Am General Corporation v. Daimlerchrysler Corporation

• Decision Date: 18 November 2002
• Docket Number: No. 02-1816.,02-1816.
• Citation: 311 F.3d 796
• Parties: AM GENERAL CORPORATION and General Motors Corporation, Plaintiffs-Appellees, v. DAIMLERCHRYSLER CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

311 F.3d 796

AM GENERAL CORPORATION and General Motors Corporation, Plaintiffs-Appellees, v. DAIMLERCHRYSLER CORPORATION, Defendant-Appellant.

No. 02-1816.

United States Court of Appeals, Seventh Circuit.

Argued October 16, 2002.

Decided November 18, 2002.

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John D. LaDue (Argued), Boveri, Murphy, Rice, Ryan & LaDue, South Bend IN, Christopher Landau (Argued), Kirkland & Ellis, Washington, DC, Paul R. Garcia, Kirkland & Ellis, Chicago, IL, for Plaintiffs-Appellees.

David H. Bernstein (Argued), Debevoise & Plimpton, New York, NY, for Defendant-Appellant.

Before BAUER, COFFEY, and WILLIAMS, Circuit Judges.

BAUER, Circuit Judge.

Plaintiffs AM General Corporation ("AM General") and General Motors Corporation ("GM") brought a declaratory judgment action in the district court asking the court to find that the front-end grille design of their recently developed H2¹ sport utility vehicle ("SUV") does not dilute or infringe upon a trademark held by the Defendant, DaimlerChrysler Corporation ("DaimlerChrysler"), for a similar looking grille on DaimlerChrysler's line of Jeep SUVs. DaimlerChrysler then filed a motion for a preliminary injunction against GM's use of the grille design on the then yet-to-be released H2.²

After an eight-day hearing on the matter, the district court denied DaimlerChrysler's preliminary injunction finding: 1) that DaimlerChrysler showed virtually no chance of success on the merits of either its federal dilution or infringement claims; and 2) that, even if DaimlerChrysler did show a better than negligible chance of winning on the merits, the balance of harms weighed heavily against issuing the injunction.

DaimlerChrysler timely filed this appeal and raised the following issues: 1) whether the district court erred in applying the doctrine of progressive encroachment to its dilution claim by finding that laches barred the claim even though prior sales of H1 vehicles occurred in a different market than the mainstream SUV market where the H2 is being sold; 2) whether the district court erred in finding that DaimlerChrysler must prove that its grille design achieved fame or distinctiveness before AM General or GM began using a similar design in a different market; and 3) whether the district court improperly balanced the harms of issuing the injunction by finding that the harm to GM, AM General, and the public interest outweighed DaimlerChrysler's presumptive harm from the alleged dilution or infringement.

Because the district court issued a thorough and well-reasoned memorandum opinion and order that does not contain any error, we adopt the district court's opinion dated February 28, 2002, as our own and AFFIRM the judgment of the lower court on all counts. Because the memorandum opinion and order was not published, it is appended below.

MEMORANDUM AND ORDER

This case is before the court on a motion for preliminary injunctive relief based solely on claims of trademark dilution and infringement arising under the Lanham Act, 15 U.S.C. §§ 1051 et seq.³ General Motors Corporation and AM General Corporation filed this suit, principally as a declaratory judgment action, against DaimlerChrysler Corporation, but DaimlerChrysler seeks the preliminary injunction. DaimlerChrysler's counterclaims against General Motors and AM General allege that DaimlerChrysler owns protectable trademark rights in a family of designs of the grilles of its Jeep vehicles, and General Motors and AM General intend to use a grille on a forthcoming vehicle that will infringe and dilute DaimlerChrysler's family of marks. DaimlerChrysler does not seek an injunction against AM General, but since AM General is a party to the suit and would be affected greatly by the requested injunction, the court allowed AM General to participate fully in the evidentiary hearing that took place from February 6-15, 2002.

The case involves two brands of motor vehicles (or perhaps more accurately, sport utility vehicles). One brand is Jeep. DaimlerChrysler owns the Jeep brand as the successor corporation to Chrysler Corporation, American Motors Corporation, Jeep Corporation, Kaiser Jeep Corporation, Willys Motors, Inc., and Willys-Overland Motors, Inc. The court will refer to DaimlerChrysler Corporation and all its predecessors in the Jeep brand simply as "DaimlerChrysler." The history of the Jeep brand (and the pertinent grille configurations) is set forth in Part B of this opinion.

The other brand of sport utility vehicle, or "SUV," is the Hummer brand, which has a far shorter biography. Part C of this opinion relates that history in some detail. Briefly, the Hummer was the civilian younger sibling of the military Humvee; both the Hummer and the Humvee were owned and produced by AM General Corporation, which was itself part of other companies (including a Jeep predecessor to DaimlerChrysler) throughout the vehicles' histories. In 1999, AM General sold the Hummer brand to General Motors Corporation. General Motors is producing (though not yet selling) a lower-priced version of the AM General Hummer. The companies now refer to the new, General Motors Hummer as the "H2" and to the old AM General Hummer as the "H1." AM General is to assemble the H2 under contract with General Motors and continues to produce the H1 and the Humvee.

For the reasons that follow, the court denies the motion for preliminary injunction.

A. PARTIES' POSITIONS AND APPLICABLE LEGAL PRINCIPLES

This case is about Jeep grilles and the grille General Motors plans to use on the H2. DaimlerChrysler contends that it has a family of marks that have featured consistent and easily recognized common grille characteristics: seven to ten vertical slots that appear to be stamped through a planar surface. DaimlerChrysler calls this configuration the Jeep grille design.

As the party seeking the preliminary injunction, DaimlerChrysler has the burden of demonstrating that it has a reasonable likelihood of success on the merits of its underlying claim, that it has no adequate remedy at law, and that it will suffer irreparable harm without the preliminary injunction; if DaimlerChrysler meets those burdens, the court then must consider any irreparable harm the preliminary injunction might impose upon General Motors (the only party against which the injunction is sought) and whether the preliminary injunction would harm or foster the public interest. Anderson v. U.S.F. Logistics (IMC), Inc., 274 F.3d 470, 474 (7th Cir.2001); Re/Max North Central, Inc. v. Cook, 272 F.3d 424, 429-30 (7th Cir.2001).

A party with no chance of success on the merits cannot attain a preliminary injunction. Kiel v. City of Kenosha, 236 F.3d 814, 815 (7th Cir.2000). In the first phase of the analysis, the court decides only whether the plaintiff has any likelihood of success—in other words, a greater than negligible chance of winning, Washington v. Indiana High Sch. Ath. Ass'n, 181 F.3d 840, 845 (7th Cir.1999)— but in the second phase, the court evaluates that likelihood of success, Storck USA, L.P. v. Farley Candy Co., 14 F.3d 311, 314 n. 1 (7th Cir.1994), as the analysis turns to a "sliding scale" under which a lesser likelihood of success can be made sufficient by a greater predominance of the balance of harms. Ty, Inc. v. The Jones Group, Inc., 237 F.3d 891, 895 (7th Cir. 2001); Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 461 (7th Cir. 2000). In performing this balancing, the court bears in mind that the purpose of a preliminary injunction is "to minimize the hardship to the parties pending the ultimate resolution of the lawsuit." Platinum Home Mortgage Corp. v. Platinum Financial Group, Inc., 149 F.3d 722, 726 (7th Cir.1998) (quoting Faheem-El v. Klincar, 841 F.2d 712, 717 (7th Cir.1988)).

To prevail on the merits of either of its claims, DaimlerChrysler must show that it has a protectable mark—in this case, a "family of marks," which ordinarily means a group of marks, each individual member of which uses a common element that consumers associate with the mark's owner. Spraying Sys. Co. v. Delavan, Inc., 975 F.2d 387, 395 (7th Cir.1992). The marks to which DaimlerChrysler points consist of trade dress that varies with respect to the number of slots.

To prevail at trial on its dilution claim under 15 U.S.C. §§ 1125(c) and 1127, DaimlerChrysler will have to prove that its family of marks was famous before General Motors adopted the intended H2 grille, that General Motors's use of the intended H2 grille is in commerce, and that General Motors's use of the intended H2 grille is likely to dilute DaimlerChrysler's family of marks. Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d at 466; Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 639 (7th Cir.1999). Unlike a trademark infringement claim, a dilution claim requires no showing of consumer confusion as to source. 15 U.S.C. § 1127.

In deciding whether DaimlerChrysler's family of marks is "famous" within the meaning of the statute, the court is to consider the family's inherent distinctiveness or secondary meaning, the time and extent of DaimlerChrysler's use of the family in connection with motor vehicles, the duration and extent of DaimlerChrysler's advertising and publicity of the family, the size of the trading area in which DaimlerChrysler uses the family of marks, the channels of trade for motor vehicles, the degree of recognition of the family in those trading areas and channels of trade, whether and how others use similar marks, and whether the family is registered. 15 U.S.C. § 1125(c)(1).

In deciding whether General Motors's intended H2 grille is likely to dilute DaimlerChrysler's family of marks, the court must consider the similarity of the grilles and the strength of the DaimlerChrysler family. Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d at 468. The type of dilution that DaimlerChrysler alleges is "blurrin...