Opinion ID: 2974026
Heading Depth: 5
Heading Rank: 7

Heading: Defendant’s Intent in Selecting the Mark

Text: “If a party chooses a mark with the intent of causing confusion, that fact alone may be sufficient to justify an inference of confusing similarity.” Homeowners Group, Inc., 931 F.2d at 1111. “Intent is relevant because purposeful copying indicates that the alleged infringer, who has at least as much knowledge as the trier of fact regarding the likelihood of confusion, believes that his copying may divert some business from the senior user.” Daddy’s Junky Music Stores, Inc., 109 F.3d at 286. Intent can be proven by direct or circumstantial evidence. Id. There can be little question that Tong Yang intentionally copied GM’s trademarks. Tong Yang reverse engineers the grilles to look as close1as possible to the original equipment manufactured by GM. Accordingly, this factor favors GM. viii. Likelihood of Expansion of the Product Lines [A] ‘strong possibility’ that either party will expand his business to compete with the other or be marketed to the same consumers will weigh in favor of finding that the present use is infringing.” Homeowners Group, Inc., 931 F.2d at 1112. Expansion could be geographic or an increase in products or services. Daddy’s Junky Music Stores, Inc., 109 F.3d at 287. The District Court noted that there is no evidence that either party plans to expand its grille manufacturing business. Accordingly, this factor favors the defendants. In sum, although the eight-factor test is arguably less important in assessing downstream confusion than point-of-sale confusion since two of the factors (5 and 6) focus on the point of sale, see Ferrari S.P.A. Esercizio, 944 F.2d at 1245, the analysis favors a likelihood of downstream confusion here because, of the remaining six factors, four (1, 2, 3 and 7) favor GM, and only two (4 and 8) favor Tong Yang. 2. Downstream Harm Our review of cases discussing the harm of injecting knockoffs into the stream of commerce further signals the likelihood of downstream confusion in this case. Even without point-of-sale confusion, knockoffs can harm the public and the original manufacturer in a number of ways, including: (1) the viewing public, as well as subsequent purchasers, may be deceived if expertise is required to distinguish the original from the counterfeit, see Hermes, 219 F.3d at 108; (2) the purchaser of an original may be harmed if the widespread existence of knockoffs decreases the original’s value by making the previously scarce commonplace, see id.; (3) consumers desiring high quality products may be harmed if the original manufacturer decreases its investment in quality in order to compete more economically with less expensive knockoffs, see United States v. Torkington, 1 After this suit was instituted, Tong Yang modified its grilles to remove the trademarked “bow tie” and “GMC” designs from the placeholders. GM argues that these modifications show Tong Yang’s intent to copy the GM trademarks. The District Court properly excluded this subsequent remedial evidence under Fed. R. Evid. 407. No. 05-1712 General Motors Corp. v. Keystone Page 7 Automotive Industries, et al. 812 F.2d 1347, 1353 n.6 (11th Cir. 1987); (4) the original manufacturer’s reputation for quality may be damaged if individuals mistake an inferior counterfeit for the original, see Ferrari S.P.A. Esercizio, 944 F.2d at 1244-45; (5) the original manufacturer’s reputation for rarity may be harmed by the influx of knockoffs onto the market, see id.; and (6) the original manufacturer may be harmed if sales decline due to the public’s fear that what they are purchasing may not be the original, see Hermes, 219 F.3d at 108. On the other hand, courts should be wary of overprotecting public domain ideas and works whose exploitation can lead to economic efficiency, greater competition, and lower costs for consumers.2 Cf. 1 McCarthy, supra, at § 2:2 (reciting the policies underlying the laws of trademark and unfair competition). Applying these principles in Ferrari S.P.A. Esercizio, this Court upheld the verdict of a bench trial enjoining the production of knockoff Ferrari automobiles which could damage Ferrari’s reputation for quality and rarity. 944 F.2d at 1245. Other courts have reached similar conclusions in cases involving knockoff Rolex watches, Rolex Watch U.S.A., 645 F. Supp. at 488, designer purses, Hermes, 219 F.3d at 108, and other products, see 3 McCarthy, supra, at § 23:7. The instant case carries similar potential for downstream confusion and corresponding harm to GM and the public –– if the public can actually see the underlying placeholders after the “bow tie” or “GMC” emblems are affixed to the grilles. Unaided by the defendants’ conspicuously marked packaging, the invoice disclaimer, or a collision shop’s expertise, the viewing public could mistake a Tong Yang grille for a GM grille. Such confusion could damage GM’s reputation for quality if the public associates any inferior attributes (e.g., improper fit or cracking) of Tong Yang’s grilles with GM. Other types of possible downstream harm, such as that resulting from a product’s reduced scarcity, however, are largely inapplicable to this case. Nonetheless, visibility of the placeholder after the automobile is repaired and returned to the road may harm the public and GM. 3. Visibility of Placeholder After GM Emblem Is Affixed If the placeholder cannot be seen after the Chevrolet “bow tie” or “GMC” emblem is affixed, the wholly hidden placeholder cannot cause downstream confusion as to origin or sponsorship. After all, that which defies perception cannot confuse. Cf. Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 148 (4th Cir. 1987) (In a suit involving knockoff Polo shirts, the placement of the defendant’s mark inside the back of the neck of each shirt did not prevent a likelihood of confusion stemming from the defendant’s placement of the Polo trademark on the front of each shirt.); Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F. Supp. 735, 747 (S.D.N.Y. 1985), aff’d, 799 F.2d 867 (2d Cir. 1986) (“Because the mark is consistently visible to the purchasing public as a constant advertisement of the product on which an evaluation of it is affixed, the similarity of the marks in a post-sale setting must be taken into consideration.”). The parties dispute whether the placeholder can be seen after the emblem is secured. GM maintains that the placeholder remains visible: The molded marks are readily visible to the car owner when the grille is installed . . . [T]he molded “bow tie” trademark surrounds the medallion to present a proportioned trademark in comparison to the size of the grille. The molded “GMC” trademark is likewise undeniably visible, projecting a three dimensional mark with the medallion on the front surface of the molded GMC . . . . 2 It is worth emphasizing that GM seeks relief only under the laws of trademark and unfair competition. Other legal theories, such as the laws of patent and trade dress, also offer protection for certain attributes of products. No. 05-1712 General Motors Corp. v. Keystone Page 8 Automotive Industries, et al. Keystone admitted that the molded GMC in the grille could be seen: Q: The next sentence says: [“]The placeholder . . . for the grille cannot even be seen.[”] You can see the placeholder as a GMC factory grille, true? A: Yes. (GM Final Brief at 35.) On the other hand, Tong Yang argues that “[o]nce the trademark emblem is attached, only the emblem, and not the placeholder, is visible.” (Tong Yang Final Brief at 6.) Keystone appears to take a middle ground, stating that “the mounted emblem hides virtually all of the accused receiver structure.” (Keystone Final Brief at 6.) The District Court improperly resolved in favor of the defendants this factual dispute regarding the visibility of the placeholders after each emblem is affixed. If the placeholders remain visible, the related question is raised whether the placeholders are sufficiently visible to cause a likelihood of confusion. These genuine disputes of material fact render summary judgment inappropriate, a common disposition in evaluating likelihood of confusion. See Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1267 (9th Cir. 2001) (quoting Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1356 n.5 (9th Cir. 1985) (“This case underscores our warning that ‘trial courts disfavor deciding trademark cases in summary judgments because the ultimate issue is so inherently factual.’ ” ).