Alfa Corp. v. Alpha Warranty Servs., Inc.

696 F.Supp.3d 1086

ALFA CORPORATION, Plaintiff, v. ALPHA WARRANTY SERVICES, INC., Defendant.

CIVIL ACTION NO. 2:20cv553-MHT

United States District Court, M.D. Alabama, Northern Division

Signed September 26, 2023

Ben Kappelman, Pro Hac Vice, Dorsey & Whitney LLP, Minneapolis, MN, Bruce R. Ewing, Pro Hac Vice, Dorsey & Whitney LLP, New York, NY, Gregory Carl Cook, Balch & Bingham LLP, Birmingham, AL, Griffin Lane Knight, Balch & Bingham, Montgomery, AL, Juan Carlos Basombrio, Pro Hac Vice, Dorsey & Whitney LLP, Costa Mesa, CA, for Plaintiff.

Joe Lawayne Leak, Michael Jon Douglas, Robert Gerald Boliek, Jr., Leak, Douglas & Morano, PC, Birmingham, AL, Kristen Jordana Gillis, Means Gillis Law PC, Montgomery, AL, Henry Lewis Gillis, Gillis Law Group, P.C., Montgomery, AL, for Defendant.

OPINION AND ORDER

Myron H. Thompson, UNITED STATES DISTRICT JUDGE

In this trademark case, the court finds itself in "the rather swampy area of unfair competition." John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 969 (11th Cir. 1983) (citations omitted). Plaintiff Alfa Corporation sues defendant Alpha Warranty Services, Inc., asserting several federal claims under the Lanham Act, including trademark infringement pursuant to 15 U.S.C. § 1114(1), unfair competition pursuant to 15 U.S.C. § 1125(a), and cancellation of a federal trademark registration pursuant to 15 U.S.C. § 1119, as well as Alabama state-law claims for trademark dilution and common-law trademark infringement. The court has subject-matter jurisdiction pursuant to 15 U.S.C. § 1121(a) (Lanham Act), 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1338 (trademarks and unfair competition), 28 U.S.C. § 1332(a) (diversity of citizenship), and 28 U.S.C. § 1367(a) (supplemental jurisdiction). This case is now before the court on defendant's motion for summary judgment. After oral argument, the court concludes that the motion should be denied.

I. SUMMARY-JUDGMENT STANDARD

"A party may move for summary judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The court must view the admissible evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment is appropriate only "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Id.

II. FACTUAL BACKGROUND

The facts, taken in the light most favorable to the non-movant, are as follows.

Plaintiff Alfa Corporation is an Alabama-based company that sells a range of insurance products and financial services. Plaintiff grew out of the Alabama Farmers Federation in 1946 and has done business under the name "Alfa Insurance" since 1987. Plaintiff chose the name "Alfa" due to its length, simplicity, and ease of remembering, to convey strength and reliability, and to reflect the company's heritage as an outgrowth of the Alabama Farmers Federation. Plaintiff views the name as useful in part due to its similarity to the Greek word "Alpha," which implies first and best. Customers, businesses, and the public generally refer to the company using the single word "Alfa."

Plaintiff has a number of federally registered trademarks, including "ALFA," "Alfa Insurance," "Alfa Financial," "Alfa Cares," and others. It has a trademark on the following design and other similar designs:

Image materials not available for display.

Plaintiff has had a federal trademark on the service mark "Alfa Insurance" since 1987 and on the service mark "ALFA" since 2012. It has acted to protect its marks by sending cease-and-desist letters to potential infringers at least 18 times between 2005 and 2021, including to companies using the spelling "Alpha" in their marks.

Plaintiff sells a range of insurance products, including automobile, home, life, business, health, dental, and other types of insurance. It sells automobile insurance policies under the name "Alfa Insurance" in only Alabama, Mississippi, and Georgia (hereafter referred to as plaintiff's "home area").¹ Its products are sold through its network of dedicated agents, who have offices using prominent "Alfa" logos and branding, as well as through its website and its customer service agents. Its agents offer its customers a product called major mechanical insurance, issued by another insurance company, in conjunction with auto loans extended by Farm Bureau Bank. Major mechanical insurance is an insurance policy that covers the cost of repairing certain mechanical breakdowns in vehicles.

Plaintiff and its related companies have spent millions of dollars over the years advertising and promoting its products and services using the "Alfa" trademarks and has generated billions of dollars in sales under these marks.

Defendant Alpha Warranty Services is a Utah-based company that sells vehicle service contracts (VSCs). VSCs are contracts to pay for the cost of repairs stemming from covered mechanical breakdowns in automobiles, should such breakdowns occur.² Consumers purchase defendant's VSCs through the finance and insurance (F & I) representatives employed at car dealerships at the time of an automobile purchase. Defendant's VSCs are primarily marketed to consumers orally by a car dealership's F&I representative.

Defendant has a single federal trademark, for the service mark "Alpha Warranty Services." It filed its application to register a federal trademark for "Alpha Warranty Services" in March 2016. It was at this time that plaintiff became aware of defendant's existence.

Defendant's trademark application initially represented that it would provide "insurance services," among other products, under the mark. In 2016, after discovering defendant's trademark application, plaintiff sent a cease-and-desist letter to defendant warning that defendant was infringing on plaintiff's trademarks. Defendant did not respond to the letter. However, it amended its application to remove "insurance services" from the description of the services it would provide under the mark. The United States Patent and Trademark Office approved defendant's amended trademark application.

In 2018, plaintiff sent another cease-and-desist letter to defendant, after becoming concerned that defendant was selling VSCs in plaintiff's home area. Again, defendant did not respond to the letter. In early 2020, plaintiff hired a private investigator to find out whether defendant was selling VSCs in Alabama. The investigator found a used car dealer that was selling defendant's VSCs in mid-January of 2020. Around six months after receiving this information, plaintiff filed this lawsuit.

III. DISCUSSION

Plaintiff brings three federal claims under the Lanham Act, as well as common-law infringement and statutory dilution claims under Alabama law. In its motion for summary judgment, defendant attacks each of the federal claims as well as the common-law infringement claim on the ground that no reasonable jury could find that its use of its mark creates a likelihood of confusion with plaintiff's marks. It also attacks the federal claims under the equitable doctrine of laches and submits that both state-law claims are barred by the applicable statutes of limitations. The court will address the likelihood of confusion first, then turn to the laches and statute-of-limitations arguments.

A. Plaintiff's Claims

Before analyzing the likelihood of confusion, the court pauses to summarize the showing required for each of plaintiff's claims. As discussed below, a showing of likelihood of confusion is necessary for most, but not all, of plaintiff's claims.

As previously noted, plaintiff brings three Lanham Act claims: one for trademark infringement under 15 U.S.C. § 1114(1), one for unfair competition under 15 U.S.C. § 1125(a), and one for cancellation of defendant's federal trademark under 15 U.S.C. § 1119. To prove trademark infringement under 15 U.S.C. § 1114(1), a plaintiff must show "(1) that its mark has priority and (2) that the defendant's mark is likely to cause consumer confusion."³ PlayNation Play Systems, Inc. v. Velex Corp., 924 F.3d 1159, 1165 (11th Cir. 2019) (citing Frehling Enter., Inc. v. Int'l Select Grp., Inc., 192 F.3d 1330, 1335 (11th Cir. 1999)). To prove unfair competition under 15 U.S.C. § 1125(a), a plaintiff must show "(1) that it had trademark rights in the mark or name at issue and (2) that the other party had adopted a mark or name that was the same, or confusingly similar to its mark, such that consumers were likely to confuse the two." Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 106 F.3d 355, 358 (11th Cir. 1997) (citations omitted), opinion modified on reh'g, 122 F.3d 1379 (11th Cir. 1997). The test for likelihood of confusion is the same for both types of infringement. See Tana v. Dantanna's, 611 F.3d 767, 773 n.5 (11th Cir. 2010) (citing Ross Bicycles, Inc. v. Cycles USA, Inc., 765 F.2d 1502, 1503-04 (11th Cir. 1985)).

A claim for cancellation of a federal trademark under 15 U.S.C. § 1119 may also turn on the likelihood of consumer confusion, though cancellation can also be sought on grounds unrelated to confusion. To prove a cancellation claim, a plaintiff must show "(1) that it had standing to petition for cancellation because it was likely to be damaged by the infringer's continued use of the infringing mark, and (2) that there were valid grounds for discontinuing registration." PlayNation Play Sys., 924 F.3d at 1171 (citing Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1557 (11th Cir. 1991)).⁴ A plaintiff satisfies the first element--standing--by showing that it has a federally registered trademark. Id. (citing...