BMW sues alleged counterfeiter for Trademark Infringement and Dilution by Tarnishment - Lawsuit on a Silver Platter?

BMW of North America, LLC and Bayerische Motoren Werke AG (BMW) have filed suit for infringement and dilution of their famous trademarks as well as several other causes of action against Mazz Auto Group, Inc. (Mazz).

The suit filed by BMW in US District Court Central District of California Western Division, claims that Mazz used BMW’s trademarks on counterfeit products sold online and at a brick and mortar location owned by Mazz in California, including automobile wheel rims, with center caps and badges. BMW seeks injunctive relief and claims that they have suffered and will continue to suffer irreparable harm if the alleged trademark infringement continues.

The issue of injunctive relief is one that has seen a major shift in recent years in response to a 2006 US Supreme Court decision and succeeding cases in courts on both coasts and in between. (See eBay Inc. v. MercExhange, L.L.C., 547 U.S. 388, 391 (2006)). However, this has created an uncertainty on the federal level that increases the importance of having a branding strategy that consists of strong intellectual property.

In ebay, the Supreme Court determined that there could no longer be a presumption of irreparable harm in patent infringement cases. The Court stated that lower courts should apply the four-factor test to decide whether to award permanent injunctive relief (the existence of irreparable injury, inadequacy of remedies at law, balancing of hardships, and public interest). The purpose of these factors is to balance the scales of justice evenly between the parties. This purpose is furthered by the Court’s ruling that irreparable harm itself, must be proved, and cannot be presumed by a finding of likelihood of confusion..

While the US Supreme Court answered the question on injunctions in patent cases over a decade ago, federal courts around the country have been unable to agree on a consensus as to whether a presumption of irreparable harm still applies in trademark cases. In 2013, the Ninth Circuit Court of Appeals, which includes California, where BMW filed suit, fielded this issue in a trademark dispute over the rights to the name of the early rock/soul/doo-wop group ‘The Platters’. (See Herb Reed v. Florida Entertainment, 736 F3d 1239 (9th Cir 2011)). Interestingly, The Platters trademark itself has been no stranger to litigation over the years. The Ninth Circuit ruled that a plaintiff who seeks injunctive relief in a trademark dispute has the burden of establishing a likelihood of irreparable harm.

Raising of the bar when deciding on a motion for injunctive relief emphasizes the balancing of the long term and immediate harms that can result from the decisions made by a court in a trademark litigation. Take the side of the yet to be, but ultimately absolved defendant, who has product on store shelves, in warehouses, or rolling down conveyor belts at a factory or shipment facility. Granting a preliminary injunction can itself result in irreparable harm, as dismayed customers see the disappearance of product from store shelves and could result in a loss of brand confidence, which may be incalculable from a financial standpoint.

In the case of BMW, they have several things on their side, however, it always comes back to brand strategy. A search of USPTO records reveals that BMW first filed an application to register the term ‘BMW’ in March of 1954 and has continuously registered many trademarks for the term ‘BMW’ including an application filed in November of 2016. As BMW alleges in their complaint, this knowledge of BMW's ownership in the trademarks at issue, and the failure to receive permission to use the marks, is likely to equal willful and bad faith use of the marks. This is a crucial determination, as such deliberate conduct can result in an increased damages award.

Each individual case has specific elements and minutiae that differentiate them and the rationale for their outcome. Most trademark disputes, revolve around two key elements; strength of the superior trademark (the mark that was registered or used in commerce first) and likelihood of confusion between the superior trademark and the allegedly confusing similar mark. This is why having a fanciful, or arbitrary trademark is one of the most important decisions that can be made in regards to intellectual property. Quite simply, when you select a trademark that is inherently distinctive your creativity is rewarded by the legal system. 

BMW’s diligence in both its registration of new iterations of the ‘BMW’ mark as well as continued monitoring for potential infringement, strengthens the case that the BMW mark remains inherently distinctive. In addition, their claim for dilution by tarnishment has a head start, since a showing of actual dilution is not required, only a likelihood of dilution need be shown. Also, there is a below zero possibility of the ‘BMW’ mark not being classified as ‘famous’ under the Trademark Act. (See RUN DMC Files Suit Over Unauthorized Use of its Famous Trademark - Someone Walked Their Way Right Into a Trademark Infringement Lawsuit). Overall, BMW has not only a strong lawsuit, but also a rock solid, well protected trademark.

Trademark Infringement and Dilution on a Silver Platter?