Sonic is not afraid of litigation, Smith said, noting the retailer's long-running lawsuit with Mercedes-Benz that was settled in 2012. In that case, Sonic sued Mercedes-Benz USA, with Smith saying in an interview that the automaker tried to "extort" store upgrades by withholding approval of a Mercedes-Benz dealership acquisition by the retailer.
The trigger in the TrueCar case was Sonic's adoption of the term True Price to describe a vehicle pricing system it finished rolling out to stores in early 2013. Sonic's True Price program sets vehicle prices within $300 of the lowest acceptable transaction price, leaving a very limited negotiating band. Sonic said it filed for its True Price trademarks in 2012 and 2013.
In addition to trademark infringement, TrueCar's lawsuit accuses Sonic of unlawful business practices, false advertising and unfair competition.
In its complaint, TrueCar said it has been building rights in a "True" family of trademarks since September 2008. The company registered trademarks for several True-related terms in subsequent years.
TrueCar sent a letter to Sonic in April 2013 demanding the dealership group stop using True Price, according to court documents. It accused Sonic of intentionally creating confusion and trading off the investment TrueCar has put into its brand, those documents say.
"Sonic's use of the True Price marks is likely to cause and has caused confusion in the marketplace," the complaint says. "The resulting and continuing confusion will cause damage to TrueCar and will injure its reputation in the trade and with the public."
Smith said Sonic will honor TrueCar coupons if customers bring them in. He said the retailer has sold a couple of thousand cars annually through the TrueCar relationship, and characterized the value of the tie-in as "immaterial."
TrueCar customers are in the market already, Smith said. In many of its markets, Sonic is the exclusive dealer for certain vehicle brands. He noted that Sonic has the only BMW dealership in Greenville, S.C., for example.
Said Smith: "Those customers are going to come by anyway, so why be a part of it?"