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Published: Thursday, 2/7/2002

Trial opens on SUV grille dispute

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER

SOUTH BEND, Ind. - In what at times sounded like a lesson in Toledo automotive history, lawyers for DaimlerChrysler AG and AM General Corp. argued here yesterday about the origins and ownership of a vehicle grille design.

The occasion was the opening day of a hearing in U.S. District Court on Daimler's attempt to stop AM General from introducing a sport-utility vehicle with a seven-slot grille similar to that of Daimler's Toledo-built Jeep.

Judge Robert L. Miller, Jr., will spend up to two weeks listening to dozens of marketing experts, company executives, and other witnesses in the high-stakes trademark dispute.

Daimler has asked for a preliminary injunction to bar AM, and brand owner General Motors Corp., from rolling out in June a scaled-down version of the Hummer military vehicle, popularized by Operation Desert Storm and film star Arnold Schwarzenegger.

Lawyers for AM General and GM acknowledged that they have developed an alternative grille design, but said a switch would cause a delay of several months, costing more than $100 million and damaging the introduction of the H2, priced at $50,000.

Daimler lawyers argued that the new model and an even less expensive Hummer planned for 2005 would infringe on Jeep's unique identity and hurt sales of Toledo-built Wrangler and Liberty models and the Detroit-built Grand Cherokee.

The car maker said the unusual grille is so integral to the brand that 42 percent of SUV buyers can identify a Jeep by its grille alone. GM's own testing for the H2 found that customers confused the vehicle with a Jeep because of the grille.

“The grille tells you it's a Jeep,” said New York lawyer David H. Bernstein, who is representing Daimler. “It's the identifier of our brand.” He accused GM and AM General of “Jeep envy.”

South Bend, home of the University of Notre Dame, is headquarters to AM General. The H2 will be built at a new plant in nearby Mishawaka, next to a plant that makes the HMMWV military model and tank-like H1 civilian Hummer.

Carl Kaser, shop chairman of a UAW local representing 1,700 AM General workers, sat in on the hearing. “There is a lot of interest in this case at the plant,” he said in a brief interview during a break in the proceedings.

Evidence presented included photos and displays showing early Toledo-made military Jeeps and civilian models made after World War II. Judge Miller heard about how both Daimler's Jeep unit and AM General were once part of Toledo's Willys-Overland automotive empire. Willys went through a number of ownership changes after World War II. In 1983, then-owner American Motors Co. sold AM General.

Four years later, the Jeep unit, along with the rest of struggling American Motors, was purchased by Chrysler Corp., which in turn merged with Germany's Daimler-Benz AG in 1998 to created DaimlerChrysler.

Despite the shared heritage of Jeep and AM General, GM lawyer John Hickey, of Chicago, accused Daimler of trying to disrupt the debut of the H2.

He acknowledged that Daimler possesses trademarks on the design of the Wrangler grille, but he disagreed with the German company's claim that trademark protection extends to other models in the Jeep lineup because they have similar grilles and are part of one “family.”

Jeep grilles have differed greatly over the years, he said. Only in recent years has there been consistency in the grilles of various models, he said.

Vertical-slot grilles aren't unique to Jeep, Mr. Hickey added. Since 1984, AM General has made Hummers with vertical-slot grilles for the U.S. military. Sales of civilian models have been going on since 1993 without objection from DaimlerChrysler or Chrysler Corp.

AM General obtained a trademark on the Hummer grille - which was a model for the new H2 - in 1996.

Daimler began objecting in December, 1999, soon after GM bought the rights to the Hummer from AM General.

The car maker didn't protest sooner because existing Hummer models were too costly and were produced in such small numbers that they didn't pose a threat to Jeep, Daimler lawyers replied.



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