IP Law Daily, TRADEMARK—D. Haw.: Infringement claims against Chrysler over ECODIESEL mark voluntarily dismissed, (Nov 4, 2014)

By Thomas Long, J.D.

Unitek Solvent Services, Inc. could voluntarily dismiss its trademark infringement claims against Chrysler Group LLC regarding the mark ECODIESEL, the federal district court in Honolulu has decided (Unitek Solvent Services, Inc. v. Chrysler Group LLC, October 31, 2014, Watson, D.). After the U.S. Court of Appeals in San Francisco affirmed an order denying Unitek’s motion for a preliminary injunction, Unitek no longer wished to pursue its infringement claims and sought to resolve the parties’ remaining registration and cancellation disputes in a pending proceeding before the Trademark Trial and Appeal Board that was stayed in March 2013.

Because Unitek agreed to dismiss all four of its infringement counts with prejudice, Chrysler’s counterclaim seeking declaratory judgment of non-infringement was moot and was dismissed with prejudice. Unitek’s registration validity claim was dismissed without prejudice, as was a corollary cancellation counterclaim asserted by Chrysler, so those claims could be adjudicated by the TTAB.

Background. Unitek initially filed for registration of the ECODIESEL mark on the Principal Register, but it eventually amended its application on September 5, 2006 to register the mark on the Supplemental Register instead. Shortly thereafter, the USPTO approved the application and on October 31, 2006, Unitek’s ECODIESEL mark was registered on the Supplemental Register. The Supplemental Register entry indicated that the mark was for “diesel fuel” and “fuel for motor vehicles, namely diesel.”

In 2013, as part of the marketing for new diesel-engine vehicles, Chrysler developed the name “EcoDiesel” to be used on specifically designed badges that would be placed on the exterior of the vehicles, and, in some cases, on the engine cover. Chrysler did not seek the exclusive right to use the term “eco” or “diesel,” but instead applied to register a distinctive EcoDiesel design mark with stylized elements. Chrysler submitted its trademark application to the USPTO on June 25, 2012.

On September 3, 2012, the USPTO issued an Office Action to Chrysler, refusing its application to register its EcoDiesel design mark on the Principal Register. The Office Action stated the USPTO’s conclusion that Chrysler’s mark was likely to be confused with Unitek’s ECODIESEL mark on the Supplemental Register.

Chrysler then initiated a petition for cancellation of Unitek’s ECODIESEL mark on the ground of abandonment. Unitek initiated the present court action on December 28, 2012 and sought to stay the TTAB cancellation proceeding. On March 19, 2013, the cancellation proceeding was suspended pending final disposition of the court action.

In a September 30, 2013 decision, the district court found that Unitek was unlikely to succeed in showing that its ECODIESEL mark—registered on the Supplemental Register for diesel fuel—had acquired the necessary secondary meaning to entitle it to trademark protection. The district court also determined that Unitek was not likely to succeed on the merits of its claim that Chrysler’s “EcoDiesel” brand, as applied to its diesel engines, was likely to cause confusion with the ECODIESEL mark. Finally, the district court held that Unitek was not likely to sustain irreparable harm in the absence of a preliminary injunction.

The appellate court affirmed the rulings that “ECODIESEL” was a descriptive mark, rather than a suggestive mark and that Unitek had not demonstrated a likelihood of success on the merits of its infringement claim. Because the appellate court affirmed the district court’s ruling on the ground that the mark was not qualified for protection, it was not necessary to reach the district court’s analysis of the likelihood of confusion question.

In addition, the appellate court affirmed the district court’s conclusion that Unitek failed to establish a likelihood of irreparable harm. Therefore, the denial of an injunction was affirmed.

Voluntary dismissal standard. Rule 41(a)(1) of the Federal Rules of Civil Procedure permits a plaintiff to dismiss an action without a court order by filing a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment. When—as was the case here—the defendant has served an answer—the plaintiff may voluntarily dismiss an action only by court order. If the defendant has pleaded a counterclaim before being served with the plaintiff’s motion to dismiss, the action may be dismissed over the defendant’s objection only if the counterclaim can remain pending for independent adjudication.

Infringement claims. Unitek sought to dismiss all of its infringement claims (Counts 2–5) with prejudice. Though Chrysler had qualms with the disposal of its counterclaims, Chrysler did not oppose the dismissal of Unitek’s infringement claims with prejudice. Accordingly, the court concluded that Counts 2–5 should be dismissed with prejudice.

Validity claim. Count 1 of Unitek’s complaint sought a declaration that its registration was valid. Unitek sought dismissal of this claim without prejudice so that it could pursue that claim in opposing Chrysler’s cancellation petition before the TTAB. Because Unitek sought dismissal without prejudice, the court examined whether Chrysler would suffer legal prejudice as a result of such dismissal.

Chrysler did not argue that it would be prejudiced directly as a result of a dismissal without prejudice of Unitek Count 1. Chrysler did argue that it would be prejudiced by dismissal of its own corollary cancellation claims. Chrysler asserted that it had devoted considerable effort and expense to developing the record in this case, the results of which were not automatically transferable to the TTAB and might require duplication. However, the court saw no reason why TTAB regulations would prevent Chrysler from relying on the deposition testimony taken in the court action, as well as the record of live testimony at the preliminary injunction hearing. The court was not convinced that proceeding before the TTAB would burden Chrysler with duplicative efforts at obtaining evidence.

The court granted Unitek’s motion to dismiss Count 1 without prejudice.

Infringement counterclaim. Part of Chrysler’s Counterclaim 1 sought a declaration of non-infringement of Unitek’s ECODIESEL mark. In light of the dismissal with prejudice of all of Unitek’s infringement claims, the court concluded that Chrysler’s infringement counterclaim was moot and should be dismissed with prejudice.

Cancellation counterclaim. Part of Chrysler’s Counterclaim 1 sough declaratory relief that Unitek’s ECODIESEL mark was not protectable. Counterclaim 2 requested an order directing the USPTO to cancel Unitek’s registration. In the court’s view, the questions raised by these counterclaims should be decided in the TTAB cancellation proceeding. Therefore, the cancellation counterclaims were dismissed without prejudice so they could be adjudicated before the TTAB, along with Unitek’s Count 1.

The case is Civil No. 12-00704 DKW-RLP.

Attorneys: Brett L. Foster (Holland & Hart LLP), Nadine Y. Ando (Sullivan Meheula Lee LLLP), and Thomas R. Sylvester (Bickerton, Lee, Dang & Sullivan) for Unitek Solvent Services, Inc. Charles H. Hooker, III (Kilpatrick Townsend & Stockton, LLP) and Martin E. Hsia (Cades Schutte) for Chrysler Group LLC.

Companies: Unitek Solvent Services, Inc.; Chrysler Group LLC

Cases: Trademark HawaiiNews