Opinion
Civil Action NO: 01-72733
March 4, 2002
JOINT MOTION FOR ENTRY OF AGREED ORDER
The parties have agreed to resolve their differences in this case and jointly request that the attached Order be entered in this case.
AGREED ORDER
I. INTRODUCTION
Plaintiff, Ford Motor Company ("Ford"), brought this action on July 20, 2001, against Defendant, A.C. Car Group Limited, ("A.C. Car"), to prevent A.C. Cars' anticipatory breach of a license agreement between the parties, and to prevent A.C. Cars' use of Ford's COBRA and FORD marks without Ford's authorization. The Parties stipulate to the following findings of fact and conclusions of law, and consent to entry of a permanent injunction as set forth below. Accordingly, the Court enters the following:
II. FINDINGS OF FACT
Ford has for many years been engaged in marketing and selling automobiles, automotive engines, automotive parts, accessories, clothing and promotional goods (collectively, "Automotive Goods") throughout the United States under Ford's COBRA trademarks, its stylized COBRA Snake Design trademarks, and its FORD trademarks (collectively, "the Marks").
Ford has sold many hundreds of millions of dollars worth of Automotive Goods under the Marks throughout the United States, and has spent many millions of dollars in advertising and promoting them.
Ford owns numerous registrations for the Marks in the United States Patent and Trademark Office. For example, U.S. Registration Nos. 807,185; 1,562,071; and 643,185 are valid and subsisting, are owned by Ford, and have become incontestable in accordance with U.S.C. § 1065 and 1115(b). In addition, U.S. Registration Nos. 2,022,758; 2,022,759; 2,265,966; 2,268,150; 2,198,685; 74,530; 1,863,707; 1,997,203; 1,863,708; and 2,018,005 are also valid and subsisting and owned by Ford.
In December, 1996 Ford and A.C. Car entered into a license agreement (the "License"), under which Ford granted A.C. Car a non-exclusive, royalty-free license. without the right to grant sub-licenses, to use Ford's COBRA mark in connection with A.C. Car's AC MK IV sports car. Under that License, A.C. Car has manufactured vehicles in the United Kingdom and marketed and sold AC MK IV sports cars under the COBRA mark. By virtue of Ford's long use, advertising and promotion of the Marks by Ford itself as well as by Ford's licensing of the Marks under agreements such as the License between Ford and A.C. Car, the Marks are distinctive and famous, possessing a strong secondary meaning signifying Ford.
In January, 2001, A.C. Car submitted a request to Ford's counsel to widen the scope of the License to, among other things, permit A.C. Car to use the COBRA mark on derivative vehicles being made by A.C. Car and powered by a Lotus engine. In February 201, while Ford's counsel was considering that request, A.C. Car made a similar request to Ford's new Vice-President-Global Marketing. Being new to her position and unaware of prior commitments and a Court Order relating to the COBRA mark, the Vice President-Global Marketing originally granted the requested permission to A.C. Car in April, 2001 after consideration with another senior executive at Ford. Subsequently, after learning of a pre-existing agreement with another party and a Court Order involving the COBRA mark from the United States District Court for the Central District of California, she revoked that permission in May, 2001. A.C. Car's Chairman immediately responded in writing that A.C. Car did not accept her revocation of the permission to use the COBRA mark in connection with the AC2I2S/C sports car powered by a Lotus engine as this did not form part of the original Agreement.
The License between Ford and A.C. Car provides for termination without cause "by Ford at any time two years after the effective date of this Agreement by giving twelve months prior notice in writing" to A.C. Car. On June 15, 2001, in accordance with that provision, Ford gave A.C. Car written notice that the License would terminate in twelve months. On June 19, 2001, A.C. Car gave written notice that it did not accept the termination of the License because it believed there was confusion surrounding the matter.
III. CONCLUSIONS OF LAW
This Court has jurisdiction over A.C. Car and this action, and A.C. Car has waived any objections to that jurisdiction.
Under Michigan law, "words or acts evincing an unequivocal intention to refuse performance in the future" are actionable as an anticipatory breach of contract. Lockhart Chemical Co. v. Moreco Energy, Inc. Beatrice Cos., 1993 U.S. Dist. LEXIS 15802 at *a4 (E.D. Mich. 1993), quoting from Brauer v. Hobbs, 151 Mich. App. 769, 776 (1986). Here, the License between Ford and A.C. is a valid contract between the parties. The termination provision of the License unequivocally gives Ford the right to terminate without cause upon twelve months written notice, but A.C. Car gave notice in writing on June 19, 2001 that because of the confusion it intended to continue to market cars under the COBRA mark beyond that date. "Under the doctrine of anticipatory breach, if a party to a contract, prior to the time of performance, unequivocally declared the intent not to perform, the innocent party has the option to sue immediately for breach of contract or wait until the time of performance." Brauer, 151 App. At 776, quoting Jackson v. American Can Co., Inc., 485 F. Supp. 370, 375 (W.D. Mich. 1980). A.C. Car's notice of its intention to continue to use the COBRA mark beyond the termination date of the License is an anticipatory breach of contract in violation of Michigan law for which Ford is entitled to relief.
A.C. Car's refusal to abide by the terms of the License with Ford also violates federal and state trademark and unfair competition law. Ford's registration and use of each of the Marks in connection with Automotive Goods establishes Ford's exclusive right to use the marks for such goods. 15 U.S.C. § 1115(a); Allard Enterprises v. Advanced Programming Resources, Inc., 249 F.3d 564, 571-722 (6th Cir. 2001) ("federal registration is prima facie evidence of the registrant's ownership and exclusive right to use the mark"). This exclusive right empowers Ford to prevent third parties from using any mark that is likely to cause confusion with the Marks. 15 U.S.C. § 1114 and 1116; Microsoft Corp. v. Compusource Distributors, Inc., 15 F. Supp.2d 800, 806 (E.D. Mich. 2000).
It is axiomatic that use of a licensed mark by an ex-licensee after termination of the license creates a likelihood of confusion, infringing and unfairly competing with the rights of the trademark owner. U.S. Structures, Inc. v. J. B. Structures, Inc., 130 F.3d 1185, 1190 (6th Cir. 1997) ("proof of continued, unauthorized use of an original trademark by one whose license to use the mark has been terminated is sufficient to establish "likelihood of confusion"). Where there is use by another of the trademark owner's mark on virtually identical goods, the public is likely to be confused. Microsoft Corp. v. Compusource, supra, 15 F. Supp.2d at 807; WSM, Inc. v. Tennessee Sales Corp., 709 F.2d 1084, 1086 (6th Cir. 1983). A.C. Car's use of the COBRA mark on sports cars after termination of the License, without authorization or control under the License by Ford, is likely to cause confusion among the public, and infringes and unfairly competes with Ford's rights.
A.C. Car's unauthorized use of the COBRA marks dilutes the distinctive quality of the Marks in the automotive industry as well. 15 U.S.C. § 1125(c). Dilution is "the lessening of the capacity of a famous mark to identify and distinguish goods or services." 15 U.S.C. § 1127. Here, Ford has developed substantial goodwill itself and through its License with A.C. Car in the Marks, so that they have become famous, and serve to identify and distinguish its Automotive Goods among consumers. When consumers are caused to associate the Marks with a company other than Ford or with any company which Ford has not licensed to use the Marks, that dilutes the distinctiveness of the Marks. See V Secret Catalog v. Mosely, 2001 U.S. App. LEXIS 16937 at *36-37 (6th Cir. 2001); Wilcom Pty., Ltd. v. Endless Visions, 128 F. Supp. 1027, 1032 (E.D. Mich. 1998).
Finally, A.C. Car's conduct constitutes unfair and confusing acts and practices in commerce in violation of the Michigan Consumer Protection Act ("MCPA") and Michigan common law. The MCPA and the common law tests are the same as the tests for federal trademark infringement and federal unfair competition under 15 U.S.C. § 1114(1) and 1125(a) is confusion likely. Homeowners Group, Inc. v. Home Marketing Specialists, Inc., 931 F.2d 1100, 1105 n. 1 (6th Cir. 1991); Microsoft v. Compusource, supra, 115 F. Supp.2d at 07. As stated above, A.C. Car's conduct creates likely confusion among the public.
In summary, A.C. Car's post-termination use of the Marks constitutes trademark infringement, unfair competition, dilution and is a violation of the MCPA. Ford, therefore, is entitled to injunctive relief.
IT IS ORDERED that A.C. Car and its officers, are permanently enjoined, after June 30, 2002, from (a) continuing use of the licensed marks or otherwise breaching A.C. Car's contractual obligations under the License; (b) using the Marks, or any other colorable imitation of the Marks in the automotive industry; (c) doing any other act or thing which has not been authorized by Ford and is likely to induce the belief that A.C. Car's business or its products are in any way connected with Ford's business or Ford's products, or are sponsored or approved by Ford; and (d) questioning the validity of the Marks.
SO ORDERED AND ADJUDGED.