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Western Diversified Servs. v. Hyundai Motor Am., Inc.

United States Court of Appeals for the Tenth Circuit

November 1, 2005, Filed

No. 03-4248


 [***1134]   [*1270]  EBEL, Circuit Judge.

This appeal involves a claim for trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127 (2000). We must determine if Plaintiff has raised a genuine factual issue as to whether Defendant's alleged infringement was willful, entitling Plaintiff to an award of Defendant's profits and attorneys' fees. The district court entered partial summary judgment in favor of Defendant on the trademark infringement claim and certified its order for immediate interlocutory review under Fed. R. Civ. P. 54(c) [**2]  . Plaintiff timely filed its notice of appeal. Our appellate jurisdiction is appropriate under 28 U.S.C. § 1291.

In addressing the issue of willfulness, we take this occasion to establish the appropriate definition of that term in the context of an award of profits. We hold that the willfulness required to support an award of profits under the Lanham Act typically requires an intent to appropriate the goodwill of another's mark. For the willful component of an award of attorney fees, we adopt the same definition of willful. On the facts of the instant case, we find that a sufficient factual dispute exists on these issues to warrant submission to a jury. Accordingly, we REVERSE.


Plaintiff Western Diversified Services ("Western") markets and sells "extended" or "aftermarket" automobile warranties to  [*1271]  consumers wishing to purchase protection beyond the terms of a standard manufacturer's warranty. In connection with this service, Western owns two federally registered service marks: (1) "THE ADVANTAGE; (R)" and (2) "THE ADVANTAGE PLUS (R)." Western has used these marks in commerce since 1983 and sells approximately 15,000 warranties per month.

 [**3]  Defendant Hyundai Motor America ("Hyundai") first entered the U.S. automobile market in 1986, quickly experiencing soaring sales and growth. By September 1998, however, Hyundai cars became known for their maintenance problems and revenues seriously lagged. Responding to this perception, executives in Hyundai's marketing department ("Marketing") decided to offer a comprehensive manufacturer's warranty which they named "THE HYUNDAI ADVANTAGE." Prior to settling on the name, however, Marketing asked the Hyundai legal department ("Legal") for clearance, pursuant to company policy. Legal then referred the matter to outside intellectual property counsel ("Counsel") to conduct a trademark search. On September 16, 1998, Counsel issued an opinion letter to Hyundai stating that the use and registration of "THE HYUNDAI ADVANTAGE" was possible but subject to risk. Specifically, Counsel's letter pointed out that Western owned registrations for "THE ADVANTAGE" and "THE ADVANTAGE PLUS" and had shown a willingness to litigate. Nevertheless, Counsel's ultimate opinion was that the use and registration of "THE HYUNDAI ADVANTAGE" was justifiable.

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427 F.3d 1269 *; 2005 U.S. App. LEXIS 23558 **; 77 U.S.P.Q.2D (BNA) 1132 ***

WESTERN DIVERSIFIED SERVICES, INC., an Illinois corporation, Plaintiff-Appellant, v. HYUNDAI MOTOR AMERICA, INC., a California corporation, Defendant-Appellee.

Subsequent History: Summary judgment denied by Western Diversified Servs. v. Hyundai Motor Am., Inc., 2008 U.S. Dist. LEXIS 46772 (D. Utah, June 12, 2008)

Prior History:  [**1]  Appeal from the United States District Court for the District of Utah. (D.C. No. 2:99-CV-84-B).


profits, willful, warranty, extended warranty, infringement, trademark, manufacturer's, district court, goodwill, genuine, summary judgment, attorney's fees, Lanham Act, marks, actual damage, reputation, Assurance, factual issue, cases, factual dispute, deliberate, products

Civil Procedure, Appeals, Summary Judgment Review, Standards of Review, Summary Judgment, Entitlement as Matter of Law, General Overview, Trademark Law, Remedies, Damages, Types of Damages, Profits, Infringement Actions, Standards, Litigation Costs, Business & Corporate Compliance, Causes of Action Involving Trademarks, Determinations, Corporations, Business & Corporate Law, Corporations, Business & Corporate Law, Duties & Liabilities, Authorized Acts of Agents