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Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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Computize Inc. v. Longhorn Packaging Inc.

No. 04-03-00138-CV (Texas Crt. App., Jan. 21, 2004)

Court upholds jury verdict, finding that computer consultant that agreed to create a "computer solution" for its client's needs breached the parties' agreement by recommending the purchase of clone computers which malfunctioned, and custom software from a vender who never supplied it.  As a result, the court upheld the jury's award of $120,793.02, which consisted of the costs incurred by the client to purchase both a new computer system and replacement software, together with the costs of hiring an expert to diagnose its problems, and recommend a solution.  Notably, the computer consultant and its designated software vendor were only paid approximately $45,000 for work, services and hardware provided.

Longhorn Packaging Inc. ("Longhorn") was looking to upgrade its computer system, which had been running slow, and its accounting software.  Longhorn entered into an agreement with defendant Computize, Inc. ("Computize") pursuant to which Computize agreed to provide a "computer solution" for Longhorn.  Toward that end, Computize recommended that Longhorn purchase 'clone' computers made by a local vendor, P.C. Wholesale, which computers Computize agreed to set up and install.  Computize also recommended that Longhorn purchase custom made accounting software from Ms. Chelanie Israel.  Computize agreed to ensure that Israel's software was compatible with its recommended PCs and that it would work.

Longhorn paid Computize $29,424.28, which included payment for the P.C. Wholesale computers.  Unfortunately, these computers repeatedly malfunctioned.  Among other things, they lost information, burned up, crashed and shocked the users.  Computize's efforts to fix these computers provided only short term relief.  Longhorn fared no better with Ms. Israel.  Despite paying her $15,770, she never produced workable software.

To remedy Ms. Israel's failures, Longhorn hired the software vendor who it had previously used, who supplied and installed on the new computers supplied by Computize the accounting software Longhorn had previously used.  Unfortunately, when installed on the new computer system, this software ran slower than it had run on Longhorn's old computer system, one of the problems Computize was hired to remedy.

Longhorn thereafter hired a consultant to recommend a solution to its computer problems.  This consultant recommended replacing the computers supplied by Computize with Hewlett Packard machines, after determining that the P.C. Wholesale computers could not be repaired.  When the parties could not reach an amicable settlement of their dispute, Longhorn commenced suit.

The jury found that Computize had breached its agreement with Longhorn, a finding affirmed on appeal.  The Texas Court of Appeals held there was more than sufficient evidence to support the jury's finding that Computize had breached the parties' agreement.  Far from providing a 'computer solution', Computize had recommended purchase of a faulty system, and software from a vendor who did not supply it.

The Texas Court of Appeals also affirmed the jury's award of $120,793.02 in damages, finding it was supported by the evidence.  This consisted of four categories of damage:  (1) the difference between the price Longhorn had agreed to pay for the equipment and services and the value of the equipment and services actually provided; (2) the reasonable and necessary costs incurred by Longhorn in attempting to repair what Computize provided; (3) the difference between the amount paid by Longhorn to replace the computers and software it was supposed to receive under the parties' contract and the amount paid to Computize therefor, and (4) consequential and incidental damages. 

Effectively, the jury awarded Longhorn the sums it expended in buying a new computer system and replacement software, as well as the funds expended in hiring a new consultant to advise it on how to solve its problems.  The Court required Computize to supply these products and services at the price Computize had set therefor in its contract, even though the actual price therefor was significantly higher.

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