A long-running patent and trade secret dispute between Cequent Performance Products (now known as Horizon Global Americas) and its former business partner Let’s Go Aero (LGA) has come to an end. An arbitrator has awarded some monetary damages to Let’s Go Aero but also denied several claims of infringement, labeling four of LGA’s design patents invalid.
“With this favorable judgment, Horizon can continue to sell its SportWing and NV-2 bike racks without further interference from LGA, and it exonerates Horizon’s retailers, who had either been threatened or sued by LGA over their resale of Horizon’s bike racks,” according to a statement from Horizon’s legal team at McDonald Hopkins in Cleveland.
A manufacturer of branded towing and trailering equipment, Cequent entered into a license agreement with LGA, a Colorado outdoor lifestyle products company for gear transport, storage, and recreation, in 2008. The agreement allowed Cequent to make and sell products — including cargo bins, a bike rack, and a pin that connects a vehicle to a towed object — involving technology for which LGA had patent rights.
In 2010, Cequent sued LGA for breach of the license, asserting, among other things, that LGA had let its patents and applications expire or go abandoned. LGA counterclaimed, alleging that Cequent breached the licensing agreement by not paying required royalties and infringing on patents.
The companies settled in 2012. Part of the settlement called for Cequent to pay $17,500 to LGA in exchange for letting it sell nearly 26,000 hitch pin units still in Cequent’s inventory.
LGA sued Cequent in Colorado federal court in 2014, claiming that Horizon’s post-termination sales infringed LGA patents, trademarks, copyrights and trade secrets. Cequent countered, claiming legal rights to sell the products.
The case worked its way through the courts and ultimately was heard by an arbitrator in Chicago, who issued a 156-page decision that was confirmed by the U.S. District Court for the Northern District of Illinois.
The arbitrator ruled that Cequent/Horizon’s bike racks were not infringing and that there was no trade secret misappropriation or copyright infringement. He did, however, rule that Cequent/Horizon oversold hitch pins beyond the license termination and that some LGA instruction sheets should have been removed from Cequent/Horizon boxes sooner.
Money was awarded to both sides. After offsetting those awards, LGA received a portion of what it had sought in damages. The amount awarded was redacted from American Arbitration Association (AAA) records.
Marty Williams, founder and CEO of LGA, issued the following comment: “We are pleased that the recent arbitration decision dealing with the sales that happened after the license was terminated did find infringement of LGA’s property rights and awarded LGA damages. We look forward to continuing our culture of product development and customer service and look forward to serving the cargo management needs of our customers.”
A statement from Horizon’s legal team asserts that: “While the AAA did find, as Horizon had conceded, that there was a slight oversell of hitch pins beyond what the license termination allowed and that some LGA instruction sheets should have been removed from Horizon boxes sooner after the license ended, it refused to award the millions sought by LGA’s financial expert. Instead, the AAA relied upon the testimony of Horizon’s financial expert, who calculated a small damage figure that was orders of magnitude less than what LGA sought.”
LGA and Horizon were ordered to split arbitration fees, compensation and expenses, totaling about $239,000, in half.
The ruling described the arbitration as “hotly contested.”
“Claimant’s complaint and respondent’s answer and counterclaims raised numerous issues, leading to lengthy party and non-party discovery. Throughout, the parties engaged in seemingly constant disputes regarding discovery, deposition scheduling, motions to compel, and claimant’s motion for the appointment of an independent auditor seeking to have respondent’s electronic documents audited. All of this resulted in significant time spent by the parties and the arbitrator, twenty-six separate orders issued by the arbitrator before this one, and numerous telephonic hearings.” — Sarah Hollander