Ohio Practical Business Law : Columbus Ohio Business Lawyer & Attorney : Teri Rasmussen : Plunkett Cooney Law Firm : Commercial Law, Creditors, Business Formation : Columbus, Central Ohio

Because getting a judgment and actually getting paid on the judgment are two very different things, it may be worthwhile to "think outside the box" when it comes to finding ways to collect.  If a judgment debtor has patents or other intellectual property, has money coming to them through a bequest under a will, or owns other intangible property, a creditor's bill  may just be the creative solution.

In Ohio, a creditor’s bill action may be used to reach assets of a judgment debtor that might not otherwise be difficult to subject to judgment liens, executions, or garnishment. In re Estate of Mason, 109 Ohio St.3d 532, 849 N.E.2d 998, 2005-Ohio-3256.  It is authorized by Ohio Rev. Code §2333.01 which states in its entirety: 

Equitable and certain other assets

When a judgment debtor does not have sufficient personal or real property subject to levy on execution to satisfy the judgment, any equitable interest which he has in real estate as mortgagor, mortgagee, or otherwise, or any interest he has in a banking, turnpike, bridge, or other joint-stock company, or in a money contract, claim, or chose in action, due or to become due to him, or in a judgment or order, or money, goods, or effects which he has in the possession of any person or body politic or corporate, shall be subject to the payment of the judgment by action.

 Essentially, a creditor’s bill allows a creditor to reach more intangible property interests of the debtor not amenable to garnishment or attachment. Among other sorts of interests, this includes:

• Interests of heirs and legatees. In re Estate of Mason, 109 Ohio St.3d 532, 849 N.E.2d 998, 2005-Ohio-3256.
• Patents in which creditor does not have a security interest. Olive Branch Holdings, L.L.C. v. Smith Technology Dev., L.L.C. , 181 Ohio App.3d 479, 909 N.E.2d 671 (10^th App. Dist. 2009)
• Fees to be received by attorney for legal services provided. Huntington Center Associates v. Schwartz, Warren & Ramirez, 2000 WL 1376524 (10^th App. Dist.).
• Breach of contract claim. Lakeshore Motor Freight Co. v. Glenway Ind., 2 Ohio App.3d 8, 440 N.E.2d 567 (1^st App. Dist. 1981).

So how does one put this sort of remedy in motion?  First, it is important to understand that judgment on the underlying claim must have been obtained.  Then the judgment creditor must file a new lawsuit against the judgment debtor and any third party holding the intagible property owned by the judgment debtor.

The creditor's bill complaint must state that the debtor does not have sufficient personal or real assets subject to execution and levy to satisfy the creditor's outstanding judgment.  This is more than a technicality.  To be successful, a creditor must in fact present evidence of the debtor's insufficient assets and this must be something more than counsel's recitation of facts such as the debtor no longer being in business and conclusory statements.   Graybar Electric Co., Inc. v. Keller Electric Co., Inc., 113 Ohio App.3d 172, 680 N.E.2d 687 (9^th App. Dist. 1996).  Thus, for best results, it may be wise to take a judgment debtor examination or attempt garnishment before filing this sort of action. 

Once the creditor's bill case is filed, the creditor then obtains a lien on the intangible property sought and will have priority over other judgment creditors who have not pursued collection of their judgment in this way.

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I'm enough of a geek (well, actually, I'm probably mostly always a geek when any sentence starts out this way) to think that it's always somehow at least a little bit "cool" when real life "LAW" intersects - in a nonthreatening way, mind you - with my everyday life.  Which is WHY I simply HAD to write this blog post about the recent change in name of one of my favorite Dublin, Ohio (and now that I know about the larger Worthington location, even more favorite) Central Ohio restaurants.

My Jason's Restaurant & Bar began life in a smallish location on Dublin's main drag that had previously been home to a Bruegger's Bagels or some such enterprise.  It quickly became one of my favorites as a lawyer working in Dublin beause of its eclectic menu featuring both Asian cuisines and more traditional American fare, terrific decor, and reasonable prices.  Parking was sometimes an issue, but hey you can't have everything and the Worthington location may solve some of those issues. 

Unfortunately for Jason's, a competitor was eyeing the territory and decided to move in.  Jason's Deli has a federal trademark and thus was able to force Jason's Restaurant & Bar to change its name.  Click here for the local newspaper account of the predicament the owner of my Jason's found himself in. 

GUEST POST BY CHERYL SCOTNEY

So how can this be?  How can an already established local eatery be forced to give up the name it has worked hard to establish in the community to an outsider?  For answers, I went to my friend Cheryl Scotney, a Registered Patent Attorney with Standley Law Group LLP.  At my request, she agreed to pen the following guest post addressing the general issue this sort of thing raises  - although she cautions that she can only surmise the actual sequence of events and actions taken (or not taken) in the particular Jason's incident.

 >>>>>>>>>> and now.....

                                                  A GUEST POST BY CHERYL SCOTNEY >>>>>>>>>>>>>>>>>>>   

The story is an old one…  a central Ohio restaurant opens with its chosen name but the name is not protected by trademark registration.  Some years later, after the restaurant is successful and has acquired goodwill in the restaurant name, it is required to change its name.  Another restaurant is entering the area with a confusingly similar name.  The new restaurant entering the market has obtained federal trademark rights in its name -- many years before the central Ohio restaurant opened.  The new restaurant demands a name change by the existing central Ohio restaurant.

This scenario can happen with restaurants or any other new business venture. That is why it is extremely important for small business owners to adequately protect their new business name. 

In some recent cases, the small business owner did not perform a federal trademark search or file for federal trademark protection before opening their business.  The small business owner may be able to go on for several years with no problem.  However, a trademark issue may then arise when the small business owner becomes successful and is thrust into the public eye and/or when a new business with a pre-existing federal trademark registration for a confusingly similar trademark comes to town.  

The small business owner (who may no longer be all that small at this point) may be required to change its name or pay legal fees to fight for their business name.  A defense to any trademark infringement claim may be that the small business owner was using the mark in Ohio prior to the federally registered entity coming to town.  Unfortunately, the defense would not be successful as federal trademark rights that were secured prior to the opening of the Ohio restaurant supersede any trademark rights acquired by the Ohio restaurant.  The cost of changing signs, menus, advertising, uniforms and other printed and online advertising is significant.  But the most costly is the loss of goodwill that is associated with the business name. 

Several recent Ohio cases point to the fact that it is not a good idea to pick your personal name as the trademark or service mark for your company.  This only becomes an issue when your small business becomes successful and another company acquires your company through a sale.  The sale will most likely include assignment of all trademarks associated with the company.  The seller will then be in the position that he/she can no longer do business using his/her own name. 

It is also important to file a trademark application in the correct party’s name.  Whatever entity is going to be using the mark with the sale of the goods or services is the correct entity to list as applicant.  If a person is in the process of filing paperwork to incorporate or set up an LLC, then filing a trademark application should wait until that business paperwork is filed and accepted.  This is done to avoid issues of fraud and liability. 

Securing Ohio trademark or service mark rights in your company’s name may be of little value in today’s advertising environment.  A federal trademark registration is the best means of protection.  Unbeknownst to most, an Ohio trademark/service mark registration application requires an applicant to verify that “no other person has a registration of the same or of a confusingly similar trade mark/service mark in the United States Patent Office for the same or similar goods” (Line 10) and that the applicant is the “owner of a concurrent registration in the United States Patent Office of this trade mark/service mark covering an area including this State” (Line 11).    Verification of these statements implies that a comprehensive federal trademark search was performed prior to filing the Ohio trademark/service mark application.  

A typical comprehensive trademark search performed by a competent trademark attorney costs about $300/mark or if searched through an outside search service, such as CorSearch, the cost is about $600/mark.   A trademark search should include a federal search on the exact mark, alternate spellings or similar marks, a search of all 50 states trademark and service mark databases, a search of domain names and a common law trademark search (usually performed on the Internet or in business listing databases).

     Cheryl S. Scotney is a Registered Patent Attorney at Standley Law Group LLP located in Dublin, Ohio.  She  has a degree in Chemistry and focuses her practice on  the preparation and prosecution of domestic and foreign patent and trademark registration applications, in the filing of opposition and cancellation trademark proceedings, and in the preparation and prosecution of copyright registration applications.  She can be reached at cscotney@standleyllp.com or by phone at (614) 792-5555.

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