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Unlawful Tarnishment of Chevron’s Shining Texaco Star?

Posted in Agreements, Contracts, Dilution, Famous Marks, Goodwill, Law Suits, Non-Traditional Trademarks, Trademarks

An interesting trademark case recently was filed in federal district court in Minnesota, Chevron Intellectual Property LLC et al v. MDW Equity Partners, LLC, a pdf copy of the complaint here.

As beleaguered BP‘s once valuable goodwill and reputation continues to flounder in the court of public opinion with the tragic gulf oil spill and disaster (by the way, how would you like to manage the Gulf oil brand nowadays?), oil industry giant and direct competitor Chevron takes an aggresive, but comparatively trivial step toward protecting its valuable goodwill and reputation, against alleged tarnishment by the land owner of property located in St. Francis, Minnesota (population 4,910 as of 2000), where a former franchisee apparently used to lawfully operate a Texaco service station, up until a little more than a year ago.

By my reading of the complaint, this is not the familiar fact pattern of a holdover franchisee whose right to use various licensed marks is terminated and the terminated franchisee unlawfully continues to operate its business using at least some of the previously-licensed marks. This is also not the petroleum franchise fact pattern recently addressed in March 2010, by the U.S. Supreme Court, in Mac’s Shell Service v. Shell Oil Products Co.

No, the present fact pattern in the Chevron trademark case, to me at least, raises the pivotol and threshold question of what constitutes "commercial use of a mark," and what legal recourse a trademark owner has when there is no longer any business being conducted at an abandoned service station, and the former-franchisee apparently has no control over the physical property any longer, yet tradmarked signage and trade dress remains affixed and visible on property maintained in a "dilapidated condition," with "boarded-up windows," "unkempt (sic) grounds," and "an overall appearance of disrepair, neglect and abandonment," as shown in the photos below:

It is pretty clear from these photos, provided to the court by plaintiff Chevron, that no business or commerce is being conducted at this former-Texaco service station location, and, it is also pretty clear from these photos that no goods or services are being offered or provided there in connection with the Texaco marks. Perhaps that is why no claim of likelihood of confusion or trademark infringement has been asserted.

Instead, Chevron, owner of the Texaco trademarks and trade dress, selectively has asserted claims based on three different trademark theories:

  1. Federal Trademark Dilution, 15 U.S.C. 1125(c);
  2. Minnesota Deceptive Trade Practices Act, Minn Stat 325D.44; and
  3. Minnesota Trademark Dilution, Minn Stat 333.285.

Notably absent from Chevron’s complaint is any claim for breach of contract, especially given Chevron’s allegation that the defendant land owner "was obligated and instructed to fully remove the Texaco Marks" from the property. Of course, any franchise agreement worth its salt requires the immediate removal of all trademarks, even non-traditional trademarks, upon termination of the trademark license agreement. But, it appears here, that the defendant and current landowner is not the former franchisee and has no contractual relationship with the trademark owner.

Even if so, the question remains, are the trademark dilution and deceptive trade practice laws appropriate vehicles to compel or otherwise fuel the removal of trademarked signage and trade dress from land and property where no business or commerce is being conducted and the trademark owner apparently failed to obtain contractual obligations directly from the land and property owner? Moreover, is there any reasonable claim of dilution or tarnishment here, assuming Chevron can overcome the initial hurdle of the "commercial use" requirement? And, if so, what about Chevron’s claim for monetary relief, requesting damages, treble damages, lost profits, and attorneys’ fees? Can anyone explain how Chevron might calculate lost profits given the status of the admittedly abandoned service station?

With respect to Chevron’s request for injunctive relief, importantly, the federal dilution statute does not apply or provide any protection whatsoever without "another person’s commercial use in commerce of a mark" and the Minnesota dilution statute similarly requires "another person’s commercial use of a mark" before any liability attaches. So, how can there be either a valid federal or state dilution claim with the requisite "commercial use" of the Texaco marks when there is no business or commerce being conducted? Similarly, how can there be deceptive trade practices with no trade?

Even in the days when the dilution laws probably were stretched beyond their intended scope to provide a needed remedy for cybersquatting activities well before enactment of the federal Anticyberpiracy Consumer Protection Act (ACPA), to have the necessary "commercial use" of a mark for dilution liability, even if there were no goods or services being sold on the website associated with the domain, it was required for the owner of the offending domain name to offer for sale the domain to the owner of the trademark comprising or contained within the domain name.

Here, there is no business or commerce being conducted at all, no ransom payments or other forms of commercial extortion, apparently just a dispute over the cost of removing trademarked signage and trade dress from an abandoned service station in a town of less than 5,000 people.

Do you suppose the lawsuit could have been avoided if Chevron had been willing to cover the cost of removing its marks from the abandoned property? How much do you suppose it might cost to hire someone in St. Francis to remove the above trademarks and trade dress from the abandoned service station? I’m thinking far less than the cost of preparing and filing the complaint, but what do I know?

  • http://www.brandranch.com Randall Hull

    Steve,
    You raise an interesting question with “how can there be deceptive trade practices with no trade?” Perhaps it depends on how we define “deceptive”. The implication of the signage is trade activity at that site, so it could be interpreted as deceptive to leave the signs, which represent said trade, when in fact no trade exists.
    Also, would it benefit trademark protection to expand the legal definition of tarnishment beyond mere unauthorized use? In this instance, could one argue unauthorized use, per paragraph 17 of the complaint?
    Your conclusion is logical. Surely the cost of sign removal is far less than legal action, and, not to be ignored, the message it sends about Chevron. Do they prefer litigation over proactive management of their branding elements?

  • Nit Picker

    Steve,
    Before picking on another person’s spelling, you should at least use an automated tool to check your own. “Pivotol” should be spelled “pivotal”, whereas “unkempt” does not deserve a “(sic)” because it is correct. Unkempt means deficient in order or neatness. Furthermore, the “(sic)” (parenthesized) should be a “[sic]” (bracketed).

  • http://www.duetsblog.com/steve-baird.html Steve Baird

    Dear Nit Picker,
    Sounds like you thought I was “picking on” the drafter of the complaint that I quoted.
    Sorry, no “picking’ intended, I was just trying to get it right, putting aside for the moment that the spell-checker was on the fritz.
    By the way, thanks for expanding my knowledge of the English language!
    Hard to imagine I haven’t encountered the word “unkempt” before, perhaps it is because I don’t have enough hair for mine to be unkempt, see Dictionary.com (“Not combed: unkempt hair”).
    As a result, I thought the complaint contained a typo, intended to read “unkept” — as in:
    “unkept
    adj.
    1. Unkempt. An unkept cemetery plot.”
    Dictionary.com
    Given the abandoned nature of the former Texaco service station property, it seemed more appropriate to leverage the cemetery connection than the one about messy hair.
    Seriously, thanks for stopping by and paying close attention to what I wrote!
    By the way, any feedback on the substance of the post?
    I’d enjoy hearing your thoughts and perspective.

  • irina karaivanova

    About Chevron’s case. Is it possible Chevron to brake a contract pulling out from Canada to Missisippi River and not taking care of his trade mark? What about if the logo is out and only te colors witout logo are left? They can not predend for a trade dress without telling the public to what to associate the services and the goods? There is next case in Belmont,MA.I am wondering since I found so many identical cases in Florida,Texas, Connecticut and other states, with identical photocopied complaints, is there a case for class action against Chevron. If in my case I do not see any grounds as I do not see in yours what about all the others.
    I will appreciate coment since I am struggling alone with my case.