API Sues Two More Oil Marketers


The American Petroleum Institute sued two oil marketers in Michigan, alleging trademark infringement, counterfeiting, trademark dilution, false advertising and unfair competition, APIs second lawsuit against oil marketers in three weeks.

Filed Nov. 4 in the U.S. District Court for the Eastern District of Michigan, the latest lawsuit names U.S. Energy Resources LLC and Babylon Trading and Developing Inc. as defendants. Individuals associated with the two companies and named as co-defendants include Ami Vyas, Tiku Vyas and Samir Lachine of U.S. Energy, and Arlando Yaldoo and Johnny Yaldoo of Babylon.

U.S. Energy Resources LLC of Detroit, Mich., recycles oil and markets products made from recycled oil, including lubricants and engine oils. Babylon Trading and Developing Inc. markets engine oils.

The lawsuit alleges the defendants, individually and in association with each other and/or third parties, have without authorization manufactured, distributed, transported and/or sold motor oil bearing copies or imitations of APIs certification marks and/or trademarks, and have falsely started that the motor oil meets certain API standards. API noted that the use of such uncertified oil by unsuspecting end users could result in expensive engine damage or failure.

API is seeking preliminary and permanent injunctions and monetary relief, including damages sustained by API in an amount not yet determined but believed to be well in excess of $75,000. It also seeks statutory damages of $1 million per counterfeit mark per type of goods sold. Among other things, it asks for seizure of the alleged counterfeit goods and packaging, as well as the means of making counterfeit goods and markets.

API said that in early 2011, U.S. Energy sought to create a private label engine oil it could sell under the brand name Energy Oil. In January 2011, U.S. Energy found an engine oil bottling company in Kingsbury, Ind., operating under the name Spire Brands LLC, owned and operated by Randy Wegner. According to API, Spire brands held itself out as bottling low end, top-off engine oil and made no claim to have API certified motor oil.

Tiku, acting on behalf of U.S. Energy, contacted Wegner via e-mail to set up a meeting to discuss Spire Brands bottling engine oil for U.S. Energy, API stated. During the meeting, Tiku and other U.S. Energy representatives told Wegner that they were looking for very inexpensive engine oil, priced at $8 per case, far less than the cost to produce engine oil that would be API certified or comply with the requirements to use the API SM designation.

According to API, co-defendant Babylon Trading contracted with U.S. Energy to purchase and bottle oil for Babylons private label Rallys brand oil. U.S. Energy subcontracted with Cedar Enterprises of Greenville, S.C., to fill Babylons order for the Rallys brand motor oil. Despite the fact that the oil was not certified by API, Babylon and/or U.S. Energy designed labels for its private label Rallys engine oil that falsely state or suggest that the product is certified, the lawsuit noted.

According to API, none of the companies involved in the various contracts – U.S. Energy, Babylon Trading, Spire Brands, Halon Oil or Cedar Enterprises -ever produced engine oils certified by API, and none of the companies were ever authorized to use the API certification marks on labeling for their engine oils.

According to APIs lawsuit, Spire Brands and U.S. Energy had a disagreement, and Spire Brands ceased bottling engine oil for U.S. Energy. Subsequently, U.S. Energy, Randy Wegner, Spire Brands, Halon and its owner Rodney Kaminga all became involved in litigation that remains pending in federal courts in Michigan and Indiana.

In preparing his defense to U.S. Energys allegations, Wegner contacted API and provided API with photographs of the labels that U.S. Energy had supplied to Spire Brands for its private label engine oil. API asked Wegner to provide samples of the U.S. Energy oil and labeling for further review.

Subsequently, API sent the U.S. Energy bottles of oil it obtained from Wegner to an independent laboratory for testing. The testing revealed that the oil fell significantly short of the requirements for the API SM designation and could cause damage to late-model automobile engines that were designed to require SM-designated engine oil.

Attorney David Sims, of law firm Finkel Whitefield Selik, is representing U.S. Energy. Sims said they filed a lawsuit against Halon Oil Brokers and Spire Brands in March in Michigan, accusing them of a conspiracy to defraud U.S. Energy out of more than $112,000, including $102,000 in cash it had wired for what it thought was high end motor oil the company planned to sell as private label products to an owner of convenience stores and gas stations.

They allegedly shipped these things to my clients, and my clients put these out there in commerce – well, it never happened, Sims told Lube Report. We never received anything – we never got our labels, we never got our containers, we never got any oil. Its all in writing. We have nothing to hide.

Wegner later filed for bankruptcy. It didnt stop us from pursuing him in bankruptcy court where we filed another lawsuit against him, Sims said. Were pursuing him. But what he did was he completely set this thing up, and now hes trying to get the API out on us as a basis to further his own agenda. I have a good rapport with the attorneys for the API, and Ive had extensive discussions and were working through our issues.

API declined to discuss ongoing litigation. Lube Report was unable to contact Babylon Trading by press time.

On Oct. 14, API filed a similar lawsuit against Tailor Made Oil of Indiana. Read Lube Reports Oct. 19 article, Indiana Blender Draws APIs Wrath, for more information: http://www.imakenews.com/lng/e_article002243510.cfm?x=b11,0,w

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