Opinion ID: 402177
Heading Depth: 3
Heading Rank: 3

Heading: The Trademark-Gasoline Tying Claim

Text: 7 Hamro contends that Shell illegally tied the use of Shell's trademark (the tying product) to the purchase of Shell gasoline (the tied product). Shell does not dispute the fact that the dealer agreement expressly granted to Hamro the right to use Shell's trademark on the condition that Hamro sell only Shell products under the trademark. In order to establish that the tie was an unlawful arrangement, however, Hamro must demonstrate that the scheme involved two distinct products. Times-Picayune Publishing Co. v. United States, 345 U.S. at 614, 73 S.Ct. at 883; Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1352 (9th Cir. 1982) (Baskin-Robbins ); Siegel v. Chicken Delight, Inc., 448 F.2d 43, 47 (9th Cir. 1971), cert. denied, 405 U.S. 955, 92 S.Ct. 1172, 31 L.Ed.2d 232 (1972) (Chicken Delight ). We affirm the district court's determination that as a matter of law the Shell trademark and Shell gasoline are not separate and distinct products. 8 This court has held that a trademark may constitute a separate tying item. See Chicken Delight, 448 F.2d at 49. But not all trademarks are treated alike. This court has suggested that trademarks fall into two distinct functional categories: (1) trademarks that identify the source of a product and (2) trademarks that warrant a certain method of doing business and certain quality standards. See id. at 48-49; accord, Redd v. Shell Oil Co., 524 F.2d 1054, 1056-57 (10th Cir. 1975), cert. denied, 425 U.S. 912, 96 S.Ct. 1508, 47 L.Ed.2d 762 (1976). With the second type of trademark, the franchisee does not pass on a finished branded product, but actually prepares the product in accordance with standards specified by the franchisor. Chicken Delight presented the second type of trademark. The franchisees of Chicken Delight were required to purchase certain cooking equipment, mixes and packaging items as a condition of obtaining a license to use the Chicken Delight trademark. 448 F.2d at 46. We held the trademark and the tied items to be distinct and separate products. Id. at 49. We reasoned: 9 (I)t is apparent that the goodwill of the Chicken Delight trade-mark does not attach to the multitude of separate articles used in the operation of the licensed system or in the production of its end product. It is not what is used, but how it is used and what results that have given the system and its end product their entitlement to trademark protection. It is to the system and the end product that the public looks with the confidence that established goodwill has created. 10 ... (A)ttempts by tie-in to extend the trade-mark protection to common articles (which the public does not and has no reason to connect with the trade-mark) simply because they are said to be essential to production of that which is the subject of the trade-mark, cannot escape antitrust scrutiny. 11 Id. 12 With a source trademark, on the other hand, the goodwill of the trademark attaches to an individual product manufactured for or by the trademark owner. Baskin-Robbins, 644 F.2d at 1354. The franchisees serve merely as conduits through which the trademarked goods of the franchisor flow to the ultimate consumer. Id. at 1353. Baskin-Robbins raised the question whether a source trademark should be considered to be a separate item for tie-in purposes. This court held that the Baskin-Robbins trademark and the ice cream products allegedly tied to the trademark were so inextricably interrelated in the mind of the consumer as to preclude any finding that the trademark is a separate item for tie-in purposes. Id. at 1354. In the instant case, the Shell trademark serves as a source trademark. Thus, the nexus between the trademark and the tied product, Shell gasoline, is sufficiently close to warrant treating them as one product. Further support for our conclusion that the Shell trademark is not a separate product is found in Redd v. Shell Oil Co., 524 F.2d 1054, where the Tenth Circuit was presented with a source trademark in a factual context almost identical to the one before us. In that case, a contract between Shell Oil Company and Redd, a wholesaler of petroleum products, granted Redd the right to use the Shell trademark in connection with the sale of petroleum products but prohibited Redd from selling non-Shell products under the Shell trademark. Id. Redd claimed that the agreement constituted an illegal tying arrangement. The court distinguished Chicken Delight and held that the trademark was not a separate product. Id. at 1056. Use of the trademark would be a representation ... that the gasoline was Shell gasoline and thus either made by or for Shell. Id. at 1056-57. 13 We agree with the reasoning of the Redd court. We therefore hold that the Shell trademark in the case before us, when used in connection with the sale of gasoline, merely identified the source of the gasoline and did not constitute a separate and distinct product. 14