Articles

CLL RACES TO VICTORY IN FERRARI V. EXOTO

Dec. 21, 2010

We succeeded in obtaining an order on behalf of Ferrari S.p.A. enforcing an earlier settlement agreement with defendant Exoto, Inc., a manufacturer of high end die-cast model replica cars.  The settlement agreement had been reached back in 2000 resolving an earlier trademark infringement case brought in the Central District of Califronia by Ferrari against Exoto for unauthorized use of the FERRARI trademarks in connection with Exoto’s model replica cars.  The district court had retained jurisdiction over the case for purposes of enforcing the settlement agreement, which was incorporated into a final judgment prohibiting future use of the FERRARI marks following a specified sell-off period.  However, when Ferrari sought to enforce the settlement agreement some eight years later after learning that Exoto was continuing to manufacture and sell the replica cars, the district court initially refused to enforce the settlement agreement.  District Judge Real held that Ferrari was required to bring a separate lawsuit in which various defenses raised by Exoto based on the alleged existence of a subsequent contract with Ferrari could be appropriately litigated.
 
Ferrari successfully appealed to the Ninth Circuit, which issued a ruling in October 2009 holding that the district court’s retention of jurisdiction over the settlement agreement required it to hold enforcement proceedings for the purpose of resolving any disputed issues rather than forcing Ferrari to bring a new case.  Following remand to a different district judge and additional briefing on the issue of whether a subsequent binding agreement had been reached by the parties overriding the terms of the settlement agreement, the district court ruled in Ferrari’s favor.  Judge Dale Fischer found that no valid license had ever been culminated between Ferrari and Exoto and that Exoto’s laches and estoppel defenses were without merit.  The court also rejected Exoto’s fair use defense, ruling that any such defense had effectively been waived by virtue of the earlier settlement prohibiting use of the marks in any context.  The court ruled that Ferrari was entitled to an award of 1.5 times the amount of Exoto’s profits or a reasonable royalty, whichever is greater, and ordered the parties to attempt to fix the amount of such award. 

For further information, contact:
Richard Mandel
rsm@cll.com
(212) 790-9291

Eric Shimanoff
ejs@cll.com
(212) 790-9226

 

 

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