Am General Corporation and General Motors Corporation v. Daimlerchrysler Corporation
Docket: 02-1816
Court: Court of Appeals for the Seventh Circuit; November 18, 2002; Federal Appellate Court
AM General Corporation and General Motors Corporation filed a declaratory judgment action against DaimlerChrysler Corporation, seeking a court ruling that their H21 sport utility vehicle's grille design does not infringe or dilute DaimlerChrysler's trademark for a similar grille design on its Jeep SUVs. In response, DaimlerChrysler sought a preliminary injunction to prevent GM from using the grille design on the upcoming H2 vehicle. After an eight-day hearing, the district court denied the injunction, concluding that DaimlerChrysler demonstrated virtually no likelihood of success on its dilution or infringement claims. Furthermore, even if there was some chance of success, the court found that the balance of harms favored GM, AM General, and public interest over any presumptive harm to DaimlerChrysler. DaimlerChrysler appealed, raising issues regarding the district court's application of the doctrine of progressive encroachment, the requirement for DaimlerChrysler to prove the fame of its grille design, and the weighing of harms related to the injunction. The Seventh Circuit affirmed the lower court's decision, adopting its well-reasoned opinion and finding no errors. The case primarily involved trademark claims under the Lanham Act, with DaimlerChrysler asserting rights over its Jeep grille designs while not seeking an injunction against AM General, who was allowed to participate in the hearings.
The case involves two brands of sport utility vehicles (SUVs): Jeep, owned by DaimlerChrysler, the successor to various historical automotive companies, and Hummer, initially produced by AM General Corporation and later sold to General Motors (GM) in 1999. DaimlerChrysler argues that it has established a distinct Jeep grille design characterized by seven to ten vertical slots. The court is addressing a motion for a preliminary injunction sought by DaimlerChrysler against GM's use of a grille design for the H2, a new version of the Hummer.
To obtain a preliminary injunction, DaimlerChrysler must demonstrate a reasonable likelihood of success on its claims, the absence of an adequate legal remedy, and potential irreparable harm without the injunction. The court will also consider the potential harm to GM and the public interest. The likelihood of success is assessed first, requiring more than a negligible chance of winning. The court employs a "sliding scale" approach, allowing for a lesser likelihood of success to be balanced against greater potential harm to the parties. The ultimate goal of the preliminary injunction is to minimize hardship for both sides while the case is resolved.
To succeed in its claims, DaimlerChrysler must demonstrate the existence of a protectable 'family of marks,' defined as a group of related marks recognized by consumers as associated with the same owner. The relevant marks involve trade dress differing in the number of slots. For its dilution claim under 15 U.S.C. §§ 1125(c) and 1127, DaimlerChrysler needs to prove the fame of its marks prior to General Motors' introduction of the H2 grille, that General Motors' use is commercial, and that it likely dilutes DaimlerChrysler's marks. Unlike trademark infringement claims, dilution claims do not require proof of consumer confusion regarding the source.
The court will evaluate the fame of DaimlerChrysler's marks based on factors like distinctiveness, use duration, advertising extent, trading area size, recognition level, similar marks' usage, and trademark registration status. To assess whether the H2 grille is likely to dilute DaimlerChrysler's marks, the court will consider the similarity between the grilles and the strength of DaimlerChrysler's marks.
DaimlerChrysler alleges 'blurring,' indicating that consumers may associate its marks with various products, weakening their distinctive significance without causing source confusion. Additionally, DaimlerChrysler asserts that its trade dress takes precedence over the H2 grille in the SUV market, requiring it only to establish current distinctiveness and fame.
For its trademark infringement claim, DaimlerChrysler must prove its marks' distinctiveness and that the H2 grille is likely to mislead consumers into believing it is affiliated with the Jeep brand. Factors for determining likelihood of confusion include the trademark type, design similarity, product identity, retail outlet similarities, advertising methods, evidence of actual confusion, and General Motors' intent to mislead. DaimlerChrysler highlights the potential for 'initial interest confusion,' where consumers may be attracted to a competing product due to similar trade dress.
DaimlerChrysler asserts that trademark dilution or infringement creates a presumption of irreparable harm, referencing Abbott Labs. v. Mead Johnson and International Kennel Club, Inc. v. Mighty Star, Inc. It claims that the introduction of H2 vehicles with distinctive grilles will undermine its control over the Jeep brand's quality and image. DaimlerChrysler argues that General Motors would not face significant harm if a preliminary injunction were issued, as it has an alternative grille design for the H2 and any delay in production would be minimal. Additionally, DaimlerChrysler maintains that enforcing trademark laws serves the public interest by preventing consumer confusion.
On the issue of trade dress functionality, DaimlerChrysler contends that its grille designs are non-functional, a claim that General Motors did not successfully contest at the hearing. General Motors argues that DaimlerChrysler is judicially estopped from asserting trademark protection for its grille designs since it failed to identify earlier grilles as prior art in a 1999 design patent application. DaimlerChrysler counters that different standards apply to design patents and trademarks.
General Motors also raises a laches defense, alleging that DaimlerChrysler unreasonably delayed addressing the H2 grille issue, citing delays spanning from 1983 to 1999. DaimlerChrysler defends its inaction by stating it had licensed the grille design for the Humvee and that AM General’s representations about the H1’s market position led to reasonable reliance on its silence. It argues that the brief timeframe in 1999 is insufficient for a laches claim and invokes the doctrine of progressive encroachment, asserting that significant concern only arose with the H2 announcement.
The excerpt concludes with a brief history of the Jeep brand, noting its military origins during World War II and Willys-Overland Motors’ production of 350,000 Jeeps for the war effort.
In 1945, after World War II, Willys-Overland released the first civilian Jeep, featuring a distinctive grille design. Over the years, ownership of the Jeep brand changed, beginning with Henry J. Kaiser purchasing Willys-Overland in 1953, leading to the formation of Willys Motors, Inc. The brand was renamed Kaiser Jeep Company in 1963 as it expanded production to include military and postal vehicles. In 1967, a dedicated Defense and Government Products Division was established. Kaiser Jeep operated until 1970 when it was acquired by American Motors Corporation (AMC), which then created Jeep Corporation and AM General Corporation as subsidiaries. AM General focused on military and postal vehicles, including the development of the Humvee, for which it received significant government contracts in the 1980s. In 1983, LTV Corporation acquired AM General, integrating it into LTV Aerospace and Defense. In 1987, Chrysler Corporation acquired AMC and Jeep Corporation, continuing to produce Jeep vehicles. A merger in 1998 formed DaimlerChrysler Corporation, which maintains the Jeep brand. Jeep has been a prominent name in the four-wheel drive SUV market and holds multiple federal trademark registrations for its grille designs, which resemble those on current models like the Jeep Wrangler and Jeep Liberty.
The first trademark registration for a Jeep grille was issued in 1981, citing first use in 1941, specifically for 'land vehicles.' A second registration, for 'utility land vehicles,' was issued in 1987 with a first use in commerce dated March 10, 1986. The third registration, for 'sport utility vehicles,' was issued in 1998 with a first use recorded as January 1, 1996. The initial two registrations are no longer utilized in Jeep production, and it remains unclear if DaimlerChrysler produces related replacement parts. Since 1945, DaimlerChrysler has sold millions of Jeep vehicles featuring the Jeep grille design, supported by extensive advertising campaigns costing billions. The grille is prominently displayed on the current Wrangler model and in the 'Jeep Provisions Catalog,' as well as featured in the annual 'Camp Jeep' event. Currently, DaimlerChrysler markets three Jeep models: Wrangler, Grand Cherokee, and Liberty, having discontinued the Cherokee in 2001.
AM General won the military contract to produce the Humvee during the 1980s, submitting a proposal in February 1981 that included a grille design with nine vertical slots. After receiving funding for prototype production in July 1981 and a design patent application in 1982 (which was never issued), AM General was selected in March 1983 to manufacture the Humvee. Design modifications led to a seven-slot grille, which has been used on all Humvees since production began in 1985. AM General sold its assets to LTV Corporation in 1983. The Humvee gained fame during Operation Desert Shield, which contributed to the launch of the commercial 'Hummer' (now 'H1') in 1992, featuring the same grille design as the military version. AM General also introduced a logo for the Hummer in 1992, highlighting key design features.
The Hummer icon was first introduced in 1992 alongside the national launch of the H1 and has since been featured on all Hummer dealer signs, company stationery, and business cards. AM General officially adopted the icon as its logo in 1993. From 1994, the icon appeared on various merchandise items in the Hummer Stuff catalog, including mugs, T-shirts, and toys. In 1993, AM General applied for a U.S. trademark for the front end design of the Humvee, which encompasses specific features like the grille and headlight sockets, seeking registration for trucks broadly. The trademark application faced initial denial due to claims of lack of distinctiveness, ornamental nature, and potential confusion with the Jeep Wrangler's design. After two reconsideration requests, the application was eventually approved in March 1996, granting AM General an unrestricted registration for use on trucks. DaimlerChrysler monitored this process but did not respond to AM General's requests regarding consent or ownership claims. Following the registration, AM General's sales materials consistently featured the Hummer grille and included trademark notices. The marketing emphasized slogans like "Meet an American Legend," which DaimlerChrysler argued mimicked Jeep advertising, while AM General asserted it reflected the H1's military heritage. General Motors's H2 promotional materials also highlighted the vehicle's front end and referenced the "Legend." Numerous media photographs of the Humvee and H1 showcased the grille, with some ads paid for by AM General and others published with its permission, further linking various brands to the Hummer image. Notably, DaimlerChrysler did not challenge AM General's use of the grille design until this litigation arose.
The H1 vehicle, despite gaining recognition, had low sales figures for AM General, prompting General Motors to explore the development of a rugged SUV dubbed 'The Chunk.' Market research indicated a strong brand image for Hummer, leading GM to negotiate with AM General for the brand's transfer. In December 1999, they formalized agreements granting GM the Hummer brand and intellectual property rights, while AM General retained exclusive manufacturing rights for the first new Hummer model. The H2, intended as a successor to the H1, would feature luxury enhancements and maintain the H1's visual identity, particularly its grille design. Following the transaction, DaimlerChrysler raised objections regarding the use of the H1 grille design. GM promoted the H2 extensively, with its concept unveiled at the January 2000 Detroit auto show, and its pricing expected to exceed $50,000 with options. The H2's dimensions were similar to the H1, but it was positioned as larger than existing Jeep models.
Vertically slotted grills have been used on various SUVs, including the Lexus RX-300 (2001 model with ten slots) and the Kia Sportage (2002 model with five slots). DaimlerChrysler sent letters to both Toyota and Kia on January 31, 2002, claiming these grilles infringe on the Jeep grille design, just days before a preliminary injunction hearing.
AM General is in the process of producing H2 vehicles, having invested over $30 million in workforce development and training, with a goal of hiring 1,000 employees by March 29. By the time of the hearing, 470 employees had been hired, with many leaving previous jobs and relocating. A shutdown of the H2 plant would result in financial losses for employees and suppliers.
The State of Indiana and St. Joseph County have provided significant financial incentives to AM General, including tax benefits and funding for infrastructure improvements. General Motors loaned AM General $235 million for the H2 plant's establishment.
DaimlerChrysler's claims are twofold, primarily focusing on trademark dilution of the Jeep grille design under the Federal Trademark Dilution Act. To prove dilution, DaimlerChrysler must demonstrate that the Jeep mark is famous, that General Motors adopted it after achieving fame, that the mark has been diluted, and that the use is commercial. The Act protects non-functional product configurations against dilution, which differs from trademark infringement by not requiring proof of consumer confusion.
15 U.S.C. 1125(c)(1) provides a nonexhaustive list of factors to assess a mark's distinctiveness and fame, including: (A) inherent or acquired distinctiveness; (B) the duration and extent of use; (C) advertising and publicity duration and extent; (D) geographical trading area; (E) trade channels; (F) recognition degree in relevant markets; (G) third-party use of similar marks; and (H) federal registration status. A junior mark may dilute a senior mark's distinctiveness if it weakens its uniqueness, with dilution assessed based on mark similarity and the strength of the senior mark. For DaimlerChrysler's claim regarding the H2 grille, it must demonstrate the distinctiveness of the Jeep grille and that the H2 grille may mislead consumers into believing it is affiliated with Jeep. Key factors for determining likelihood of confusion include trademark similarity, area and manner of use, consumer care, strength of trade dress, actual confusion, and intent to mislead. DaimlerChrysler asserts that its 'Jeep grille design,' characterized by seven to ten vertical slots, constitutes a family of marks despite not being uniformly used across all products. The company argues that the H2 grille will dilute and infringe this family of marks, prompting a request for a preliminary injunction to halt General Motors from producing the H2 with its proposed grille, which will mimic the Jeep grille but in chrome instead of plastic.
DaimlerChrysler must demonstrate the existence of its family of marks prior to or in 1985 to support its dilution claim. General Motors asserts that the first commercial use of the grille design occurred in 1981 with a prototype Humvee featuring a nine-slotted grille, while the first consistent commercial use was in 1985 when AM General delivered the first Humvee under contract. DaimlerChrysler argues that since 1945, it has maintained a lineage of Jeep vehicles characterized by a grille design with seven to ten vertical slots, creating a recognizable symbol known as the Jeep grille design.
The legal framework permits the plaintiff to define the trade dress elements for protection, even if they do not encompass all features of a product. DaimlerChrysler excludes headlamp openings from its definition of the Jeep grille design family, focusing solely on the slots' number and appearance. However, evidence presented included grilles with headlamp openings, and DaimlerChrysler's trademark registrations and associated insignias featured these openings as well. General Motors' registered trademark encompasses the entire front end, and all survey materials included headlamp openings. The concept of a "family of marks" requires that the marks share a recognizable common characteristic, which must establish public association with the trademark owner beyond mere similarity among the marks.
Recognition by the purchasing public is essential to establish that a common characteristic of goods indicates a shared origin. A family of marks exists only when the public perceives this commonality. DaimlerChrysler asserts a family of trade dress, which encompasses the overall image of a product, including attributes like size, shape, color, texture, and graphics. Courts apply a "consistent overall look" standard when evaluating trade dress claims. A plaintiff must demonstrate that their packaging possesses a cohesive appearance; however, identical packaging is not required. Variations in packaging do not preclude trade dress protection as long as there is a recognizable overall look. Courts should assess only the specific products for which trade dress protection is sought. Claimants must clearly define and consistently use their claimed trade dress, as courts scrutinize broader claims to protect competition. Furthermore, for protection under the Lanham Act, the common characteristic must have developed secondary meaning.
A product's design or packaging can develop distinctiveness, allowing it to identify its manufacturer, thus qualifying as trade dress. Trade dress, once it acquires secondary meaning, cannot be used in ways that confuse consumers regarding the product's origin, sponsorship, or approval. The distinctiveness must inform consumers of the product's source rather than its nature. The existence of a family of marks hinges on factual considerations, including the distinctiveness of the common component, usage, advertising, and promotion. Joint advertising can help create an association of common origin, and likelihood of confusion is significant in assessing a family of marks.
In this context, the focus is on whether the opposing party has a recognized family of marks in veterinary pharmaceuticals characterized by the syllable "FUR," and whether the applicant's mark "SALFURIDE" will be mistaken as part of this family. The determination rests on whether the average purchaser believes that all products with "FUR" in their trademarks originate from the opposing party. Previous cases highlight the necessity for a competitor's mark to avoid causing confusion about product origin, emphasizing that having a family of products does not automatically mean a family of marks exists. Merely using or registering similar marks does not establish a family unless it is supported by a cohesive branding strategy.
The excerpt outlines the legal considerations surrounding trademark registrations and the concept of "family of marks," particularly in the context of the Jeep brand and its design elements. The use of a common component across multiple products can weaken the argument for a family of marks, as exemplified by various cases.
The historical development of the Jeep brand is detailed, starting with the registration of "Jeep" by Willys-Overland post-World War II. The Jeep CJ-2A, introduced in 1945, featured a distinctive grille design, registered as trademark 1,170,088 in 1981, with its first use cited as 1941. Subsequent Jeep models, including CJ-3A, CJ-3B, CJ-5, and others, closely resembled the CJ-2A grille design.
Additionally, DaimlerChrysler produced models with alternative grille designs, such as the Jeep Cherokee and Comanche, which featured different slot configurations but still retained a rectangular appearance. Notably, some Jeep models diverged significantly from the established grille designs, indicating a broader range of aesthetic variations within the Jeep trademark family.
The 1972-73 Jeepster Commando grille featured a grid of vertical and horizontal bars, while the 1972-73 Wagoneer grille consisted of two prominent horizontal bars and fourteen vertical bars. The 1974-1978 Wagoneer grille included two horizontal bars, one subordinate horizontal bar, and twelve vertical bars, enclosing the headlamp openings. The 1979-80 Cherokee grille was characterized by a single horizontal bar that was removed in the same model years. From 1979 to 1985, the Wagoneer grille had a narrow rectangular shape enclosing a grid pattern and the headlamp openings. Various Jeep models had slotted grilles, with specific counts: twenty-two slots on the 1972-73 Jeep truck and similar numbers on other models from 1974-78. A 1971 advertisement illustrated two Jeep models without slotted grilles and two with them. An advertisement from 1985 featured various grilles, including one with horizontal bars and another with vertical slots.
By 1985, General Motors introduced Humvees with seven vertical grille slots, while DaimlerChrysler had no grilles within that slot range. The CJ-2A grille had been in use for forty years and was registered as a mark. Only a ten-slotted grille appeared on the 1984-1985 Jeep Cherokee and 1985 Jeep Comanche, which did not achieve secondary meaning by 1985, as evidenced by DaimlerChrysler's abandonment of the ten-slot design by 1988. DaimlerChrysler's dilution claim requires proof of the fame of its family of marks prior to General Motors' usage of an allegedly diluting mark. As DaimlerChrysler failed to demonstrate a likelihood of establishing this at trial, it is not entitled to a preliminary injunction for dilution.
For the infringement claim, DaimlerChrysler presented evidence regarding the strength of its family of marks in 2002, where all three Jeep models featured seven vertical slots. Courts differ on whether to assess the strength of a mark at the time of market entry or when seeking an injunction, but prevailing authority suggests that proof of public perception of the mark as a source indicator must precede the junior user's market entry.
Shuster emphasizes evaluating the strength of a family of trademarks at the moment a junior user enters the market. Citing various cases, the text notes that a junior user's trademark use is permissible if it occurred before the senior mark achieved secondary meaning. The court aligns with the majority view, asserting General Motors cannot infringe on a family of marks that either did not exist or lacked secondary meaning at the time its grille was introduced. Specifically, the Hummer grille, which debuted in 1985, could not be associated with a family of marks established later.
DaimlerChrysler argues against considering the 1985 timeframe, claiming AM General lacked the rights to convey the Humvee grille design to General Motors due to a limited license from Jeep, which was meant solely for military use. They contend that AM General's request for Jeep's design led to its incorporation into the Humvee, restricting its use beyond that context. The licensing issue is tied to the stock purchase agreement between American Motors and LTV, which detailed the trademarks and rights transferred to LTV. The agreement included a list of patents and trademarks, among them a 1982 design patent application for the Humvee that outlined a specific grille design. Additionally, it stated that certain rights were reserved for American Motors, including the Jeep trademark and logo, which were explicitly excluded from the rights transferred prior to the closing of the purchase transaction in September 1983.
A side agreement from September 14, 1983, explicitly excluded certain intellectual property from transfer, notably the CJ-10 vehicle design, but did not mention the Humvee. Since its sale to LTV, AM General has produced and sold the Humvee, utilizing a distinctive front grille design with seven vertical slots, a design that has been used on the Hummer since 1992. In 1996, AM General obtained trademark registration for the Humvee/H1 front end, including the grille, and has licensed this design to various businesses.
DaimlerChrysler claims that licensing agreements allowed AM General to use the grille only for military purposes on the Humvee, while AM General argues that American Motors retained no ownership interest in the grille configuration. New York law governs the interpretation of the relevant agreements, emphasizing that clauses must be construed to give reasonable meaning to all terms. The stock purchase agreement and subsequent license agreements did not mention the Humvee in relation to proprietary rights, although the Humvee was referenced in connection with AM General's intellectual property.
The agreements' language indicates that all rights related to the Humvee design were transferred to AM General, with specific restrictions preventing it from labeling the Humvee as a "Jeep" or using the CJ-2 grille design, which were reserved for American Motors. Although DaimlerChrysler points out that AM General did not receive the design patent it applied for, the outcome of the application does not alter the clear intent of the contractual language, which supports AM General's rights to the Humvee's design.
In September 1983, there was no indication that the design patent application would be denied, as the parties involved were aware that AM General could not secure patent protection over a design that included American Motors' intellectual property, particularly the longstanding CJ-2A grille design. John Tierney, a negotiator of the 1983 agreements for American Motors, testified that the Humvee featured a Jeep grille design and that American Motors licensed its use to AM General. However, the court rejected this assertion for two reasons: first, the agreements' unambiguous language precluded consideration of parol evidence regarding the parties' intent; second, the court focused on the parties' actual intent rather than that of the negotiators. The clear language of the agreements indicated that AM General was entitled to all aspects of the Humvee as per the design patent application.
Additionally, evidence suggested that American Motors and its successors neglected to act on the purported license, failing to collect royalties or object to AM General's trademark registration for the Humvee's grille. This inaction implied that American Motors did not intend to enforce the license. Consequently, it was determined that AM General held no license for the Humvee's grille.
Regarding the CJ-2A grille, while DaimlerChrysler had a protectable trademark, it did not demonstrate a strong likelihood of success in claiming that the intended H2 grille would dilute the CJ-2A mark, primarily due to General Motors' laches defense.
The application of laches requires demonstrating an unreasonable lack of diligence by the party against whom it is asserted, along with resulting prejudice. General Motors argues that DaimlerChrysler's inaction regarding the vertically slotted grille on the Humvee and H1 led to significant investments by General Motors in the Hummer brand. In response, DaimlerChrysler contends that any lack of diligence is attributable to General Motors, claiming that a thorough investigation would have revealed that AM General held only a license for the grille design. However, the court previously established that AM General possessed full rights to the design, negating DaimlerChrysler's argument.
DaimlerChrysler further asserts that during the trademark registration process, AM General sought consent, which included language suggesting the Humvee did not compete in the same market as Jeep products. The court disagrees, stating that a letter without a response cannot hold the significance DaimlerChrysler claims and that the registration’s vehicle classification did not preclude SUV market use. Additionally, DaimlerChrysler fails to explain its silence from 1985 until the 1994 letter, especially during the years when AM General sold the H1.
DaimlerChrysler invokes the doctrine of progressive encroachment, arguing that it can tolerate minor infringements before taking action against more significant threats. It maintains that the Humvee, being a military vehicle with low sales of the H1, did not pose a serious threat to its trademark, thereby justifying its earlier inaction.
The court does not accept General Motors' request to rule that the progressive encroachment doctrine cannot apply in dilution cases, but it finds that this doctrine does not support DaimlerChrysler's dilution claim here. DaimlerChrysler argues that dilution only occurred when General Motors announced the Hummer, as prior to that, the Jeep's identification was not diminished. The court notes that prior to the federal anti-dilution act of 1996, state laws addressed dilution without considering competition. The federal statute allows for dilution to occur regardless of competition, contradicting DaimlerChrysler's position that dilution should only be recognized upon competition. The court emphasizes that the test for likelihood of dilution focuses on the similarity of marks and the renown of the senior mark, neither of which has changed significantly since previous models, thus the progressive encroachment doctrine does not apply.
In contrast, the doctrine does apply to DaimlerChrysler's infringement claim. The court is skeptical of General Motors' laches defense against this claim, given the absence of confusion between the Wrangler and the Humvee or H1. To win the infringement claim, DaimlerChrysler must demonstrate that its CJ-2A grille has acquired secondary meaning and that the H2 grille's similarity creates a likelihood of consumer confusion regarding product source or affiliation. The court believes DaimlerChrysler has a strong chance of proving secondary meaning due to the grille's lengthy use on Jeep vehicles. However, DaimlerChrysler has not sufficiently demonstrated a significant likelihood of consumer confusion, as it concedes that high-end consumers of H2s would not mistake them for Jeeps.
DaimlerChrysler argues that two types of confusion are likely: initial interest confusion and source or sponsorship confusion, emphasizing that motor vehicles remain visible on the roads for years, acting as "rolling billboards" that influence consumer purchasing decisions. The company asserts that the design of the intended H2 grille will lead consumers to associate it with the Jeep brand, potentially affecting perceptions up to the point of sale.
The likelihood of confusion is assessed based on several factors: a) similarity of the trade dresses; b) area and manner of concurrent use; c) consumer care level; d) strength of DaimlerChrysler's trade dress; e) evidence of actual confusion; and f) intent of General Motors to mislead consumers.
Focusing on the trade dress similarity, the court finds that while both the CJ-2A and intended H2 grilles feature seven slots, their designs differ significantly in size and spacing. The court notes the importance of evaluating similarity in the context of marketplace dynamics rather than mere side-by-side comparisons.
Confusion studies conducted by George Mantis do not support DaimlerChrysler's claims. In one study, respondents viewed altered images of an H2 that featured a prominent "HUMMER" name, while the other study used outdated H2 images without control questions. Mantis's findings indicated a weak association with the Jeep brand, primarily referencing the Jeep Wrangler, which was the only model utilizing the CJ-2A grille at the time of the surveys.
The court finds that the Cherokee grille used from 1996 to 2000 is significantly similar to the intended H2 grille, but since DaimlerChrysler has not established a family of marks from 1985 and the Cherokee grille was not in use then, this similarity does not support a likelihood of confusion with the Jeep CJ-2A grille. Surveys conducted by Mr. Mantis reveal that only a small percentage of Jeep owners associated the H2 with the Wrangler model; most associations were with the Cherokee or other variants. In his second survey, only a small number of respondents confused the H2 with Jeep, and none specified the Wrangler. The court acknowledges that these surveys do not conclusively disprove likelihood of confusion but assert that they do not support the claim that the H2 grille is similar enough to the Jeep CJ-2A grille to cause confusion. Furthermore, while there are some similarities in the area and manner of concurrent use of the Wrangler, Liberty, and H2, significant differences exist, including price points and dealership types. The H2 typically costs over $50,000, while the Wrangler and Liberty are priced lower, with the Wrangler categorized as a small SUV and the Liberty as lower-middle-sized, contrasting with the H2's classification as a large SUV.
The excerpt details the differences between the Hummer H2 and Jeep models, emphasizing that while some dealerships may sell both, consumers are unlikely to confuse the two due to significant variations in design and size. The H2 is notably larger in multiple dimensions: it is seven inches taller, has a nine-inch wider track width, and is fifteen inches longer than the Liberty and three feet longer than the Wrangler. These distinctions are clear when viewed in a showroom setting. DaimlerChrysler does not argue that consumers will mistake the H2 for a Jeep upon purchase but rather expresses concern about potential confusion in the consumer's mind before and after the sale. They fear that seeing an H2 on the road may cause consumers to erroneously associate it with Jeep. However, the document asserts there is insufficient evidence to support this brand confusion, especially since the vehicles are not low-cost, impulse-buy items, which typically could lead to such confusion. The similarity in grille design does not create a "bait and switch" scenario. The Lanham Act protects against competitors misleading consumers at the point of initial interest, but the court finds that any potential post-sale association does not reach the level necessary to substantiate a claim of infringement.
The degree of care exercised by consumers is significant in assessing the likelihood of confusion, particularly in cases involving high-priced products like vehicles, where consumers are expected to engage in thorough research and use a high degree of care. Despite this sophistication, there remains potential for confusion regarding the source of the product, as illustrated by the H2 vehicle's association with DaimlerChrysler. The strength of DaimlerChrysler's trade dress is notable, given its long-standing use and promotion of the CJ-2A grille, which has acquired substantial secondary meaning and distinctiveness, thereby warranting protective measures against similar marks. However, the absence of actual confusion in the marketplace does not favor either party, as General Motors has not yet launched the H2. Furthermore, there is no direct evidence that General Motors intends to pass off its H2 vehicle as a DaimlerChrysler product; their intent appears focused solely on introducing a new SUV model. Although DaimlerChrysler cites General Motors's advertising as indicative of an intent to create confusion, this circumstantial evidence is insufficient to demonstrate fraudulent intent.
DaimlerChrysler raises concerns regarding General Motors's advertising slogans, particularly "The Legend Continues," which echoes DaimlerChrysler's historic use of the term in Jeep launches from 1991 to 2001. While DaimlerChrysler does not claim trademark infringement, it suggests that the slogan could lead to consumer confusion if General Motors had initiated its use. However, General Motors did not originate this slogan; it was first associated with the Humvee by AM General shortly after Operation Desert Shield, which General Motors continued for the Hummer line.
DaimlerChrysler also argues that General Motors’s use of head-on views in advertising the H2 mirrors DaimlerChrysler’s long-standing practice with Jeep advertising and suggests an intent to confuse consumers regarding the source of the Hummers. Nonetheless, this perspective was also used by AM General and other industries in the 1990s, indicating that General Motors did not intend to associate the H2 with Jeep.
Overall, there is no evidence suggesting General Motors aimed to mislead consumers into thinking the H2 is a Jeep. The only factor that might indicate a likelihood of confusion is the strong association of the CJ-2A grille with DaimlerChrysler. Still, the intent demonstrated by General Motors and the use of the Humvee's branding by third parties significantly weaken this factor, suggesting that the Hummer has developed its own distinct identity.
DaimlerChrysler is unlikely to succeed in its trademark infringement and dilution claims against General Motors regarding the H2 grille's resemblance to the Humvee and its impact on the CJ-2A grille. The court finds that DaimlerChrysler's motion for a preliminary injunction must be denied due to the lack of a reasonable likelihood of success on the merits of either claim. Established precedents indicate that failure to demonstrate a substantial chance of success negates the need to analyze other elements of a preliminary injunction.
Despite concluding that DaimlerChrysler does not meet the threshold for success, the court still evaluates the remaining factors for a preliminary injunction, acknowledging that the company may suffer irreparable harm without it and lacks an adequate legal remedy for its claims. The court then weighs the potential irreparable harm to General Motors if the injunction is granted and considers the implications for public interest. Ultimately, while DaimlerChrysler has not shown a strong likelihood of success, the court recognizes the complexity of the situation and proceeds with the balancing test for the injunction.
The court evaluates irreparable harm to both parties by considering the potential consequences of denying or granting a preliminary injunction. It assesses the harm to DaimlerChrysler and the public if the trial determines that DaimlerChrysler is entitled to relief, versus the harm to General Motors and the public if it is found that DaimlerChrysler is not entitled to relief. The court employs a sliding scale approach: a stronger likelihood of success for a party reduces the necessity for a favorable balance of harms. DaimlerChrysler is presumed to have more than a negligible chance of success on its trademark claims, yet the current balance of harms does not favor it.
Allowing General Motors to use the disputed H2 grille could lead to significant irreparable harm to DaimlerChrysler, including dilution of its Jeep grille's distinctiveness and loss of brand goodwill developed over decades. Such harm is deemed irreparable and difficult to quantify legally. If Jeep sales decline due to this harm, job losses could ensue for DaimlerChrysler employees, with broader negative impacts on the marketplace. The court also notes that an injunction protects consumers from confusion and preserves the trademark's unique association with its products.
Conversely, General Motors would face similar irreparable harm if denied the use of its H2 grille, which is likely to be considered its intellectual property. This situation underscores the potential for significant harm to both parties, reinforcing the complexity of balancing their respective interests.
General Motors faces significant financial harm, estimated between $500 million to $1 billion, due to potential injunctions against its H2 vehicle's grille design. The company has invested $700 million in the H2 project, which has garnered substantial public attention, including appearances at major auto shows and celebrity endorsements, alongside $20 million in advertising. The project's success is crucial for AM General, which anticipates that 35% of its income will derive from the H2. Local and state governments projected $477.5 million in annual sales growth for Indiana businesses due to the new H2 assembly plant. This led to major community investments, including home purchases, and resulted in 10,000 job applications. Currently, 471 employees work at the plant, with plans to increase to 1,000 by August. AM General incurs operational costs of $4.2 million monthly, expected to rise to $10 million. The company has invested over $30 million in workforce development and secured a ten-year labor agreement with its union. If an injunction is issued, AM General will be forced to close the new plant, jeopardizing its expected income for 2002, which was projected to be over a third of its total revenue.
Hundreds of jobs will be lost, and the economic impact on the local community from the new plant will be significant and unquantifiable. The court's findings will remain unchanged even if General Motors (GM) opts for the alternative "painted grille" design, which was explored after the case began. DaimlerChrysler discovered this design late in the discovery process. The painted grille, an alternative that could be used on the H2, would visually alter the grille to create the illusion of eight "floating bars" while maintaining the seven-slot design.
DaimlerChrysler does not claim that this painted grille would infringe upon its trademarks but argues that adopting it would only delay H2 production by six to eight weeks—or potentially not at all if GM waived certain testing procedures. GM contests this timeline, asserting that any delay would likely be longer due to quality control commitments, especially for a high-value vehicle like the H2, and emphasizes that the painted grille is unlikely to be accepted because it contradicts the Hummer's heritage.
The heads of GM's Hummer division have suggested halting the project entirely and awaiting a December trial outcome. DaimlerChrysler cautions that GM's high-risk strategy could be perceived as coercive, threatening the community's economic stability. However, the court believes it is more probable that GM would not utilize the painted grille if temporarily enjoined from the intended design. GM has heavily invested in marketing the H2 with a Humvee-like appearance, generating approximately 500 million consumer impressions. Any change in grille design could result in a projected revenue loss of $500 million over two and a half years due to altered consumer perceptions, although GM has not conducted consumer research to validate this assumption.
General Motors (GM) faces a potential preliminary injunction regarding the H2 vehicle's grille design, which DaimlerChrysler claims may infringe on its Jeep models. The court questions the implications of such an injunction, considering GM's decisions that may have increased its potential losses from an adverse ruling. Although GM believes it should not have to acquiesce to what it considers unreasonable demands from DaimlerChrysler, the harm from an injunction primarily affects GM and AM General and is not due to their actions. The court notes that a preliminary injunction could irreparably harm GM's intellectual property and public identification rights. Despite DaimlerChrysler's likelihood of success on dilution or infringement claims being low, the court emphasizes that the balance of harms weighs heavily against issuing the injunction. Key findings include: (1) DaimlerChrysler is unlikely to prove a "family of marks" related to the grille design, (2) it delayed too long in claiming the H2 grille dilutes Jeep's uniqueness, and (3) there is minimal chance of consumer confusion between the Jeep Wrangler and H2. Ultimately, the court denies DaimlerChrysler's motion for a preliminary injunction, acknowledging the significant harm that could arise for GM, AM General, and the public if the injunction were granted and DaimlerChrysler were to lose at trial.
DaimlerChrysler seeks a preliminary injunction to prevent GM and AM General from selling the H2 with its current grille design, which DaimlerChrysler argues resembles its Jeep grille. Despite this legal action, GM and AM General began sales of the H2 in July 2002. DaimlerChrysler contends that the appeal remains relevant and requests the court to remand the case for a new hearing on the injunction to potentially halt further H2 sales. The court has jurisdiction under 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338. GM modified the grille design following DaimlerChrysler's complaint, but the changes are not easily visible from a distance. The legal definition of DaimlerChrysler's trade dress is unclear, particularly concerning potential dilution or infringement claims against other manufacturers like Toyota or Kia. Without a clear definition of trade dress, litigation may become challenging, as courts require specific articulation of the design elements involved. The court also noted concerns about whether a range of "seven to ten" vertical slots in a grille constitutes sufficient specificity for protection. During the preliminary injunction hearing, there was confusion over the terminology used to describe the grille, with references to both the Hummer and Jeep grilles. Additionally, all Jeep models have adhered to DaimlerChrysler's family definition of grille design since 1998. Internal company statements presented as evidence were deemed not to reflect official corporate positions but rather individual thoughts within the companies.
The primary market for the HUMMER vehicle is military, with a civilian version introduced that shares significant design elements with the military model. In contrast, the JEEP vehicle's radiator grille design is prevalent in the sport/utility vehicle segment, typically priced at one-half to one-third of the HUMMER. The court disagrees with DaimlerChrysler's claim that the intended H2 grille exceeds General Motors's trademark scope. Although Dr. Ericksen's secondary meaning survey supports this claim, the court finds the study unpersuasive, particularly because it included headlamps in its analysis, while DaimlerChrysler defines the "Jeep grille design" as excluding them. The evidence does not allow for a proper discount on the Ericksen survey due to this inclusion, and the court notes that greater visibility of the vehicle likely aids in accurate identification by respondents.
Differences in design are highlighted, particularly regarding headlamp openings, with the H2 grille featuring rectangular openings that differ from those on the Jeep CJ-2A grille. The only noted design change for the H2 grille was the addition of "H-U-M-M-E-R" lettering. Mr. Mantis's survey indicated a net confusion figure of 8.9% for respondents associating the H2 with Jeep, but this includes mentions of the vehicle's "front end," which encompasses features not alleged to infringe on DaimlerChrysler's trademark.
General Motors adjusted the H2's width to accommodate commercial car washes, and much of the incurred expenses were during the lawsuit, with potential changes to the grille anticipated. While the court finds the two grilles similar in appearance side-by-side, the overall vehicles appear different. General Motors criticized DaimlerChrysler for delayed disclosure regarding potential grille dilution or infringement, but the court dismisses this as frivolous, citing numerous procedural obstacles created by General Motors that hindered DaimlerChrysler's ability to respond promptly.
