California businessman Mark T. Pappas might have avoided jail time once again for civil contempt of court on Friday when, just hours before a court deadline, he filed affidavits saying he was living up to the terms of the ruling against him in a copyright case.
Pappas, CEO of Creative Pipe Inc., had until 2 p.m. Friday to produce affidavits outlining his compliance with a injunctions and monetary sanctions stemming from his long-running legal fight with Dunkirk, Md.-based Victor Stanley Inc. Pappas said in the affidavits he had complied with all of the injunctions except for paying more than $3 million he still owes in damages and sanctions for destroying electronic discovery material during the trial.
Pappas said he had been unable to come up with the full amount owed and offered to make a $100,000 “good faith” payment and further installments of $20,000 a month. He has appealed the U.S. District Court’s decision to the 4th U.S. Circuit Court of Appeals.
“The ongoing costs related to this lawsuit continue to hamper the business’ cash flow and it needs funds to operate and I need funds to support my family,” Pappas wrote.
Pappas said also that he had depleted the company’s two lines of credit already in paying the sanctions and he could not qualify for a loan because of the judgment against him and Creative Pipe.
To date, Pappas has paid $478,409.
Randell C. Ogg, a Washington, D.C., solo practitioner who represents Victor Stanley Inc., chided Pappas on the claims of financial hardship. He said in a response filed with the court a few hours after Pappas’ affidavits that it was the first he heard of any hardship and that the company was supposed to have been putting money aside all along as part of its compliance with the discovery rulings against them.
“Defendants proffered no excuse or explanation, made no partial payment or request any delay in payment prior to today,” Ogg wrote. “[Victor Stanley] respectfully submits that the affidavit filed by Mr. Pappas is not credible and does not excuse non-compliance.”
In October 2006, Victor Stanley Inc. sued Pappas and his company, Creative Pipe, for downloading the company’s design schematics for benches and then having similar items manufactured in China. Pappas competed against Victor Stanley for site furnishing contracts using the pilfered designs under the trade name “Fuvista,” which Pappas later admitted was short for “FU Victor Stanley.”
The litigation in U.S. District Court in Baltimore was marked by repeated e-discovery violations, leading Magistrate Judge Paul W. Grimm to impose sanctions of more than $1 million and recommend jail time for repeated contempt in September 2010.
The sanction, but not incarceration, was upheld by Senior Judge Marvin J. Garbis, who later heard the case in a bench trial in January.
Garbis ruled in September that Creative Pipe’s actions amounted to unfair competition under state law as well as violations of the Lanham Act with false advertising and reverse palming-off. One bench design was also ruled to have infringed on Victor Stanley’s existing patent.
Garbis ordered monetary damages as well as injunctive relief on Sept. 30. The judge’s final order, issued Nov. 4, gave Creative Pipe until Dec. 1 to comply. When that deadline passed, Garbis gave the company until Dec. 15 to be in full compliance.
The injunctive relief included scrubbing Creative Pipe’s website of all drawings and references to Fuvista and any products found to infringe Victor Stanley’s copyrights. The company also was required to remove all claims that its products are “Made in the USA,” and to tell customers who purchased the products that they were manufactured in China.
As of 5 p.m. Friday, Garbis had not issued an order or response to Pappas’ filings. James Rothschild of Anderson, Coe & King, who represents Pappas and Creative Pipe, said Friday afternoon that he had not heard from the court on the affidavits.
“We’re just going to wait to see what the court has to say,” Rothschild said.