Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc. - 457 F.3d 1062 (9th Cir. 2006)

Rule:

The doctrine of aesthetic functionality has a somewhat checkered history. In broad strokes, purely aesthetic product features may be protected as a trademark where they are source identifying and are not functional. On the other hand, where an aesthetic product feature serves a significant non-trademark function, the doctrine may preclude protection as a trademark where doing so would stifle legitimate competition. Taken to its limits, this doctrine would permit a competitor to trade on any mark simply because there is some "aesthetic" value to the mark that consumers desire. This approach distorts both basic principles of trademark law and the doctrine of functionality in particular.

Facts:

Volkswagen and Audi are manufacturers of automobiles, parts and accessories that bear well-known trademarks. The marks are registered in the United States and have been in use since the 1950s. Auto Gold produces and sells automobile accessories to complement specific makes of cars. 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. The marks used are exact replicas of the registered trademarks or, in at least some cases, genuine trademark medallions purchased from Volkswagen dealers; Auto Gold states that it "applies authentic [Volkswagen and Audi] logos to its marquee license plates." Auto Gold has license and marketing agreements with several car manufacturers, authorizing sales of auto accessories bearing those companies' trademarks. Despite several attempts to secure similar arrangements with Volkswagen and Audi, Auto Gold is not authorized to sell products with their trademarks. Instead, Auto Gold products are accompanied by disclaimers that deny any connection to Volkswagen or Audi. The disclaimers are not visible once the product is removed from the packaging and in use, nor are the disclaimers always clear. In the mid-1990s, another car maker aggrieved by unauthorized sales of trademarked accessories sued Auto Gold for trademark infringement and obtained an injunction prohibiting Auto Gold from selling any products that incorporate replicas of its registered marks. Fearful that the decision would invite further trademark claims, Auto Gold filed suit against Volkswagen and Audi in the District of Arizona in 2001. Auto Gold's complaint sought a declaratory judgment that its activities did not constitute trademark infringement or trademark counterfeiting under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a), or trademark dilution under 15 U.S.C. § 1125(c). Auto Gold also included claims for interference with prospective economic advantage and trade libel. Volkswagen and Audi filed counterclaims. After discovery, Auto Gold filed a motion for partial summary judgment seeking a declaratory judgment that its products do not infringe or counterfeit the Volkswagen and Audi trademarks and do not unfairly compete. Auto Gold's primary argument was that its products were lawful under the "first sale" doctrine. In response, Volkswagen and Audi filed a motion for summary judgment on their trademark infringement, trademark dilution, and unfair competition claims. After discovery, Auto Gold filed a motion for partial summary judgment seeking a declaratory judgment that its products do not infringe or counterfeit the Volkswagen and Audi trademarks and do not unfairly compete. Auto Gold's primary argument was that its products were lawful under the "first sale" doctrine. In response, Volkswagen and Audi filed a motion for summary judgment on their trademark infringement, trademark dilution, and unfair competition claims. The district court granted summary judgment in favor of Auto Gold. Volkswagen and Audi appealed.

Issue:

Did the doctrine of aesthetic functionality protect Auto Gold’s products?

Answer:

No

Conclusion:

The circuit court found that the doctrine of aesthetic functionality did not protect Auto Gold’s products. Volkswagen’s and Audi’s trademarks were registered and incontestable. Auto Gold’s products would work just as well without the marks. The use of Volkswagen’s and Audi’s marks was neither aesthetic nor independent of source identification; rather, the alleged aesthetic function was indistinguishable from the marks' source-identifying nature. Such poaching was not countenanced by the trademark laws, and the marks were protected by the Lanham Act. The likelihood of confusion was clear-cut, and Volkswagen and Audi had made out a prima facie case of infringement. Although Volkswagen and Audi had presented no evidence of actual confusion, neither had Auto Gold presented any evidence that its packaging disclaimers had any effect, and so that factor was at best in equipoise. Because the district court had not considered Auto Gold’s defenses, the court remanded for further consideration of that issue.