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MOAB Industries LLC v. FCA US, LLC.

United States District Court, D. Arizona

October 6, 2016

MOAB INDUSTRIES, LLC, Plaintiff,
v.
FCA US, LLC, formerly known as Chrysler Group, LLC, Defendant.

          DECISION

          H. Russel Holland United States District Judge

         The following is the court's decision on the merits of this case based upon the pleadings of the parties, previous orders of the court, testimony and exhibits received at the trial of this case, the parties' briefs in lieu of oral argument, and their proposed findings of fact and conclusions of law.

         Proceedings

         This case was opened with plaintiff's complaint.[1] Plaintiff's Count 1 alleges a federal trademark infringement claim. Plaintiff's Count 2 alleges a federal unfair competition claim. Plaintiff's Count 3 is a state law claim for trademark dilution based upon A.R.S. § 44-1448.01. Plaintiff's Count 4 is a claim for common law unfair competition. Defendant denied plaintiff's claims.[2] Defendant separately asserted five amended counterclaims for relief.[3] Defendant's first counterclaim seeks a declaratory judgment that defendant's use of the mark “MOAB” does not infringe, dilute, or otherwise violate plaintiff's purported rights. Defendant's second counterclaim for relief seeks cancellation of plaintiff's MOAB INDUSTRIES mark. Defendant's third counterclaim is one for trademark dilution pursuant to 15 U.S.C. § 1125. Defendant's fourth counterclaim is for infringement by plaintiff upon defendant's registered trademarks. Defendant's fifth counterclaim for relief is a state law claim for dilution based upon A.R.S. § 44-1448.01. Plaintiff has denied defendant's counterclaims.[4]

         Defendant moved for summary judgment. Plaintiff's Count 3 (the state law dilution claim) was dismissed with prejudice.[5] In summary judgment proceedings, the court was required to view the evidence then before the court (and in particular, the evidence of the likelihood of confusion) in the light most favorable to the non-moving party, plaintiff. Plaintiff loses that benefit after trial. The court is now entitled to weigh all of the evidence, make credibility determinations, and rule in accordance with the weight of the evidence.

         Plaintiff requested a jury trial. That request was denied.[6] The case was tried to the court commencing April 11, 2016, and concluding April 14, 2016. Written closing arguments were requested and filed.[7] Proposed findings of fact and conclusions of law were requested and filed.[8]

         In what follows, the court has made findings of fact (numbered paragraphs 1 through 63 as to each of plaintiff's claims and defendant's counterclaims), interspersed with discussion of applicable law and authorities, and followed by conclusions of law (paragraphs 64 through 76).

         FINDINGS OF FACT

         A. Agreed Facts

         On February 29, 2016, in anticipation of trial, the parties filed their joint statement of uncontested facts.[9] The court adopts those uncontested facts and incorporates them into its decision as follows:

         1. Moab Industries, LLC (herein “plaintiff”), is an Arizona corporation with its principal place of business at 820 East Sheldon Street in Prescott, Arizona. Plaintiff is owned by John Silvernale.

         2. Neither party has a principal place of business in Moab, Utah, and neither party maintains an office in Moab, Utah.

         3. FCA U.S. LLC, formerly Chrysler Group LLC (herein “defendant”), is a Delaware corporation with a principal place of business at 1000 Chrysler Drive in Auburn Hills, Michigan 48236.

         4. Defendant manufactures and sells to its licensed dealers throughout the United States CHRYSLER, JEEP, DODGE, and RAM brand vehicles.

         5. Defendant manufactures and sells to its licensed dealers throughout the United States JEEP WRANGLER vehicles.

         6. Defendant and its predecessors in interest have used the JEEP mark for more than 60 years and the WRANGLER mark since the 1980s in connection with the sale of vehicles.

         7. Defendant owns the following U.S. Trademark Registrations for the JEEP mark: U.S. Registration Nos. 526, 175; 1, 081, 322; 1, 129, 553; 1, 130, 015; 1, 128, 972; 1, 129, 828; 1, 134, 153; 1, 236, 540; 2, 461, 861; 2, 512, 866; 2, 586, 284; 2, 635, 685; 2, 681, 201; 2, 729, 404; 2, 800, 213; and 2, 849, 309.[10]

         8. Defendant owns the following U.S. Trademark Registrations for the WRANGLER mark: U.S. Registration Nos. 2, 602, 935 and 1, 557, 843.

         9. Defendant owns the following U.S. Trademark Registrations for the JEEP GRILLE Design Mark: U.S. Registration Nos. 2, 924, 936; 2, 823, 099; 2, 732, 021; 2, 161, 779; 2, 794, 553, and 2, 764.249.

         10. In addition to the JEEP mark and the JEEP GRILLE Design Mark, defendant's JEEP WRANGLER vehicles bear the WRANGLER mark.

         11. Plaintiff is in the business of customizing or “upfitting” vehicles.

         12. The primary vehicle that plaintiff customizes or upfits is the JEEP WRANGLER vehicle, which is manufactured by defendant.

         13. Plaintiff's website, www.moabindustries.com, depicts mostly JEEP vehicles.

         14. Plaintiff does not remove the JEEP mark, the JEEP GRILLE Design Mark, or the WRANGLER mark from the vehicles it upfits and resells.

         15. Plaintiff has no documentary evidence showing sales prior to 2005 of goods or services in connection with its MOAB INDUSTRIES or MOAB marks.

         16. Plaintiff's total sales of upfitted vehicles consisted of 53 vehicles in 2011, 70 in 2012, and 92 in 2013.

         17. Plaintiff has sold its customized vehicles at dealer auctions and licensed resale dealers.[11]

         18. On February 1, 2011, the United States Patent and Trademark Office (“USPTO”) issued U.S. Trademark Registration No. 3, 912, 705 for the service mark MOAB INDUSTRIES to plaintiff for “automotive conversion services, namely, installing specialty automotive equipment” in Class 37.

         19. In June 2012, defendant conducted an audit of one of its dealerships, Mountain Home Auto Ranch in Idaho.

         20. On June 13, 2012, defendant filed an intent-to-use trademark application for the trademark MOAB under Serial No. 85/650, 654 for use in connection with “[m]otor vehicles, namely, passenger automobiles, their structural parts, trim and badges” in Class 12.

         21. Also on June 13, 2012, defendant's legal department performed a search for the use of MOAB in connection with motor vehicles. The results of this search included plaintiff's registration for the MOAB INDUSTRIES service mark for “[a]utomotive conversion services, namely, installing specialty automotive equipment” in Class 37, along with a variety of other MOAB-formative marks, such as MOAB TAXI for “taxi transport” in Class 39 and MOAB STAR for “lights for vehicles, ” as well as MOAB standing alone for: “bicycles” in Class 12; “retail store and online retail store services in the fields of clothing, camping gear, sporting goods, ” and the like in Class 35; “juices and fruit drinks” in Class 32; “cutlery” in Class 8; “eyewear; namely, eyeshields for use in sports activities” in Class 9; “distribution job management tools for . . . computers . . . . [and] technical support services and computer services” in Classes 9 and 42; “training/certification course for individuals and groups on recognizing, reducing and managing violent and aggressive behavior” in Class 41, and for CDs and CD ROMs featuring such courses in Class 9. The search results also included common law uses like MOAB 4X4 OUTPOST and MOAB OFFROAD.

         22. Third parties operate automotive conversion businesses under names incorporating the term “Moab, ” such as “Moab Offroad” in Lexington, Kentucky, owned by Max Dollinger, and “Moab 4x4 Outpost” in Moab, Utah, owned by Steve Nantz.

         23. On September 3, 2012, the USPTO issued an Office Action initially refusing defendant's Application Serial No. 85/650, 654 “because of a likelihood of confusion with the marks in U.S. Registration Nos. 3912705 and 4078497.” Registration No. 3912705 is plaintiff's registration.

         24. The USPTO's September 3, 2012, initial refusal stated that defendant's “mark MOAB is similar in sound, meaning, and appearance to registrant's mark MOAB INDUSTRIES, ” that defendant's “goods, namely, passenger automobiles, parts, trims and badges are closely related to registrant's services, ” and that “[u]se of these marks on closely related goods and services is likely to result in confusion.”

         25. Defendant responded to the September 3, 2012, Office Action on March 4, 2013, arguing that there is no likelihood of confusion between plaintiff's use of MOAB INDUSTRIES for automotive conversion services in Class 37 and defendant's use of MOAB for vehicles in Class 12.

         26. In a Final Office Action dated April 2, 2013, the USPTO refused “registration for the applied-for mark … because of a likelihood of confusion” with MOAB INDUSTRIES' mark and one other mark.

         27. On October 28, 2013, the USPTO issued a suspension notice suspending action on defendant's U.S. Trademark Application Serial No. 85/650, 654 in light of the present lawsuit, which plaintiff filed on December 7, 2012.

         28. The USPTO's October 28, 2013, suspension notice stated: “[b]ecause the civil proceeding(s) pertains to an issue that could directly affect whether applicant's mark can be registered, action on this application is suspended pending termination of the civil proceeding(s).” 29. For model year 2013, defendant introduced a JEEP WRANGLER MOAB Special Edition vehicle. Defendant manufactured and sold approximately 3, 375 JEEP WRANGLER MOAB Special Edition vehicles.

         B. Plaintiff's Federal Trademark Claims

         As is often done, [plaintiff] frames its claims under sections 32 and 43(a) of the Lanham Act in terms of trademark infringement and unfair competition, respectively.” Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1046 n.8 (9th Cir. 1999). “[T]he analysis under the two provisions is oftentimes identical.” Id. at 1047 n.8. Because this is the case here, plaintiff's Count 1 and Count 2 can be, and have been, evaluated together.

         To establish a federal trademark infringement claim, plaintiff has to prove two elements: (1) “a valid, protectable trademark, and (2) [defendant's] use of the mark is likely to cause confusion.” S. Calif. Darts Ass'n v. Zaffina, 762 F.3d 921, 929 (9th Cir. 2014) (quoting Applied Info. Sciences Corp. v. eBAY, Inc., 511 F.3d 966, 969 (9th Cir. 2007)). “The test for ‘likelihood of confusion' requires the factfinder to determine whether a ‘reasonably prudent consumer in the marketplace is likely to be confused as to the origin of the goods or service bearing one of the marks.'” Surfvivor Media, Inc. v. Survivor Productions, 406 F.3d 625, 630 (9th Cir. 2005) (quoting Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998)). But there are two distinct types of trademark infringement claims: forward confusion and reverse confusion. “Forward confusion occurs when consumers believe that goods bearing the junior mark [here defendant] came from, or were sponsored by, the senior mark holder [here plaintiff].” Id. “By contrast, reverse confusion occurs when consumers dealing with the senior mark holder [here plaintiff] believe that they are doing business with the junior one [here defendant].” Id. “In such a case, the smaller senior user, such as [plaintiff], seeks to protect its business identity from being overwhelmed by a larger junior user who has saturated the market with publicity.” Cohn v. Petsmart, Inc., 281 F.3d 837, 841 (9th Cir. 2007).

         In their briefing on defendant's motion for summary judgment, the parties debated whether or not plaintiff had asserted a reverse confusion claim or a forward confusion claim. In ruling on the motion for summary judgment, the court concluded that plaintiff had pleaded a reverse confusion claim.[12] The parties continued to disagree as to whether or not plaintiff pleaded a reverse confusion case. However, just prior to trial, plaintiff confirmed that the issue to be tried was a claim for reverse confusion.[13] Plaintiff's infringement claim was in fact tried as a reverse confusion claim.

         30. Plaintiff's MOAB INDUSTRIES trademark is valid and protectable. Plaintiff's MOAB unregistered mark was employed in commerce by plaintiff prior to defendant's first use of the MOAB mark on its MOAB Special Edition.

         31. Plaintiff was a reseller of vehicles (mostly JEEP WRANGLER vehicles) which plaintiff purchased new from authorized JEEP dealers. In one instance, a customer of plaintiff purchased a JEEP WRANGLER from an authorized dealer and arranged for plaintiff to take delivery of the vehicle for upfitting, 32. Defendant sells newly-manufactured vehicles bearing its marks such as WRANGLER through its authorized new car dealers all over the country. Defendant also sells a MOAB branded, after-market wheel. The wheels do not bear the MOAB mark. Defendant's use of MOAB in connection with after-market wheels predated plaintiff's sale of MOAB branded, upfitted vehicles. There is no evidence suggesting the likelihood of confusion between MOAB branded wheels and plaintiff's MOAB branded, upfitted JEEP WRANGLER vehicles.

         The second element of a federal trademark claim (whether defendant's use of the MOAB mark is likely to cause confusion) calls into play the Sleekcraft factors. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The Sleekcraft factors are:

1. strength of the mark;
2. proximity of the ...

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