UPDATE: Company sues over bonded leather criticism
Two defendants deny accusations
Larry Thomas -- Furniture Today, March 4, 2010
GREENSBORO, N.C. — The company that claims to have introduced bonded leather to the U.S. furniture industry has filed suit against Ashley Furniture, Ashley President Todd Wanek and two others, accusing them of denigrating the product through false advertising and a variety of other misrepresentations.
The suit, filed in U.S. District Court here by Design Resources Inc. and its owner, Alan Naness, accuses the defendants of numerous violations of the federal Lanham Act and North Carolina statutes that prohibit unfair trade practices.
"DRI has been harmed by defendants' false and/or misleading claims about DRI's products..." the 32-page complaint reads. "DRI's actual and potential customer relationships have been damaged, and DRI has been forced to spend substantial sums to address resulting damage to its reputation and goodwill and has lost substantial sales and market share."
In addition to Ashley and Wanek, the suit names the trade association Leather Inds. of America and Dr. Nicholas Cory, the group's technical director, as defendants.
William Koslo, an attorney for Ashley, said in response, "We don't believe the suit has any merit. We're frankly surprised by it and certainly intend to vigorously defend our position."
Richard Milone, an attorney representing Cory and the trade association, said the two defendants "believe that DRI's accusations are completely baseless, and intend to defend the litigation aggressively."
According to the suit, Cory tested the DRI product, NextLeather, in late 2006 and concluded could be labeled and marketed as "bonded leather" in accordance with Federal Trade Commission guidelines.
Naness launched NextLeather in January 2007, and the suit says Ashley soon ran several ads in Furniture/Today that denigrated the product, but didn't mention it by name.
"All informed readers of Ashley's advertisements knew they were referring to DRI and its NextLeather bonded leather," the lawsuit says, because no other company was then marketing bonded leather.
The suit claims Cory told Ashley that DRI was misrepresenting NextLeather as bonded leather, and says his comments fueled a "smear campaign" by Ashley against DRI and NextLeather that included negative comments about bonded leather in Furniture/Today news story published in July 2007.
Cory also told Ashley that DRI had forged e-mails from him that said NextLeather could be labeled as bonded leather, the suit claims.
"Defendants ... deprived DRI of a unique, one-time opportunity to exploit and capitalize on its position as the first to develop a novel, successful bonded leather product and create a new market niche," the suit reads.
Ashley later launched its own bonded leather product, and the suit says Ashley is buying it from the same Chinese factory that makes NextLeather. That has caused delays in shipments of DRI's product because Ashley is tying up the plant's production capacity, the suit contends.
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