Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-03057/USCOURTS-ca8-05-03057-0/pdf.json

Parties Involved:
MQVP
Appellant
Mid-State Aftermarket Body Parts
Appellee

Document Text:

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-3057

___________

Mid-State Aftermarket Body Parts, Inc., *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Arkansas.

MQVP, Inc., formerly known as *

Global Validators, Inc., *

*

Defendant - Appellant. *

___________

Submitted: May 18, 2006

Filed: October 19, 2006 

___________

Before LOKEN, Chief Judge, JOHN R. GIBSON and COLLOTON, Circuit Judges.

___________

LOKEN, Chief Judge.

This is a trademark infringement dispute between the owner of a registered

service mark, MQVP, Inc., and an alleged infringer, Mid-State Aftermarket Body

Parts, Inc. MQVP appeals the district court’s grant of summary judgment dismissing

Lanham Act claims of infringement and false advertising. Concluding there are

genuine issues of material fact as to whether Mid-State’s unauthorized use of MQVP’s

service mark was “likely to cause confusion” as to the origin of products or services,

15 U.S.C. § 1125(a)(1)(A), or was false commercial advertising within the meaning

of 15 U.S.C. § 1125(a)(1)(B), we reverse.

Appellate Case: 05-3057 Page: 1 Date Filed: 10/19/2006 Entry ID: 2101014
1

A certification mark is “any word [or] name . . . used by a person other than

its owner . . . to certify . . . origin . . . quality . . . or other characteristics of such

person’s goods or services.” 15 U.S.C. § 1127. “A certification mark is a special

creature created for a purpose uniquely different from that of an ordinary trademark

or service mark.” 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair

Competition, § 19:91 (4th ed. 2006). A certification mark may be cancelled if the

owner markets services to which the mark attaches or permits use of the mark for

purposes other than to certify. See 15 U.S.C. § 1064(5)(B) & (C). 

2

“QS-9000” is a manufacturing quality control process adopted by Ford,

General Motors, and Daimler Chrysler. “ISO 9000” refers to a set of quality control

standards developed by the International Organization for Standardization.

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I.

Insurers, automobile repair shops, and car owners have been legitimately

concerned about the quality of parts used to repair damaged vehicles (aftermarket

parts) and about the increasing use of counterfeit foreign parts. Responding to these

concerns, a non-profit organization, Certified Automotive Parts Association (CAPA),

was created in 1987. After testing, CAPA certifies that a particular part meets

CAPA’s recognized quality standards. The manufacturer is then authorized to place

CAPA’s certification mark on the external packaging of the certified part.1

In 2000, MQVP, a for-profit company, began marketing a competing quality

assurance program, the Manufacturers’ Qualification and Validation Program, and set

out to enlist manufacturers and distributors of aftermarket parts. To participate, a

manufacturer must have its plant “QS-9000 registered,” and a distributor must have

an “ISO 9000” quality control implementation plan in place that is satisfactory to

MQVP.2

 After a manufacturer is approved by MQVP, the program contemplates that

each shipment of qualified parts will be entered into a “Global Online Certification

System.” Run by MQVP on-line software, this system enables the end user of a

specific part -- a repair shop or insurer -- to trace the shipment of that part from the

manufacturer through the chain of distribution, thereby validating the part’s quality.

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The MQVP program also includes a second on-line software service, “Global Online

Corrective Action Reporting,” which is a database of customer complaints and reports

of non-conforming parts. This MQVP on-line software is available only to

participating manufacturers and distributors. An early MQVP comparative

advertising piece explained the advantages of its program as follows:

[MQVP] has taken the spirit of CAPA, added the globally recognized

quality standard to which all OEM’s manufacture [QS-9000], included

the added value of cradle to grave traceability and accountability and

empowered it with on-line reporting software.

In 2001, MQVP registered three service marks to identify its new venture,

MQVP® for the program itself, GOCERTS® for the on-line tracing system, and

GOCAR® for the on-line complaint system. As amended by the Examining Attorney

of the U.S. Patent and Trademark Office, the registration for the MQVP® service

mark describes the services on which the mark will be used as:

Creating and maintaining a registry of manufacturers that validates that

parts or products made by the manufacturers meet established part

standards and product specifications and that the manufacturers listed are

registered in and follow ISO 9000, QS-9000, TS 16949 and other

industry standards. 

The MQVP program contemplated that participating manufacturers would

qualify their parts as complying with QS-9000 quality standards and sell those parts

to participating distributors using the GOCERTS® on-line tracing software so that end

users may validate the quality of a specific part used to repair a vehicle. But the record

in this case makes it clear that at least some participating manufacturers were

unwilling to limit sales of qualified parts to participating MQVP distributors. Sales

to non-MQVP-participants led to this Lanham Act dispute.

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Mid-State is a distributor of aftermarket automobile parts that it purchases from

various vendors. In 2002, Mid-State advertised that it has “MQVP parts available”

in its catalog, various trade journals, flyers, and over the telephone to customers and

potential customers who requested “MQVP parts.” Mid-State also recorded “MQVP

parts” on pick tickets sent to Mid-State customers to confirm their orders. In 2003,

when Mid-State declined MQVP’s offer of a license to use the MQVP® service mark

and to participate in the MQVP program, MQVP demanded that Mid-State cease all

use of the MQVP® mark. Mid-State began telling customers that it is not a participant

in the MQVP program but continued its use of the mark. This lawsuit followed. MidState argues that its statement “MQVP parts available” is true because Mid-State buys

qualified parts from MQVP-participating manufacturers. 

II.

We conclude that the district court’s application of the Lanham Act to the

undisputed and disputed facts of this case is flawed. First, the court criticized MQVP

because it uses a registered service mark, MQVP®, “to refer to products, and it

licenses others to use the mark MQVP® to refer to products.” But a service mark may

properly be used to identify the goods associated with the services protected by the

mark, so long as the mark continues to identify the presence of some services and not

only goods. Therefore, “while the distinction between a trademark and a service mark

may be relevant for registration purposes, it is not particularly relevant for the

purposes of the likelihood of confusion analysis.” Frehling Enters., Inc. v. Int’l Select

Group, Inc., 192 F.3d 1330, 1334 n.1 (11th Cir. 1999). Moreover, in this case,

whether MQVP uses the mark to refer to products as well as its program services is

a disputed fact. Mid-State without MQVP approval has used the mark to refer to

products -- “MQVP parts available” -- and there is evidence that some program

participants have used the mark in the same way. But MQVP submitted evidence that

it has never authorized such a use. Thus, whether MQVP has permitted participants

to use the mark in the same way CAPA permits third parties to use its certification

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mark, and the relevance of that fact to the likelihood-of-confusion and false

advertising inquiries, are issues for trial. 

Next, misconstruing the “validating” component of the MQVP program, the

district court concluded that MQVP describes and uses the MQVP® mark “in terms

that fit the definition of” a certification mark such as the CAPA mark. To be sure,

Mid-State’s unauthorized use -- “MQVP parts available” -- makes MQVP® look like

a certification mark for products, divorced from the validating on-line software

services that MQVP markets as an essential part of the overall program. But MQVP

registered MQVP® as a service mark, not a certification mark, and it is entitled to

service mark protection. As described by MQVP, the mark identifies a basket of

services -- verifying that participating manufacturers and distributors of qualified parts

satisfy the QS-9000 and ISO-9000 quality control standards, monitoring their

continued compliance, and providing on-line software that enables end users to verify

that the qualified parts they use are genuine. “The Lanham Trademark Act affords the

trademark holder the right to control the quality of the goods manufactured and sold

under its trademark.” Shell Oil Co. v. Commercial Petrol., Inc., 928 F.2d 104, 107

(4th Cir. 1991). Service mark owners are entitled to the same protection, so MQVP

may control the services sold under its service mark. See 15 U.S.C. § 1053. Of

course, MQVP may have altered its initial concept in marketing the program, in which

case its infringement claims may fail. But MQVP’s use of the mark and the nature of

the services its use protects are disputed issues for trial that are relevant to both the

likelihood-of-confusion and the false advertising issues.

Finally, the district court’s likelihood-of-confusion analysis emphasized that

distributor Mid-State does not offer services that compete with the MQVP services

protected by the mark, and that Mid-State’s customers are collision shops who are

parts end users, not the manufacturers and distributors who are potential purchasers

of MQVP’s services. But the Lanham Act’s unfair competition inquiry is not so

narrow. “Confusion is relevant when it exists in the minds of persons in a position to

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influence the purchasing decision or persons whose confusion presents a significant

risk to the sales, goodwill, or reputation of the trademark owner.” Beacon Mut. Ins.

Co. v. OneBeacon Ins. Group, 376 F.3d 8, 10 (1st Cir. 2004). Here, viewing the

evidence most favorably to MQVP, as we must, Mid-State engaged in the

unauthorized use of the MQVP® mark for the obvious purpose of confusing, indeed

deceiving, end users into believing they are buying qualified “MQVP parts” that are

fully validated under the MQVP program, with all its attendant services. The

deception, if successful, would discourage competing vendors from paying MQVP to

participate in the full program, thereby destroying the market for the very basket of

services the MQVP® mark was intended to protect.

Under the Lanham Act, likelihood of confusion and false advertising are factintensive inquiries. See SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.

1980) (likelihood of confusion); United Indus. Corp. v. Clorox Co., 140 F.3d 1175,

1180 (8th Cir. 1998) (false advertising). The many uncertain and outright disputed

issues of material fact that permeate the chaotic record in this case persuade us that

summary judgment was improperly granted. The judgment of the district court is

reversed, and the case is remanded for further proceedings not inconsistent with this

opinion.

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