AutoZone, in business since 1987, became aware of Strick's two businesses in December 1998, but did not take any legal action against Strick until November 14, 2003 (a cease and desist letter was sent to Strick in February 2003). On cross-motions for summary judgment, the district court found that AutoZone's claims of trademark infringement and unfair competition failed as a matter of law because AutoZone had failed to produce sufficient evidence to show a likelihood of confusion between AutoZone's marks and Strick’s Oil Zone and Wash Zone marks – the district court found that the AutoZone mark and the Oil Zone and Wash Zone marks were "not similar enough for a reasonable finder of fact to find that there is a likelihood of confusion."
The Court of Appeals, reviewing de novo the district court's decision to grant summary judgment, found that the evidence was not so one-sided that it was proper for the district court to determine the issue of likelihood of confusion at the summary judgment stage, and thus reversed the district court’s decision. The Court reached this conclusion by doing its own analysis of each of the seven likelihood of confusion factors adopted by the Seventh Circuit. See Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001).
Regarding similarity of the marks, because the marks are all comprised of two words in the same font, slanted in the same direction, with “Zone” as the second word and the first letter of both words larger than the other letters in the marks, and feature bar designs that suggest movement or speed, the Court found that the marks in this case were similar enough that a reasonable finder of fact could find that a consumer would believe that the marks are connected to the same source. While the Court acknowledged some dissimilarities, “viewing the facts in the light most favorable to AutoZone, as we are required to do at this stage of the litigation, the prominent similarities between the marks may very well lead a consumer cruising down the street to believe, after driving past both parties' businesses, that Oil Zone and Wash Zone represented AutoZone's entry into the oil-change and car wash-services market.”
Regarding similarity of the products, the court stated that:
in light of the similarity of the marks, a reasonable consumer may very well be led to believe that Oil Zone and Wash Zone are AutoZone spinoffs. A retailer or manufacturer with a strong mark venturing into a related service industry would not be that surprising. And the automotive services provided by Strick's businesses are related to the automotive products sold at AutoZone stores. Indeed, there is even some direct overlap between AutoZone's products and the services provided by Strick's businesses: Strick provides car washes and oil changes while AutoZone sells car-wash and oil-change products. A reasonable consumer, taking into account the similarity of the marks, could therefore conclude from the relatedness of the goods and services provided by AutoZone, Oil Zone, and Wash Zone that the marks are all attributable to a single source. Thus, AutoZone has shown that a genuine dispute exists here as well.
Regarding customer degree of care, the district court had found this factor to support AutoZone’s argument for confusion and the Court agreed. AutoZone presented evidence that many of its automotive products are inexpensive and Strick did not present any evidence that his customers are particularly sophisticated. As such, a reasonable trier of fact could conclude that this factor favors AutoZone.
Regarding the strength of AutoZone’s mark, the Court found the evidence of record more than sufficient to support AutoZone’s argument that its AutoZone marks was strong. “The AutoZone mark is displayed prominently on more than 3,000 stores nationwide, and it has been the subject of hundreds of millions of dollars' worth of advertising since 1987.” Strick attempted to argue that the AutoZone mark is weak based on evidence that the word "Zone" is commonly found in other marks. However, Strick did not actually produce any evidence to show how extensively any of the third party marks that use the word "zone" have been promoted or become recognized by consumers in the marketplace, and thus evidence of such marks does not raise any question about the strength of AutoZone's mark. In addition, Strick’s argument fails to note that a mark must be viewed as a whole, and while the word “zone” by itself may be common, the same is not necessarily true for a composite mark like AutoZone, and a trier of fact could reasonably conclude that AutoZone's mark is strong and thus the factor of confusion would favor AutoZone.
Regarding the factor of Strick’s intent to palm off his services as those of AutoZone, while Strick testified that he was not aware of the AutoZone mark when he created the Oil Zone mark, the Court noted that in some circumstances, an intent to confuse may be reasonably inferred from the similarity of the marks where the senior mark had already attained great notoriety. In this case, “a reasonable trier of fact could conclude from Strick's experience in the industry, AutoZone's extensive marketing of its mark in the area where Strick did business, and the close similarity in design between the marks that Strick designed the Oil Zone mark with the intent to mislead consumers into believing that Oil Zone was somehow affiliated with AutoZone.” Whether Strick was honest in not being aware of the AutoZone mark was a decision for the trier of fact to decide.
The Court concluded that based on its own analysis of the likelihood of confusion factors, “a reasonable finder of fact could have found that consumers might be led to believe that AutoZone and Strick's Oil Zone and Wash Zone are affiliated with each other. AutoZone has therefore presented sufficient evidence to create a triable issue of fact on the issue of likelihood of confusion.” As such, it was improper for the district court to grant summary judgment with the existence of so many unresolved genuine issues of material fact, and the Court remanded the case back to the district court for trial.
Finally, Strick had argued at the district court and again a the Court of Appeals, that AutoZone’s claims were barred by the doctrine of laches – based on the delay between the time when AutoZone first became aware of Strick’s businesses in 1998 and when AutoZone finally took action in 2003. However, because a district court's decision to apply the doctrine of laches is discretionary and the district court declined to rule on the issue in its decision, the Court opted to let the district court determine on remand how it will exercise its discretion in this case.