Saturday, March 13, 2010

Court Concludes No Likelihood of Confusion between AutoZone and OilZone/WashZone and AutoZone’s Claims Barred by Laches

I previously blogged (link here) about the trademark infringement lawsuit brought by automotive parts retailer AutoZone against Illinois businessman, Michael Strick, doing business under the service marks Oil Zone and Wash Zone. The Seventh Circuit reversed a district court’s decision finding no likelihood of confusion as a matter of law between the AUTOZONE mark and Strick’s use of OILZONE and WASHZONE. See AutoZone, Inc. et al v. Strick et al., Appeal No. 07-2136 (7th Cir. September 11, 2008). The decision sent the case back the lower court for trial.

After a bench trial was held on November 2 and 3, 2009, U.S. District Court Judge John Darrah on March 8, 2010, issued findings of fact and conclusions of law which rule in favor of Strick and against AutoZone. The court concluded that Strick's use of the OIL ZONE and WASH ZONE names and marks was not likely to cause consumer confusion with AutoZone’s mark, and, in the alternative, AutoZone’s lawsuit was barred the doctrine of laches. See AutoZone, Inc. et al v. Strick, 2010 U.S. Dist. LEXIS 21928, Case No. 03-cv-8152 (N.D. Ill. March 8, 2010).

Because there was no issue regarding the protectibiliyt of AutoZone’s marks, the decision came down to likelihood of confusion. The court went through an analysis of the seven likelihood of confusion factors set forth in CAE, Inc. v. Clean Air Engineering, Inc., 267 F.3d 660, 677-78 (7th Cir. 2001).

Regarding the similarity of the mark, while they all three contained the word “zone” (preceded by a short one or two syllable word), the court found that the marks have significant differences, including color, letter capitalization, the appearance of the individual letters altogether and even the graphical elements conveying movement or speed, that made the marks only somewhat similar. The court also took into account the retail context in which the marks appeared to find that confusion was even less likely:

Furthermore, confusion between the marks is even less likely when the marks are considered in the physical retail context in which they are displayed by the parties and perceived by the consumer. Specifically, the exterior appearance of the Oil Zone facilities significantly diminishes the probability of consumer confusion by associating either location with AutoZone. The Wheaton Oil Zone location is a simple concrete building with a green Oil Zone sign. The Naperville Oil Zone/Wash Zone location is a white building with a blue roof. Neither has an appearance even slightly resembling a typical AutoZone store, which has the standardized, uniform look consistent with a retail store operated as part of a nationwide chain. In contrast, the Oil Zone locations present the appearance of two small, independent businesses, not associated with any national commercial entity.

Regarding similarity of the products and/or services offered, while the businesses may generally relate to care and maintenance of automobiles, the court found that Oil Zone and Wash Zone primarily provide automotive services while AutoZone primarily sells automotive products. The court rejected as unsupported by any evidence AutoZone’s claims that consumers would believe these are service-only centers of AutoZone.

Regarding the “area and manner of concurrent use” factor, the court found differences in the customer bases of the two businesses (65% of Strick's customers are women while 20% of AutoZone customers are women; AutoZone has a very high percentage of DIY customers while Strick’s facilities provide basic automobile maintenance services to automobile owners). The court also noted that AutoZone customers generally seek to purchase products for use by the customer in performing maintenance and repair on an automobile whereas Oil Zone/Wash Zone customers are seeking to purchase both the part and the installation and repair or maintenance service. The court also found that the physical appearance of the interior of Strick's facilities make it unlikely that a consumer would believe that the business sold auto parts. Similarly, the typical AutoZone store is a retail facility with large glass windows but no car bays with an interior that contains aisles of shelves stocked with automobile parts and accessories. The court also noted that there is no significant concurrent use of the marks in advertising because AutoZone’s ads are mostly nationwide through television, radio, newspapers, and sponsorship of professional teams, while Strick’s primary means of advertising is through direct mail -- a method not used extensively by AutoZone.This factor favored no likelihood of confusion.

As for the degree of care likely to be exercised by consumers, the court rejected AutoZone’s arguments that customers are likely to exercise a low degree of care because most of the products and services sold by Autozone and Strick are inexpensive in light of the “distinct difference in essentially the sale of services offered by Strick and the sale of products offered by AutoZone.”

Sidenote: The court could not resist pointing out that AutoZone, in its own proposed findings of fact and conclusions of law, stated that “Strick's customer base consists largely of individuals who live or work within a three-mile radius of one of its two locations, which suggests that those customers are drawn to Strick's business because they are convenient to customers' homes and offices, and that these customers would continue to frequent Strick's business regardless of the names used to identify those operations,” which the court took as an admission by AutoZone that Strick's customers are drawn from a limited surrounding area, familiar with his business and not dependent on Strick's use of any particular mark. [ed.--Oops!]

There was no dispute that AutoZone’s marks were strong, and thus the “strength of the mark” factor favored AutoZone. AutoZone admitted that it had no evidence of actual confusion. While the court acknowledged that evidence of actual confusion is not required to show likelihood of confusion, lack of such evidence over an extended period of time may indicate lack of actual confusion. In this case, Strick had been using the OIL ZONE mark for over 13 years and AutoZone had no evidence of any incident of confusion between the marks during this time period – even though AutoZone had two facilities located within a mile of Strick’s locations. “Therefore, the absence of actual confusion, particularly when considered in the context of these facts, fails to support AutoZone's claim.”

The final factor was Strick’s intent. The court found credible and persuasive Strick’s testimony that he had not heard of AutoZone at the time he created the OIL ZONE name and mark in 1996. The court also rejected AutoZone's evidence that its Chicago-area advertising somehow put Strick on notice when he opened his business: “AutoZone did not provide specific evidence as to what advertising was done in Chicago prior to 1996. Considering the evidence presented, it is reasonable to conclude that Strick created OIL ZONE before AutoZone had fully developed its Chicago advertising campaign.” In addition, the two AutoZone stores nearest to Strick at the time he opened his first location were forty miles away, which the court found could not have reasonably provided notice of the AUTOZONE mark. The court found no persuasive evidence that Strick intended to "palm off" his business as AutoZone

Weighing all of the factors above, the court found that AutoZone had failed to establish by a preponderance of the evidence that Strick's use of the OIL ZONE and WASH ZONE marks were likely to cause confusion among consumers (finding that only the strength of the mark weighed in favor of AutoZone, which was significantly outweighed by the dissimilarity of the marks and the products and services offered by the parties).

The court also addressed Strick’s alternative argument that the doctrine of laches bars AutoZone's claims. AutoZone became aware of Strick's use of OIL ZONE and WASH ZONE in December 1998, but did nto contact Strick until a cease and desist letter was sent in February 2003. This four year delay was outside the three-year statute of limitations found in the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/10a(e), and therefore, there was a presumption of unreasonable delay applied.

AutoZone attempted to argue that its delay was not unreasonable and was excusable due to AutoZone's other ongoing enforcement actions between 1998 and 2003 (even having in-house counsel testify regarding AutoZone’s procedures for monitoring and prioritizing trademark enforcement actions). But the court shot down AutoZone quite directly stating “It is clear that the actual reason AutoZone did not pursue this case in a reasonably timely manner was not that it was too busy with other enforcement actions but, rather, that for whatever reason, it gave the case file no attention for nearly four years. This does not excuse AutoZone's delay. Therefore, AutoZone has not overcome the presumption that its four-year delay was unreasonable.” (footnote omitted).

After determining unreasonable delay, the court turned to the question of whether Strick has shown prejudice due to AutoZone's inaction. While AutoZone tried to argue that Strick had presented no concrete evidence that he has built up good will or customer loyalty over the last four years, the court rejected the need for such evidence in showing prejudice: “It is undisputed that Strick spent four years and a substantial sum promoting the Oil Zone name. Forcing him to change that name now would obviously cause a loss in terms of both time and money. Thus, Strick has shown that he has been prejudiced by AutoZone's delay.” While AutoZone argued that that Strick had not shown that he relied on AutoZone's delay and that AutoZone's action induced Strick to adversely change his position, the court rejected the argument that such a showing was required (citing recent Seven Circuit case law) and held that Strick did not need to make any further showing with respect to prejudice.

Accordingly, the court held that AutoZone unreasonably delayed in bringing this suit, and Strick would be prejudiced by allowing AutoZone to now assert its rights and applied the doctrine of laches to bar AutoZone’s lawsuit.

1 comment:

strick said...

Great article.. As the owner of Oil Zone this has been a long battle. Autozone is a billion dollar company. They trademarked my name Oil Zone while our case has wound its' way through the courts. I'd appreciate any help to battle them on trademarking my name.