In a case that may have massive ripple effects throughout the promo industry, Counselor Top 40 supplier ETS Express (asi/51197) is being sued for selling stainless steel water bottles that S'well Bottle Company now claims infringes upon its trademark.

Bottles like the h2go Force - the bottle in question that ETS has been importing and selling for years – have existed since long before S'well launched its product in 2010, argues Sharon Eyal, CEO of ETS Express. The h2go Force bottle is currently sold by many resellers in the promotional products markets.

“A company can’t take an existing design, put their name on it, and claim it’s theirs,” Eyal told Counselor. “We have a strong legal case and I believe we're going to win.”

After sending two cease-and-desist letters to ETS, first in 2014 and then in 2016, S'well served the Southern California supplier in May. Then over the summer, U.S. Customs and Border Protection agents seized ETS’ imports in five separate incidents at the Port of Charleston, South Carolina. The agency intercepted shipments of 345,597 stainless steel water bottles, totaling more than $12 million, claiming them to be “counterfeit,” which they are not.

“This was a wholly egregious act,” said Eyal, which was quickly and effectively reversed when the Court in which the lawsuit is pending ordered S’well to advise Customs that S’well consents to the immediate release of the seized bottles and to refrain from seizing bottles in the future until further notice.

The seized items were finally released on September 10. In the Court’s memo detailing its ruling, Judge Rakoff said that ETS has shown irreparable harm. “Customs and Border Protection has been initially detaining all of ETS’ imports - not just those that are allegedly infringing - so the shipments can be searched for (the bottles),” Rakoff said. “ETS has provided evidence that this delay has caused financial harm in canceled orders and reputational harm, as ETS can no longer be trusted to deliver its goods on time.”

The judge went on to say that ETS’ “bottles have been on the market for years, and it turns out that there are dozens of other companies selling very similar bottles today.” ETS’ lawyers have turned up more than 50 similar bottles being sold today.

What is particularly curious about this incident, Eyal observed, is that approximately one month after the release of ETS’ bottles in September, the CBP issued a press release on Oct. 4 boasting of the seizure of “$12 million in counterfeit water bottles.” In point of fact, S’well never claimed ETS’ bottles were counterfeit.

“It’s the first time our numbers have been hurt in our 32-year history,” Eyal says. “We ran out of stock while our competitors’ products were still coming in. This shouldn’t happen to anybody.”

ETS isn’t the only supplier targeted by S'well, Eyal says, as he knows of a handful of others who also received cease-and-desist letters. Although he is willing to lead the charge in defense of the industry, he wishes more heavy hitters would have his back.

“I reached out to all the top CEOs and all but two didn’t want to get involved,” Eyal says. “I was highly disappointed in some of our industry leaders. If ETS loses, S'well will be able to go against every other supplier and get a summary judgment because now there is precedence. We can't have newbies coming into our industry and disrupting how we do business.” Eyal notes that both parties are currently in the discovery process of the litigation. Requests to S'well for comment have not been returned.

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