What was the outcome of the litigation initiated by Craters & Freighters against Daisychain Enterprises?

In 2010, we initiated litigation against Daisychain Enterprises (dba Freight & Crate), Cathy Benz and Fred Benz ("Defendants") for trademark infringement. The Defendants were using the name "Freight & Crate" in the operation of a business in California similar to a Craters & Freighters Franchised Business. On May 5, 2010, the United States District Court for the Northern District of California issued a permanent injunction against the Defendants. The court permanently restrained and enjoined them from (a) using the infringing mark "Freight & Crate" in conjunction with any shipping or packaging services; (b) using the infringing mark "Freight & Crate" in conjunction with any web-based advertisement or print advertisement; (c) using the infringing mark "Freight & Crate" at any call center to suggest that Freight & Crate is affiliated with Craters & Freighters; (d) identifying themselves anywhere or any time, by their initiative or in response to questions by others, as "Craters & Freighters" or as affiliated with Craters & Freighters; (e) using Craters & Freighters' copyrighted materials in advertisements and promotions; and (f) using the registered trademark "Craters & Freighters" for any purpose whatsoever.

In early 2014, it came to our attention that the Defendants were violating the permanent injunction and using our name to advertise products online. In February 2014, we sent the Defendants a letter to demand that they cease from using the words "Crate & Freight" and that they comply with the permanent injunction. In March 2014, we sought for the Defendants to be held in civil and criminal contempt for violating the permanent injunction. The Defendants were ordered to appear in court in May 2015 to show cause why they should not be held in contempt for failure to comply with the permanent injunction. In August 2015, the Defendants, proceeding pro se, filed an appeal relating the multiple judgments we have obtained against them thus far, which currently total more than $100,000 and are collecting interest at the maximum amount allowed under California law. We submitted our Answering Brief in September 2015, and the United States Court of Appeals for the Ninth Circuit in D.C. No. 14-17497 rendered a decision that the lower District Court's Orders Stand – i.e., we (Craters & Freighters Franchise Company) are the prevailing party.

Subsequently, it came to our attention that the Defendants started a Colorado-based company called Craters & Freighters, a Colorado corporation, in violation of the Ninth Circuit's Permanent Injunction, which prohibited any such use of our marks. In or about December 2016, we filed a Complaint in the United States District Court for the District of Colorado alleging civil conspiracy, false designation of origin and false representation, violation of the Lanham Act, violation of the Colorado Consumer Protection Act, unfair competition, and common law trademark and trade name infringement. As of the issuance date of this Franchise Disclosure Document, this matter remains active and is identified as case no.: 1:16-cv-02951-JLK; Craters & Freighters Franchise Company v. Kathy Benz, individually; Fred R. Benz, individually; Tyler F. Benz, individually; Steve Barnard, individually, and as an officer of Craters & Freighters, a Colorado corporation; and Craters & Freighters, a Colorado corporation.

On or about January 5, 2017, Defendant Steve Barnard entered a pro se appearance on behalf of himself and Craters & Freighters, a Colorado corporation, by submitting an Answer to our Complaint. Mr. Barnard's Answer was stricken on or about January 20, 2017. In or about April 2017, counsel entered an appearance on behalf of Steve Barnard and Craters & Freighters, a Colorado corporation. After Defendant Barnard dissolved Craters & Freighters, a Colorado corporation, counsel filed a Motion to Dismiss Steve Barnard and Craters & Freighters, a Colorado corporation. On or about February 7, 2018, this Motion to Dismiss was granted without prejudice to us. We have the right to re-file, and our management team is taking this into consideration. All other Defendants (except as described above) remain in the case except Tyler Benz, who paid us to settle out of court. Defendants Kathy Benz and Fred R. Benz have evaded service. Meanwhile, motion practice continued as opposing counsel submitted a Motion for Attorney's Fees and Costs as to the dismissal of Defendant Barnard.

Our management team reviewed this Motion and decided not to pursue an appeal. All defendants, except Tyler Benz (who settled out of court) were dismissed without prejudice (meaning Craters & Freighters Franchise Company may reinstate the lawsuit).

Source: Item 13 — TRADEMARKS (FDD pages 32–34)