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Chesapeake Energy Sued Again Over Natural Gas Royalties

Chesapeake Energy is facing another lawsuit over allegedly improper natural gas royalty payments. The lawsuit was filed by several Fort Worth investors and landowners in state court, alleging that Chesapeake improperly deducted costs from royalty payments.

The company has been sued several times previously by other leaseholders over the same issue. The most recent lawsuit also alleges that Chesapeake used sham transactions to its affiliates to lower the reported price for natural gas production, and did not pay royalties at all for some natural gas liquids.

The lawsuit claims that Chesapeake and co-defendant Total E&P USA used an accounting system that led to lower royalty payments, making sales to its affiliates to arrive at a lower reported price from which royalties would be calculated and conducting sham transactions as a way to impose post-production costs. The suit alleges that for some natural gas liquids, Chesapeake simply did not pay any royalties at all.

Natural gas liquids, which are separated from the gas after production, can command a higher price per unit of energy than dry gas.

Previous lawsuits against Chesapeake Energy over royalty payments were filed by a group of Tarrant County landowners and by the city of Arlington. According to news reports, similar cases have been brought against the company in at least six other states.

AT&T Sued by T-Mobile Over the Color Magenta

Dallas-based AT&T is being sued by T-Mobile in federal district court in Houston, Texas over AT&T’s discount phone subsidiary Aio’s use of the color magenta in its promotional material.

The lawsuit seeks injunctive relief and monetary damages for Aio’s alleged trademark dilution, trademark infringement and unfair competition with regard to trademark rights to the color magenta in the telecommunications field.

According to the lawsuit, in early 2013, T-Mobile announced plans to compete against other telecommunications providers by offering service without the need for an annual or two-year contract. The complaint alleges that AT&T responded by forming Aio, a wholly-owned subsidiary, which began offering no-contract telecommunications services. The lawsuit claims that Aio chose magenta for its promotional material “out of all the colors in the universe” and that the use of the color was likely to dilute the company’s “famous magenta color trademark” and to engender “initial interest confusion” as to the affiliation of Aio.

For its part, Aio says that the logo is simply not magenta.

“T-Mobile needs an art lesson,” an Aio spokesperson said in a statement. “Aio doesn’t do magenta.”

A comparison of the company’s logos shows that while the colors are not identical, they both potentially could be described as magenta. T-Mobile’s logo is somewhere on the hot-pink end of the magenta spectrum, while Aio’s color scheme might be called maroon or plum.

Aio launched in early May, offering no-contract mobile phone service to customers in Houston, Tampa and Orlando. The company plans to expand to other markets over the course of the next year.

The complaint alleges that T-Mobile’s parent company, the German firm Deutsche Telekom, began using the color magenta in the telecommunications field in the 1990s and that magenta is “internationally recognized” as a symbol of the company.

In the United States, Deutsche Telekom began using magenta in T-Mobile marketing materials in 2002. According to the lawsuit, the company has promoted the “Magenta Mark” continuously for over ten years and owns national rights to it in the telecommunications context. The company referenced its spokeswoman Carly Foulkes, who appeared in a magenta dress in early television commercials. T-Mobile has also replaced the traditional red carpet with a magenta carpet at promotional events.

The lawsuit claims violations of the Lanham Act, the Texas Anti-Dilution Statute, the Texas Business and Commerce Code and Texas common law.

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