CMS Slapped With Lawsuit Over Stickers

A small sticker could land your company in court.

CMS Enhancements Inc. in Tustin, a supplier of computer peripheral equipment, found that out last week when Compaq Computer Corp. sued the company in U.S. District Court in Los Angeles, alleging trademark violations. Compaq claims in the suit, filed last Tuesday, that CMS violated trademark laws by putting “Compaq” stickers on the computer disk drives CMS makes for use in Compaq systems.

CMS officials said Monday that the use of the stickers, which did not imitate the lettering of the Compaq corporate logo, was an oversight. They said the stickers were meant only to identify the Compaq-compatible 40-megabyte and 100-megabyte disk drives CMS supplies to computer dealers, who install them in Compaq machines.

“We’re disappointed they didn’t give us the courtesy of a phone call before filing the lawsuit,” said Fred Judd, CMS chief financial officer. “We’re resolving the suit now and expect to have a settlement soon.”

But Debra Globe, a spokeswoman for Houston-based Compaq, said the firm learned about the stickers after its repair unit received some drives from customers who were apparently confused about the manufacturer of the products.

That could have raised questions over which company was responsible for repairing the disk drives under warranty, Compaq alleges in the suit. Compaq is seeking treble damages and attorneys’ fees from CMS.

“I don’t know if we called them or not before filing the suit, but we are careful to preserve our trademark in the industry,” Globe said.

Judd acknowledged that Compaq has some valid concerns about the trademark confusion. He said CMS is negotiating a settlement with Compaq for which CMS has offered to pay for legal expenses and to stop using the stickers.

“This was an inadvertent error,” Judd said.