A federal appeals court in Cin-cinnati has ruled that an Ohio dealership group improperly used the name 'CarMax' and violated the trademark owned by Circuit City Stores Inc.
'It means the CarMax name will be recognized throughout the country, whether we have stores (in a particular location) or not,' said Richard Knoth, a Cleveland lawyer who argued the appeal for Circuit City.
The 6th U.S. Circuit Court of Appeals upheld an injunction against CarMax Inc., an affiliate of Artz Auto Group, which had used the name for its used-car operation in Willoughby, Ohio.
CarMax Inc. claimed it started using 'CarMax' before Circuit City chose the name in 1991 for its superstores. CarMax Inc. was incorporated in 1990, the court said, and applied two years later to register the name with the U.S. Patent and Trademark Office. The name represented a combination of the first names of Carson and Max Artz, sons of one of the owners, Philip Artz, the court said.
Circuit City sued for trademark infringement and unfair competition, seeking an injunction but no monetary damages. CarMax filed a counterclaim alleging Circuit City fraudulently registered the trademark.
Republic Industries Inc. acquired Artz Auto Group after the suit was filed.
During a bench trial, CarMax offered testimony that it had used the name in radio ads, although there were no copies of the ads or documents to show that, and used it on customer sales statements, financing documents and other paperwork.
'Credibility was a major issue,' Knoth said.
After a federal judge in Akron ruled in favor of Circuit City, Republic stopped using the Car-Max name at the lot, Republic spokesman Oscar Suris said.
The appeals court upheld the decision, finding insufficient evidence that CarMax Inc. had a superior right to use the name. The court also noted that Philip Artz had admitted fabricating a letter before the trial began in an attempt to establish early use of 'CarMax.'
Appeals Judge Gilbert Merritt said Circuit City's right to use the name was protected, although the company had no definite plans to open superstores in northeastern Ohio when the suit was filed.
Once there was a finding of infringement, a trademark owner is entitled to an injunction even if it does not intend to enter a defendant's market, Merritt said.
Suris said Republic plans no further appeal.