Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 5 of 188 PageID #: 43
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`September 28, 2017
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`VIA EMAIL
`
`Port Director, U.S. Customs and Border Protection
`Attn: Tracey Marquez, Fines, Penalties and Forfeitures Officer
`One East Bay Street
`Savannah, Georgia 31401
`
`
`
`CONFIDENTIAL
`
`Re:
`
`LKQ Petition No. 68 for Relief from Seizure and Forfeitures Notices
`
`Case Nos.
`
`2017-1703-000376-01 and 2017-1703-000378-01
`
`Dear Ms. Marquez:
`
`As you know, we represent LKQ Corporation and its subsidiary Keystone Automotive
`Industries, Inc. (“Keystone”), referred to collectively herein as “LKQ.” LKQ has shared with
`us certain seizure notices issued from your office generally pertaining to the seizure of
`aftermarket LKQ grilles intended for automobile repair. On May 26, 2017, we filed a 200-
`page petition responsive to the first three seizures of LKQ grilles, Seizure Nos. 2017-1703-
`000073-01, 2017-1703-000074-01, and 2017-1703-000091-01 (the “First Filed Petition”).1
`Since that time, your office has made one hundred and thirty-eight (138) additional seizures,
`all of which we respectfully contend are improper for the same reasons as set forth in the
`First Filed Petition.
`
`In June 2017, authorization was given to file “short form” petitions that would refer
`back to, and incorporate by reference, the First Filed Petition as well as set forth and address
`the specific facts at issue and make any arguments unique to the seizures in question. To
`date, LKQ filed thirty-five of these short form petitions, as well as a further eighteen long
`form petitions. As of the date of this petition, LKQ has not received any response from your
`office in regards to any of the fifty-four filed petitions.
`
`In order to again set out fully all of LKQ’s arguments as to why seizure of its goods is
`inappropriate, this petition will not refer back to the First Filed Petition. Instead, this
`Petition fully sets out LKQ’s arguments by restating and incorporating all relevant arguments
`from (1) the First Filed Petition, (2) subsequent supplemental materials that LKQ has
`submitted as part of the short form petitions, and (3) communications with CBP
`Headquarters. This petition responds to U.S. Customs and Border Protection (“CBP”)
`property seizure notices CBP Case Nos. 2017-1703-000376-01 and 2017-1703-000378-01
`(together, “Notices”), which are dated September 1 and 5, 2017 (attached hereto as Exhibit
`
`1 In the First Filed Petition, LKQ combined three seizure notices, however, per your office’s request,
`each subsequent petition has addressed no more than two seizure notices.
`
`1
`
`GM 2001
`LKQ v. GM
`IPR2020-00065
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`

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`Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 6 of 188 PageID #: 44
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`September 28, 2017
`Page No. 2
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`A). Respectfully, and as explained herein, LKQ disagrees that there is a basis under
`applicable law for the seizure of its aftermarket replacement grilles.
`
`Please be advised that this Petition contains confidential business information and
`LKQ requests that it be kept confidential. Please also note that—based on discussions with
`Dax Terrill and Alaina van Horn, Attorney Advisors for the Intellectual Property Rights
`Branch of CBP, and in light of national importance of this issue—we are providing a copy of
`this confidential Petition to Charles Steuart, Chief of the CBP Intellectual Property Rights
`Branch.
`
`In support of its Petition, LKQ submits Exhibits A–J, attached hereto, including the
`Declaration of Justin Jude (“Jude Dec.”) (attached hereto as Exhibit C), Senior Vice President
`of Wholesale Operations at LKQ, with supporting Exhibits 1–10, attached thereto; a June 29,
`2017 Declaration by Professor Mark P. McKenna (“McKenna Dec.”) (attached hereto as
`Exhibit D); and a May 25, 2017 Declaration of Professor David J. Franklyn (“Franklyn Dec.”)2
`(attached hereto as Exhibit E). Professors McKenna and Franklyn are both well-respected
`experts in the area of trademark law.
`
`Turning now to the substance of the Notices, CBP has seized ten (10) styles of LKQ
`replacement grilles; four models of replacement Chrysler grilles, five models of replacement
`Ford grilles, and one model of a replacement Hyundai grille. Seizure of LKQ’s grilles is
`inappropriate for the following reasons:
`
`• Seizure of all of the grilles is improper under the doctrine of functionality and
`the well-established right to repair trademarked articles.
`
`• Additionally, LKQ is authorized to import and sell at least six of the seized
`replacement grilles, indicated below, pursuant to confidential design patent
`license agreements it has entered into with Chrysler and Ford.3 Automobile
`
`
`2 In support of its First Filed Petition, LKQ submitted the Declaration of David J. Franklyn, the director
`of the LLM program in IP and Technology Law and Director of the McCarthy Institute for IP and
`Technology Law at the University of San Francisco School of Law. Professor Franklyn opined that
`LKQ’s replacement grilles are not infringing of the Asserted Marks under the doctrine of functionality
`and the long-standing right of consumers to repair trademarked items absent a likelihood of
`confusion. See generally Exhibit E hereto, Franklyn Dec. LKQ further supported its position in the
`short form petitions with the Declaration of Notre Dame Law Professor and Presidential Fellow Mark
`P. McKenna. Professor McKenna—author of the oft-quoted article addressing the doctrine of
`functionality “(Dys)Functionality,” Houston Law Review, Vol. 48, No. 4, p. 823, 2011—reached the
`same conclusion as Professor Franklyn. See generally Exhibit D hereto, McKenna Dec.
`3 The designs of at least Seized Grilles CH1200298, CH1200303, CH1200340V, CH1200260,
`FO1200432, and FO1200455 fall within the claims of design patents licensed to LKQ under the terms
`of its confidential Chrysler and Ford License Agreements. See Exhibit C hereto, Jude Dec. at ¶19.
`While there are no design patents that cover the design of Seized Grilles FO1200426, FO1200374V,
`and FO1200142, LKQ has a license under its confidential Ford License Agreement to design patents
`which correspond to the trademarks that Customs has asserted against these seized grilles. Id. at
`
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`2
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`September 28, 2017
`Page No. 3
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`parts manufactured and sold pursuant to a license agreement cannot be
`“counterfeit” and their seizure is improper on that basis alone.
`
`• Many of the grilles cannot be counterfeit, as they are not identical to or
`substantially indistinguishable from the asserted marks. As shown below, in
`Section II.E and II.G, many of the grilles are not even similar to, much less
`identical to or substantially indistinguishable from, the recorded mark upon
`which seizure is allegedly based. As such, they cannot be counterfeit.
`
`• As to the replacement grilles seized based upon a registered trademark for the
`emblem of an original equipment manufacturer (“OEM” or plural, “OEMs”)
`(i.e., the Hyundai replacement grille), the replacement grilles by necessity
`have placeholder areas that are designed to receive the emblem tag
`manufactured by the OEM. As the replacement grilles do not replicate the OEM
`emblem identically or in a way that is “substantially indistinguishable” from
`the registered trademark, these three replacement grilles are not and cannot
`be counterfeit.
`
`• Additionally, the placeholder regions of the seized Hyundai grilles are
`completely covered by a properly applied OEM emblem tag, which obviates
`any likelihood of confusion as to the source of these replacement grilles at any
`point to the relevant consuming public.
`
`• Finally, the well-established right to repair trademarked articles gives LKQ the
`right to make use of trademarks to repair items in the context of these grilles
`containing an emblem placeholder as well.
`
`As such, LKQ respectfully requests relief from the seizure and forfeiture of its
`inventory in these cases, as well as any other detentions currently pending in the Port of
`Savannah, and requests to reclaim possession of its lawful merchandise.
`
`I.
`
`FACTUAL BACKGROUND
`
`A.
`
`For Decades, Non-OEM Manufacturers Have Supplied Aftermarket
`Automobile Parts to Repair and Restore Automobiles
`
`Perhaps for as long as automobiles have been sold, aftermarket auto part suppliers
`have offered replacement parts for those automobiles. Beginning in the early 1900’s,
`blacksmiths, who already repaired and replaced parts for tractors and farm equipment,
`became involved in the repair and replacement of automobile parts. See, Kevin L. Borg, Auto
`Mechanics: Technology and Expertise in Twentieth-Century America, 31-52 (2007). As
`
`
`¶22. However, since the design of the grilles covered by the trademarks bear no similarity to Seized
`Grilles FO1200426, FO1200374V, and FO1200142, LKQ does not contend that it has a license to these
`seized grilles. Instead, because the seized grilles are not similar to the trademarked design, and for
`the other reasons discussed herein, the seizures are improper. See infra, Section II.E.
`3
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`Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 8 of 188 PageID #: 46
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`September 28, 2017
`Page No. 4
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`automobiles became more popular both during the Great Depression and the great boom
`after WWII, consumers continued to use third-party automotive replacement parts to repair
`their cars. These consumers were soon able to begin browsing automotive catalogues that
`sold third-party replacement parts for automobiles, which catalogues included replacement
`grilles and gauges of many brands. See Exhibit B; see also, e.g., David Goldenberg, The Long
`and Winding Road: A History of the Fight Over Industrial Design Protection in the United States,
`45 J. Copyright Soc’y U.S.A. 21, 28–29 (1997–98).
`
`Although OEMs typically sell replacement parts for their respective automobiles for
`a number of years after they are introduced, aftermarket auto part suppliers generally offer
`replacement parts at a much lower price than OEMs, saving American consumers and
`insurance companies billions of dollars each year.4 Additionally, aftermarket auto part
`suppliers continue to manufacture replacement parts for automobiles well after the OEM has
`ceased production of the vehicle line and replacement parts for the vehicles. See Exhibit D
`McKenna Dec., at ¶12; see also Exhibit E Franklyn Dec., at ¶12.
`
`B.
`
`LKQ is an Established Automotive Aftermarket Parts Supplier
`
`LKQ is a U.S. company with headquarters in Chicago, Illinois. For decades, LKQ and
`its predecessors have been offering for sale aftermarket replacement automobile parts,
`including grilles. See Ex. C, Jude Dec., at ¶¶5–6. LKQ has 42,000 employees with 20,000
`employees in the US, and more than 1300 facilities, more than 500 of which are located in
`the US. Id.
`
`LKQ carefully monitors its parts production to ensure that all replacement parts meet
`or exceed the quality of the OEM parts it replaces. Due to its long-standing presence in the
`aftermarket industry, and its reputation for quality, LKQ has become a market leader among
`replacement automobile parts providers. See Ex. C, Jude Dec., at ¶7. LKQ’s quality assurance
`department inspects production and manufacturing plants and also randomly tests parts
`post-production to make sure they meet LKQ’s high standards. In addition, two independent
`companies review and certify LKQ’s various parts: NSF International and CAPA (the
`“Certified Automotive Parts Association”). Id. Finally, insurance carriers also require LKQ
`to maintain quality levels that meet or exceed OEM quality standards. Id.
`
`LKQ’s customers for aftermarket automotive parts primarily consist of professional
`auto body and mechanical repair shops who are knowledgeable about the automotive
`industry. See Ex. C, Jude Dec., at ¶10. When LKQ sells its aftermarket parts, it makes clear in
`its online sales channels, and on its packaging, that the products are not manufactured by
`the automobile manufacturer that originally sold the vehicle on which the replacement grille
`
`
`“Generic Auto Crash Parts, 2016”
`Institute,
`4
`See,
`e.g.,
`Insurance
`Information
`http://www.iii.org/issue-update/generic-auto-crash-parts [accessed May 3, 2017] (“The Property
`Casualty Insurers Association of America said that non-OEM parts saved consumers over $2.2 billion
`in insurance costs in 2010.”).
`
`4
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`Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 9 of 188 PageID #: 47
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`September 28, 2017
`Page No. 5
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`is intended to be placed. Id. at ¶¶12-13. Furthermore, LKQ’s website expressly touts the fact
`that its parts are a low-cost alternative to OEM parts:
`
`Keystone Automotive Industries, Inc., a subsidiary of LKQ
`Corporation, is the United States’ largest aftermarket auto parts
`supplier. Keystone Automotive is an ISO registered distributor
`that offers a high-quality, low-cost alternative to new OEM
`parts for autos and trucks. Keystone's aftermarket auto parts
`product
`lines
`include: bumpers, hoods,
`fenders, grilles,
`remanufactured wheels, radiators, and condensers. We offer a
`variety of Keystone aftermarket product lines to meet or exceed
`the needs of any vehicle owner or repairer.
`
`www.lkqcorp.com/en-us/Aftermarket/About-Our-Aftermarket-Parts
`See
`added).
`
`(emphasis
`
`To the extent LKQ references an OEM trademark in the course of marketing or selling
`its products, it is done so in a nominative fair use fashion, to truthfully inform consumers of
`the OEM vehicles on which the LKQ replacement parts can be used, and LKQ does not make
`more use of the trademark than is necessary to inform the customer. Cf. Volkswagenwerk
`Aktiengesellschaft v. Church, 411 F.2d 350, 352 (9th Cir.1969) (Auto repair shop “may
`advertise to the public that he repairs appellant’s cars, [but he] must not do so in a manner
`which is likely to suggest to his prospective customers that he is part of Volkswagen's
`organization of franchised dealers and repairmen.”). In addition, many of LKQ’s aftermarket
`grilles are sold under LKQ’s own “REPLACE” trademark. And LKQ’s packaging indicates that
`the parts inside are aftermarket. See Ex. C, Jude Dec., at ¶13.
`
`In addition, when auto body shop customers buy, or insurance underwriters work up
`an estimate for, aftermarket parts, they almost always do so through CCC Information
`Services Inc., an online system that requires a user to select the type of part they wish to
`purchase/estimate. See Ex. C, Jude Dec., at ¶11. The CCC online system requires that a user
`select whether he or she wishes to purchase/price out an OEM, recycled, or aftermarket part.
`If the user selects an aftermarket part, he or she can then choose LKQ or another aftermarket
`supplier. Id. It is therefore clear to the CCC user whether he or she is purchasing/estimating
`OEM or aftermarket parts.
`
`Finally, no OEM has complained of or alleged trademark infringement against LKQ
`based on the shape and design of the grilles themselves. The disputes that arose pertained
`not to the general shape and design of the grilles, but rather to the shape and design of the
`placeholders designed to accommodate the OEM’s logo badge or to design patents (as
`opposed to trademark rights) covering the grille designs. See, e.g., General Motors Corp. v.
`Keystone Automotive Indus., Inc., 453 F.3d 351 (6th Cir. 2006) (“Keystone II”). The lack of
`OEM enforcement efforts evinces a key fact: participants in the pertinent industry have long
`recognized that trademark law is not a means to prevent fair competition in the aftermarket
`for replacement automobile parts, and the doctrines of functionality and the right to repair
`preclude using the trademark law to do so.
`
`
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`5
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`

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`September 28, 2017
`Page No. 6
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`C.
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`Detention and Seizure of LKQ Aftermarket Grilles at the Port of
`Savannah, Georgia
`
`We understand from the Notices that, on or about August 23, 2017, CBP seized several
`of LKQ’s aftermarket automobile grilles being shipped to LKQ’s subsidiary Keystone from its
`various manufacturer suppliers, including Tong Yang Industry Company, Limited (“Tong
`Yang”), a major Taiwanese manufacturer of automobile replacement parts. See Exhibit B.
`
`The below tables show the seized LKQ replacement parts for repair of Chrysler
`vehicles, on the right, and the mark allegedly forming the basis for CBP’s seizure of that part,
`on the left, for seizure notices 2017-1703-000376-01 and 2017-1703-000378-01:
`
`Seizure Notice 2017-1703-000376-01
`
`
`Chrysler Reg. No. 2,764,249, for use in
`connection with structural parts for motor
`vehicles, namely, automobiles and sport
`utility vehicles
`
`Part No. CH1200298
`
`Chrysler Reg. No. 2,764,249
`
`
`
`Part No. CH1200303
`
`
`
`
`
`Chrysler Reg. No. 3,062,290, for use in
`connection with motor vehicles and their
`structural parts
`
`
`
`
`
`Part No. CH1200340V
`
`
`
`Seizure Notice 2017-1703-000378-01
`
`
`Chrysler Reg. No. 2,593,670 for use in
`connection with trucks and their structural
`parts
`
`Part No. CH1200260
`
`
`
`
`
`
`
`
`6
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`Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 11 of 188 PageID #: 49
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`September 28, 2017
`Page No. 7
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`The below tables show the seized LKQ replacement parts for repair of Ford vehicles,
`on the right, and the mark allegedly forming the basis for CBP’s seizure of that part, on the
`left, for seizure notices 2017-1703-000376-01 and 2017-1703-000378-01 (as is apparent,
`many of the seized parts bear no relationship to the recorded mark):
`
`Seizure Notice 2017-1703-000376-01
`
`Ford Reg. No. 3,453,754, for use in
`connection with automobile grilles
`
`
`
`
`Part No. FO1200432
`
`Seizure Notice 2017-1703-000378-01
`
`Part No. FO1200426
`
`Part No. FO1200374V
`
`Part No. FO1200142
`
`Part No. FO1200455
`
`Ford Reg. No. 3,453,754
`
`Ford Reg. No. 3,453,754
`
`Ford Reg. No. 3,453,754
`
`
`Ford Reg. No. 3,580,534, for use in
`connection with automobile grilles
`
`
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`
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`7
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`Case 1:18-cv-00225-GMS Document 1-1 Filed 02/07/18 Page 12 of 188 PageID #: 50
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`September 28, 2017
`Page No. 8
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`The below table shows the seized LKQ replacement parts for repair of Hyundai
`vehicles, on the right, and the mark allegedly forming the basis for CBP’s seizure of that part,
`on the left, for seizure notice 2017-1703-000378-01:
`
`Seizure Notice 2017-1703-000378-01
`
`
`Hyundai Reg. No. 1,569,538, for use in
`connection with automobiles and
`structural parts thereof
`
`
`II.
`
`CBP’S SEIZURES ARE IMPROPER
`
`Part No. HY1200141V
`
`
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`A.
`
`Overview of Legal Principles Applicable to Seizures
`
`Seizures Must Be Based Upon Registered Trademarks, and Seized Goods Must
`Have an Identical or Substantially Indistinguishable Mark. As stated in the Notices, the
`Tariff Act prohibits the importation of merchandise bearing a counterfeit trademark that is
`both registered with the United States Patent and Trademark Office (“PTO”) and recorded
`with CBP. See 19 U.S.C. § 1526(e).
`
`The Tariff Act specifically sets forth: “Any such merchandise bearing a counterfeit
`mark (within the meaning of section 1127 of title 15) imported into the United States in
`violation of the provisions of section 11245 of title 15, shall be seized and, in the absence of
`the written consent of the trademark owner, forfeited for violations of the customs laws.” 19
`U.S.C. § 1526(e). The referenced Lanham Act Section (Section 1127) defines a “counterfeit”
`mark as “a spurious mark which is identical with, or substantially indistinguishable from,
`a registered mark.” 15 U.S.C. § 1127 (emphasis added). Thus, merchandise cannot be seized
`unless such seizure is based upon a registered mark, and the mark on the merchandise is
`“identical with, or substantially indistinguishable from” the registered mark.
`
`Seized Goods Also Must Be Likely to Cause Confusion. As also shown above, the
`Tariff Act also requires that the importation violate 15 U.S.C. § 1124, which provides: “[N]o
`article of imported merchandise ... which shall copy or simulate a trademark registered in
`accordance with the provisions of this chapter ... shall be admitted to entry at any
`customhouse of the United States....” 15 U.S.C. § 1124. Customs regulations define that a
`“‘copying or simulating’ trademark or trade name is one which may so resemble a recorded
`
`
`5 15 U.S.C. 1124 states: “[N]o article of imported merchandise ... which shall copy or simulate a
`trademark registered in accordance with the provisions of this chapter ... shall be admitted to entry
`at any customhouse of the United States....”
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`8
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`September 28, 2017
`Page No. 9
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`mark or name as to be likely to cause the public to associate the copying or simulating mark
`or name with the recorded mark or name.” 19 C.F.R. § 133.22(a).
`
`Courts have determined that this test is equivalent to the traditional test used to
`determine infringement of a federally registered trademark in ordinary litigation. U.S. v. Able
`Time, Inc. 545 F.3d 824, 830 (9th Cir. 2008) (citing 5 J. Thomas McCarthy, McCarthy on
`Trademarks and Unfair Competition § 29:37 (4th ed. 2007)). In any action involving
`allegations of trademark infringement under the Lanham Act, to prove infringement, it must
`be shown: “(1) that [there is] a protectable trademark, and (2) [there is] a likelihood of
`confusion as to the origin of the defendant’s accused product.” Ty, Inc. v. Jones Group, 237
`F.3d 891, 897 (7th Cir. 2001) (quoting Int'l Kennel Club of Chicago, Inc. v. Mighty Star, Inc.,
`846 F.2d 1079, 1084 (7th Cir.1988)).
`
`Thus, in order for a seizure of goods under 19 U.S.C. § 1526(e) to be proper, the seized
`goods must cause a likelihood of confusion amongst the relevant consuming public, i.e., the
`goods must infringe the registered trademarks as traditionally determined by courts in
`trademark disputes.
`
`Seized Goods Must Be Counterfeit or Bear a Counterfeit Mark. As shown above, the
`seized merchandise must be counterfeit or bear a counterfeit mark. A mark that is
`authorized cannot be a counterfeit mark. Cf., 15 U.S.C.A. § 1116 (“but [counterfeit mark] does
`not include any mark or designation used on or in connection with goods or services of which
`the manufacture [sic] or producer was, at the time of the manufacture or production in
`question authorized to use the mark or designation for the type of goods or services so
`manufactured or produced, by the holder of the right to use such mark or designation.”).
`
`B.
`
`The Asserted Trademarks Cannot be Enforced Against LKQ Due to Their
`Functionality in the Context of The Replacement Parts Market
`
`As a fundamental matter, all of the seized LKQ grilles, whether they were seized based
`upon a trademark registration covering the shape of a grille itself or based upon the
`trademark registration covering the OEM logo should be released due to the doctrine of
`functionality. The Supreme Court in TrafFix set forth the two tests for functionality, and the
`theoretical existence of other potential designs is not one of them. TrafFix Devices, Inc. v.
`Marketing Displays, Inc., 532 U.S. 23, 32-33 (2001). A product feature is functional, and
`therefore not protectable as a trademark, the Court said, “if it is essential to the use or
`purpose of the article or if it affects the cost or quality of the article.” TrafFix Devices, 532
`U.S. at 32 (quoting Qualitex, 514 U.S. at 165). Even if a product feature does not meet the
`first definition of functional, the product feature is still functional if having it is a
`“competitive necessity,” that is, if its exclusive use “would put competitors at a significant
`non-reputation-related disadvantage.” Id. at 32–33 (quoting Qualitex, 514 U.S. at 165). The
`aftermarket grilles at issue here are functional under both tests. This is not to say that the
`OEM logo registrations are per se invalid. We understand that U.S. Customs does not
`entertain challenges to the validity of trademark registrations and LKQ is not seeking to
`invalidate the recorded OEM logo registrations at issue. Indeed, the recorded registrations
`may be valid and enforceable in different circumstances, such as against other automobile
`
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`9
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`September 28, 2017
`Page No. 10
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`manufacturers selling their own brands of automobiles.6 Rather, LKQ notes that the context,
`or market definition, in which the infringement is alleged to have occurred is critical.
`See Ex. D, McKenna Dec., at ¶¶19–21; Ex. E, Franklyn Dec., at ¶¶22–24. Indeed, “functionality
`must be assessed within the context in which the product design is being used” because “a
`product design or feature may be non-functional in one context while its use in other
`contexts is functional and not infringing.” Chrysler Corp. v. Vanzant, 44 F.Supp.2d 1062,
`1070-1071 (C.D. Cal. 1999) (emphasis added).
`
`Here, the context is simple and involves no attempt by LKQ to pass off one brand as
`another or to confuse consumers; LKQ sells replacement grilles in the aftermarket repair
`parts market. For example, LKQ sells replacement grilles that look like BMW grilles to return
`damaged BMW vehicles to their original appearance and condition. LKQ does not sell grilles
`that look like BMW grilles to alter the appearance of a low-cost vehicle and make them look
`like BMW vehicles. In this specific and narrow context, LKQ’s replacement grilles must look
`like the OEM grilles or they will not be able to return the damaged vehicles to their original
`condition and appearance. Additionally, the vast majority of OEM grilles, including those at
`issue in this Petition, include a tag displaying the logo of the OEM. This tag is either separate
`from the grille and applied to the grille at some point in the manufacturing process, or
`molded into the grille itself. When the former sort of logo tag is at issue, the OEM
`manufactures its logo tags to uniform specifications in the shape and design of its registered
`logo trademarks. As such, the general size and shape of the placeholder region on a grille is
`almost entirely dictated by the shape, size and design of the OEM logo trademark and
`mechanically, the placeholder region must provide a viable point on the grille to mount the
`legitimately purchased OEM tag. See Ex. D, McKenna Dec., at ¶¶15–17, 22–23. See also Ex. C,
`Jude Dec. at ¶23. If the placeholder region is a shape entirely different to that of the tag, the
`tag will not sit flush against the grille or stay attached as well, potentially creating a safety
`hazard if the tags are prone to falling off while a vehicle is in use. If a grille is damaged in
`some way and requires replacement, a replacement grille must include a region for a new
`tag to be mounted if a vehicle is to be returned to its original appearance and condition. To
`be clear, LKQ does not provide the OEM logo tag itself; a consumer must purchase the
`genuine OEM logo tag from the OEMs. See Ex. C, Jude Dec., at ¶23.
`
`1. The Size, Shape, Style, and Appearance of a Replacement Grille and The OEM Logo
`Placeholder Region are “Essential to Its Purpose,” and, Therefore, Trademarks
`Purporting to Cover the Size, Shape, and Design of a Grille Are Not Enforceable
`Against Replacement Grille Manufacturers
`
`The first TrafFix functionality test explains that a product feature is functional “if it is
`essential to the use or purpose of the article….” TrafFix Devices, 532 U.S. at 32 (quoting
`Qualitex, 514 U.S. at 165). The purpose of a replacement grille is to repair a vehicle to its
`original condition and appearance; thus, the appearance of replacement grilles is essential
`
`
`6 In other words, Honda cannot copy a BMW logo and use it on a Honda vehicle without running afoul of
`trademark law. But LKQ can make a replacement grille that looks like a Honda grille and contains a placeholder
`region to receive a Hondo logo tag to be used in repairing a Honda vehicle to its original condition and
`appearance.
`
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`to the purpose of replacement grilles. In addition, many OEM grilles bear a logo tag
`identifying the brand of vehicle; thus, the corresponding replacement grilles bear a
`placeholder region at which an OEM logo tag can be affixed. Having a placeholder capable of
`supporting an OEM logo tag is also essential to the purpose of the replacement grille, as
`vehicle owners (and insurance companies paying for vehicle repairs) require that the vehicle
`be returned to its original condition and appearance. As such, enforcing the Asserted
`Trademarks against LKQ runs afoul of the first TrafFix functionality test.
`
`Automobile replacement parts are unlike most products in that they serve a
`necessarily narrow market—that of replacement parts for a specific make and model of
`automobile. Ex. C, Jude Dec., at ¶9; Ex. D, McKenna Dec., at ¶21; Ex. E, Franklyn Dec., at ¶¶23–
`24. Once an automobile is sold, its parts are often damaged or become worn out before the
`automobile itself. See Ex. C, Jude Dec., at ¶8. Automobile owners seek to repair their
`automobiles in a way that returns their automobile as closely as possible to its original
`appearance and condition. Id. at ¶16. Furthermore, most, if not all, states require their
`motorists
`to
`have
`insurance,
`see,
`e.g.,
`Exhibit F,
`hereto,
`<<https://www.thebalance.com/understanding-minimum-car-insurance-requirements-
`2645473>>. Insurance companies are overwhelmingly the customers in aftermarket repair
`parts market transactions, acting on behalf of their driver clients, because most vehicle body
`repairs are covered by insurance. See, e.g. Exhibit G hereto, <<http://www.all-about-car-
`accidents.com/who-pays-for-car-damage.html>>. State insurance laws and insurer
`contracts require that insurance companies cover the cost to repair vehicles to their
`original appearance and condition, which cannot be done using a replacement grille that
`is dissimilar in appearance from the original OEM grille. See Automotive Service
`Association’s Summary of State Aftermarket Parts Disclosure Laws, attached hereto as
`Exhibit H; see also Exhibit I (NAIC’s Compendium on State Laws on Insurance Topics; Laws
`on Aftermarket Automobile Parts). For example, Georgia’s “Aftermarket Crash Parts”
`regulation states, in pertinent part that “[t]he price of nonoriginal manufacturer aftermarket
`crash parts may be used by insurers to determine repair costs, provided that the use of such
`parts would restore the damaged vehicle to its preaccident condition relative to quality,
`safety, function and appearance.” GA Comp. R & Regs Rule 120-2-52-.05. (emphasis added).
`Florida similarly requires that “[a]n insurer may not require the use of replacement parts in
`the repair of a motor vehicle which are not at least equivalent in kind and quality to the
`damaged parts prior to the loss in terms of fit, appearance, and performance.” Fla. Stat. Ann.
`§ 626.9734(9) (emphasis added).
`
`Even where state laws and regulations do not include an explicit reference to the
`“appearance” of replacement parts, they do require that non-OEM replacement parts be of
`“like kind and quality” to OEM parts. See, e.g., Exhibit I. In response to such laws and
`regulations, many insurance contracts include language that the insurer will repair an
`automobile using OEM parts or aftermarket parts that are equal or superior in kind and
`quality to OEM parts. Courts have interpreted that “kind and quality” language to require a
`restoration of repaired automobiles to their pre-accident appearance, among other
`
`
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`requirements.7 See DiGangi v. Government Employers Ins. Co., 2014 WL 3644004 at *8
`(E.D.N.Y. 2014) (denying requested injunction preventing insurance company from using
`aftermarket parts unless they “are of like kind and quality as to OEM