Kars 4 Kids INC v. America Can! Cars For Kids.
8 F.4th 209
| 3rd Cir. | 2021Background
- Two charities used similar marks: America Can! Cars for Kids (using “Cars for Kids” in Texas since early 1990s) and Kars 4 Kids (started 1995, national advertising and jingle from late 1990s/2000s).
- America Can sent a 2003 cease-and-desist after noticing Kars 4 Kids in Texas; Kars continued national advertising (including keyword ads) and registered carsforkids.com in 2011 (later parked).
- Kars 4 Kids sued in 2014; America Can counterclaimed in 2015 seeking cancellation of Kars’ federal registration, disgorgement, and a nationwide injunction.
- A jury found America Can has trademark rights and that Kars willfully infringed in Texas; jury rejected dilution claims and found no fraud in Kars’ trademark registration.
- The district court denied laches, awarded disgorgement of Texas-related profits (~$10.6M), enjoined Kars’ use in Texas and the domain, denied cancellation of Kars’ registration, and refused enhanced damages and prejudgment interest.
- On appeal the Third Circuit: affirmed ownership findings, held Kars waived its challenge to mark validity, affirmed denial of enhanced damages and prejudgment interest, but vacated and remanded laches and disgorgement for further equitable analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ownership/priority of unregistered mark | America Can: continuous Texas use since early 1990s gives first-in-time rights | Kars: America Can failed to prove ownership/priority | Jury and court found America Can first used in Texas; appellate court affirms ownership finding |
| Validity (distinctiveness / secondary meaning) | Kars: mark descriptive and lacked secondary meaning before Kars’ Texas use | America Can: mark was distinctive or had acquired secondary meaning | Kars waived this argument by not raising it in Rule 50(a); appellate court will not review validity challenge |
| Laches as a defense to equitable relief | America Can: delay (2003–2015) and prejudice bar equitable relief | Kars: America Can was lulled by apparent pullback of Kars’ Texas advertising; raised laches at trial | District court denied laches; Third Circuit vacated and remanded for fuller analysis (including national advertising reach and prejudice) |
| Equitable remedies: disgorgement, enhanced damages, prejudgment interest, injunctive relief | America Can: seeks disgorgement of Kars’ Texas-related profits, enhancement, prejudgment interest, injunctive relief and domain relief | Kars: equitable defenses (laches, prejudice), no basis for enhancement or prejudgment interest | District court ordered disgorgement and injunctive relief in Texas, denied cancellation, enhancement, and prejudgment interest; appellate court vacated disgorgement and remanded to apply Banjo Buddies equitable factors, but affirmed denial of enhanced damages and prejudgment interest |
Key Cases Cited
- Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187 (3d Cir. 1990) (elements required to prove trademark infringement)
- Covertech Fabricating, Inc. v. TVM Bldg. Prods., Inc., 855 F.3d 163 (3d Cir. 2017) (first-use test governs ownership of unregistered marks)
- Santana Prods., Inc. v. Bobrick Washroom Equip., Inc., 401 F.3d 123 (3d Cir. 2005) (laches analysis in Lanham Act cases and burden-shifting when analogous statute of limitations has run)
- Banjo Buddies, Inc. v. Renosky, 399 F.3d 168 (3d Cir. 2005) (factors district courts should weigh when deciding whether disgorgement of profits is equitable)
- A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 166 F.3d 197 (3d Cir. 1999) (disgorgement is equitable and not automatic upon finding infringement)
- Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059 (9th Cir. 2015) (guidance on when courts should enhance monetary awards beyond proven profits)
- In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009) (clear-and-convincing standard for showing intent to deceive PTO in fraud-on-the-office claims)