Audi Hits Bump in the Road in its Trademark Infringement Suit Against an Audi Parts Supplier
By: Lora M. Friedemann
February 2009
The court in Audi AG v. Shokan Coachworks Inc., 2008 WL 4911730 (N.D.N.Y. 2008) grappled with a number of trademark issues. Audi prevailed on some of its claims, but two aspects of the case did not turn out as Audi planned.
Shokan Coachworks is an Audi recycling facility specializing in Audi vehicles. It included the AUDI brand and logo in its advertising. When Audi sued for trademark infringement, Shokan raised the defense of nominative fair use, arguing that that it uses the AUDI marks fairly and accurately to describe the Audi parts Shokan sells. Considering the strength of the AUDI mark, that Shokan’s use was identical to Audi’s mark, and that the parties were in competitive proximity, the court found that Shokan’s use of the phrase “Shokan Audi Parts” in its email signature block infringed and diluted the AUDI trademark. After that, Audi ran into trouble.
Audi had previously sued Shokan in 1990, but the parties settled. As part of the settlement, Shokan agreed to change its logo and refrain from using the AUDI mark except as an adjective to describe its repair services. However, the settlement specifically approved a Shokan ad that used the phrase “AUDI USED PARTS” and the phone number “1–800–ALL–AUDI.”
These permitted uses came back to bite Audi in the second lawsuit. The court granted summary judgment for Shokan on its laches defense, finding that the settlement agreement unambiguously permitted Shokan’s use of the vanity telephone number 1-800-ALL-AUDI and the phrase “AUDI USED PARTS” shown in the “approved” advertisement.
The court also relied on the settlement agreement to deny Audi’s motion for summary judgment on its cybersquatting claim. Because the prior settlement permitted use of the vanity phone number, the court was unable to find as a matter of law that Shokan’s use of the phone number as a domain name constituted bad faith.
The case serves as a reminder to be careful when drafting settlement agreements. Although Audi likely believed it was permitting narrow uses when it entered into the settlement agreement, permitting any such use create questions of fact as to whether similar uses should be allowed later.
This case also has lessons for litigators on the need to carefully authenticate documents intended to be used as evidence, regardless of the source of the documents. The court granted summary judgment for Shokan on Audi’s claim that the email address allaudi.shokan@verizon.net infringed, because Audi did not properly authenticate supporting documents. Audi submitted documents showing Shokan’s use of the email addressed obtained from www.archive.org. Audi attached the documents to an affidavit of an Audi employee, but did not authenticate the printouts with an affidavit from a representative of www.archive.org. Audi’s failure to present a representative from www.archive.org meant Audi failed to properly authenticate the printouts, and the court declined to consider them.