Use of famous car marks fails aesthetic functionality test

In Au-Tomotive Gold Inc v Volkswagen of America Inc, the US Court of Appeal for the Ninth Circuit has found that the unauthorized use by a manufacturer of car accessories of the marks VOLKSWAGEN and AUDI on its products constituted trademark infringement.

Au-Tomotive Gold Inc (Auto Gold) sought a declaration that its use of the VOLKSWAGEN and AUDI marks on its car accessories did not constitute trademark infringement or counterfeiting. In defence of its activities, Auto Gold invoked the aesthetic functionality doctrine, arguing that the marks were aesthetic functional features of products that were necessary to compete.

Trademarks, of course, serve as source identifiers. In ruling for Auto Gold, the US District Court for the District of Arizona noted that these well-known automobile marks were not used for the purpose of identifying source, but rather because of the marks' aesthetic quality that consumers were seeking.

On appeal, the Ninth Circuit applied a two-step functionality test. The first step was an inquiry into whether the marks were functional under the Inwood test, which states that a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. If this test is met, the inquiry is over and the mark is not protected. The second step asks whether the mark performs some function such that the exclusive use of the mark would put competitors at a significant non-reputation-related disadvantage.

In holding that the marks do not meet the Inwood functionality test, the court noted that Auto Gold's products would still frame licence plates and hold keys without use of the marks. The court emphasized that even if a mark is a feature of the product that consumers find desirable, this does not render it unprotectable. Furthermore, the marks do not alter the cost or add to the quality of the products.

Applying the second part of the test, the court noted that the marks were source-identifying and emphasized that consumers want the accessories associated with Volkswagen and Audi, not "beautiful" accessories. Indeed, the court found no evidence that consumers purchased the products solely because of their "intrinsic aesthetic appeal". Any disadvantage to Auto Gold is "tied to the reputation and association with Volkswagen and Audi".

Thus, the court concluded that the VOLKWAGEN and AUDI trademarks are entitled to protection under the Lanham Act in this context, because the marks are not aesthetic functional features. The court emphasized that any other decision would serve only to permit the "naked appropriation of such marks". The court further held that such unauthorized use was likely to cause consumer confusion and was sufficient to support a trademark infringement claim.

Ron N Dreben, Morgan Lewis, Washington DC, with assistance from Merry Biggerstaff