Gennie Shifter makes aftermarket auto parts and accessories. It sued competitor Lokar for a declaratory judgment of noninfringement of copyright and trademark and lack of false advertising/unfair competition. Lokar counterclaimed for the things you’d imagine.
In 2007, Gennie Shifter began selling the Lo-Dapt Shifter Knob Adapter, which allows customers to attach Gennie Shifter specialty shifter knobs to push-button type shifters manufactured by other companies such as Lokar. The Lo-Dapt is similar to Lokar’s Shifter Knob Adapter. Lokar objected to the use of its trademarks in Lo-Dapt ads, similarities between Lo-Dapt installation instructions and ad materials, and claims that the Lo-Dapt had no “annoying rattles.” Undeterred, Gennie Shifter began expanding its family of Lo-branded products (which had since the early 1980s also included the Lo-Line Brake, though the dates are hotly disputed by the parties). It used “Lo” in ads, including the words/phrases “Lo-Craze” and “Lo is the new Hi.” (Lokar’s president is named Craze, and Lokar had a product line called “Hi Tech.”)
On cross motions for summary judgment, the court granted Gennie Shifter’s motion on the copyright infringement claim as to the installation instructions. Though Lokar’s installation instructions were registered, and in spite of Lokar’s arguments that (1) the decision to use certain terms such as “outer adapter housing” and “inner sleeve” was creative and (2) Gennie Shifter’s ultimate rewriting of the instructions proved that there were alternatives, the court found that merger and scenes a faire defeated the infringement claim. Here’s a sample of the instructions, to give you the flavor: “STEP 1: Using a 9/16 wrench, loosen the jam-nut. Unscrew both the knob and jam-nut and remove them from the shifter lever. (These parts will not be reused in this installation. Save them for future use in changing back to the Lokar knob.) Fig. 1 (For Pre-1995 Shifters, please call Lokar for Shifter Knob Removal Instructions.)”
The court found that the instructions were “merely the recitation of the mechanical steps and parts dictated by the installation process.” Naming of parts merely reflected the physical reality of the product, flowing naturally from considerations external to authorial creativity. Gennie Shifter’s revised instructions didn’t avoid a finding of scenes a faire, because that doctrine does not require that there be only one means of expressing an idea as long as the expression necessarily flows from the common theme or setting.
By contrast, Lokar’s catalog was creative enough to be protected; the text described its jam nuts as “hidden” and the overall appearance of the product as “clean.” (That doesn’t seem like a modicum of originality to me; it seems like two words. But ok.)
The Lokar catalog said: “The Shifter Knob Adapter is designed with the common 3/8-16 and 3/8-24 threads found in most aftermarket shifter knobs. Designed with hidden jam nuts for a flush mount against the shifter knob. Chromed finish blends with the Lokar chromed shifter lever to give you the desired clean look with a custom knob.” The Gennie Shifter catalog said: “The Lo-Dapt TM Shifter Adapter is designed with the common 3/8-16 threads found in most aftermarket shift knobs. Designed with hidden jam nuts for a flush mount against the shifter knob. Gennie's polished 304 Stainless Steel Lo-Dapt TM blends with any chromed shifter to give you the desired clean look with your choice of Gennie Shift Knobs.” Thus, Gennie Shifter copied thirty-nine of the fifty-two words in the quoted paragraph.
The court found that an ordinary observer would find substantial similarity in the protectable expression, and Lokar might be entitled to summary judgment, but withheld judgment pending resolution of other motions. (Query: isn’t the protectable work the entire catalog? Can substantial similarity really be found based on 39 words from a much larger catalog? I realize our de minimis doctrine has gotten ridiculously restrictive, but doesn’t this case show the problem with that?)
The court proceeded to deny summary judgment on the trademark claims, using traditional confusion to analyze both Gennie Shifter’s use of “Lokar-like” and its use of the “Lo” prefix. Though Lokar argued that the latter increased the confusion caused by the former, the court rejected that argument—it appears that “Lo” is used to evoke “low” by both parties. Gennie Shifter argued nominative fair use—it only used Lokar’s name in text, not the stylized version of the mark for which Lokar has a registration, and that it used Lokar’s name to point out that the Lo-Dapt was compatible with Lokar shifters. Though this sounds like a slam-dunk to me, the court adopted the (misguided) view that nominative fair use isn’t an affirmative defense but rather goes to proof of likely confusion.
Lokar argued that, since Gennie Shifter’s product was compatible with all push-button shifters, not just Lokar shifters, the reference to Lokar was unnecessary. (So, since there are many brands of cola, I guess it’s not necessary to refer to Coke when making comparative claims about Pepsi?) Gennie Shifter responded that each of its three Lo-Dapt models were designed for different shifters, but the court found the argument problematic, because the catalog at issue didn’t distinguish between the models.
Argh! This is a sideshow. The test is not whether it was necessary to refer to the trademarked product, because one can always imagine an ad that does not do so. The test is that, having decided to refer to the trademarked product, was the use of the trademark to do so necessary? And the answer is, of course, yes. Amazingly, the court ruled that, because it was not necessary to reference Lokar in describing the product—the FAQ didn’t do so—the use was not nominative. This is clear error.
So somehow the obvious comparative use of the mark turned into a “very close” question on likely confusion, largely because of the intent and degree of care prongs. Notice that because the use was nominative—describing the compatibility of the product with those of a market leader—similarity of marks, similarity of products, and strength of mark all favored the plaintiff in the classic confusion test. But any comparative claim regarding a market leader will look bad on these factors no matter how obviously nonconfusing the use is. This is precisely why the nominative fair use test is a replacement for the usual multifactor confusion analysis in such cases, as the New Kids court explained.
On to false advertising: Lokar alleged that Gennie Shifter’s reference to an “annoying rattle” accused Lokar’s product of having such a rattle, and that Gennie Shifter’s press releases about the present litigation were also false advertising.
Gennie Shifter argued truth: there was a history of customer complaints about audible rattling in Lokar’s product. Lokar didn’t disagree, but attribued the complaints to faulty installation, not faulty construction. The court interpreted this as a claim of falsity by necessary implication: by suggesting that the rattle could be avoided by using a different brand, the claim necessarily implied that the fault was with the product and not with the installation process. (Couldn’t it be both? If Gennie Shifter’s product is easier to install, or simply differently configured, then the claim could be true because of the lower risk of improper installation.) The court found the argument “too attenuated” for a reasonable factfinder to accept. Given that the actual claim was that Gennie Shifter’s construction process produces “long lasting durability without any of those annoying rattles,” the slur on Lokar would not necessarily and unavoidably be received by the consumer, and thus could not violate the Lanham Act without evidence of consumer perception. Moreover, even if the message were necessarily implied, the evidence showed that the set screws of Lokar’s product, even when properly installed, were at least part of the problem; Lokar changed the design to address the issue. Thus, there was no material issue of fact.
What about the press releases? Lokar argued that Gennie Shifter falsely accused Lokar of instigating the underlying litigation anticompetitively, and objected to Gennie Shifter’s characterization of its claims as “spurious.” But the press release was titled “Gennie Shifter, LLC Files Suit Against Lokar, Inc.,” and merely mentioned the counterclaims. And the “spurious” claims were those which Lokar agreed to dismiss with prejudice. Again, no issue of material fact on falsity.
Lokar’s federal dilution claim was dismissed for failure to show fame, as one would expect. Though “If you’re into hot-rods, you know Lokar,” that’s not the standard: it’s fame to the general consuming public. Use since 1983; marketing expenses of about $1 million/year from 2002-2006; tens of millions in sales; sales in all fifty states and some foreign countries; and federal registration—all were insufficient. Niche market fame, which was established, is simply insufficient.
Finally, the court also dismissed Lokar’s false designation of origin/product design trade dress claim for failure to prove the distinctiveness of its trade dress. The evidence of secondary meaning was from “a recently fired employee of a company owned by Gennie Shifter’s president,” who stated that one customer inquired about whether the Lo-Dapt was actually Lokar’s product, based on its appearance. A Lokar employee also testified that Lokar customers recognized Lokar’s “hexagonal-tapered” shape as an indication of source. Again as you’d expect, this was insufficient, even without weighing credibility, especially given Gennie Shifter’s evidence of another competing product with a similar shape.