The two companies credited with changing the auto retail landscape are headed back to court.
CarMax Group is asking that a $50 million jury verdict issued in October 1998 against AutoNation USA Inc. be reinstated. CarMax also is asking for a new trial to settle the matter of trademark infringement.
CarMax's appeal is under way in the U.S. Court of Appeals for the 11th Circuit in Fort Lauderdale, Fla.
On Nov. 5, 1998, U.S. District Judge William Dimitrouleas of the U.S. District Court for the Southern District of Florida in Fort Lauderdale overturned the jury's punitive damage award. He said the jury's award 'is entirely inconsistent with its finding that CarMax had no protectable property interest in its (trade)marks.'
AutoNation has not yet responded to CarMax's appeal brief. 'We're confident that the ruling that reinforces our right to use the AutoNation name will also stand on appeal,' said AutoNation spokesman Oscar Suris. Oral arguments are expected sometime within the next year.
The dispute stems from a 1996 suit filed by AutoNation asking the court to declare that it was not infringing on CarMax's AutoMation trademark when it named its used-car retail chain AutoNation USA. AutoMation is the name of the touch-screen kiosk system used at CarMax stores.
CarMax claimed that it spent tens of millions of dollars developing the AutoMation name and promoting its tag line, 'The New Way to Buy Used Cars.' AutoNation adopted the slogan 'The Better Way to Buy a Car.'
While the jury ruled that AutoNation deliberately infringed on CarMax's AutoMation trademark, at the same time it found that CarMax had no 'protectable interest' in the AutoMation name because it was not distinctive enough.
CarMax spokesman Val Brown said his company is pursuing the matter in court because the term AutoMation and its tagline are protected by federal trademarks and the name AutoNation and its similar sounding tagline are not.
'The opposition should recognize and respect our rights as determined by both the U.S. Patent and Trademark Office and the Florida jury that heard this case,' he added.
CarMax, a subsidiary of Circuit City Stores Inc. in Richmond, Va., had sought $477 million in damages. CarMax has 21 new-car franchises and 30 used-car superstores at 35 locations.
AutoNation, formerly called Republic Industries Inc., spun off its waste business in 1998 and changed its name in April to expand its automotive business.
The largest dealership group in the United States, AutoNation will have 394 franchises at 276 locations in 20 states when its latest acquisitions are complete.
AutoNation has 45 used-car
superstores and three rental car companies: National Car Rental Systems Inc., Alamo Rent-A-Car Inc. and CarTemps USA.