North Carolina Business Litigation Report

Passing Off Chinese Product As A Superior American Product Yields Preliminary Injunction from NC Business Court

Yesterday, the Business Court entered a preliminary injunction against a distributor which the Court determined had engaged in deceptive conduct by "passing off" a Chinese product as coming from the American manufacturer of a  superior product, in Pittsburgh Corning Corp. v. McCormick Insulation Supply, Inc.

Plaintiff Pittsburgh Corning Corp. is the only American manufacturer of cellular glass insulation, which it sells under the trademark FOAMGLAS.  McCormick had been a licensed distributor of FOAMGLAS until May 2008.  After that, McCormick began delivering the Chinese insulation to its customers even as it continued to represent on its website that it was still a distributor for the Plaintiff, and it accepted orders from customers specifying Plaintiff's trademarked product.

Testing of the product after it was installed revealed that it contained carcinogenic levels of crystalline silica about which the buyers had not been informed.

The Order outlines the circumstances under which McCormick sold 220,000 pounds of the Chinese insulation to 53 customers who believed they were receiving PCC's product.  Judge Tennille called McCormick's actions deceptive (Op. ¶¶39, 50-51).

The injunction entered was sweeping, ordering McCormick among other things to notify all 53 customers which had received the Chinese product of its opinion, and the Court drafting a letter for McCormick to send  to those customers informing them of the inadequacy of the Chinese product and its carcinogenic nature. 

 

 

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Mack Sperling
Brooks Pierce, LLP
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