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Keywords

appealtrademark
summary judgmenttrademarkcorporation

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Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062, 80 U.S.P.Q.2d 1293, 06 Cal. Daily Op. Serv. 7377, 2006 Daily Journal D.A.R. 10,602

Facts

Auto Gold produces and sells automobile accessories to complement specific makes of cars, including Cadillac, Ford, Honda, Lexus, Jeep, Toyota, and others. In 1994, Auto Gold began selling license plates, license plate frames and key chains bearing Volkswagen's distinctive trademarks and, in 1997, began selling similar products bearing Audi's distinctive trademarks.

Issue

Whether the use of Volkswagen and Audi's trademarks by Auto Gold constitutes trademark infringement under the Lanham Act.

Whether the use of Volkswagen and Audi's trademarks by Auto Gold constitutes trademark infringement under the Lanham Act.

Rule

The principal role of trademark law is to ensure that consumers can identify the source of goods. A trademark is not protected if it is deemed functional, meaning it is essential to the use or purpose of the article or affects its cost or quality. The aesthetic functionality doctrine may preclude trademark protection if the feature serves a significant non-trademark function that would stifle legitimate competition.

The principal role of trademark law is to ensure that consumers are able to identify the source of goods. A functional product feature does not enjoy protection under trademark law. Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 170, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995).

Analysis

The court analyzed whether the trademarks were functional under the Inwood Laboratories definition, which states that a feature is functional if it is essential to the use or purpose of the article. The court found that the trademarks were not functional as they did not affect the products' utility or quality. Furthermore, the court determined that the aesthetic appeal of the trademarks did not negate their source-identifying function, and thus, they were entitled to trademark protection. The likelihood of consumer confusion was also established due to the strong nature of the trademarks and the direct competition between Auto Gold and the manufacturers.

Auto Gold's incorporation of Volkswagen and Audi marks in its key chains and license plates appears to be nothing more than naked appropriation of the marks. The doctrine of aesthetic functionality does not provide a defense against actions to enforce the trademarks against such poaching.

Conclusion

The court reversed the district court's ruling, holding that Auto Gold's use of Volkswagen and Audi's trademarks constituted trademark infringement and that the trademarks were entitled to protection.

We reverse the district court's grant of summary judgment in favor of Auto Gold on the basis of aesthetic functionality.

Who won?

Volkswagen and Audi prevailed in this case as the appellate court reversed the lower court's decision that had favored Auto Gold. The appellate court found that the trademarks were not functional and were entitled to protection under trademark law. The court emphasized that allowing Auto Gold to use the trademarks without authorization would undermine the purpose of trademark law, which is to prevent consumer confusion and protect the reputation of trademark holders.

Volkswagen and Audi prevailed in this case as the appellate court reversed the lower court's decision that had favored Auto Gold. The appellate court found that the trademarks were not functional and were entitled to protection under trademark law.

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