IP Law Daily Chrysler cannot intervene in government seizure action against auto parts importer
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Friday, January 17, 2020

Chrysler cannot intervene in government seizure action against auto parts importer

By Cheryl Beise, J.D.

Chrysler’s trademark interests in forfeiture case were adequately represented by the government.

A federal district court correctly denied automaker Chrysler’s motion to intervene in a government in rem seizure action against an automotive parts distributer accused of importing counterfeit automotive grilles, the U.S. Court of Appeals in Atlanta had determined. The trademark interests Chrysler sought to protect were adequately represented by the government, and the relevant statutory and regulatory framework did not contemplate intervention by private rights owners who asserted no claim to the seized property itself. Because Chrysler had no basis for intervention as a matter of right, there was no "final decision" subject to appellate review. The appeal was accordingly dismissed for lack of jurisdiction (United States v. 60 Automotive Grilles, January 15, 2020, per curiam).

LKQ Corporation and its subsidiary Keystone Automotive Industries, Inc. (LKQ) import and sell automotive replacement parts. In 2017, Customs and Border Patrol (CBP) began seizing LKQ’s imports pursuant to the Tariff Act. Over the course of approximately 10 months, CBP executed at least 167 seizures at three different ports. LKQ claimed an interest in the seized property, including the seized Chrysler grilles at issue. The government then filed the instant in rem condemnation proceeding in the federal district court in Atlanta. After the government initiated the forfeiture action, LKQ filed a Verified Claim contesting the forfeiture of the grilles, thereby inserting itself as a defendant in the case. LKQ asserted it was the "lawful owner" of the seized grilles and that the grilles did not violate any trademark law because (1) the trademarked designs are functional, at least in the context of aftermarket repairs; and (2) the replacement grilles are not counterfeit and there is no likelihood of confusion.

FCA US LLC (Chrysler) filed a motion to intervene in the case due to "the erroneous arguments" made by LKQ. Chrysler argued LKQ had mischaracterized trademark law, insisting it needed to intervene to "vindicate" both its trademark and contractual rights and "present evidence" as to those issues. In the alternative, Chrysler sought leave to appear as amicus curiae. LKQ opposed the motion, and the government expressed no view on the matter.

The district court denied the motion to intervene. Before addressing the substance of Chrysler’s motion, the district court found that, because the Supplemental Rules did not refer to or otherwise permit intervention as a plaintiff in a forfeiture proceeding, Federal Rule of Civil Procedure 24(a) applied. Applying that rule, the district court concluded that, assuming Chrysler’s interest in protecting its intellectual property was sufficient to warrant intervention, Chrysler’s interests were already adequately represented by the government. Chrysler appealed.

The Eleventh Circuit began by noting that the denial of a motion to intervene generally is not considered a final appealable order. However, under the Eleventh Circuit’s "anomalous rule," the court had "provisional jurisdiction" to review the district court’s denial of Chrysler’s motion to intervene as a matter of right under Rule 24. If the district court’s ruling was correct, appellate jurisdiction would disappear because the district court’s ruling would not be a final decision. If the district court erred, the appeals court would maintain jurisdiction and reverse the ruling.

Turning to the merits, the court briefly reviewed the relevant laws applicable to the seizure and forfeiture of infringing goods imported into the United States and then turned its attention to Federal Rule of Civil Procedure 24(a)(2), which provides for intervention as a matter of right where certain conditions are met. According to the court, a party seeking intervention of right must demonstrate that: (1) his application to intervene is timely; (2) he has an interest relating to the property or transaction which is the subject of the action; (3) he is so situated that disposition of the action, as a practical matter, may impede or impair his ability to protect that interest; and (4) his interest is represented inadequately by the existing parties to the suit. Worlds v. Dept. of Health and Rehab. Servs., 929 F.2d 591, 593 (11th Cir.1991).

Assuming intervention as a plaintiff is appropriate in this sort of civil asset forfeiture proceeding, the Eleventh Circuit focused on the district court’s finding that Chrysler failed to show its interest was not adequately represented by the government. The appeals court explained that where an "applicant[] for intervention seek[s] to achieve the same objectives as an existing party in the case," the applicant must overcome a presumption that it is adequately represented. United States v. City of Miami, 278 F.3d 1174, 1178 (11th Cir. 2002) (quotation marks omitted).

Like the district court, the appeals court discerned no difference between Chrysler’s objectives and those of the government in showing that it had good cause to seize and forfeit the defendant property. "In making its case, the Government will necessarily need to make the same arguments FCA indicates it wishes to make: the defendant automotive grilles unlawfully infringe on FCA’s trademark rights and were imported into the United States without the consent of FCA," the court said. "The fact that FCA might go about making these arguments in a different manner or otherwise believes itself to be in a better position to make them does not make the Government’s representation inadequate."

Chrysler argued that the government was tasked with serving "multiple interests" beyond protecting Chrysler’s intellectual property, such as "ensur[ing] that the overall regulatory scheme for the nation’s borders is not jeopardized." However, the appeals court pointed out that Chrysler did not show that any the government’s additional interests were in direct conflict with its interest in protecting trademark rights. "At the end of the day, the Government cannot succeed in its forfeiture action without making the case that the defendant automotive grilles unlawfully infringed on the rights of FCA and other trademark owners," the court said.

Finally, the Eleventh Circuit observed that the relevant statutory and regulatory reinforced the conclusion that Chrysler’s interests were adequately represented by the government. Section 24 of the Lanham Act and Section 526 of the Tariff Act prohibit the importation of goods that "copy or simulate" registered trademarks owned by United States citizens or corporations. CPB is authorized to seize and forfeit infringing goods, and generally does so where a trademark owner has recorded its mark with the Customs Office. 19 U.S.C. §§ 1526(b) and (e), 1595(c)(2)(C); 19 C.F.R. § 133, Subpart A. "This scheme assumes the Government is competent to protect those rights in the context of forfeiture proceedings," the court said. "And notably, none of the relevant statutes, the regulations promulgated pursuant to those statutes, or the Supplemental Rules applicable in forfeiture proceedings contemplates intervention as a plaintiff by private rights owners who assert no claim to the defendant property itself."

The court concluded that the primary objectives Chrysler sought to achieve in this case were goals shared by the government. Therefore, Chrysler’s interests were adequately represented and the district court did not err in denying Chrysler’s motion to intervene. Because Chrysler had no basis for intervention as a matter of right, and there was no "final decision" for the court to review, the Eleventh Circuit dismissed the appeal for lack of appellate jurisdiction.

The case is No. 19-12023.

Attorneys: Judith A. Powell (Kilpatrick Townsend & Stockton, LLP) for FCA US LLC. Barry F. Irwin (Irwin IP, LLC) for 324 Automotive Grilles and 60 Automotive Grilles.

Companies: FCA US LLC

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