9th Circuit Rejects "First Sale" Defense in Volkswagen Trademark Case
On the case's second appeal, the Ninth Circuit addressed the "first sale" defense of Au-Tomotive Gold in connection with its sale of marquee license plates bearing Volkswagen badges purchased from Volkswagen.
As relevant to the "first sale" defense, Au-Tomotive purchased Volkswagen badges from a Volkswagen dealer, altered them by removing prongs and sometimes gold-plating them, and mounted them on marquee plates, which were packaged with labels explaining that the plates were not produced or sponsored by Volkswagen.
On the first appeal from summary judgment in favor of Au-Tomotive on all claims, the Ninth Circuit concluded that Au-Tomotive's production and sale of auto accessories bearing Volkswagen's trademarks created a sufficient likelihood of confusion to constitute trademark infringement. But the Ninth Circuit remanded to the trial court to consider Au-Tomotive's "first sale" and other defenses. On that remand, the District Court granted summary judgment and a permanent injunction to Volkswagen and Au-Tomotive appealed.
With respect to Au-Tomotive's "first sale" defense, the Ninth Circuit considered both cases addressing that doctrine as well as cases not specifically applying that doctrine but which recognized the relevance of "post-purchase" confusion among purchasers and non-purchasers. In doing so, the Ninth Circuit held that the "first sale" doctrine did not provide a defense to Au-Tomotive because, as the Court had held in the first appeal, the license plates created a likelihood of "post-purchase confusion." But the Ninth Circuit was careful to characterize the specific type of confusion its holding was based on:
We do not base our holding on a likelihood of confusion among purchasers of the plates. Rather, we base it on the likelihood of post-purchase confusion among observers who see the plates on purchasers' cars.
The Ninth Circuit thus affirmed the District Court's grant of summary judgment to Volkswagen on its trademark infringement claim.
The cite is Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., No. 08-16005 (9th Cir. May 6, 2010).
