Allstate Insurance Company v. Kia Motors America Inc.

Trademark Infringement and Unfair Competition

Central District

U.S. District Judge S. James Otero

Defense Lawyers: Lance A. Etcheverry, Raoul D. Kennedy, Kevin J. Minnick, Maximillian W. Hirsch, H. Young Shin, Albert Tae, Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates

Plaintiff’s Lawyers: Garret A. Leach, Sierra Elizabeth, Robin A. McCue, Gregory Polins, Megan M. New, Jordan M. Romanoff, Kirkland & Ellis LLP

Allstate Insurance Company sought a permanent injunction to end Kia Motors America Inc.’s use of the “Drive Wise” name for its optional driving assistance features, arguing the name infringes its registered trademark “Drivewise,” used to market auto insurance and a mobile phone app.

After a four-day court trial, Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates’ attorneys persuaded U.S. District Judge S. James Otero that Allstate’s mark is weak, that other companies use the name, that Kia’s Drive Wise features do not overlap Allstate’s mark in use or function. Further, defense attorneys argued that the lack of any consumer confusion to date shows that future confusion is unlikely.

Otero found no infringement in a December ruling even after a jury had reached an advisory verdict in Allstate’s favor. Allstate Insurance Co. v. Kia Motors America Inc., 16-CV06108 (C.D. Cal., filed Aug. 15, 2016).

Lance A. Etcheverry called the outcome notable for at least three reasons. First, Otero agreed with Skadden’s litigators that he could consider in its infringement analysis a non-final U.S. Patent and Trademark Office decision which found that Kia’s pending trademark application for “Drive Wise” appears to be entitled to registration.

Second, Otero relied on the parties’ respective decisions to seek trademark protection in different international classes of goods and services, a move that weighed against infringement because it reflected the parties’ intent to operate in different segments, diminishing the likelihood that consumers could become confused.

Third was the plaintiff’s failure to conduct a survey to demonstrate consumer confusion. “Very seldom do you see a trademark case where there is no evidence in the form of a survey of actual confusion or a likelihood of confusion,” Etcheverry said.

He argued that Allstate had both the means and the opportunity to develop data to show that consumers might confuse Kia’s Drive Wise with Allstate’s Drivewise. Skadden conducted and disclosed its own survey, which found no consumer confusion. Allstate disclosed a rebuttal expert who claimed he could show that Kia’s survey was flawed.

At trial, when Allstate revealed that its expert would constitute its entire rebuttal case, Etcheverry and colleagues made a game day switch to the witness list, withdrawing Kia’s survey expert and withholding the survey evidence that showed no confusion. Without Kia’s affirmative expert, there was nothing for Allstate to rebut.

Allstate was left without a witness to explain why it believed a survey could not be accomplished. Otero ultimately cited Allstate’s failure to conduct a confusion survey as supporting an inference that consumer confusion could not be shown.

“It was a big hole, and the judge relied on it in his opinion,” Etcheverry said.

Skadden also turned Allstate’s further evidence against it when the plaintiff argued that Allstate-branded insurance agencies exist inside 27 Kia dealerships, allegedly confusing consumers. But Skadden had learned in discovery that no confusion had arisen at the 27 locations.

“They argued that there were similar marketing channels, but we said this is a perfect test case — and nobody has said there was any confusion,” he said.

— John Roemer