Toyota Motor Sales, U.S.A. v. Tabari

Citation: Toyota Motor Sales, U.S.A., Inc. v. Tabari, 2010 WL 2680891 (9th Cir. July 8, 2010)(full-text).

Factual Background
Defendants-counterclaimants Farzad and Lisa Tabari are auto brokers who specialize in facilitating the purchase of Lexus vehicles for their customers. Their business, Fast Imports, maintained websites located at the domains “buy-a-lexus.com” and “buyorleaselexus.com” until Toyota Motor Sales U.S.A., the exclusive distributor of Lexus vehicles in the United States, brought this action for trademark infringement.

Trial Court Proceedings
The district court granted an injunction based on the use of the Lexus mark in the Tabaris’ domains and the use of copyrighted photographs of Lexus vehicles on the sites as well as the use of Toyota’s Lexus “L Symbol Design” trademark. Before the trial, the Tabaris removed the photographs and trademark uses and added a disclaimer to their sites indicating that they are not affiliated with Toyota or Lexus but independent brokers.

Appellate Court Proceedings
The appellate court reversed the lower court’s decision, lifting the injunction, after a determination that the Tabaris’ use was nominative fair use, shifting the burden to show infringement to the Plaintiff.

In granting the injunction, the district court applied the eight-factor test for likelihood of confusion established in AMF, Inc. v. Sleekcraft Boats, however, this analysis does not apply where a defendant uses a mark to refer to the trademarked good itself. Additionally, the injunction granted by the district court prohibited the Tabaris from using “any. . . domain name, service mark, trademark, trade name, meta tag or other commercial indication of origin that includes the mark LEXUS.” Such an overly broad injunction would even apply to domains that could never lead to consumer confusion, such as ThisIsNotLexus.com, or LEXUSSUCKS.com.

Toyota argued that it is entitled to exclusive use of the string “lexus” in domain names because it spends hundreds of millions of dollars every year making sure everyone recognizes and understands the word “Lexus.” But, “[a] large expenditure of money does not in itself create legally protectable rights.”

When a nominative fair use defense is raised, the court applies the following analysis: whether (1) the product was “readily identifiable” without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder. In the present case, while the Tabaris could have used other words to describe their business, the domains chosen were the most efficient and effective way to tell consumers what they do, they help their clients buy or lease a Lexus.

Additionally, the name of their business did not include the “Lexus” mark, and while their domain names were used in their advertising campaigns, their use was only to direct consumers to their websites, which would not, in itself, have lead to confusion. Additionally, the appellate court noted that while disclaimers, such as those added by the Tabaris before trial, are not required to defeat a finding of consumer confusion, the new websites submitted by the Tabaris made it clear to the target consumers that they were not affiliate with Toyota or Lexus in any other way than their business of helping clients buy such vehicles.

A defendant that asserts a nominative fair use defense only has to show that it used the mark to refer to the trademarked good, which is how the Tabaris used the “Lexus” mark in the present case, therefore the burden shifts to the Plaintiff to show a likelihood of confusion.