Seventh Circuit gives AutoZone the green light

In AutoZone Inc v Strick (Case 07-2136, September 11 2008), the US Court of Appeals for the Seventh Circuit has held that the district court had improperly decided disputed issues of fact in finding that there was no likelihood of confusion between the plaintiff’s mark AUTOZONE and the defendants' marks OIL ZONE and WASH ZONE. 
AutoZone Inc, one of the largest retailers of automotive parts in the United States, owns approximately 3,500 stores nationwide. AutoZone’s stores primarily sell automotive parts. In addition, the stores offer services in conjunction with the sale of those products, such as diagnostic advice, oil reclamation and free battery testing. AutoZone sells to both individual consumers and commercial automotive establishments, but the bulk of its business is from sales to individual consumers.
AutoZone first began using its trademark AUTOZONE (and design) in November 1987. The mark is federally registered and referred to by AutoZone as its 'speedbar' design. By 1996 AutoZone had opened approximately 100 stores in the Chicago area, which operated under the speedbar design. AutoZone heavily invested in advertising both nationwide and in Chicago, sponsoring local sports teams such as the Chicago Bulls and the Chicago White Sox.
Strick Enterprises Inc and Strick Inc (collectively Strick) worked in Chicago in the automotive goods and services industry during AutoZone’s period of expansion and growth into the Chicago market. Strick opened two stores in the Chicago area, one of which was within a mile of an AutoZone store. Strick’s Oil Zone and Wash Zone stores provided car washes, oil changes, transmission services, rear differential services and coolant flushes. Strick began using the OIL ZONE mark in 1996 and the WASH ZONE mark in 1998. 
AutoZone sued Strick alleging that use of the OIL ZONE and WASH ZONE marks constituted:
  • federal service mark and trademark infringement in violation of 15 USC 1114(1);
  • trade name infringement in violation of Illinois common law;
  • unfair competition in violation of 15 USC 1125(a) and Illinois common law; and 
  • service mark and trademark dilution in violation of 15 USC 1125(c). 
Strick claimed that it had no knowledge of the AUTOZONE mark or the AutoZone stores. While AutoZone learned of Strick’s marks in December 1998, AutoZone did not send a cease and desist letter to Strick until February 2003.
Strick moved for summary judgment dismissing the infringement and dilution claims. It also contended that AutoZone's claims were barred by laches.
The district court granted Strick’s motion for summary judgment and denied AutoZone’s motion for summary judgment on the grounds that there was no likelihood of confusion between the marks. The district court did not reach the issue of laches.
Reviewing de novo, the Seventh Circuit reversed and held that the district court had improperly resolved disputed issues of fact in finding that there was no likelihood of confusion. Referring to Packman v Chicago Tribune Co (267 F3d 628, 642 (2001)), the court pointed out that a "question of fact may be resolved on summary judgment only if the evidence is so one-sided that there can be no doubt about how the question should be answered". The Seventh Circuit applied the seven-factor Packman balancing test and concluded that this was not a case where the evidence was "so one-sided that the issue of likelihood of confusion can be properly determined at the summary judgment stage". 
The court noted during its analysis of each factor that there were genuine disputes as to material facts. For example, the Seventh Circuit held that the marks, while containing a few dissimilarities, had many similarities:
  • the marks all comprised two words;
  • the second word of each mark was 'zone'; and 
  • the marks used the same font and were slanted in the same direction. 
These similarities, along with others, could lead consumers driving by Strick’s stores to believe that AutoZone had entered into the oil-change and car wash services market.
Finally, the Seventh Circuit rejected Strick’s assertion that the court could still uphold the district court’s decision based on the doctrine of laches. Instead, the Seventh Circuit left the issue for the district court to determine because the decision “to apply the doctrine of laches is discretionary”. The case was thus remanded to the district court.
Sarah Marks, Arent Fox LLP, New York

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