A David and Goliath Trademark Battle

I see it all the time. Well-funded trademark bully starts pounding on small business. Small business, if it resists at all, eventually breaks financially. Unethical lawyer on bully’s side goes home and tells his or her kids something about morality, yet fails to choke on the irony.

I’m not certain that this case falls into that category, but it might. If it does, the defendant might have something in store for the plaintiff.

A small auto service in Crestview, Fla. got tired of Progressive Auto Insurance’s efforts to pull him into their network. So, owner Ed Lowe fought back:

In front of [his] service building, a flashing sign promotes the business by scrolling various messages, including one that says, “Progressive Customers Try Our Consierge (sic) Service.”

Progressive’s lawsuit states the sign also has read:

l “Progressive customers, give us 15 minutes and we will give you an estimate.”

l “Welcome Progressive customers — try our concierge service — drop and go.”

l “One week free rental to all Progressive customers.”

The lawsuit also states Lowe has used radio commercials to “urge Progressive’s customers not to allow Progressive to ‘dictate where (they) take (their) vehicle for repairs.’ ”

Progressive claims that this is a violation of its trademark rights. I’m not entirely convinced, but I don’t see it as a slam dunk.

This will most likely come down to whether the use of PROGRESSIVE was fair use. A great case to start with in doing research on that issue is New Kids on the Block v. New America Publ’g, Inc., 971 F.2d 302 (9th Cir. 1992). In that case, the defendant conducted a survey about NKOTB, and the crappy boy band sued for trademark infringement. The court held that the magazine couldn’t have conducted the survey without using NKOTB’s name. The “classic fair use case” is one in which “the defendant has used the plaintiff’s mark to describe the defendant’s own product.” Id.

In Playboy Enters. v. Welles, 279 F.3d 796 (9th Cir. 2002), a former Playmate of the Year described herself as such. The district court held (and the appeals court affirmed) “There is no other way that Ms. Welles can identify or describe herself and her services without venturing into absurd descriptive phrases. To describe herself as the “nude model selected by Mr. Hefner’s magazine as its number-one prototypical woman for the year 1981” would be impractical as well as ineffectual in identifying Terri Welles to the public.

Naturally, these are 9th Circuit cases, and thus only persuasive in the 11th. However, they are highly persuasive and cited in a handful of 11th Circuit cases. Also, the Fifth Circuit (back before the 5th / 11th split) held in Volkswagenwerk Aktiengesellschaft v. Rickard, 492 F.2d 474 (5th Cir. 1974) that a car repair service could use the VOLKSWAGEN mark to advertise its services, as long as it did not seek to create a false connection with VW.

Ultimately, this is going to likely come down to an issue of fact — whether the use by the auto shop was calculated to, or had the effect of, confusing consumers into believing that there is a connection between his shop and Progressive. Given the facts as reported, it is not clear. If I were a Progressive customer, I might think that the signs (if reported truthfully) implied that the shop was a Progressive authorized shop. On the other hand, one certainly has the right to engage in comparative advertising and to market to customers of another business.

What is heartening in this case is that the defendant has insurance to fund his case. Progressive may prevail, then again, they may not. But, at least Mr. Lowe will get his day in court.

The moral of the story? If you don’t have intellectual property litigation insurance — get some.

2 Responses to A David and Goliath Trademark Battle

  1. […] Randazza of the The Legal Satyricon analyzes the ethics of 800lb intellectual property gorillas slapping around the little guy. Instead of a rock, Professor Randazza points out, the David in this case appears to have his sling […]

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