ND1114114

Title: API Sues Motor Oil Marketers Over Trademarks Usage

Description: The American Petroleum Institute is accusing two companies of selling engine oils that bear API?s trademark without its authorization.

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WASHINGTON ? The American Petroleum Institute (API) has gone to court, accusing two companies of selling engine oils that bear API?s trademark without its authorization.

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The lawsuit was filed in a federal court against two Michigan companies. It charges that Detroit-based U.S. Energy Resources LLC and Warren-based Babylon Trading & Development manufacture and distribute engine oils bearing imitation API logos. API says the companies are not licensed to use its trademarks and their oil does not meet its quality standards.

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They are ?unfairly trading on API?s goodwill? with the intention ?of deceiving the public,? API alleges.

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Tiku Vyas, CMO of U.S. Energy Resources, says the API allegations against the company are false. ?We have never sold a single bottle of motor oil with an API logo on it,? he said.

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The second firm named in the lawsuit, Babylon Trading & Development could not be reached for comment. No number could be found for the company by press-time.

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API is seeking an injunction barring U.S. Energy Resources and Babylon Trading from using its trademarks. It wants damages of $1 million for each grade oil that the firms sold using its logos, and wants the court to order the destruction of nameplates or products bearing its marks. It has also asked that the two companies be required to issue corrective advertising and notify each purchaser that the oil they bought was not certified by API.

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The lawsuit is the second trademark case API has filed against a motor oil firm in a month.

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API says its federally registered Sunburst and Donut trademarks can only be used on oils that pass inspection and meet its standards. It has operated a certification program since 1985. Currently, there are about 530 companies licensed to use the marks.

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A company that is involved in a separate dispute with U.S. Energy Resources, according to the complaint, tipped off API to the alleged trademark infringement.

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In early 2011, U.S. Energy wanted to create a private-label engine oil that it could sell under the brand name ENERGY OIL. In an Internet search it found Spire Brands, a bottler of low end, top-off engine oil owned by Randy Wegner that made no claim to have API-certified lube oil.

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Tiku Vyas told Wegner in a meeting that U.S. Energy Resources was looking for ?very inexpensive engine oil, pricing at $8 per case,? according to API.

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Wegner arranged for U.S. Energy to meet with an oil supplier, Halon Oil, owned by Rodney Kaminga and it was agreed that Halon would supply engine oil at the low-end price asked for.

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As part of the agreement, U.S. Energy was to supply the bottles and labels to Spire Brands. Tiku Vyas approved proofs of labels bearing the API trademarks that were e-mailed to him by a printing company and the labels were subsequently used by Spire Brands on more than 200 four-liter bottles of 5W-20 engine oil, API alleges.

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Spire Brands and U.S Energy later had a disagreement and Spire stopped bottling oil for U.S. Energy. All the firms have since become involved in litigation pending in federal courts in Michigan and Indiana, according API.

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Wegner later provided API with boxes of unused labels that U.S. Energy had supplied and several bottles of oil he had filled before U.S. Energy broke off its agreement with Spire Brands.

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Testing by an independent laboratory revealed that the oil ?fell significantly short? of API?s quality requirements and ?could cause damage to late-model automobile engines,? API alleges.

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As for Babylon Trading & Development, API claims the company markets private-label engine oil under the RALLY?s brand, and possibly other names, for export to Iraq and other locations overseas. Some of the oil is also sold in the Detroit area.

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Babylon contracted with U.S. Energy to buy and bottle oil for its RALLY brand. U.S. Energy took labels carrying fake API logos to Spire Brands but no oil was actually bottled because of the dispute between the two companies, API says. Wegner also gave some of those labels to API.

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The API lawsuit does not say how much oil was involved in the U.S. Energy deal with Spire and Halon but other litigation involving the firms puts the amount at 35,000 gallons of various grades of motor oil and 1,000 gallons of transmission fluid. In court documents in that case, U.S. Energy Resources says it was led to believe that the oil being bottled was supplied by ExxonMobil but later learned that shipping documents it was shown were ?fake.?

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?Carole Donoghue

caroledonoghue@yahoo.com

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Content Subject: Corporate

Formatted Article Date: November 14, 2011

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