Au-Tomotive Gold, Inc. v. Volkswagen Of America, Inc.

457 F.3d 1062 (9th Cir. 2006)

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Nature of the Case

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Facts

P makes automotive accessories such as key chains and license plate covers. P used Ds’ marks on those products. In 1994, P began selling license plates, license plate frames, and key chains bearing Volkswagen's (D) distinctive trademarks and, in 1997, began selling similar products bearing Audi's (D) 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. D states that it 'applies authentic logos to its marquee license plates.' P sells its license plates, license plate covers, and key rings with Ds' trademarks to the wholesale market, including car dealers, auto accessory dealers, and other merchants. Both Ds for their operations in the United States, license an independent marketing firm to sell license plates, covers, and key chains directly to consumers. P has license and marketing agreements with several car manufacturers, authorizing sales of auto accessories bearing those companies' trademarks. P is not authorized to sell products with Ds' trademarks. P disclaimers that deny any connection to Ds. The disclaimers are not visible once the product is removed from the packaging and in use, nor are the disclaimers always clear. BMW of North America, Inc. sued P and obtained an injunction against P. P sued Ds for declaratory judgment. P 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). Ds filed counterclaims for trademark infringement under 15 U.S.C. § 1114(1)(a); false designation of origin under 15 U.S.C. § 1125(a); trademark dilution under 15 U.S.C. § 1125(c); consumer fraud under the Arizona Consumer Fraud Act; tortious interference with contract; tortious interference with business expectancy; trademark counterfeiting under the Arizona Consumer Fraud Act; and a request for declaratory judgment as to all claims. P filed a motion for partial summary judgment seeking a declaratory judgment that its products do not infringe or counterfeit Ds' trademarks and do not unfairly compete. P's primary argument was that its products were lawful under the 'first sale' doctrine. The district court found that the marks were aesthetic and functional. It entered judgment for P and Ds appealed.