FOR IMMEDIATE RELEASE Court Enters Judgment after InterNACHI Violates Settlement Agreement February 18, 2008 CONTACT: Mallory C. Anderson (800) 448-3942 A federal court has found that the National Association of Certified Home Inspectors, Inc. (n/k/a InterNACHI) violated its settlement agreement with the National Association of Home Inspectors, Inc. ("NAHI") and acted in bad faith, and the court accordingly has entered a money judgment against InterNACHI in the amount of NAHI's attorney fees and costs. On January 25, 2008, a federal court entered a money judgment against the National Association of Certified Home Inspectors, Inc. ("NACHI"), now known as InterNACHI. The judgment requires InterNACHI to reimburse the National Association of Home Inspectors' attorney fees and costs incurred after the court determined that InterNACHI acted in "bad faith" and violated the terms of the settlement between the two home inspector associations resolving a long-term lawsuit. On March 10, 2004, NACHI filed an application with the U.S. Patent and Trademark Office to register a "NACHI" logo. The National Association of Home Inspectors, Inc. ("NAHI") filed an opposition to this application before the Trademark Trial and Appeal Board based on the likelihood of confusion and mistake with NAHI's name and logo. On April 26, 2006, while the trademark opposition was pending, NAHI also filed a lawsuit against NACHI in the United States District Court, Eastern District of Michigan. In that lawsuit, NAHI alleged that NACHI's use of the terms "National Association of Certified Home Inspectors," "NACHI," and "C.R.I." infringed upon and acted to dilute the value of NAHI's trademarks. In addition, NAHI alleged that NACHI, on its own account and through its founder, Nick Gromicko, had repeatedly published defamatory statements regarding NAHI and its members. NAHI also alleged that NACHI engaged in unlawful practices and tortious conduct by manipulating Internet search engine results and making false statements concerning NAHI and the qualifications of its members. After receiving NAHI's evidence during discovery and taking the deposition of NAHI's Executive Director, Mallory Anderson, NACHI agreed to a number of NAHI's demands, and, in return, NAHI agreed to dismiss its pending lawsuit. Pursuant to the settlement, NACHI agreed to start using the assumed name of "InterNACHI," and neither names "National Association of Certified Home Inspectors" or "NACHI" would be used for any commercial, marketing, or publicity purpose. In addition, InterNACHI agreed to amend or withdraw its trademark application for its "NACHI" logo pending before the U.S. Patent and Trademark Office. This resolution effectively provides NAHI with all of the relief that could have been obtained through its opposition filed with the Trademark Trial and Appeal Board. InterNACHI further agreed to give up any claim to the CRI (or C.R.I.) designation. In addition, the parties agreed that InterNACHI's founder, Nick Gromicko, would not use NAHI's name or acronym in discussions on InterNACHI's website, although he may do so in other forums. Nick Gromicko and paid employees of InterNACHI are also not permitted to make disparaging remarks about NAHI. InterNACHI also agreed to remove all offensive material about NAHI from its website and as requested by NAHI in writing. Moreover, InterNACHI agreed not to use NAHI's name, including the phrase "national association of home inspectors," in meta tags or hidden text on its websites to manipulate Internet search engines. Shortly after the settlement was reached, InterNACHI and its founder violated the terms of the settlement, including changing its logo to include the new name in miniscule lettering and beginning an Internet vendetta to disparage and defame NAHI and its executive director personally. Accordingly, NAHI filed a motion to enforce the terms of the settlement agreement and to seek sanctions against InterNACHI for violating the agreement and acting in bad faith. In November, 2007, the federal court entered an Order and Opinion granting NAHI's request to incorporate the terms of the settlement in a court order, putting InterNACHI at risk of contempt if the violations continue; granting NAHI's request to specifically enforce the settlement; and granting NAHI's request for its attorney fees and costs incurred by InterNACHI's behavior. In its opinion, the "Court does not find credible Defendant's arguments" to excuse InterNACHI's failures to change its name on its websites, and it was "apparent that Defendant had no intention of honoring its representation" to make the changes to its name. In addition, the court found that Gromicko's "internet comments constituted 'disparaging' remarks," and that "Gromicko's message board comments referencing [NAHI's executive director] clearly violated the terms of the settlement agreement." The court further held that, "based on the evidence in the record, that Defendant acted in 'bad faith' or in a manner 'tantamount to bad faith' in violating certain terms of the settlement agreement." On January 25, 2008, the federal court entered a judgment in the amount of $10,586 requested by NAHI in the amount of its attorney fees and costs. As of this time, InterNACHI has not yet paid the amount of the judgment, and NAHI intends to aggressively collect on the judgment. The National Association of Home Inspectors, Inc., is a non-profit trade association incorporated in 1987. The mission of NAHI is to promote excellence and professionalism in the home inspection industry. NAHI has members in all fifty states and in Canada. For further information, please contact Mallory Anderson, Executive Director, National Association of Home Inspectors, at (800) 448-49452 or by email to Mallory@nahi.org.
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