Court Opinion

ID: 3041240
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:05:29.043157+00
Date Added: 2024-06-11T11:48:59.577270
License: Public Domain

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.
                                             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.

       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.

                                            -2-
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.

                                           -3-
        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. Mid-
State 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

                                          -4-
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

                                           -5-
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 fact-
intensive 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.
                         ______________________________

                                         -6-