Ford Motor Co. v. Heritage Mgmt. Grp., Inc.

• Decision Date: 27 November 2012
• Docket Number: Civil Case No. 1:11–CV–92.
• Citation: 911 F.Supp.2d 616
• Parties: FORD MOTOR COMPANY, Plaintiff, v. HERITAGE MANAGEMENT GROUP, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

911 F.Supp.2d 616

FORD MOTOR COMPANY, Plaintiff,

v.HERITAGE MANAGEMENT GROUP, INC., et al., Defendants.

Civil Case No. 1:11–CV–92.

United States District Court, E.D. Tennessee.

Nov. 27, 2012.

Alicia Brown Oliver, Jeffrey G. Granillo, Chambliss, Bahner & Stophel, PC, Chattanooga, TN, Gregory D. Phillips, Scott R. Ryther, Phillips Ryther & Winchester, Salt Lake City, UT, for Plaintiff.

Danny R. Ellis, Roger A. Miller, Allen, Kopet & Associates, PLLC, Knoxville, TN, for Defendants.

MEMORANDUM

CURTIS L. COLLIER, District Judge.

Before the Court is Plaintiff Ford Motor Company's (“Ford”) motion for summary judgment (Court File No. 42). Defendants Heritage Management Group, Inc. (“HMG”) and Marc Collins (“Collins”) responded to Plaintiff's motion (Court File No. 53), and Ford replied (Court File No. 56). For the reasons discussed below, the Court GRANTS Defendants' motion for summary judgment (Court File No. 42). The Court RESERVES RULING on the amount of damages awarded and whether this case is an “exceptional case” under 15 U.S.C. § 1117(a). Ford is also ordered to submit a proposed injunction fourteen days from the date of the Court's order. The Court will announce the date and briefing schedule of a damages hearing in a separate order.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Ford Motor Company is a widely known manufacturer and distributer of motor vehicles. Ford obtained a federal trademark associated with its automobiles and parts in 1909, and has continued to obtain trademarks since then, including Reg. No. 74,530, one of the trademarks at issue in this case (Court File No. 4, Comp., p. 4). In 1986, Ford obtained a trademark registration for its ubiquitous “Ford in Script in Oval” design mark and logo. Also in 1986, Ford obtained Reg. No. 1,399,080 for the Ford in Script in Oval mark used on parts and components for vehicles ( id. at p. 5). Ford has registered its Motorcraft mark, including Reg. No. 709,311 at issue in this case, for various parts and components used in its automobiles ( id.). Additionally, Ford obtained registrations for a “Speeding Car Design” used for parts and products used in its vehicles, including Reg. No. 1,628,837. Under these and other registrations, Ford has manufactured, sold, and distributed large numbers of vehicles and parts throughout the world.

For Ford and Motrocraft parts, Ford has implemented a “Core Return Policy.” This program encourages purchasers of Ford and Motorcraft parts to return the part for remanufacturing when it contains a component part, or “core” part, capable of reuse. Ford's charge for the original part contains a “core charge” which can be refunded when returned to Ford or an authorized supplier. The core is to be returned in the replacement part's packaging, which bears identifying barcodes.

Ford limits the manufacture, engineering, and distribution of parts marked with its trademarks to authorized suppliers (Court File No. 43–2, Kosofsky Decl., p. 2). Ford's packaging contains security features designed to distinguish between authorized products and unauthorized products. Ford uses a single supplier for labels bearing the Ford and Motorcraft trademarks to facilitate this process. Allegations of counterfeiting and trademark infringement are investigated by Ford's Customer Service Division through its Global Brand Protection Group (Court File No. 4, Comp., p. 6). The Brand Protection Group instructed its return location for Ford core parts to ship any parts returned by Mountain View Ford, located in Chattanooga, Tennessee, directly to the Group, where they would be investigated for counterfeit labels. Parts were then forwarded to the Group, which included a number of fuel injector assembly kits bearing labels that Investigator Jason Kosofsky identified as counterfeit. After this determination, Ford investigated the parts and packaging of Mountain View Ford's inventory. Ford located 155 parts in packaging bearing counterfeit labels. These parts were sold to Mountain View Ford by Defendant HMG between July 2010 and January 2011.

After discovering the counterfeit packaging and labels, Ford sought an ex parte seizure order from the Court, which was granted (Court File No. 11). Ford executed this order at Collins' residence and at the building in Red Bank, Tennessee where HMG conducts its business. At the Red Bank building, Ford seized a number of items including counterfeit packaging, labels, truck parts, and Defendants' means of producing counterfeit labels. Ford filed with the Court an inventory of the parts and products seized (Court File No. 20). Additionally, Investigator Kosofsky selected a handful of examples from the inventory and determined they were counterfeit (Court File No. 43–7, Kosofsky Decl. II). These included counterfeit packaging and labels. Additionally, Ford located counterfeit “Core Deposit” labels, used by customers to return core parts to Ford for reimbursement.

Pursuant to the ex parte seizure order, Defendants served a sworn statement on Ford describing their business (Court File No. 43–8, Ex. A, Defs. Stmt.). In the statement, Defendants admitted to purchasing parts on eBay, although they were unsure where the parts came from or where they were produced before they arrived in their possession. Defendants admit they produced packaging and labels meant to resemble Ford's own, but claim they did this solely to avoid confusion for its customers, which were primarily car dealerships. Defendants maintain that, to their knowledge, HMG never sold a product in Ford packaging or Ford-like packaging that was not a genuine Ford product. However, Investigator Kosofsky examined the spreadsheets and names associated with Defendants' suppliers, and determined most of the parts were not purchased from a Ford authorized supplier of genuine new or remanufactured parts.

Ford filed a complaint alleging trademark infringement, false designation of origin, and trademark dilution (Court File No. 4). The parties agree on nearly all of the facts detailed above. The only point of disagreement between the parties is whether HMG ever sold a non-genuine Ford part in its counterfeit packaging or labels. Defendants assert, based on Collins' affidavit, that he inspected each part and determined whether it was a genuine Ford product before he resold the part. Ford, on the other hand, claims the parts sold by HMG were not purchased through Ford's supply chain and are accordingly not genuine Ford parts.

II. STANDARD OF REVIEW

Summary judgment is proper when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of demonstrating no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir.2003). The Court views the evidence, including all reasonable inferences, in the light most favorable to the non-movant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nat'l Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 907 (6th Cir.2001). However, the non-movant is not entitled to a trial based merely on its allegations; it must submit significant probative evidence to support its claims. See Celotex, 477 U.S. at 324, 106 S.Ct. 2548;McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir.2000). Should the non-movant fail to provide evidence to support an essential element of its case, the movant can meet its burden of demonstrating no genuine issue of material fact exists by pointing out such failure to the court. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989).

At summary judgment, the Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the Court concludes a fair-minded jury could not return a verdict in favor of the non-movant based on the record, the Court should enter summary judgment. Id. at 251–52, 106 S.Ct. 2505;Lansing Dairy, Inc. v. Espy, 39 F.3d 1339, 1347 (6th Cir.1994).

III. DISCUSSION

Ford's complaint alleges Defendants are liable under the Lanham Act for trademark infringement and counterfeiting, 15 U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125(a), and Trademark Dilution under 15 U.S.C. § 1125(c).

A. Trademark Infringement and Counterfeiting

1. Likelihood of Confusion

A claim of trademark infringement under the Lanham Act, 15 U.S.C. § 1114, requires a plaintiff to show “(1) that it owns a valid, protectable trademark; (2) that the defendant used the mark in commerce and without the registrant's consent; and (3) there was a likelihood of consumer confusion.” Abercrombie & Fitch v. Fashion Shops of Kentucky, Inc., 363 F.Supp.2d 952, 957 (S.D.Ohio 2005). Further, if a plaintiff establishes infringement and additionally alleges trademark counterfeiting, he must also show that “the defendant intentionally used the mark knowing it was a counterfeit, as the term counterfeit is defined in 15 U.S.C. § 1116.” Id. at 957–58.Section 1116 defines counterfeit mark as “a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered.” “Elsewhere, the statute provides additional clarification, defining ‘counterfeit’ as ‘a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.’ ” Laukus v. Rio Brands, Inc., 391 Fed.Appx. 416, 425 (6th Cir.2010) (quoting 15 U.S.C. § 1127).

The first two elements of trademark infringement are undisputed in this case. Defendants do not contest...