Officers and Directors Can be Liable for the Contempt of an Entity Related to Ongoing Trademark Infringement

In Buffalo Wing Factory, Inc. v. Mohd, 2008 WL 4642163 (E.D.Va. 2008), Plaintiffs filed a claim for false advertising, trademark infringement, misappropriation of trade secrets, and tortious interference, among other claims, against Defendants.  Plaintiff was Buffalo Wing Factory, Inc., a restaurant chain known for its buffalo wings.  The Defendants consisted of various individuals, including former employees of the Plaintiff, and a corporate restaurant entity, all of whom participated in opening a restaurant named Buffalo Wing House.  The Defendants were found to have used many of the same business practices used by Plaintiff in an apparent attempt to create customer confusion between the two restaurants and to benefit from the Plaintiff's reputation and good will.  The parties initially settled the dispute by a consent order.  Subsequently, Defendants were found in civil contempt for failing to abide by the consent order.  When the Defendants again failed to comply with the consent order, Plaintiff filed a motion for additional sanctions for continuing violations as to the original consent order and the subsequent contempt order.  Ultimately, the Court ruled that: (1) the Defendants were in contempt; (2) officers and directors of the entity were liable for the contempt of the corporate entity; (3) the Court had the authority to imprison the Defendants for their ongoing violations, yet refused to impose imprisonment while reserving the right to do so in the future; (4) the individual Defendants would be enjoined from working at their infringing restaurant and prohibited from receiving compensation from the restaurant until the Defendants complied with the consent order; and (5) the Court had the authority to close the infringing restaurant, yet refused to impose that punishment at the time.