Mobil Oil Corp. v. Auto-Brite Car Wash, Inc.

• Decision Date: 13 February 1984
• Docket Number: Civ. A. No. 81-2106-Z.
• Citation: 615 F. Supp. 628
• Parties: MOBIL OIL CORPORATION v. AUTO-BRITE CAR WASH, INC., et al.
• Court: U.S. District Court — District of Massachusetts

615 F. Supp. 628

MOBIL OIL CORPORATION v. AUTO-BRITE CAR WASH, INC., et al.

Civ. A. No. 81-2106-Z.

United States District Court, D. Massachusetts.

February 13, 1984.

Robert M. Gault, Mintz, Levin, Cohn, Glovsky & Popeo, Boston, Mass., Jeffrey Conciatori, Kenneth E. Newman, Donovan, Leisure, Newton & Irvine, New York City, for plaintiff.

Robert Bush, Harvey B. Heafitz, Newton, Mass., for defendant.

MEMORANDUM OF DECISION

ZOBEL, District Judge.

This is an action for trademark infringement, unfair competition, and unfair and deceptive trade practices, as well as for breach of the agreements between plaintiff Mobil Oil Corporation ("Mobil") and defendant Auto-Brite Car Wash, Inc. ("Auto-Brite"). It is based upon Auto Brite's actions in selling non-Mobil gasoline allegedly under the Mobil trademark without Mobil's consent. Auto-Brite denies liability and in its counterclaims I and VI alleges that Mobil breached agreements between the parties. Mobil has moved for summary judgment on all the remaining counts of its complaint and those two counts of defendant's counterclaim.¹

The following facts are not in dispute. On June 1, 1978, Mobil and Auto-Brite entered into a Retail Dealer Contract under which Mobil agreed to supply and Auto-Brite to buy certain quantities of gasoline and other products.

Paragraph 6 of the contract provided that:

Buyer shall use Seller's trademarks and brand names to identify and advertise Seller's products and shall not use such trademarks and brand names for any other purpose. Buyer shall ... not use Seller's trademarks or brand names in connection with the storage, handling, dispensing or sale of any adulterated, mixed or substituted products.... Any violation of the provisions of this paragraph by Buyer shall give Seller the right to immediately terminate this Contract. On any termination of this Contract, Buyer shall cause all references to Seller and all use of Seller's color schemes, trademarks, brand names, slogans and advertising to be discontinued....

Under a "Sign and Equipment Rent Rider" to the contract, Mobil leased two signs (together with other equipment) to Auto-Brite. The rider provided that the lessee should "use it the equipment solely for Lessor's products on the premises," and that "on termination of the Retail Dealer Contract ... Lessor may remove the equipment ... or Lessor may abandon said equipment."

Mobil and Auto-Brite also entered into an "Equipment Loan Agreement" on June 1, 1978 under which Mobil lent ten Mobil round pumps (and two light units) to Auto-Brite. Paragraph 1 of the agreement provides that "Borrower shall, with respect to the equipment ... (c) make no additions thereto or alterations therein without Company's prior written consent, (d) keep legible and visible all trademarks and signs of Company ... and (h) use it solely for Company's products." Under Paragraph 3 Auto-Brite was obligated "on the termination of this contract for any reason, ... promptly to return the equipment to Company. If not so returned, Company may remove it without liability ... or Company may abandon all or any part thereof."

On September 19, 1980, Mobil sold Auto-Brite two Mobil round pumps for $420. A Round Pump Repurchase Agreement of the same date provided that "upon final termination of all product contracts between CUSTOMER and MOBIL, CUSTOMER shall forthwith sell to Mobil all `Mobil Round Pumps' owned by CUSTOMER," and set a formula for the repurchase price.²

In a letter dated May 3, 1978, Mobil granted Auto-Brite a competitive allowance of 1.5 cents for each gallon of gasoline it purchased pursuant to the Retail Dealer Contract. The letter stated that "You Auto-Brite have acknowledged that this allowance may be decreased or withdrawn by Mobil at any time upon not less than thirty (30) days prior written notice to you." In a letter dated July 19, 1979, Mobil notified Auto-Brite that the competitive allowance would be withdrawn as of August 31, 1979. Auto-Brite had the right to cancel the Retail Dealer Contract if the competitive allowance was withdrawn, but it did not do so.

Auto-Brite concedes the existence and validity of Mobil's registered trademarks. Mobil concedes that at the time of the events at issue, the round pump was not registered as a trademark, although the Mobil pump is in a distinctive shape associated with Mobil.

Auto-Brite admits that around April 4, 1981, it began to buy gasoline from suppliers other than Mobil, that it sold this gasoline through the round pumps supplied by Mobil, and that it continued to accept Mobil credit cards as payment for this gasoline. It further concedes that it received from Mobil a notice, dated July 23, 1981, that Mobil was immediately terminating the parties' franchise relationship, including the Retail Dealer Contract with its riders, and the Equipment Loan Agreement. The parties agree that upon receipt of the notice Auto-Brite covered the word "Mobil" on the pumps with masking tape and stopped accepting Mobil credit cards in payment.³ However, it did not remove the two large "Mobil" signs until about August 13, 1981, nor did it cease to sell other Mobil products in containers clearly marked Mobil.

I. Mobil's Claims

Counts I and II of the complaint allege violations of sections 32 and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a), respectively. Count III alleges common law unfair competition and trademark infringement; and Count VII, violation of Mass.Gen.Laws ch. 93A, § 11. Count VIII alleges breach of the agreements between Mobil and Auto-Brite.⁴ At oral argument defendant agreed that as to the first four of those counts, there was no dispute of fact precluding summary judgment for Mobil with respect to the time prior to the termination of the contract. Defendant has, however, sought to raise the defense of laches with respect to that period claiming that Mobil was notified of the alleged violation in mid-April but took no action until July. The Court previously denied Auto-Brite's motion to amend its answer by adding laches as an affirmative defense. In any event, Auto-Brite has not made the required showing of unreasonable or prejudicial delay. See Toys "R" Us, Inc. v. Canarsie Kiddie Shop, Inc., 559 F.Supp. 1189 (E.D.N.Y.1983) (prejudice a necessary element of laches); Jordan K. Rand, Ltd. v. Lazoff Bros., Inc., 537 F.Supp. 587 (D.P.R.1982) (filing of complaint three months after becoming aware of defendant's act not unreasonable delay). Mobil is therefore clearly entitled to summary judgment on Counts I-III and VII insofar as they are based on defendant's actions through July 23, 1981.

Mobil raises no claim of trademark infringement after August 13, 1981 when defendant Auto-Brite removed all signs. As a result, the parties' dispute as to the appropriateness of summary judgment for Mobil on its Counts I-III and VII concerns only the three-week period from July 23 to August 13. Auto-Brite contends that after it received notice of the contract termination, it took steps to insure that its sale of gasoline could not be construed as an attempt to sell non-Mobil gasoline as Mobil gasoline and that the facts pertaining to its alleged infringement of Mobil's mark are therefore in dispute.

Summary judgment is often inappropriate in infringement cases because they present a complicated array of factual issues requiring substantial development. Where, however, the facts have been fully developed through pleadings, affidavits, depositions and exhibits, and the legal issues are squarely presented, summary judgment is appropriate. See, e.g., Pignons S.A. de Mecanique de Precision v. Polaroid Corporation, 498 F.Supp. 805 (D.Mass.1980), aff'd, 657 F.2d 482 (1st Cir. 1981); Beef/Eater Restaurants, Inc. v. James Burroughs Ltd., 398 F.2d 637 (5th Cir.1968); Community of Roquefort v. William Faehndrich, Inc., 303 F.2d 494 (2d Cir.1962).

While the causes of action asserted in Counts I-III and VII vary, the essential element of each is that defendant's use of plaintiff's mark be likely to cause confusion among customers as to the source of its product. Purolator, Inc. v. EFRA Distributors, Inc., 687 F.2d 554 (1st Cir.1982). The test is whether an appreciable number of ordinarily prudent purchasers was likely to be misled or confused as to the source of the goods in question. McGregor-Doniger, Inc. v. Drizzle, Inc., 599 F.2d 1126 (2d Cir.1979). In this Circuit, likelihood of confusion is considered a question of fact. Coca-Cola Co. v. Snow Crest Beverages, Inc., 162 F.2d 280, 283 (1st Cir.), cert. denied, 332 U.S. 809, 68 S.Ct. 110, 92 L.Ed. 386 (1947); see also Purolator, Inc. v. EFRA Distributors, Inc. 687 F.2d 554 (1st Cir.1982). However it is characterized, where there is no genuine issue as to the existence of a substantial likelihood of confusion, the court may grant summary judgment.

There is no dispute between the parties as to what Auto-Brite did between July 23 and August 13, 1981: in a station displaying Mobil signs and selling Mobil oil and other products in containers with the Mobil mark, it sold non-Mobil gasoline from Mobil's distinctive round pumps on which the name "Mobil" had been covered with masking tape. It no longer accepted Mobil credit cards, but took no other steps to inform customers that the gasoline was not Mobil. The undisputed facts establish the requisite likelihood of confusion⁵ during the period from July 23 to August 13, 1981.

Defendant clearly used Mobil's registered trademark without its consent in connection with the sale or offering for sale of goods. Given that such use was likely to cause confusion or mistake, or to deceive, plaintiff has established defendant's liability under § 32(1) of the Lanham Act, 15 U.S.C. § 1114(1). Franchised Stores of New York, Inc. v. Winter, 394 F.2d 664 (2d Cir.1968).

The essence of a common law unfair competition claim under Massachusetts law is the appropriation of a competitor's business to his injury. Quabaug Rubber Co. v....