A U.S. District Court ruled Aug. 14 that a Fort Myers, Fla., plastics importer illegally passed off acetal purchased in Taiwan in 1993 and 1994 as a more expensive resin produced by Hoechst Celanese Corp.
Hoechst, of Summit, N.J., had accused Nylon Engineering Resins and its owner, Thomas Popoli, of purchasing Tepcon-brand acetal in Taiwan and reselling it in the United States as Hoechst's Celcon-brand acetal. Popoli was also accused of buying Hoechst's Encore-brand recycled acetal in the United States and reselling it as Celcon as well.
In the ruling, Judge Susan Bucklew wrote that the court did not have to establish material differences between Tepcon and Celcon because NER admitted to placing Celcon labels on Tepcon.
Tepcon is produced by Taiwan Engineering Plastics Co. (Tepco). Hoechst Celanese owns 45 percent of Polyplastics, a joint venture that owns 75 percent of Tepco. When the suit against NER was filed, Hoechst companies owned 50 percent of Tepco, with Polyplastics owning an additional 25 percent.
Tepco is licensed to make and sell Hoechst's Celcon in Taiwan.
Celcon sold for between $1.30 and $1.50 a pound in North America between 1992 and 1994, while Tepcon sold for less than $1 a pound in Taiwan during that same period, court records showed. Prices for Encore were not included in the ruling. Hoechst would only say Encore generally costs ``substantially less'' than virgin Celcon.
According to the court ruling, Popoli had the Tepcon name removed from bags of the product before it was shipped to the United States. NER then placed Celcon labels on the bags and sold them for significantly less than Celcon's U.S. price, the ruling stated.
Popoli, in an Aug. 20 telephone interview from his Fort Myers office, said he believed the bags of resin he imported were Celcon. He said the bags were marked only ``M90,'' a designation that Hoechst uses for Celcon.
``If you ask 100 customers what M90 means, they'll say Celcon,'' Popoli said.
But Hoechst is not the only firm to use the M90 identifier, according to Carl Amond, vice president and general manager of Hoechst's technical polymers unit.
He said M90 is a melt index used by several resin makers. It is a secondary trademark for Celcon, but also appears on several acetal resins not made by Hoechst.
``Mr. Popoli believes that if you put a secondary trademark on something it magically turns into something with the Celcon primary trademark,'' Amond said.
Popoli said Celcon and Tepcon are the same material, though the court ruling states Tepcon contains melamine, an additive that has not been approved by the Food & Drug Administration and that is not used in Celcon.
``I bought [the acetal] at a deep discount and my customers sampled it, liked it and bought it,'' said Popoli, who plans to appeal the ruling. ``Not a pound of it has been returned.''
Amond said he heard a different story from customers who bought what they believed was Celcon from NER.
Hoechst traced several shipments of counterfeit resin back to Popoli in 1994 after customers called Hoechst when the resin's performance and packaging did not match standard Celcon, Amond said.
Hoechst received several such calls after running full-page advertisements in trade publications alerting buyers to the existence of counterfeit acetal. The ads were prompted by a February 1996 raid in Long Island, N.Y., where federal agents seized 18 gaylords of reground acetal that were being sold as virgin Celcon.
Popoli repeated his previous claims that Hoechst's actions are part of a price-fixing effort to keep North American prices artificially high by dumping resin at a lower price in the Far East.
``The key here is that Hoechst is trying to control the marketplace by controlling supply,'' Popoli said. ``They put the U.S. market on supply allocation in 1994 so customers couldn't get what they want and had to pay the higher price. But all the while they're selling the product for less than a dollar throughout Asia.''
Amond declined to comment on the price-fixing allegation, saying only that he finds many of Popoli's statements ``rather unique.''
Hoechst took action against NER and several other alleged counterfeiters in late 1994. By the end of that year, Hoechst had reached out-of-court settlements with five companies it suspected of being involved in trading counterfeit acetal resins.
Amond described the ruling as ``very favorable,'' adding Hoechst ``got everything we wanted out of the decision.''
A trial to decide the amount of damages Popoli will pay Hoechst will be held later this year. Amond declined to reveal the amount the company is seeking.
``It's a customer safety and product liability issue,'' Amond said. ``Our customers and processors rely on the products we sell and the testing we do. When you introduce a product as something it's not intended to be, you've specifically denied the customer the signal that they should do their own end-testing.''
Near the close of the Aug. 20 interview, Amond said the NER case ``never should have been allowed to grow to the magnitude that it did.''
``The industry needs to be more vigilant to protect itself,'' Amond said. ``When you're offered a deal that's too good to be true, chances are good it's not a real deal.''
The court ruling also dismissed a $10 million countersuit Popoli had filed against Hoechst in December. In the suit, Popoli claimed Hoechst defamed and damaged Nylon Engineering's business by accusing the company of counterfeiting in statements made by Amond that were published in Plastics News.
Popoli also faces a criminal trial after his October arrest on a 27-count indictment prepared by the U.S. Customs Office for allegedly smuggling resins into the United States, using a fraudulent document to avoid paying about $147,910 in customs duties and other related charges.
A customs spokesman in Fort Myers said Popoli's trial is set for November. Popoli was arrested as he was leaving Southwest Florida International Airport in his private plane for the Bahamas, the U.S. Attorney's Office said.