CHICAGO — After a Chicago federal judge refused a gas canister seller's attempt to dismiss a lawsuit brought by UL, alleging the canister company wrongly sold products implying UL had certified the products, the parties have agreed to end the lawsuit with a permanent injunction barring the cannister company from ever using UL's mark.

On Jan. 26, U.S. District Judge Matthew F. Kennelly signed off on the injunction agreement between American Energy Products LLC (AEP) and UL LLC, about two weeks after the judge denied AEP's motion to dismiss UL's suit.

According to court documents, UL LLC sued AEP and its chief executive officer Jude Shao, alleging violations of the federal Lanham Act and state law claims. 

According to UL’s complaint, filed on Oct. 4, AEP allegedly used UL's certification and service marks on gas fuel containers without permission.

Based in Illinois, UL tests products to certify if they comply with safety standards.

In its complaint, UL alleged AEP requested a quote for testing some canisters and "UL and AEP entered into a series of written agreements under which AEP agreed to submit representative samples of its canisters to UL for testing so that UL could determine whether the canisters were eligible for use of its certification marks," according to the decision.

According to the complaint, AEP "was authorized to place UL's marks on its products only after UL performed various procedures to verify compliance. AEP was prohibited from distributing products bearing the UL marks before these procedures" were completed.

UL provided a preliminary certificate of compliance and advised the company, through Shao, that it could not start shipping products with the UL mark until it passed an initial inspection.

According to court records, "UL argues AEP shipped products with UL's certification mark, evidently both before and after the October and November 2015 site visits."

UL further alleged the company shipped the products "despite Shao's acknowledgment that AEP had not passed the contractually required product inspection," according to court documents. 

In the wake of the complaint filed by UL, AEP and Shao filed four motions, including each defendant separately moving to dismiss the case.

In its motion for dismissal, AEP argued that personal jurisdiction is lacking in this district, and Shao argued absence of personal jurisdiction and failure to state a claim. 

AEP and Shao also sought a stay in the case pending the outcome of a lawsuit they filed in Texas, and they also moved to dismiss for lack of federal subject matter jurisdiction.

“This court has personal jurisdiction if an Illinois court would, and that, in turn, depends on whether the exercise of personal jurisdiction in Illinois would be consistent with the requirements of the Due Process Clause of the Constitution's 14th Amendment,” Kennelly said in the decision. 

Moreover, he noted that each defendant simply must have purposely established minimum contacts with the state to ensure that it reasonably should expect litigation in Illinois.

Kennelly stated that Shao, "on behalf of AEP, reached out to UL, which is based in Illinois" and all parties conducted exchanges and visits.

Further, Kennelly noted there was sufficient evidence to enable a court in Illinois to hold personal jurisdiction over both defendants.

“AEP and Shao are alleged to have deliberately traded on the goodwill of an entity they knew to be based on Illinois and are alleged to have known that by doing so, they would cause injury to that Illinois entity,” he wrote.

Citing Dangler v. Imperial Machine Co., Kennelly noted that UL also sufficiently argued its basis for Shao’s personal liability.

Kennelly also added the court would move the case quickly to avoid duplication with another case in which AEP sued UL, but the defendants weren't entitled to a stay.

Under the permanent injunction settlement, AEP would not pay any damages to UL, but agreed to stop selling any products bearing UL's logo.

UL is represented in the case by attorneys with the firm of Greenberg Traurig LLP, of Chicago.

AEP and Shao are represented by the firms of Fogler Brar Ford O''Neil & Gray LLP, of Houston, and Eimer Stahl LLP, of Chicago. 

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Eimer Stahl LLP U.S. District Court for the Northern District of Illinois

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