Not So Clever After All: Humorous Commercial on “Luxury” Lands Hyundai in Hot Water

In an ad run initially during the post-game show of the 2010 Super Bowl, Hyundai encouraged viewers to re-think “luxury” and as a result consider buying a Sonata. The ad, which can be viewed on YouTube here, juxtaposed images of “luxury” with everyday settings: policemen eating caviar, middle class houses with giant yachts parked next door, and — in what turned out to be a step too far — men playing basketball on an inner-city court, with a ball that bore designs very closely resembling Louis Vuitton’s “toile monogram.” This long-registered and famous LV mark consists of “a repeating pattern design of the letters LV and flower-like symbols on a chestnut-brown background.”

LV sued Hyundai in the Southern District of New York, and, in a recent summary judgment ruling by the district court, won a complete victory. Not only did the court grant summary judgment in LV’s favor on its claim for dilution by blurring and deny Hyundai’s motion on LV’s infringement claim, but it found as a matter of law that Hyundai had diluted LV’s mark willfully — thereby exposing Hyundai to all the damages available under 15 U.S.C. § 1117(a), including the possibility of multiple damages and/or a deterrence-based award.

LV had survey evidence showing that a modest percentage of respondents “associated” the image of the basketball with LV, but that itself does not carry the day in a dilution case. Why did LV win summary judgment in its favor? The answer lies in very damaging admissions made by Hyundai’s witnesses. Clearly they had to admit that the pattern on the basketball was intended to evoke LV in viewers’ minds: otherwise the attention-grabbing juxtaposition would not work. But they also admitted that they wanted to “reframe the way people looked at Hyundai, the brand” by associating it with luxury marks like LV’s. Another witness — a former (perhaps disgruntled?) marketing employee — agreed with the proposition that Hyundai “used LV-like marks in order to raise the image of the Hyundai brand in the mind of the consumers,” and stated, “I believe it was a brown basketball as you’d expect with some gold emblems on it to represent luxury definitely laddering and borrowing equity from Louis Vuitton.” E-mails and other evidence also showed that Hyundai’s outside advertising agency asked permission from several companies, including LV, to reference their marks in the commercial, but did not obtain it. The final nail in the coffin was Hyundai’s decision to keep running the ad well after receiving a cease-and-desist letter from LV’s counsel.

In these circumstances, the six-factor test for dilution by blurring was rather easily met. Hyundai, however, sought protection under the fair use provision of the Trademark Dilution Revision Act. This protects use “of a famous mark by a person other than as a designation of source for the person’s own goods or services, including use in connection with . . . identifying and parodying, criticizing, or commenting upon the famous mark owner.” The problem with Hyundai’s statutory argument, as the district court held, was that regardless of whether its commercial could be viewed as “parody” or “criticism,” it was admittedly not directed specifically at LV, but rather at luxury in general. Thus, it failed the test of being directed at the “famous mark owner.”

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