Turbo notes repeatedly that Turbo ``innocently infringed'' on the Yokohama patent and requires nothing more of the dealership than to stop doing so.