US Trade Commission Investigative Staff say Fiat Chrysler Automobiles is contractually barred from pursuing the investigation.
29 Nov 2018 | 9878 Views | By Nilesh Wadhwa
Here's the latest update in the ongoing Mahindra Roxor saga. The investigation conducted by US Trade Commission Investigative Staff does not find any agreement violation for using the approved grille design on the vehicle. The probe says FCA is "contractually barred from pursing this investigation."
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Here's the latest update in the ongoing Mahindra Roxor saga. The investigation conducted by US Trade Commission Investigative Staff does not find any agreement violation for using the approved grille design on the vehicle. The probe says FCA is "contractually barred from pursing this investigation."
With this, the over 120-day-long legal dispute between partners turned rivals FCA and Mahindra in the United States finally sees some closure. On August 1, 2018, Fiat Chrysler Automobiles US had filed a complaint against Mahindra & Mahindra (M&M) and Mahindra Automotive North America (MANA) with the United States International Trade Commission (USITC), which said that the sale of the Mahindra Roxor violated Section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain motorised vehicles and components thereof that infringe trade dress and trademarks asserted by the complainant.
The FCA complaint alleged that certain design features of the details of the Mahindra Roxor infringed the intellectual property rights of dispute/ litigation – Fiat's Jeep design as it was modelled after the original Willys Jeep. FCA had requested that the USITC issue a limited exclusion order and cease-and-desist orders against Mahindra & Mahindra and MANA.
Mahindra had disputed the claim and had said that the case was without any merit. On August 29, the company had issued a public statement, which said, " Our goals on the public interest statement were two-fold. One was to state our position on the merits and the other was to correct inaccuracies regarding Mahindra as a company and the Roxor as a product. We set the record straight on the history of Mahindra, including its US operations. We also demonstrated that the Roxor is a vehicle that was always intended only as off-road, does not compete with Fiat vehicles, is manufactured and assembled in the first OEM plant to be built in Michigan in the last 25 years, was the result of more than three years of research and development, and categorically rejected the notion that the Roxor was an imported, low-quality "knock-off" kit car."
On August 23, 2018, Mahindra filed a complaint in Federal Court in Michigan on the issue of the applicability and enforcement of its 2009 agreement with Fiat. The company had said, “We are asking the court to block Fiat from participating in the ITC claim – an injunction – because of the fact that they agreed in 2009 to never bring such claims if we use a grille that they approved. The Roxor uses that grille. We are also arguing that Fiat is using the ITC case to harm our Roxor business by creating negative publicity, damaging our reputation and our stature in the marketplace.”
The dispute arose between the former partners, when Mahindra launched the Roxor for the US market. In its argument, FCA claimed that the Roxor infringes FCA's intellectual property rights because the Roxor's grille, which has five slots, is confusingly similar to the Jeep brand's seven-slot grille design. Mahindra countered the argument saying that an agreement from 2009 barred FCA's pursuit of the infringement allegations because the Roxor uses the five-slot grille design that FCA approved for use in the 2009 agreement.
Above left: Mahindra's original seven-slot grille design to which Chrysler objected.
Right: Nine images of certain registered trademarks, each having the seven-slot grille design that Chrysler identified in its 2008 letter.
As per the official investigation documents accessed by Autocar Professional, the 2009 agreement arose from a dispute between Chrysler Group LLC ('Chrysler', FCA’s predecessor-in-interest to the Jeep brand) and Mahindra. The dispute concerned Mahindra’s planned importation of vehicles that had a seven-slot grille design. Beginning in 2008, Chrysler asserted that Mahindra’s use of a seven-slot grille design would be confusingly similar to the Jeep brand’s grille design. Mahindra disputed the assertion at that time but it nonetheless proposed, over the course of around a year, three different grille designs that varied in the number of slots in each design.
The five-slot grille design accepted by Chrysler.
The first proposal included six slots, followed by eight slots, which were rejected by the Jeep brand. The third proposal by Mahindra was a grille design having five slots, which was accepted by Chrysler for vehicles being imported into the United States.
Accordingly, the dispute about the number of slots in Mahindra’s grille design ended with the 2009 Agreement, in which Mahindra agreed to use a five-slot grille design on the different vehicles that it planned to import into the US. In exchange, FCA made a promise to not assert its trade dress, trademark, or “other intellectual property rights” against Mahindra’s vehicles, so long as the vehicles “contained or used” the approved grille design.
The document further states that 'years after the 2009 Agreement, and in accordance with the parties’ understanding of the agreement’s terms, Mahindra adapted the Approved Grille Design to fit onto the vehicles (the Roxor) that Mahindra ultimately imported into the United States.
The Mahindra Roxor and its five-slot grille.
The probe document says that FCA argued the Roxor does not use the Approved Grille Design essentially because the whole front end of the Roxor does not match exactly the image shown in Exhibit A of the 2009 Agreement. But as the evidence shows, Mahindra complied with its end of the 2009 Agreement by using the grille design.
Moreover, FCA read into the Approved Grille Design additional requirements that would not be understood by the relevant industry, and the contracting parties at the time of the negotiation, as part of a “grille design.”
Investigation findings
In its observation, the US Trade Commission Investigative Staff said: "After considering the 2009 Agreement as a whole, the ordinary meanings of its terms, and the evidentiary record, the evidence shows that the term 'Approved Grille Design' has a meaning that is consistent with Mahindra’s interpretation. The term means the collection of primary and secondary design elements that make up the grille shown in Exhibit A of the 2009 Agreement, and these elements may be adapted to fit different vehicles. The design elements include the number and arrangement of the grille’s openings, the grid pattern within the openings, a raised surface surrounding the central opening and Mahindra 'M' logo, and the location of the 'M' logo within the grille pattern."
FCA’s expert Brian Baker testified that the Approved Grille Design has an outer shape that forms “wings” on either side of the grille, while the Roxor does not have these features. He also testified, in support of his conclusions, that the “headlight openings” in the Roxor’s front end are not present in the Approved Grille Design.
However, the US Trade Commission Investigative Staff observed that the features that Baker identified are not the openings through which air passes, a key feature in the dictionary definitions of 'grille' that are in the record.
The primary element of FCA's '7-slot' design changes in shape and proportions to fit different vehicles.
While informative, the US Trade Commission Investigative Staff is of the view that the dictionary definitions, standing alone, do not fully resolve the parties’ dispute (“the court must not mechanistically parse the meaning of each word in the phrase; instead, it must look to the contextual understanding and consider the phrase as a whole”).
Mahindra’s witness Paul Lowis, who has been working in the automotive and design industry for about 45 years, testified as follows: "It includes no dimensions or specifications whatsoever. It’s two-dimensional, and doesn’t include any side views or isometric or orthographic views that would show you, for example, how deep the grille is, or how deep the grating on it is. It doesn’t tell you what the grille is made of, or if the grille is any particular colour."
"Automotive manufacturing is about precision — you have hundreds or thousands of different pieces that need to fit together properly. If you want someone to make you an exact part to fit your vehicle, you need to give them dimensions," added Lowis.
Jason Hill, Mahindra’s expert, also testified that the 2009 Agreement “does not specify the size, measurements, colour, materials, or finish of the Approved Grille Design. Therefore, when viewing the image, a designer has the task to assess what makes up the ‘grille design,’ and then apply it to whichever vehicle — or vehicles — they are tasked with adapting it to.”
The commission staff observed that the 2009 Agreement, however, does not explain the extent to which the Approved Grille Design may be adapted to fit a vehicle.
Conclusion: Roxor uses the Approved Grille Design
In its final observations, the US Trade Commission Investigative Staff said, "Under the broad terms of Paragraph One of the 2009 Agreement, FCA is contractually barred from pursuing this Investigation if Mahindra’s vehicles contain or use the Approved Grille Design. The evidence shows that Mahindra’s Roxor uses the Approved Grille Design. Thus, the record supports a finding that Mahindra met its burden of proving by a preponderance of the evidence that FCA is contractually barred from pursuing this Investigation."
Images used in story courtesy - US Trade Commission