Thursday, January 06, 2011

Gorillas no longer in our midst: GM wins against replica kit maker

General Motors Co. v. Urban Gorilla, LLC, 2010 WL 5395065 (D. Utah)

GM sought to enjoin Urban Gorilla from making certain body kits that it alleged infringed and diluted its Hummer marks and trade dress. The court ruled for GM, though denying GM costs and attorney’s fees.

GM has a registered trademark in the shape of the H1 Hummer model (which was discontinued in 2006), the Hummer nose and grill area, the word "Hummer," and the slogan "Like Nothing Else."

In 1997, defendant’s predecessor in interest Active Power launched a line of “body kits” which customers install on a “donor” truck chassis. A kit costs about $10,000 (less than 1/10th the cost of a Hummer). Between 1997 and 2008, slightly over a hundred kits were sold, 18-19 between 2004 and 2008.

In 1998, AM (GM’s predecessor in interest) sent Active Power a C&D claiming infringement of its registered trademarks "Humvee," "Hummer," and the "Hummer vehicle Nose Design." Active Power agreed to change its product line and discontinue use of surplus Hummer parts in its kits. There was no further contact until 2006. When GM sued in 2006, the court denied a preliminary injunction.

The court first ruled, unsurprisingly, that the TDRA applied, except as to any award of costs and attorney’s fees for pre-TDRA behavior.

The court found various Hummer trademarks/trade dress famous, highlighting the usual things like hundreds of millions of dollars spent on advertising over nearly two decades. It also noted that GM’s confusion survey, which showed respondents pictures of an an assembled Urban Gorilla body kit or pictures of another military style 4x4 vehicle, produced some responses of “Hummer” without the use of the Hummer logo or word mark. “Over 71% of participants were able to produce the names GM or Hummer when shown an image of a boxy, military-style vehicle. Thus, consumers know these marks by look and name.”

The court also spent a while finding the Hummer marks distinctive (the trade dress had acquired distinctiveness), holding that distinctiveness means the same for dilution as it does for the rest of trademark law.

Intentional copying is relevant to many inquiries, including distinctiveness, but the court was not convinced of defendant’s bad intent. Though the kit was intended as a replica, defendant’s predecessor in interest changed the body kits when AM protested, and Urban Gorilla made several dozen more changes to the design, illustrating its efforts to distinguish the model from the Hummer.

The court also held that the Hummer marks became famous in the early 1990s after Operation Desert Storm in 1991; Active Power began marketing the kits after that.

The only claim was blurring, which requires assessment of (i) the degree of similarity between the mark or trade name and the famous mark; (ii) the degree of inherent or acquired distinctiveness of the famous mark; (iii) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (iv) the degree of recognition of the famous mark; (v) whether the user of the mark or trade name intended to create an association with the famous mark; and (vi) any actual association between the mark or trade name and the famous mark.

Similarity of marks: “Although several circuits formerly required nearly identical marks for a dilution claim, a shift towards a more relaxed similarity requirement has followed the enactment of the Trademark Dilution Revision Act.” This factor is “among the most critical,” but based on the multifactor test and the legislature’s decision not to require “substantial” similarity, “a slightly relaxed similarity standard is appropriate.”

GM’s Hummer slogan “Like Nothing Else” was strongly similar to Urban Gorilla’s slogan in some ads “When Nothing Else Will Do.” They were short, used “nothing” and “else” in connection with cars, and conveyed similar meanings. Urban Gorilla also made several comparisons to the Hummer in marketing materials. Customer testimonials appeared on its website and the web page where the testimonials are located is titled hummer-kit-car.php. There was also a disclaimer of any association with GM or Hummer. Despite the disclaimer, Urban Gorilla produced approximately 1400 emails using the terms "Hummer", "H-1," "H-2," and "H-3," and the Urban Gorilla body kits were listed as a "Military style and family Hummer-type" vehicles in the third-party publication Kit Car Buyer's Guide. (Isn’t that the same as legitimate comparative advertising? That is, to the extent we attribute this third-party statement to defendants, Hummer is clearly used as a comparator, not as a mark for defendant’s product, which is what dilution requires.)

Despite the disclaimer, “the evidence indicates that Urban Gorilla strategically included the term Hummer in its product promotions. In some instances the Urban Gorilla body kit is being compared to the Hummer, such as on the testimonials page, which is arguably fair use; however, in other instances the term ‘Hummer’ was used to drive traffic to the Urban Gorilla web site and to describe the Urban Gorilla body kits. To the extent that Urban Gorilla used the Hummer name to describe or identify its body kits, it used a mark identical to Hummer trademarks.” It sounds like Urban Gorilla really needed a comparative advertising/fair use argument here. As Eric Goldman has tried to educate us, using a competitor’s mark to drive traffic to a site can easily be a legitimate competitive tactic and, when it functions as comparative advertising, is not the same thing as using the mark as a mark for one’s own goods or services. The court’s footnote says, “Urban Gorilla does not make a fair use argument, but it probably could have for some aspects of its allegedly illegal conduct.”

As for the trade dress, though the original designs for the body kits used Humvee surplus parts as molds for the doors and windshield frame, they have been significantly modified. Customers can choose two, four, or six door versions; the registered Hummer trade dress has four doors. The court first determined that it was the assembled body kits that should be compared to the Hummer trade dress, because consumers encounter the assembled body kit (this seems to incorporate post-sale “consumers,” since the direct consumer first gets the “raw” kit, though the kits are sold with images of the assembled kits).

Though the Urban Gorilla nose and grill no longer resemble the Hummer—the Urban Gorilla has a single horizontal bar across the front center instead of the Hummer’s seven vertical bars—and the power dome doesn’t have the Hummer’s washboard look, the court still found a strong resemblance to the Hummer trade dresses for two of the models. “The overall shape and dimensions of the body kits are ‘Hummer-esque.’ The Urban Gorilla and Hummer share rectangular bodies with sharp corners, the roofs are flat and look somewhat compressed, the windows are split and have windshield wipers attached to the top of the window, and both use prominent latches on the front good. The overall impression of the Urban Gorilla, in spite of several differences, is strongly similar to the Hummer.”

However, two other models escaped strong similarity and therefore dilution. “The combat version does not have any doors or a roof. The result is a more dune-buggy-esque looking Urban Gorilla. The slant back version also has a unique shape with a panel sloping off behind the passenger compartment toward the bumper. GM did not present evidence of similar Hummer models or registered trade dresses. In the world of automobiles where similarities run high and small variations make a big difference, these features sufficiently distinguish these models of Urban Gorilla from the Hummer trade dress.”

The court next found that the Hummer marks have acquired distinctiveness, though did not specify its degree. Moreover, GM was policing against unauthorized uses and engaging in extensive advertising to promote the marks, evidence of substantially exclusive use. The Hummer marks were also “very famous,” with revenues of $2 billion in licensing from Hummer related products. The number of trademark lawsuits GM filed also supported a finding of fame.

Intent to create an association: this doesn’t require bad faith, which wasn’t present, but there was an intent to associate its product with the Hummer line. “The landing page for Urban Gorilla's web site included several customer testimonials comparing their completed body kits with Hummers. The word ‘Hummer’ and other related terms are used throughout the text. The file name for the testimonials web page is ‘hummer-kit-car.php.’ This name was selected by Urban Gorilla because ‘the hottest search terms’ were ‘Hummer Kit, Hummer Kit Car, Hummer Replica, Humvee kit/replica, etc.’ Therefore, Urban Gorilla sought to associate its web site with the Hummer name to drive traffic to the site.” (Assume Urban Gorilla had mounted a full-fledged fair use argument. Are all of these fair uses? Now that it can only use non-Hummer-looking trade dress, can it still use these terms?)

Actual association: the court found there was evidence of actual association by customers, potential customers, and members of the general public. The 1400 emails referring to a Hummer trademark include several inquiring about Urban Gorilla’s “hummer wagon” or “Hummer.” A National Post article sub-titled "Kit will turn your Chevy pickup into a Hummer-on the cheap" showed that the author associated the Urban Gorilla body kits with Hummer. And GM’s survey found a high rate of actual confusion: over 50 percent of the respondents thought the image they were looking at either was a Hummer or had some affiliation with GM or Hummer. “The respondents to the survey associated the Urban Gorilla with GM's famous Hummer marks--they looked at a picture of an Urban Gorilla and thought ‘Hummer.’”

Weighing all the factors, the court found dilution from Urban Gorilla’s use of Hummer trademarks to describe or identify its products. “However, where Urban Gorilla's advertisements or promotions permit consumers to compare its products to the Hummer, the use is protected.” The slogan “When Nothing Else Will Do” was likely to dilute “Like Nothing Else.” (The fame conclusion on this one seems the shakiest part of the decision to me—while the Hummer and its grill are likely famous, I find it hard to believe that the slogan is a household word of the type Congress said it was protecting, and the court didn’t cite slogan-specific evidence of fame.) Finally, the soft top, hard top, and wagon models were likely to dilute the Hummer registered trade dress.

Turning to trade dress infringement, the court presumed nonfunctionality of the registered trade dress. While somewhat sympathetic to defendant’s functionality arguments, the court ultimately concluded that it had not met its burden of showing functionality of the total trade dress:
Urban Gorilla makes a strong argument the features allegedly unique to the Hummer and its registered trade dress are in fact functional features shared by military-style vehicles in general. Specific design elements identified by GM as comprising its trade dress include the rectangular doors, high belt line, upstanding windshield with the split in the center, latch hooks on the front hood, running lights on the side of the vehicle, and the power dome configuration on the top of the hood. Several examples were provided illustrating that these particular features are common in many military vehicles. The features also serve a specific purpose, i.e. they are functional. For example, the split windshield provides structural support to the roof and the flat, upright windows. Also, the "boxiness" of military style vehicles is functional because using flat panels allows for less expensive, smaller quantity production.

Although Urban Gorilla has shown the functional aspects of several features of the Hummer trade dress, it has not shown that an equally functional design that is close in cost and quality is impossible. An equally functional design is one that would allow for the type of off-road activity common to both the Hummer and Urban Gorilla. The images presented by Urban Gorilla actually support a finding of non-functionality because many of the vehicles share functional features of the Hummer trade dress such as a high belt line, split windows, and flat body panels without evoking the Hummer "look." GM also provides several examples of full-size SUVs that share some of the design features of the Hummer, but do not in totality resemble the Hummer trade dress.

The remaining question was likelihood of confusion, considering post-sale confusion as well as point of sale confusion. (Barton Beebe was cited for a proposition I’m not sure he normatively endorses, that post-sale confusion is actionable for exclusive goods because "the brand's reputation for exclusiveness is damaged." Barton Beebe, Intellectual Property Law and the Sumptuary Code, 123 Harv L.Rev. 810, 852 (2010).)

As noted above, the dilutive models had a high degree of similarity to the Hummer; the nondilutive models didn’t.

Intent: intent to copy typically supports an inference of likely confusion in the Tenth Circuit; the proper question is whether the defendant intended to derive benefit from plaintiff’s reputation or goodwill. The evidence supported a finding that Active Power’s initial design was intended to replicate the Hummer trade dress, since the designer used the term “replica” and used surplus Humvee parts in the original design. However, Active Power and Urban Gorilla also attempted to distinguish the body kits from the Hummer trade dress, abandoning the use of surplus parts and changing the kit design. The court refused to impute the original intent to Urban Gorilla, because it was a separate entity that purchased assets from another company, rather than buying the entirety of Active Power. “Even GM acknowledges that ‘Urban Gorilla was an arms-length, third-party purchaser that brought in an entirely new set of management, employees, subcontractors, etc.’” Thus, in spite of the original intent to replicate the Hummer, Urban Gorilla did not share that intent.

Actual confusion: GM’s survey was a double-blind controlled survey administered online. “Respondents viewed three images from different viewpoints of either an assembled Urban Gorilla wagon model body kit or a military-style control vehicle. Each respondent then answered a series of questions related to the images. The terms ‘Hummer,’ ‘GM,’ or ‘Urban Gorilla’ were not used in the questions about the images and there were no other brand identifiers.”

The survey pool consisted of 1127 respondents, 1100 of whom were ultimately included in the calculations. Respondents were considered relevant if they had “purchased in the last three years or plans to purchase within the next three years a new or used four-wheel drive SUV with off-road capability and who is a decisionmaker in their household for a car, truck, or SUV.” Here’s what seems like a weird description: “A random selection of individuals who met market data demographics affiliated with this group were invited to participate in the survey.” That sounds like doublespeak—more specifically, it sounds like respondents didn’t have to be a recent/upcoming purchaser of such a vehicle, but rather needed only to be a part of a larger group whose members often purchase such vehicles. In other words, respondents might only have needed to be within a certain age and income range. (There might have been other demographics such as location, but it sounds as if—perhaps to make sure the sample size was large—the survey wasn’t restricted to actual likely/recent purchasers, which could be a big problem if people who don’t buy SUVs are less attentive to differences in SUVs than people who do.)

The survey found a net confusion rate of 50.4%. In the control condition, 21.1% of respondents associated the images with Hummer or GM, compared to 71.5% in the test condition. (I note that 21.1% baseline confusion is pretty bad in itself. How much good does GM do for its brand getting these 100 kits off the market?)

Urban Gorilla’s main argument was about relevant consumers: it contended that only Hummer and Urban Gorilla target markets mattered, which would be potential buyers of $150,000 luxury vehicles and potential buyers of body kits. Urban Gorilla contended that the survey pool didn’t mirror the demographics of the Hummer target market: individuals with an income of about $200,000 a year who are 40 years old and have grown children. By contrast, the Urban Gorilla target market is comprised of middle to lower income, former military, "do-it-yourselfers."

The court concluded that, if only Hummer purchasers’ confusion were relevant, Urban Gorilla would have been right. But the Lanham Act “was intended to protect the market as a whole from confusion as to the source of a product." “[T]hose with opinions relevant to the litigation are those who are potential or actual purchasers of both the Hummer and the Urban Gorilla body kit. The demographics of the survey pool encompass the income level, gender, age, and educational attainment of both the Hummer and Urban Gorilla target markets. Therefore, the pool surveyed is a fair one for this matter.”

The conclusion does not follow from the premises, as noted above, because the kits are specialty products, not the kind of thing that almost everyone in the demographic pool can be expected to have on hand (e.g., toothpaste). If kit purchasers are a small enough subset of the pool, then the survey may well not have included enough of them to tell anything about how they react to the kits. Suppose the product at issue had been oil paints used by artists: even if we were confident that most artists fell within the income/age category surveyed, wouldn’t we worry that the survey had mostly surveyed non-artists if demographics, rather than questions about actual or likely purchases of oil paints, had been used to include/exclude subjects? At least, wouldn’t we want the survey to have looked for ex-military do-it-yourselfers? Or, if the product at issue had been pharmaceuticals prescribed by doctors, and the survey had covered the income/age category in which doctors are most likely to be found, wouldn’t we still worry that the responses from financiers and law professors had irrelevantly distorted the results—especially since people uninterested in the products at issue are less likely to pay attention to potential differences between them?

Regardless, the court found the survey responses compelling, given that over 70% of respondents who looked at images of the assembled Urban Gorilla thought it was a Hummer or affiliated in some way: “The respondents in this case repeatedly said the Urban Gorilla was a "Hummer" and when asked why, the oft recurring response was ‘because it looks like one.’ These responses strongly suggest, if not prove, actual confusion.”

Marketing channels: the parties aren’t direct competitors, selling unassembled body kits to the “mechanically inclined” versus (literal) turnkey vehicles sold to affluent "rugged individualists" and "successful achievers." Though there were isolated examples of direct competition, “including evidence that Urban Gorilla attempted to sell one assembled body kit online and a quote from an Urban Gorilla customer who sold his Hummer H1 and bought two body kits instead, … the parties are not competitors in any meaningful sense of the word.” Overall there were relatively few similarities in forms of marketing; the fact that both had websites and had been featured on TV and in print was “inconclusive.” This factor weighed in favor of Urban Gorilla.

Degree of care: Here the usual post-sale confusion knot-tying occurred. The relevant inquiry is degree of care at time of purchase, except that in post-sale confusion cases, “the degree of care exercised by purchasers is of diminished importance because it is not the purchasers' confusion that is of concern.” Still, a Hummer H1 purchaser would exercise a high degree of care in selection of such an expensive vehicle.

Strength of the mark: Though the conceptual strength of the Hummer trade dress is weak, the mark was commercially strong.

On balance, there was a likelihood of confusion between the Hummer trade dress and the three dilutive models.

Urban Gorilla argued laches, which requires inexcusable delay and resulting prejudice. Delay is measured from when the plaintiff knew or should have known of the allegedly infringing conduct. While delay of up to three years has been found excusable, delay over six years is generally inexcusable.

Urban Gorilla argued that GM should have known of the product line actually or constructively as early as December 1999 when GM acquired the Hummer line from AM General, and that it was also given notice in March 2001 via an affidavit in litigation against another producer of body kits, which included a copy of the September 1998 Kit Car Buyer's Guide as an attachment. The ad included the Bummer (hee!), a body kit produced by Tatonka Products, along with several others including the Urban Gorilla. And as noted above, the parties’ predecessors in interest were in contact with each other in 1998. In February 1999, AM’s lawyer sent a followup letter requesting copies of the promised design changes, though the parties disputed whether the changes were sent or received. In December of that year, GM acquired AM and AM agreed to provide GM with any information it had about suspected infringing activity or otherwise relating to the Hummer marks. There was testimony that the transfer had been carried out in orderly fashion.

The court concluded that, though these facts could lead to an inference of actual knowledge, they were not conclusive enough. As for constructive knowledge, “[i]f GM did have the files from AM General about the Urban Gorilla body kits, then there is a strong argument that from the point when it acquired the files it should have known of the body kits. The evidence, however, is not strong enough to draw the inference that GM actually had the files.” Furthermore, a reference to an exhibit attached to an affidavit for a different lawsuit doesn’t provide notice.

Finally, the court was impressed by GM’s general history of aggressive trademark defense. “Given that history it seems unlikely that GM would simply turn a blind eye to Urban Gorilla's product line. Therefore, I find that GM knew of the Urban Gorilla body kits on November 23, 2005 and the three month delay in filing suit was not unreasonable or inexcusable.” Thus, the court did not consider prejudice.

Likewise, the court also rejected Urban Gorilla’s acquiescence defense, which requires a finding that the plaintiff engaged in conduct amounting to an express or implied assurance that it would not assert trademark rights against the defendant. Mere silence is not enough; what’s required is
actual misrepresentations, affirmative acts of misconduct, intentional misleading silence, or conduct amounting to virtual abandonment of the trademark. Moreover, acquiescence is a personal defense which results only in a loss of rights by the plaintiff against the person or company to which it granted assurances.

The court first asked whether AM acquiesced to Active Power’s conduct. “The final letter in the record was from AM General's new counsel to Active Power requesting to view the design changes to the body kit. Active Power responded by leaving a voicemail for AM General on March 24, 1999. No further contact between the parties was indicated.”

This was not enough to constitute an affirmative representation by AM that Active Power’s use of the marks was permissible. There was negotiation, but no resolution. “A complete lack of contact can hardly be called an assurance on the part of the plaintiff that it will not sue the defendant.” Nor was the silence intentionally misleading. Instead, it seemed “completely unintentional and a result of files either misplaced or never received.” Thus, the court did not reach the issue of whether the acquiescence transferred to Urban Gorilla.

GM sought costs and attorney’s fees. Injunctive relief is the exclusive remedy for dilution unless the dilution was willful, which requires something more than indifference. The court found this a close call: “Urban Gorilla's strategic use of the Hummer name on its web site indicates an intent to associate with the trademark but it is a logical leap to say that intent to associate amounts to willful use of the plaintiff's mark or goodwill.” As for pre-TDRA conduct, GM would need to show actual injury, and the court also found that a close call: “To the extent that Urban Gorilla has used identical marks, it has reduced the capacity of the Hummer marks to identify exclusively the Hummer line. However, we find the impact negligible. First, the only instance where Urban Gorilla used identical marks was indirect through its reference to the Hummer name in its web page to drive web traffic and increase search engine hits. Also, a very small quantity of body kits have been sold (barely over 100 over twelve years).” The court, in its discretion, ruled that each party should bear its own costs.

As for infringement, a successful plaintiff is entitled, subject to principles of equity, to recover defendant’s profits, plaintiff’s damages, and costs, but typically courts deny recovery of costs in the absence of fraud. There was insufficient evidence to find bad faith by Urban Gorilla, which made many changes to the body kit design since taking ownership, took steps to remove any references to Hummer from its web site and marking materials, and showed a willingness to work with GM to address its infringement concerns. There was no knowing misrepresentation or concealment: “Urban Gorilla does not advertise its body kits as Hummers, it advertises them as essentially an alternative to the Hummer. Having no misrepresentation, there can be no detrimental reliance.” Thus, an award of costs to GM would be inequitable.

Nor was this an exceptional case for purposes of an attorney’s fees award. The trademark infringement was not malicious, fraudulent, deliberate, or willful; intentional copying alone, without more, is not willful.

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