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Square D Sues Unauthorized Distributor

Square D distributor; authorized distributors inflate the price of Square D’s products; the authorized distributors do not maintain adequate stock; Square D coaches and trains its distributors to obfuscate and to be manipulative; Scott purchases Square D products by the “trailer load”; Scott uses its quality control department to test its Square D products; and Square D’s products lack features possessed by Square D’s competitors.


“Upon information and belief, Scott made use of the statements in the flyer to bait and switch’ customers and sell them products of competing manufacturers in lieu of Square D products,” according to the lawsuit.


Damages
Square D claims that as a result of Scott’s statements, the company and its distributors have lost sales. The manufacturer also says its reputation as well as the reputation of its distributors has been “irreparably harmed.” Square D estimates harm done to it and its distributors to total “hundreds of thousands, if not millions, of dollars.”


Square D asks for both punitive and pecuniary damages in the lawsuit. If Scott fulfills the requirements laid out in the consent order, Square D will drop the lawsuit.


“The swift handling of this lawsuit demonstrates how determined and serious Square D is about putting an end to the counterfeiting of its products. There will be many more battles as part of the larger war Square D intends to wage on counterfeiters,” Schneider Electric’s Snyder said.


Resources
http://www.stopfakes.gov/ the Department of Commerce’s Web site with information on how to protect intellectual property, as well as report counterfeit goods.


Electrical distributor Scott Electric Company, Greensburg, PA, has been barred from selling counterfeit versions of Square D electrical products. Square D, Palatine, IL, is a global brand of the North American operating division of electrical and industrial control products manufacturer Schneider Electric.


Square D filed a lawsuit against Scott Electric Apr. 7, 2006, alleging Scott has been selling counterfeit Square D products as well as participating in false advertising, product disparagement and trademark infringement in violation of federal and state law.


In May, Scott consented to a full inspection of its Square D inventory.


Scott Electric is also permanently barred from knowingly marketing, selling or distributing any counterfeit Square D product. Through Apr. 12, 2008, Scott has agreed to notify Square D if it suspects it is in possession of counterfeit product and must fully cooperate with a Square D inspection.


Another term of the consent order signed by Scott is that the distributor will provide Square D with a list identifying all of its suppliers of Square D inventory for the past 36 months.


If Scott complies with these terms, Square D will dismiss the lawsuit against Scott Electric.


“Armed with Scott Electric’s supplier list, Square D has every intention of pursuing counterfeiters up and down the distribution chain,” said Bill Snyder, vice president for channel development for the Schneider North American Operating Division. “We’ll stop at nothing to preserve the integrity of our products and protect innocent customers from the serious health and safety hazards associated with counterfeit products.”


Details of Allegations
Square D sued Scott Electric and retail outlet Bossert’s Hardware and Sporting Goods Store in April. The lawsuit alleges Bossert’s sold Square D products it obtained from Scott Electric.


Square D’s products include circuit breakers, electric panels and switches. Its products are distributed nationally and internationally directly and through a network of authorized distributors. Square D’s direct sales are generally confined to national accounts.


According to court documents, Square D obtained samples of purported Square D QO circuit breakers from Scott and Bossert. All of the QO circuit breakers had the Square D trademark as well as the QO mark.


Square D says it determined after inspection that the circuit breakers purchased from Scott were not authentic and had multiple discrepancies from the authentic QO circuit breaker. Among other things, the circuit breaker had a different cover thickness, no stainless steel latch plate, no jaw grease and a smaller extruded hole on the clamp plate.


Samples taken from Bossert showed variances from the originals including lack of a visible date stamp (used by Square D to identify date and country of manufacture) and contained an etched, as opposed to molded, trademark symbol for Square D, according to Square D allegations in the lawsuit.


“The counterfeit products may not function as an authentic Square D breaker and could cause or fail to terminate an arcing or over-voltage event,” the lawsuit says. “Such failure could result in fire or electrocution hazard to innocent consumers.”


The lawsuit alleges Scott and Bossert both knew they were marketing and selling counterfeits. “Scott further informed customers and potential customers that it was an unauthorized’ Square D distributor and that it stocked Square D products,” the lawsuit reads.


False Advertising
Starting in late February, Scott sent a flyer to customers and potential customers in western Pennsylvania, West Virginia and Maryland, according to the lawsuit.


The flyer contained “false and deceptive statements,” according to allegations laid out in court documents, including that Scott is an “unauthorized”

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