Adoption of Identical Service Mark With Knowledge of Plaintiff's Mark Allowed Inference of Willful Infringement

Case: Western Diversified Services, Inc. v. Hyundai Motor America., Inc. (10th Cir. 11/2/05 - No. 03-4248)

The One Sentence Summary: Adoption of a service mark identical to plaintiff's registered mark allowed plaintiff to seek defendant's profits based upon an inference of willful bad faith and intent to profit from plaintiff's goodwill and reputation.


What They Were Fighting About: Plaintiff Western Diversified owned federally registered service marks for automobile warranties "THE ADVANTAGE" and "THE ADVANTAGE PLUS." Hyundai adopted the name "THE HYUNDAI ADVANTAGE" for its manufacturer's warranty program after receiving an opinion letter that the use of the name was possible but subject to risk and litigation. Another division of Hyundai then adopted the names "ADVANTAGE" and "ADVANTAGE PLUS" for extended warranties, but did not do request another trademark opinion letter. The district court granted summary judgment for defendant, finding no evidence of willful infringement.

Tenth Circuit Holdings:

• An award of the infringer's profits requires a showing of willfulness or bad faith and a weighing of the equities.


• In the Tenth Circuit, in order for a trademark plaintiff to receive an award of profits under the Lanham Act in the absence of actual damages, the plaintiff must ordinarily show that the defendant intended to benefit from the goodwill or reputation of the trademark holder.
• Summary judgment for Hyundai was improper because a jury could infer that Hyundai intended to benefit from the goodwill and reputation of the plaintiff's mark.
• Hyundai could not show that it did not know of plaintiff's mark by arguing that knowledge of the mark was confined to the legal department. Knowledge of the legal department was imputed to the corporation.