Wynn Oil Co. v. American Way Service Corp.

Decision Date30 April 1990
Docket NumberCiv. No. 89-CV-71777-DT.
PartiesWYNN OIL COMPANY, a California corporation, Plaintiff, v. AMERICAN WAY SERVICE CORPORATION, a Michigan corporation and Thomas A. Warmus, Defendants.
CourtU.S. District Court — Western District of Michigan

COPYRIGHT MATERIAL OMITTED

William C. Potter, Jr., Detroit, Mich., for plaintiff.

Raymond L. Morrow, Troy, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

ANNA DIGGS TAYLOR, District Judge.

Plaintiff, Wynn Oil Company (Wynn) has filed this action against Defendants American Way Service Corporation (American Way) and Thomas A. Warmus, its president, seeking both damages and the injunction of further infringement of Wynn's registered trademark, "X-TEND". Plaintiff alleges trademark infringement in violation of 15 U.S.C. § 1114, unfair competition in violation of 15 U.S.C. § 1125(a), unlawful trademark dilution and injury to business reputation, common law trademark infringement and unfair competition, and violation of the Michigan Consumer Protection Act, M.C.L.A. §§ 445.901 et seq. The matter has been tried by the court without a jury, and this memorandum constitutes the findings of fact and conclusions of law of the court.

Wynn is a California corporation owned by Wynn's International, Inc. with its principal office in Fullerton, California. It manufactures automotive products including fuel and oil additives which are marketed through hardware, automotive supply, and mass market chain stores, service stations, garages and new and used car dealerships.

During the early 1970's, Wynn divided its additives into two distinct product lines. The first, an easy-to-use car care line, was designed for use by the hobbyist or economy-minded vehicle owner. This product line was intended for direct sale to the consumer for personal car care. It was marketed through manufacturer's representatives and a direct sales force to automotive supply outlets, discount chains, convenience, hardware, and drug stores and similar retailers. This product was sold under the registered trademark "Wynn's", which was registered on March 13, 1973. (U.S. Patent Office Trademark No. 954,863).

The second product line was intended for use by professional auto mechanics who repair cars for their customers. This line, marketed through an extensive distributor network to car dealers, repair shops, service stations and national account chains, bore the registered trademark "Wynn's X-TEND". (U.S. Patent Office Trademark Nos. 821,881; 997,417; 1,482,081; 1,525,053). X-TEND was first registered as a trademark on January 10, 1967 by X-TEND Automotive Industries, Inc. The trademark was assigned to Wynn on October 15, 1971. This product line continues to market its products under the X-TEND trademark. In the early 1970's, Wynn also began to market a product warranty program called "Wynn's X-TEND Guarantee". This program provides warranty protection for certain repair costs to new and used car purchasers provided they regularly used Wynn's X-TEND auto products in their cars. Customers buy a "product warranty kit" which warrants all internally lubricated parts. This extended guarantee program is available through new and used car dealers who also sell the X-TEND product line. The price range for the product warranty kits is from $120.00 to $550.00 at retail. Prices vary depending on the duration of the warranty, the scope of coverage and the type of kit purchased. In 1980, Wynn changed the name of this warranty program to "Wynn's Product Warranty".

Wynn does not itself advertise directly to the purchasing public. However, either the Wynn's distributor or the retailer who purchases Wynn's and X-TEND products provides direct advertising to the public. Wynn then reimburses its distributors and the retailers through a "co-op" advertising allowance. The distributors and retailers place advertisements in local newspapers and in trade journals such as Motor Magazine, Motor Age and Service Station Management. For the X-TEND product line, Wynn provides advertising materials to distributors and retailers for use at the point of sale. This includes counter cards intended to be placed in the service area, posters, banners, and display flags bearing X-TEND advertising, and promotional items such as thermos jugs, digital watches, picnic bags and pens, all intended to be given to those customers who buy X-TEND products from the retailer. The distributors also are given items intended for the retailer or repair shop and their employees. These include jackets, vests, sweatshirts, T-shirts, and hats, all of which prominently bear the X-TEND trademark. These items are worn by employees with whom the customer comes into contact.

In Michigan currently, there are over sixteen trucks and vans owned by distributors covered by the trademark "Wynn's X-TEND" on their exterior, and constantly on the roads making deliveries. Further, over one thousand "power flush" machines bearing the X-TEND mark have been placed in the service areas of various auto service establishments throughout Michigan.

American Way is a Michigan corporation with principal offices in Southfield, Michigan. Thomas A. Warmus is president and sole shareholder of the company. In 1980, American Way introduced an extended warranty program to new and used car dealers under which it would administer extended service contracts which the dealers would sell to customers buying new and used cars. This service contract reimburses the car buyer for covered repair costs incurred within the period of coverage and which are not otherwise covered by the manufacturer's warranty. These contracts, like Wynn's Product Warranty, cover repairs necessitated by the failure of internally lubricated parts. In administering these contracts, American Way deals exclusively with new car dealers, many of whom also sell used cars.

Beginning about 1985, American Way released brochures, forms, service contracts and other written literature describing its service contract program as "The American Way X-TEND". Before doing so, Mr. Warmus testified, neither of the Defendants conducted any search or investigation whatsoever to ascertain whether the term X-TEND was already in use or registered.

Wynn Oil first became aware of American Way's use of the term X-TEND about July, 1987 when it was first sent a brochure, but that brochure did not contain the address of American Way. It was not until January, 1989 that Wynn was able to ascertain American Way's location. On February 9, 1989, Wynn's counsel, Carl J. Kidwell, wrote to American Way informing it of the registration of the mark and demanding that it cease using the mark X-TEND. No response was ever received from that letter. Outside counsel for Wynn wrote a second demand on April 10, 1989, requesting that American Way cease and desist from using the X-TEND trademark. This letter also explained that unless Wynn or its attorney received some affirmative answer within twenty days, appropriate relief through the courts would be sought.

On April 21, 1989, Warmus responded by letter that X-TEND had been used by his company for nine years, and that if "your client or law firm are the type of people who like to go around and throw their muscle, then be my guest, I'll go to court and see if some judge agrees that our logo is any violation of your rights." Wynn filed the instant suit on June 5, 1989.

I. TRADEMARK INFRINGEMENT

Wynn alleges that American Way's use of the term X-TEND constitutes trademark infringement in violation of 15 U.S.C. § 1114. The test for trademark infringement in this circuit is "whether the alleged infringement of a trade or service mark causes a `likelihood of confusion' among consumers." Wynn Oil Co. v. Thomas, 839 F.2d 1183, 1186 (6th Cir.1986).1 "The general concept underlying likelihood of confusion is that the public believe that the mark's owner sponsored or otherwise approved of the use of the trademark." Id. at 1186. In Frisch's Restaurants v. Elby's Big Boy, Inc., 670 F.2d 642 (6th Cir.1982), the court of appeals enumerated the factors to be considered in determining likelihood of confusion. They are:

1. The strength of the mark;
2. The relatedness of the goods;
3. The similarity of the marks;
4. Evidence of actual confusion;
5. Marketing channels used;
6. The likely degree of purchaser care;
7. The defendant's intent in selecting the mark;
8. The likelihood of expansion of the product lines.

Id. at 648. Wynn is not required to prove all, or even most, of these factors in order to prevail. Wynn Oil, supra, at 1186.

1. Strength of the Mark.

15 U.S.C. § 1065 provides that a registered mark that is not successfully challenged within five years of registration becomes incontestable.2 The trademark X-TEND was first registered in 1967 and has been owned by Wynn since 1971. American Way has acknowledged the incontestability of Wynn's trademark but maintains that X-TEND is merely a descriptive mark and may be challenged on that basis. However, the Supreme Court held in Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985) that "an infringement action may not be defended on the grounds that a mark is merely descriptive, if that mark has met the requirements of incontestability." If registered for five years, a mark is considered strong and worthy of full protection. Wynn Oil, supra, at 1187. The Court therefore finds that X-TEND is an incontestable trademark, the strength of which cannot be challenged as merely descriptive.

2. Relatedness of the Goods.
A. Wynn's Automotive Products and American Way's Service Contract.

American Way maintains that there is little relatedness of the goods because it sells services with the X-TEND mark, whereas Wynn sells products with the mark. However, in Wynn Oil, supra, at 1187, the Court held that there was sufficient relatedness between defendant's car wash services and plaintiff's car care products to support a finding...

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