U-Haul 2016 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2016 U-Haul annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

12
The claims arose from U-Haul’s use of the word “pod” and “pods” as a generic term for its U-Box
moving and storage product. PEI alleged that such use is an inappropriate use of its PODS mark. Under
the claims alleged in its Complaint, PEI sought a Court Order permanently enjoining U-Haul from: (1) the
use of the PODS mark, or any other trade name or trademark confusingly similar to the mark; and (2) the
use of any false descriptions or representations or committing any acts of unfair competition by using the
PODS mark or any trade name or trademark confusingly similar to the mark. PEI also sought a Court
Order (1) finding all of PEI’s trademarks valid and enforceable and (2) requiring U-Haul to alter all web
pages to promptly remove the PODS mark from all websites owned or operated on behalf of U-Haul.
Finally, PEI sought an award of damages in an amount to be proven at trial, but which are alleged to be
approximately $70 million. PEI also sought pre-judgment interest, trebled damages, and punitive
damages.
U-Haul does not believe that PEI’s claims have merit and vigorously defended the lawsuit. On
September 17, 2012, U-Haul filed its Counterclaims, seeking a Court Order declaring that: (1) U-Haul’s
use of the term “pods” or “pod” does not infringe or dilute PEI’s purported trademarks or violate any of
PEI’s purported rights; (2) the purported mark “PODS” is not a valid, protectable, or registrable trademark;
and (3) the purported mark “PODS PORTABLE ON DEMAND STORAGE” is not a valid, protectable, or
registrable trademark. U-Haul also sought a Court Order cancelling the marks at issue in the case.
The case was tried to a jury, beginning on September 8, 2014. On September 19, 2014, the Court
granted U-Haul’s motion for directed verdict on the issue of punitive damages. The Court deferred ruling
on U-Haul’s motion for directed verdict on its defense that the words “pod” and “pods” were generic terms
for a container used for the moving and storage of goods at the time PEI obtained its trademark
(“genericness defense”). Closing arguments were on September 22, 2014.
On September 25, 2014, the jury returned a unanimous verdict, finding in favor of PEI and against U-
Haul on all claims and counterclaims. The jury awarded PEI $45 million in actual damages and $15.7
million in U-Haul’s alleged profits attributable to its use of the term “pod” or “pods.”
On October 1, 2014, the Court ordered briefing on U-Haul’s oral motion for directed verdict on its
genericness defense, the motion on which the Court had deferred ruling during trial. Pursuant to the
Court’s order, the parties’ briefing on that motion was completed by October 21, 2014.
On March 11, 2015, the Court denied U-Haul’s Renewed Motion for Directed Verdict, For Judgment as
a Matter of Law, Or in the Alternative, Motion for a New Trial. Also on March 11, 2015, the Court entered
Judgment on the jury verdict in favor of PEI and against U-Haul in the amount of $60.7 million. This was
recorded as an accrual in our financial statements.
The parties have filed a series of post-Judgment motions:
On March 25, 2015, PEI filed a motion for an award of attorneys’ fees and expenses in the amount of
$6.5 million. On April 27, 2015, U-Haul filed its opposition brief to that motion.
On March 25, 2015, PEI filed a Proposed Bill of Costs in the amount of $186,411. On April 14, 2015,
U-Haul filed an opposition to PEI’s Proposed Bill of Costs. On May 1, 2015, PEI filed an amended bill of
costs in the amount of $196,133.
On April 6, 2015, U-Haul filed, with PEI’s consent, a motion to stay execution of the Judgment,
pending the trial court’s rulings on U-Haul’s post-Judgment motions. That motion was supported by a
supersedeas bond in the amount of $60.9 million, which represents 100% of the Judgment plus post-
Judgment interest at the rate of 0.25% per year for 18 months. PEI and U-Haul both reserved the right to
modify the amount of the bond in the event the Judgment is modified by the Court’s rulings on the parties’
post-Judgment motions (described below). On April 7, 2015, the Court granted U-Haul’s motion on
consent, staying the Judgment pending rulings on U-Haul’s post-Judgment motions.
On April 8, 2015, U-Haul filed its Renewed Motion for Judgment As Matter of Law, or in the
Alternative, Motion for New Trial, or to Alter the Judgment. U-Haul argued that it is entitled to judgment
as a matter of law because even when all evidence is viewed in PEI’s favor, it was legally insufficient for
the jury to find for PEI. Alternatively, U-Haul argued that it is entitled to a new trial because the verdict is
against the weight of the evidence. Alternatively, U-Haul argued that the Court should reduce the
damages and profits award under principles of equity. On April, 27, 2015, PEI filed its opposition brief.