Trademark infringement is something every layperson, and law student, thinks they can spot. An imitator cobbles together fenders and bodywork, then affixes the Chevrolet “bowtie” on the front, and puts it up for sale.
Infringement – right? Well, maybe, according to recent decisions that remand for “further proceedings consistent” therewith. Both involve after-market car parts bearing the famous logos of automakers. In GM v. Keystone Autom., (6th Cir. 6/30/2006), it was “replacement grilles” with “placeholders” or recesses shaped to accept the Chevy bowtie or the GMC logo. In Au-Tomotive Gold v. VW, (9th Cir. 8/11/2006), the items were “license plates, license plate frames and key chains” bearing the VW and Audi marks. Even with direct, intentional copying of the automakers well-known marks, proving trademark infringement was, well, not so easy. Both district courts granted summary judgment to the alleged infringers.
The eight-factor test for proving a likelihood of confusion is reviewed in both Circuit cases. Additionally, the 9th Circuit gave extensive treatment to the defensive doctrine of aesthetic functionality. Taken all together, the trademark owners faced a lot of turns through this maze of factors, defenses and doctrines.
In trademark litigation, one key battle is over who is the “public” which the mark may likely confuse. Is it wholesale purchasers, retail consumers, or the general public? The level of purchaser sophistication, etc., varies. In the 6th Circuit case, the ruling against the trademark owners was affirmed because “there is no likelihood of confusion ‘at the point of sale’ to body shops” who know they are purchasing aftermarket, replacement grilles.
The 6th Circuit segmented the purchasers into those collision repairs shops and their customers, and “downstream” customers, who buy cars not knowing about the aftermarket grilles. It held that factual issues precluded summary judgment as to downstream confusion. The 9th Circuit collapsed the keychain and accessory market into one group of wholesale and retail buyers. Though “Auto Gold sells its products to the wholesale market, the ultimate consumers are the same.” Then it summed the confusion evidence from the entire market, and reversed the summary judgment. The 6th Circuit separated the direct and second-line purchasers, and set out six “principles” of “downstream confusion” that reflect how “knockoffs can harm the general public and the original manufacturer.” There was no “evidence of actual confusion” in the direct market. The 6th Circuit then used six principles to weigh the “potential fo downstream confusion.” The 9th Circuit merged the “downstream confusion” analysis into the larger factor of “actual confusion.” The “law in the Ninth Circuit is clear that ‘post-purchase confusion,’ i.e., ..[by] someone other than the purchaser who, for example, simply sees the item …can establish the required likelihood of confusion under the Lanham Act.”
Thus, in cases where the buyer markets are segmented, the trademark owner must make an eight factor showing for the direct market, then again, for the downstream market. Evidence of confusion may be split between these markets, which can reduce its effectiveness. A key example in these two cases was the disclaimers on the imitation products. The aftermarket grilles are received by the body shop with clear indications of origin, and of not being GM parts. That lead the courts to conclude that confusion was impossible. In the 9th Circuit case, the general rule was that in cases of “verbatim copying …plaintiff’s reputation and goodwill should not be rendered forever dependent on the effectiveness of fineprint disclaimers often ignored by consumers.” Still, both Circuits required that disclaimers be consistent and comprehensive. Should your street vendor clients be advised to work under a banner sign – “These are not Vuitton purses.”
Overall, cases involving plain and intentional copying of famous trademarks must still get past the eight factor test of likelihood of confusion. To prevail, the trademark owner must prove the commercial realities of the desired market for the original and knockoff products, and who truly are the customers.