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In an ad run initially during the post-game show of the 2010
Super Bowl, Hyundai encouraged viewers to re-think
"luxury" and as a result consider buying a Sonata. The
ad, which can be viewed on YouTube here, juxtaposed
images of "luxury" with everyday settings: policemen
eating caviar, middle class houses with giant yachts parked next
door, and -- in what turned out to be a step too far -- men playing
basketball on an inner-city court, with a ball that bore designs
very closely resembling Louis Vuitton's "toile
monogram." This long-registered and famous LV mark consists of
"a repeating pattern design of the letters LV and flower-like
symbols on a chestnut-brown background."
LV sued Hyundai in the Southern District of New York, and, in a recent summary judgment ruling by the district
court, won a complete victory. Not only did the court grant
summary judgment in LV's favor on its claim for dilution by
blurring and deny Hyundai's motion on LV's infringement
claim, but it found as a matter of law that Hyundai had diluted
LV's mark willfully -- thereby exposing Hyundai to all the
damages available under 15 U.S.C. § 1117(a), including the
possibility of multiple damages and/or a deterrence-based
award.
LV had survey evidence showing that a modest percentage of
respondents "associated" the image of the basketball with
LV, but that itself does not carry the day in a dilution case. Why
did LV win summary judgment in its favor? The answer lies in very
damaging admissions made by Hyundai's witnesses. Clearly they
had to admit that the pattern on the basketball was intended to
evoke LV in viewers' minds: otherwise the attention-grabbing
juxtaposition would not work. But they also admitted that they
wanted to "reframe the way people looked at Hyundai, the
brand" by associating it with luxury marks like LV's.
Another witness -- a former (perhaps disgruntled?) marketing
employee -- agreed with the proposition that Hyundai "used
LV-like marks in order to raise the image of the Hyundai brand in
the mind of the consumers," and stated, "I believe it was
a brown basketball as you'd expect with some gold emblems on it
to represent luxury definitely laddering and borrowing equity from
Louis Vuitton." E-mails and other evidence also showed that
Hyundai's outside advertising agency asked permission from
several companies, including LV, to reference their marks in the
commercial, but did not obtain it. The final nail in the coffin was
Hyundai's decision to keep running the ad well after receiving
a cease-and-desist letter from LV's counsel.
In these circumstances, the six-factor test for dilution by
blurring was rather easily met. Hyundai, however, sought protection
under the fair use provision of the Trademark Dilution Revision
Act. This protects use "of a famous mark by a person other
than as a designation of source for the person's own goods or
services, including use in connection with . . . identifying and
parodying, criticizing, or commenting upon the famous mark
owner." The problem with Hyundai's statutory argument, as
the district court held, was that regardless of whether its
commercial could be viewed as "parody" or
"criticism," it was admittedly not directed specifically
at LV, but rather at luxury in general. Thus, it failed the test of
being directed at the "famous mark owner."
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