Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-5_07-cv-05009/USCOURTS-arwd-5_07-cv-05009-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

ROTOWORKS INTERNATIONAL LIMITED PLAINTIFF

v. Civil No. 07-5009

GRASSWORKS USA, LLC;

GRASSWORKS!!! L.L.C.;

ROBERT D. UMBERSON a/k/a/BOBBY 

UMBERSON; and LINDA K. REED DEFENDANTS

O R D E R

On the 21st day of February, 2007, came on for hearing

plaintiff's Motion For Preliminary Injunction (document #3), and

upon consideration of that motion, the response thereto, the

evidence adduced at the hearing, the arguments of counsel, and the

post-hearing briefs, the Court finds and orders as follows:

1. Plaintiff alleges trademark infringement by

counterfeiting and implied passing off, in violation of 15 U.S.C.

§1114(1), and trade dress and trademark infringement under 15

U.S.C. §1125(a). It seeks, preliminarily, an injunction which

would prevent defendants from making or selling equipment which

imitates its products; prevent them from selling genuine Rotowiper

products they currently have in stock; prevent them from any

marketing activities using plaintiff's trademark or trade dress;

prevent them from selling or otherwise disposing of their own line

of equipment until plaintiff has had a chance to inspect it during

discovery; and prevent them from disposing of documentary evidence

relevant to this dispute.

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There was evidence that a few - very few - Rotowipers were painted red, but the 1

number appears to be extremely small, insufficient to undermine the effect built up over

years of painting almost all machines aqua.

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2. The Court finds the following to be the facts relevant

to the dispute:

* Plaintiff Rotoworks International Limited ("Rotoworks"),

a New Zealand corporation, produces a line of

agricultural implements which are generically described

as "weed wipers." Weed wipers are essentially rollers

on wheels, designed to roll across pasture or crops

wiping herbicide on undesirable plants while sparing the

desirable ones, by virtue of the differing height of the

plants.

* Since at least 1998, Rotoworks has used the trademark

"Rotowiper" for its weed wipers. It has obtained United

States trademark protection for the mark "ROTOWIPER."

Due to the passage of time, that trademark has become

incontestable. It has obtained similar protection for

the mark in New Zealand, Australia, the United Kingdom,

the European Community, and France. 

* Rotoworks painted its Rotowipers aqua, and applied to 1

them a logo which consisted of a small red box depicting

plants being rolled over by a circular object.

* During the time period relevant to this case, Rotowipers

were distributed in the United States exclusively by

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individual defendant Bobby Umberson ("Umberson") and an

entity commonly referred to as GrassWorks. The correct

name of this entity is a matter of confusion. Umberson

- one of its principals - was unable to clearly explain

the distinction between GrassWorks USA, LLC;

GrassWorks!!! LLC; and GrassWorks. The Court has found

nothing in the evidence to clarify this situation, and

will, therefore, treat all the "GrassWorks defendants"

as name variations on the same entity until sufficient

proof is adduced to distinguish them. 

* There was no written contract setting forth the

parameters of the manufacturer/distributor relationship

between Rotoworks and Umberson/GrassWorks, but it was

understood by all concerned that Umberson/GrassWorks

would be the only United States distributor of

Rotowipers.

* Umberson and GrassWorks used internet websites, printed

sales brochures, advertisements in trade magazines, and

display booths at trade shows to market Rotowipers.

Pictures - and examples - of Rotowipers, as well as the

Rotowiper trademark name and red logo, were prominently

displayed in all these marketing materials. 

* In late Summer or early Fall, 2004, without

authorization from or notice to Rotoworks, Umberson and

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GrassWorks began fabricating weed wipers at a shop in

Lincoln, Arkansas. While there were minor differences,

the design of these weed wipers was essentially the same

as that of the Rotowiper. The Arkansas-made weed wipers

were painted the same aqua color as Rotowipers.

Defendants did not utilize the red logo, or put the name

Rotowiper on their units, but instead attached a small

label that stated the units were "manufactured

exclusively for GrassWorks USA, Inc. LLC."

* At about the same time, defendant Linda Reed ("Reed"

became the Marketing Director for GrassWorks.

* Umberson and Reed began to tout their Arkansas-made weed

wipers to the customers they obtained via the channels

already established and used to market Rotowipers. They

did not tell customers that they sold two brands of weed

wipers, both Rotowipers and GrassWorks Weed Wipers.

Instead, they purported to sell only Rotowipers, some

made in New Zealand and some made in Arkansas. In some

instances Umberson or Reed would indicate that the

models made in Arkansas were stronger, had better tires,

and had larger tanks allowing longer use before

refilling. In some they would state that the Arkansasmade units were built to the same specifications as the

New Zealand units. It appears that there was no price

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differential.

* In November, 2006, Rotoworks got wind that the

defendants were making and selling competing weed

wipers, and immediately retained a private investigator,

Steve Mankin ("Mankin"), to look into the matter.

* Mankin visited the Rotowiper booth at the Tulsa Farm

Show on December 9, 2006, posing as a horse farmer

interested in purchasing a weed wiper to upgrade his

pasture. A Rotowiper was on display. Umberson

extolled the virtues of Rotowipers to Mankin. He told

Mankin that he imported some Rotowipers from New

Zealand, and manufactured some in Arkansas, building

them to the same specifications and paying Rotoworks a

royalty. 

* Mankin later located the GrassWorks manufacturing

facility near Lincoln, Arkansas, and via telephone

placed an order for a 12' Rotowiper with Reed. When

Mankin received written confirmation of his order, it

stated that he had ordered a "12' pull type GrassWorks

Weed Wiper."

* On January 15, 2007, Umberson called Mankin and offered

to deliver his unit. In the telephone conversation,

Umberson asked Mankin if he wanted a New Zealand-made

unit or an Arkansas-made unit. Mankin said he was not

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One document (a two-sided sheet identified as W1 and W2) does mention the 2

GrassWorks Wiper one time, but it mentions Rotowiper or rotowiper.com a total of seven

times. The context is such that a reader would undoubtedly understand the single

reference to GrassWorks Wiper as being a Rotowiper.

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particular, but wanted a 12' Rotowiper, and he wanted

one that would last. Umberson told Mankin that the

Arkansas-made unit had a larger tank, stronger pumps,

and frames, and would last longer and outperform the New

Zealand unit. He did not, however, indicate that the

Arkansas-made unit was not a Rotowiper. Umberson

attempted to deliver an Arkansas-made unit, but Mankin

did not accept the delivery, instead having Umberson

served with process in this lawsuit.

* Potential buyers of weed wipers found GrassWorks,

Umberson, and Reed exclusively through their Rotoworks

marketing materials. These materials contained no

references to an Arkansas-made weed wiper, or a

GrassWorks Weed Wiper. There were no separate 2

marketing materials for an Arkansas-made weed wiper or

a GrassWorks weed wiper, nor were the Arkansas-made

units marked with a plate identifying them as

"GrassWorks Weed Wiper." Instead, the decal on the

Arkansas models stated that they were "manufactured

exclusively for GrassWorks USA, Inc. LLC." 

* When a customer wanted to place an order, Umberson and

Reed did not ask whether he wanted a genuine Rotowiper

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or an Arkansas-made knock-off. Instead, they would ask

questions about the planned usage of the equipment, such

as the number of acres to be treated or what size tank

the customer wanted. Based on the responses, they would

then conclude that the customer preferred an Arkansasmade weed wiper rather than a genuine Rotowiper.

Umberson described this technique as "allowing the

customer to notice the difference" between the Arkansasmade weed wipers and the genuine Rotowipers. This

deceptive marketing tactic allowed Umberson and Reed to

take advantage of the Rotowiper trademark, marketing

efforts, name recognition, and reputation, to sell a

different product.

* Umberson testified that if he were enjoined from selling

both Rotowipers and Arkansas-made weed wipers painted

aqua, he would anticipate a loss in the range of

$750,000.00 for 2007. Reed testified that such a loss

was a "possibility." This testimony is not credible.

Umberson testified that he purchased only one container

of Rotowipers a year, that a container held 48 units,

and that he had 55 units on hand as of the date of the

hearing. It thus appears that the sale of Arkansas-made

weed wipers had completely displaced the sale of genuine

Rotowipers by 2006. As for aqua-painted units, Umberson

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testified that he was not "selling on color," and had

begun painting his Arkansas-made units yellow about two

weeks before the hearing.

* Umberson gave a variety of explanations for why he

decided to paint the Arkansas-made weed wipers aqua.

His testimony on this issue is not credible. He

testified that he chose aqua because he had the paint on

hand to touch up Rotowipers damaged in shipment; because

it provided good coverage without using much paint;

because it did not clash with the colors of other farm

equipment; and because it did not show blemishes, rust,

or manure. These asserted reasons fly in the face of

common sense. The quantity of paint on hand for touchups would clearly be insufficient to paint the number of

Arkansas-made units that were being produced. Rust and

manure would not show up less against an aqua background

than against other colors. Aqua does not offer less

"clash" with common farm implement colors than other

colors. 

* Umberson also testified that aqua paint is cheaper than

yellow paint, but his testimony about the size of the

price differential was contradicted by that of Rafe

Essary, a witness with a background in auto body work.

While there does appear to be a differential, the

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credible evidence indicates that it is minimal.

3. In order to establish its right to preliminary

injunctive relief, Rotoworks must satisfy the four factors set out

in Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109 (8th

Cir. 1981):

* Is there a threat of irreparable harm to Rotoworks?

* What is the balance between harm to Rotoworks if

injunctive relief is not granted, and harm to the

defendants if it is granted?

* What is the probability that Rotoworks will succeed on

the merits?

* What is the public interest in this matter?

4. The Threat of Irreparable Harm:

For the reasons set forth in paragraph 6, the Court finds

that the conduct of defendants had a tendency to deceive customers

who wished to purchase a Rotowiper. That being the case,

irreparable harm to Rotoworks is presumed. "A finding of tendency

to deceive satisfies the requisite of irreparable harm." Black

Hills Jewelry Mfg. v. Gold Rush, Inc., 633 F.2d 746, 753 (8th Cir.

1980). This factor weighs in favor of Rotoworks.

5. The Balance of Harms:

Against the presumed irreparable harm to Rotoworks if an

injunction is not granted the Court has only the testimony of

Umberson and Reed that their business might suffer a loss of as

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much as $750,000.00 in 2007 if it is enjoined from selling

Rotowipers and Arkansas-made weed wipers painted aqua. The Court

finds this testimony incredible. The evidence suggests that

defendants' sales of Rotowipers had come to a virtual standstill

as a result of their practice of substituting their own products.

Indeed, judging from the numbers given by Umberson, it appears

that no Rotowipers were sold in 2006. As for aqua-painted

Arkansas-made weed wipers, Umberson testified that he was not

"selling on color," and has already begun painting his units

yellow. The Court thus finds there will be very little, if any,

harm to defendants if they are enjoined from selling Rotowipers

and aqua-painted Arkansas-made weed wipers. This factor weighs in

favor of Rotoworks.

6. The Probability of Success on the Merits:

(a) The "implied passing off" claim:

The Lanham Act "prohibits the use of a mark in connection

with goods or services in a manner that is likely to cause

confusion as to the source or sponsorship of the goods or

services." Davis v. Walt Disney Co., 430 F.3d 901 (8th Cir.

2005); 15 U.S.C. §1125(a)(1). This includes confusion "as to

whether there is an 'affiliation, connection, or association' with

another person." Id. "[T]he core element of trademark infringement

law is whether an alleged trademark infringer's use of a mark

creates a likelihood that the consuming public will be confused as

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to who makes what product." Id. (internal citations and quotation

marks omitted).

In evaluating the likelihood of confusion from the use

defendants made of the mark "Rotowiper," six factors are to be

considered:

* the strength of the mark for Rotoworks, which has a

right to its protection because it is a registered,

incontestable mark;

* the similarity between Rotowork's and defendant's marks;

* the degree to which the goods compete;

* whether defendants intended to confuse the public;

* the type of product, its costs and conditions of

purchase; and

* evidence of actual confusion in the marketplace.

Frosty Treats Inc. v. Sony Computer Entertainment America Inc.,

426 F.3d 1001 (8th Cir. 2005). The Court evaluates these factors

as follows:

* The "Rotowiper" mark was a strong one for Rotoworks. It

was registered in the United States, and also in New Zealand,

Australia, the United Kingdom, the European Community, and France.

Rotoworks has used the mark since at least 1998. 

* The "similarity" factor does not come into play in this

case, inasmuch as the gravamen of the claim is that defendants

were profiting from deceptive use of Rotoworks' trademark rather

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than using one confusingly similar. In that respect, this case is

akin to Truck Equipment Service Company v. Fruehauf Corporation,

536 F.2d 1210 (8th Cir. 1976), where the defendant used

photographs of plaintiff's product to trade upon plaintiff's

reputation and to "confuse potential customers as to the source of

origin of the trailer pictured on the sales literature."

* The goods in question were in direct competition.

* There is strong evidence that defendants intended to

confuse the public as to the distinction between their Arkansasmade weed wipers and genuine Rotowipers, including Umberson's

statements to Mankin at the Tulsa Farm Show, the sales tactics

described by Reed, and the close similarity in appearance between

the Rotowipers and the Arkansas-made weed wipers.

* The type of product, its costs, and conditions of

purchase are also factors which weigh in favor of Rotoworks. The

product is a farm implement for which there is no established

showroom, no widely circulated catalog. A sample of the product,

along with one-page brochures and video clips, is taken to farm

shows, where potential customers can look it over. They may place

orders there, or over the telephone or internet. The product is

delivered to them later, when they may have lost or discarded the

sales literature. If an Arkansas-made machine is delivered, it

will be virtually identical in appearance to the machine the

customer viewed at a show, or the machine in the sales brochure.

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The tag on the Arkansas-made weed wipers reflects that the machine

was "mfg exclusively for GrassWorks USA, Inc. LLC," which would

not necessarily disabuse a purchaser of the notion that the

machine was a Rotowiper manufactured exclusively for GrassWorks.

* While there was no evidence of actual confusion, the

Court does not find this to weigh heavily in favor of defendants,

under the peculiar circumstances of this case. Defendants'

customers are Americans, and defendants were the only American

distributor of the product. Thus any complaints would have been

fielded by Umberson or Reed, and the chance that they would ever

reach Rotoworks appears minuscule. The issue, however, is not

actual confusion, but likelihood of confusion, a finding which

"must ultimately rest on the inference to be drawn from

circumstantial evidence." Heartland Bank v. Heartland Home

Finance, Inc., 335 F.3d 810, 822 (8th Cir. 2003)(citation

omitted). An inference of confusion may certainly be drawn from

the sales tactics of the defendants. 

The foregoing evaluation of factors leads the Court to

conclude that Rotoworks has shown a strong likelihood of

prevailing on its Lanham Act claim of implied passing off.

(b) The trade dress infringement claim:

Rotoworks claims that its aqua paint color is protectible

trade dress that has been infringed by defendants' act of painting

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Rotoworks also contends that the doctrine of licensee estoppel prevents defendants 3

from contesting the protectibility of the aqua color, but has cited no cases of licensee

estoppel involving trade dress. The Court does not find it necessary to address this

argument, given that the decision turns on other points of law.

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their virtually identical product the same color. Defendants 3

counter that color is not a protectible aspect of trade dress.

Trade dress is "the total image of a product, the overall

impression created, not the individual features." To establish a

claim for infringement thereof, Rotoworks must prove:

(1) that its trade dress is inherently distinctive, or has

acquired distinctiveness through secondary meaning;

(2) that it is nonfunctional; and

(3) that its imitation would result in the likelihood of

confusion in consumers' minds as to the source of the

product.

Gateway, Inc. v. Companion Products, Inc., 384 F.3d 503 (8th Cir.

2004).

The Court finds that a sufficient showing of secondary

meaning has been made to justify injunctive relief on this theory.

There was evidence that no other brand of farm machinery is

painted aqua, and that Rotoworks has used the color almost

exclusively for its Rotowipers since it began operations. This

date is not shown by the evidence, but the American trademark

registration was obtained in 1998, so the implements have been

made for at least eight years. 

In addition, "[t]he existence of secondary meaning of a mark

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may be inferred from evidence of deliberate copying of that mark,"

Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 871 (8th Cir.

1994). Here, the evidence strongly suggests that defendants chose

to paint their competing weed wipers aqua because that was the

color of genuine Rotowipers, lending strength to Rotoworks' claim

of secondary meaning for its paint color.

The Court also finds that the aqua color is non-functional as

that concept is understood in trademark jurisprudence. Trade

dress is functional if it performs some function other than

identifying the product. 

If the particular feature is an important ingredient in

the commercial success of the product, the interests in

free competition permits its imitation in the absence of

a patent or copyright. On the other hand, where the

feature or, more aptly, design, is a mere arbitrary

embellishment, a form of dress for the goods primarily

adopted for purposes of identification and individuality

and, hence, unrelated to basic consumer demands in

connection with the product, imitation may be forbidden

where the requisite showing of secondary meaning is

made. Under such circumstances, since effective

competition may be undertaken without imitation, the law

grants protection.

Gateway, 384 F.3d at 508, citing in part the Fruehauf case. 

The Supreme Court has explained functionality thus: 

[i]n general terms, a product feature is functional, and

cannot serve as a trademark, if it is essential to the

use or purpose of the article or if it affects the cost

or quality of the article, that is, if exclusive use of

the feature would put competitors at a significant nonreputation-related disadvantage.

Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165 (1995).

Although Umberson gave a litany of reasons for using the aqua

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color, none of those reasons persuades the Court that the color

was functional. While aqua may be a cheaper color than the yellow

defendants have now started painting their weed wipers, the

difference is minimal, and certainly not such as to put defendants

at a "significant non-reputation-related disadvantage." 

As for the likelihood of confusion in consumers' minds as to

the source of the product, the Court has already explained that

the evidence is strong that this is the very reason defendants

chose to paint their weed wipers aqua.

For the foregoing reasons, the Court finds a likelihood that

Rotoworks will succeed on its claim that its aqua paint color is

protectible trade dress, contributing strongly to the total image

of its product, which was infringed by defendants.

7. The Public Interest:

The legislative history of the Lanham Act, as cited in Truck

Equipment, supra, points up the public interest in this matter:

Trade-marks . . . are the essence of competition,

because they make possible a choice between competing

articles by enabling the buyer to distinguish one from

the other. Trade-marks encourage the maintenance of

quality by securing to the producer the benefit of the

good reputation which excellence creates. To protect

trade-marks, therefore, is to protect the public from

deceit, to foster fair competition, and to secure to the

business community the advantages of reputation and good

will by preventing their diversion from those who have

created them to those who have not.

536 F.2d at 1215 (citation omitted).

It is for these reasons, so succinctly stated, that the Court

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finds the public interest would be served by the grant of

preliminary injunctive relief in this matter.

8. Having concluded that the Dataphase factors weigh in

favor of granting preliminary injunctive relief, the Court now

turns to the form that relief should take. Rotoworks furnished

the Court with a precedent for a preliminary injunction which

would include the following forms of injunctive relief:

(a) prohibiting defendants from making or selling equipment

which imitates the Rotowiper product line;

(b) prohibiting defendants from selling their remaining

Rotowipers;

(c) prohibiting defendants from marketing activities which

use the Rotowiper trademark, logo, or aqua trade dress;

(d) prohibiting defendants from destroying or selling

equipment which imitates the Rotowiper product line

until Rotoworks has had an opportunity to inspect

defendants' manufacturing facility during discovery;

(e) prohibiting defendants from destroying or concealing

documentary evidence related to the manufacture or sale

of their Arkansas-made weed wipers until Rotoworks has

had a chance to complete discovery.

The Court believes that the first of these prohibitions is

overly broad, in that Rotoworks does not hold a patent on weed

wipers, and therefore cannot prevent competitors from making and

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selling them. However, to the extent that defendants use aqua

paint to make their weed wipers appear to be Rotowipers, the Court

finds that the injunction should be granted, and the use of aqua

paint on competing Arkansas-made weed wipers should be prohibited

at this stage of the case.

The second of these prohibitions is overly harsh, in that it

would force defendants to hold on to an inventory of some 55

Rotowipers indefinitely. While the Court is cognizant that this

is essentially what defendants have been doing for the past year,

the Court believes that equity requires a different result. The

Court will, therefore, prohibit defendants from selling their

existing inventory of Rotowipers only on the condition that

Rotoworks repurchase them for the price paid by defendants, less

ten per cent per annum to account for depreciation on the units,

and less the cost of shipping the units back to New Zealand. If

Rotoworks elects to repurchase the Rotowipers, the transaction is

to be completed within thirty (30) days. If Rotoworks does not

elect to repurchase the Rotowipers, defendants may sell them, but

may not represent that they are authorized Rotowiper dealers, and

may not use any Rotoworks or Rotowiper advertising materials,

including Rotowiper brochures and the rotowiper.com website, to

effect the sales.

The third prohibition will be granted in full.

The fourth prohibition will be granted, with the provision

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that Rotoworks may inspect and photograph equipment which imitates

the Rotowiper product line at defendants' manufacturing facility

during the next thirty days, after which defendants may begin

selling their equipment, so long as it does not violate any other

prohibition in this Order. This prohibition does not apply to

equipment made after the date of this Order which does not in any

way violate the terms of this Order.

The fifth prohibition will be granted in full.

9. The Court next takes up for consideration the matter of

bond, which is required pursuant to F.R.C.P. 65, to secure "the

payment of such costs and damages as may be incurred or suffered

by any party who is found to have been wrongfully enjoined or

restrained." The Court finds that a bond in the sum of $5,000.00

will adequately protect defendants, given that the prohibitions

herein ordered will inhibit their business only by preventing them

from selling existing units for thirty (30) days, and preventing

them from painting their weed wipers aqua. Indeed, the Court

recognizes a very real possibility that defendants may benefit by

reselling their inventory of Rotowipers to Rotoworks, given that

their marketing efforts have been focused on their own product for

the past two years.

IT IS THEREFORE ORDERED that plaintiff's Motion For

Preliminary Injunction (document #3) is granted.

IT IS FURTHER ORDERED that, unless and until this injunction

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is dissolved by Court order, defendants cease painting their

Arkansas-made weed wipers aqua.

IT IS FURTHER ORDERED that Rotoworks may elect to repurchase

from defendants their existing inventory of Rotowipers, at the

price paid for the units by defendants, less ten per cent per

annum to account for depreciation on the units, and less the cost

of shipping the units back to New Zealand. If Rotoworks elects to

repurchase the Rotowipers, the transaction is to be completed

within thirty (30) days. If Rotoworks does not elect to repurchase

the Rotowipers, defendants may sell them to other purchasers, but

may not represent that they are authorized Rotowiper dealers, and

may not use any Rotoworks or Rotowiper advertising materials,

including Rotowiper brochures and the rotowiper.com website, to

effect the sales.

IT IS FURTHER ORDERED that defendants are prohibited from

conducting any marketing activities which use the Rotowiper

trademark, logo, website, or aqua trade dress.

IT IS FURTHER ORDERED that defendants are prohibited from

destroying or selling any equipment currently in their possession

or control which imitates the Rotowiper product line until

Rotoworks has had thirty days to inspect and photograph

defendants' manufacturing facility and inventory as a part of

discovery. This thirty-day period is to commence on the day after

this Order is entered, and defendants are to cooperate fully in

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allowing Rotoworks access to their facilities and inventory.

IT IS FURTHER ORDERED that defendants are prohibited from

destroying or concealing documentary evidence related to the

manufacture or sale of their Arkansas-made weed wipers until the

trial of this matter and any related appeals are concluded.

IT IS FURTHER ORDERED that Rotoworks post a bond in the sum

of Five Thousand and no/100 Dollars with the Clerk of Court, same

to stand good for any damages that might accrue to defendants if

this injunction should prove to have been granted in error.

IT IS SO ORDERED, this 5th day of March, 2007.

 /s/ Jimm Larry Hendren 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

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