OEM Trademarks in the AfterMarket: Exploring the Boundaries

By Susan Frohling
September 19, 2018

While there are certainly limits on how—and how much—aftermarket sellers can use OEM trademarks to communicate key information about aftermarket parts, the legal boundaries for aftermarket sellers are not always clear.

Image Created by Renee Quinn

Automotive aftermarket parts, defined as replacement parts made by a company other than the vehicle’s original manufacturer, is a huge and growing business in the United States.  Indeed, with the median age of an American car on the road today climbing to 11.2 years, the automotive spare parts industry, which includes replacement grilles, fenders, bumpers, and headlights, has surpassed that of the original automotive business, exceeding $318 billion annually.

Historically, aftermarket parts were sold almost exclusively via repair shops.  Today, however, end consumers often purchase aftermarket auto parts directly from on-line aftermarket retailers.  Not surprisingly, aftermarket sellers frequently use original auto makers’ trademarks (e.g., Ford, GM, Volkswagen) to market their aftermarket parts, as consumers certainly need to know whether a spare part they are looking to purchase is compatible with the vehicle for which it is to be used.  Understanding this, courts for decades have allowed aftermarket sellers to use trademarks of original equipment manufacturers (“OEMs”) to inform consumers that their replacement parts fit particular OEM products.

While there are certainly limits on how—and how much—aftermarket sellers can use OEM trademarks to communicate key information about aftermarket parts, the legal boundaries for aftermarket sellers are not always clear.  And, in the automotive industry, the question of legal boundaries is perhaps most intriguing when the trademark concerned is one of product configuration.  Indeed, several U.S. auto companies own incontestable trademarks registrations for various source-identifying parts of their automobiles such as grilles, headlights, and fenders.  In light of such perpetual trademark rights in these part configurations, how can aftermarket sellers offer visually identical replacement grilles, headlights or fenders without significant risk of a trademark infringement claim from the auto companies?

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The Likelihood of Confusion Question

Boiled down to its most basic tenet, trademark law prohibits unauthorized use of others’ trademarks if that use is likely to confuse consumers about source, sponsorship or affiliation.  Accordingly, the ultimate question for an aftermarket seller is whether its use of OEM trademarks is likely to confuse consumers about source, sponsorship or affiliation of its aftermarket goods.  While the courts have regularly allowed aftermarket sellers to use OEM trademarks to honestly communicate the compatibility of parts with the original equipment, the question has always been how and how much can the aftermarket seller use the OEM trademarks without running afoul of the trademark laws.

How and how much can OEM word marks be used?

One of the first cases to look at the use of OEM trademarks in the aftermarket context was Elecs. Corp. of Am. v. Honeywell, Inc., 428 F. 2d 191 (1st Cir. 1970).  In that case, the aftermarket seller of a HONEYWELL system component used the HONEYWELL trademark in its marketing materials.  The First Circuit found the aftermarketer’s use permissible, and went so far as to state that it was necessary to tolerate some slight confusion risk in the arena of replacement parts.  The court noted, however, that HONEYWELL was a well-known company, and that the aftermarket product, packaging, and advertising conspicuously stated that it was competing with the HONEYWELL replacement products.

In another well-known case involving repair services for automobiles, the Ninth Circuit held that a repair shop’s prominent and frequent use of the word “Independent”—whenever the auto maker’s “Volkswagen” or “VW” trademarks appeared in his advertising—was sufficient to distinguish his business.  Volkswagenwerk Aktiengesellshaft v. Church, 411 F. 2d 350, 351 (9th Cir. 1969).  Importantly, the court remarked that the repair shop owner did not use the logos of VOLKSWAGEN in its materials, but instead used the brand names only.

Similarly, in a 1987 case concerning replacement parts in the field of electronic heat technology, the First Circuit stated, “In the absence of false representations or palming off, the sale of unpatented replacement parts by one other than the manufacturer of the original equipment is neither unlawful nor actionable.”  Hypertherm, Inc. v. Precision Products, Inc. 832 F. 2d 697 (1st Cir. 1987).  The First Circuit went on to explain that imitators have a right to tell the public what they are doing (making aftermarket parts) and that prohibiting imitators from telling others the very purpose for which their “make-do” articles were assembled would severely restrain competition.  However, despite generally allowing defendant PPI to use Hypertherm’s trademarks, the court held that some of its particular practices were unlawful, namely, its use of deceptively similar packaging, imitative numeric designations, and masking PPI as the true source of its goods.

While courts in these cases allowed minimal use of OEM word marks, reasoning either that such use would not cause confusion or that some confusion must be tolerated in some contexts, the Ninth Circuit in 1992 clarified the analysis in creating a doctrine called “nominative fair use,” which would squarely address use of OEM trademarks by aftermarket sellers.  While different courts use slightly different tests, the basic elements of nominative fair use are:  (1) the use must accurately refer to the trademark of goods or services sold; (2) the use must not imply any endorsement or sponsorship by the trademark owner; (3) there should be no easier way to refer to the products or owner; and (4) only so much of the trademark can be used as is needed to identify the trademark owner.

Not surprisingly, in post-1992 aftermarket cases, courts typically applied the nominative fair use test to determine whether aftermarket use of OEM marks was within legal bounds.  For example, in a 2010 case, the U.S. District Court for the District of Colorado employed the nominative fair use test in concluding that an aftermarket seller had overused its rival’s LOKAR trademark when it displayed the LOKAR mark in connection with many goods beyond those compatible with Lokar’s transmission shifters.  Gennie Shifter, Ltd. Liab. Co. v. Lokar, Inc., 2010 U.S. Dist. LEXIS 2176 (D. Colo. 2010).

In sum, courts have consistently allowed aftermarket sellers to use OEM word trademarks as long as the use did not go so far as to cause likely consumer confusion.  When aftermarket sellers use logos of the OEMs, when the use of the OEM trademark extends beyond conveying compatibility, or when aftermarket sellers adopt deceptively similar packaging or numeric designations, courts very well may find likelihood of confusion.

Point of Sale vs. Downstream Confusion

In deciding whether automotive aftermarket sellers’ use of automakers’ trademarks is likely to cause confusion, several decisions have examined the question of likely confusion post-sale or “down-stream,” as well as the confusion risk at the point of sale.

In a 1989 case involving the sale of aftermarket floor mats bearing several Ford marks, the U.S. District Court for the Central District of California noted that while point of sale confusion can be easily minimized with packaging disclaimers and the like, post-sale confusion may be harder to avoid.  Interestingly, the court then discussed a potential need to temper the likelihood of confusion standard “downstream” when the use of the OEM mark might be aesthetically functional.  Specifically, the court explained, “A floor mat whose upper surface reads “FORD (not authorized by Ford Motor Co)” would obviously attract few customers,” and then stated that perhaps some confusion as to the source or sponsorship must be tolerated after the point of sale.  Plasticolor Molded Prods. v. Ford Motor Co., 713 F. Supp. 1329 (C.D. Cal. 1989).  That said, the Plasticolor court did add that post-sale likelihood of confusion can be diminished by requiring an aftermarket seller to take all reasonable steps to eliminate post-sale confusion.

Similarly, in GMC v. Keystone Auto Indus. 453 F. 3d 351 (6th Cir. 2006), the Sixth Circuit considered likelihood of confusion brought about by an aftermarket seller’s replacement grilles that included “placeholders” in the shape of two GM logo-design trademarks.  The Sixth Circuit affirmed the lower court’s ruling that there was no likelihood of confusion at the point of sale because the sellers used boxes and packaging very different from those containing GM’s replacement grills (including conspicuous logos of the aftermarket seller) and also used conspicuous disclaimers.

However, on the question of post-sale confusion, the appeals court held that there could be likelihood of downstream confusion if the aftermarket seller’s placeholders for the GM emblems would be visible after GM’s emblems were affixed.  In explaining its conclusion, the Sixth Circuit noted that post-sale confusion could occur if the viewing public mistakenly believed that the aftermarket grille placed on a GM car was, in fact, a GM part and that part showed inferior attributes such as improper fit or cracking.  On the other hand, the court reasoned, if the placeholder would not be visible after the genuine Chevy bow tie or GMC emblem was affixed, the wholly hidden placeholder would not cause downstream confusion because “that which defies perception cannot confuse.”

Use of OEM product configuration trademarks

Up to now, this discussion has focused on aftermarket sellers’ use of word (or stylized-logo) trademarks.  An interesting issue arises when the trademark at issue consists of a product configuration.  Indeed, several auto makers have cleared the high hurdle of obtaining product configuration trademark registrations for “structural parts” of automobiles, including:

Could these incontestable product configuration registrations block aftermarket products and thereby give automakers a virtual monopoly on aftermarket replacement parts?

Generally speaking, to establish valid rights under the Lanham Act, a party asserting a product configuration trademark must establish that the asserted design (a) is not functional and (b) has acquired secondary meaning in the marketplace.  (In trademark infringement actions, if a product configuration trademark is registered, it is the defendant’s burden to prove functionality.)  These requirements are consistent with the policies underlying trademark law.  First, if the design in question is not functional, there is no competitive need for others to use the design, and recognizing trademark rights in the design therefore will not be anti-competitive.  Second, requiring secondary meaning ensures that the configuration signifies the source of the product, independent of any word trademarks that may appear on the product.  Legal protection will attach only after the party claiming rights has used and promoted the configuration for a considerable period of time, such that consumers have come to associate it with a particular producer or brand.

In Chrysler Corp. v. Vanzant, 44 F. Supp. 1062, 1071-1072 (C.D. Cal. 1999), for example, the court considered whether Chrysler’s  registered product configuration trademarks for its JEEP grilles (which were registered for “land vehicles”) were infringed by an aftermarket seller’s use of the identical grille design for its form-fitting grille covers.

Before ruling in favor of the aftermarket seller, the court noted that Chrysler must prove that its registered grille configuration trademark was both distinctive and non-functional in the grille cover category.  In delving into this question, the court stated, “functionality must be assessed within the context in which the product design is being used.”  Because the court found Chrysler’s grille configuration functional for grille covers (a good related to, but not the same as, goods covered by Chrysler’s registration) the aftermarket seller prevailed.

Likely Analysis of Automakers’ claims of Product Configuration Trademark Infringement

These cases give us some clue into how a court might analyze a likelihood of confusion claim by an automaker against an aftermarket seller of parts covered by a product configuration trademark for structural parts.  As is true in any trademark infringement case, the plaintiff must prove that it has a valid trademark and that a junior user’s use of a similar trademark is likely to cause confusion.  As discussed above, in the context of product configuration trademarks, courts may find these parts registrations functional (hence invalid) in the narrow context of aftermarket parts.  Or, perhaps courts will find no likelihood of confusion if the only real risk of such confusion is downstream where the viewing public would not necessarily expect older cars to exclusively use OEM replacement parts.

Aftermarket seller’s use of structural part designs may be functional, even when such parts are registered trademarks

Typically, functionality is a question of trademark validity that comes up during prosecution of design mark applications.  When product configurations are registered only for the end-product (e.g., cars or land vehicles) courts have revisited the functionality question when aftermarket part sellers argued that the auto-makers had not proven non-functionality for the parts themselves.  But, how would courts analyze the functionality question when the product configurations are, in fact, registered for “structural parts” of the cars or land vehicles?  It seems quite possible that courts would re-visit the functionality question in an enforcement action since even incontestable product configuration trademarks may be invalidated on the grounds of functionality.

Along these lines, perhaps the U.S. PTO should no longer allow registration of visible structural auto parts for parts per se, but instead allow registration only for the automobiles themselves.  Indeed, perhaps these product designs do not really identify the source of parts at all, but certainly may identify the source of the overall vehicle.

No Likelihood of Confusion for Aftermarket Products Downstream

Or, perhaps courts would focus on the likelihood of confusion question, which some aftermarket cases have noted is different in the downstream context.  It seems logical to argue that when consumers see older cars, they do not necessarily think that all the visible parts are original, so there really can be no likelihood of downstream confusion.  As such, as long as the aftermarket seller clearly communicates that its products are not affiliated with the OEM at the point of sale (via disclaimers and minimal use of the OEM trademarks, etc.) courts will not find likely confusion.

In sum, while the case law in recent decades generally allows aftermarket sellers to use the trademarks of OEM’s to communicate essential features of their products, there are boundaries around such use.  Indeed, when an aftermarketer uses OEM trademarks more than necessary to communicate compatibility, courts may prohibit such “overuse.”  When aftermarketers copy designs of structural parts protected by product configuration trademarks, courts may find a way to allow the aftermarket products as long as the seller makes it clear that its products are not those of the original automaker at the point of sale.  While automakers would theoretically have strong arguments of downstream confusion, courts may find a way to argue around the downstream confusion risks either by citing functionality (in the narrow context of aftermarket products) or no likelihood of confusion in the aftermarket context based on consumer expectations and understanding about aftermarket parts.

The author would like to offer a special thank you to Jeff Handelman and Mark McKenna, Professor of Law at Notre Dame Law School, for their help with the article.

The Author

Susan Frohling

Susan Frohling Is a Trademark Attorney with Brinks Gilson & Lione. She is an experienced trademark lawyer, bringing more than 15 years of experience from both in-house and private practice settings. Susan’s extensive in-house experience gives her a unique, business-focused perspective, allowing her to counsel clients with practical and strategic advice on a wide range of trademark and copyright issues.

For more information or to contact Susan, please visit her Firm Profile Page.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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