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National Oil & Lube News: Lube Operator Fights Lawsuit

By Nicole Andries
NOLN Staff Writer
[email protected]

April 2007

Lawsuits are no fun — usually for either party involved. They’re tedious, expensive and more often than not offer little in the way of gratification, especially when both sides are resolved to fight to the last.

Case in point is the lawsuit pitting Keith Smith, owner of Mars, Pennsylvania-based Lube Pro, and Shell.

According to Kim Muller, senior trademark counsel for Shell, the suit was initially filed against Smith on Oct. 27, 2005.

In regards to what specific damages/ actions the lawsuit seeks, Shell had this to say via e-mail:

“Shell, as an affiliate of Pennzoil-Quaker State Company, is seeking five things: First, the removal and return of all Pennzoil signs loaned to the prior owner of the oil change facility now operated by Keith Smith; an injunction against Mr. Smiths continuing use of the Pennzoil mark and logo; and an accounting of his profits, if any. Shell is also seeking statutory damages as permitted under the federal trademark statute, which provides for awards up to $100,000 per violation and up to $1 million for willful trademark violations, along with an award of Shell’s attorney fees incurred in the lawsuit.”

According to Muller, Shell has recently filed a motion for summary judgment, seeking a sum of $50,000 in statutory damages, along with an award of its attorney fees and issuance of a permanent injunction, Muller said.

As to why the lawsuit was filed, Muller indicated the issue was about protecting Shell’s rights.

“The lawsuit was filed because Mr. Smith refused to comply with Shell’s repeated requests to remove the Pennzoil signage at his facility. At the time of the suit, Mr. Smith was using a large road sign stating ‘We Feature Pennzoil Products,’ which dated back to operation of the facility by a prior owner who was an authorized Pennzoil installer. The prior owner also had multiple other Pennzoil logo signs at his premises, Mr. Smith is not an authorized installer of Pennzoil products and at his deposition, testified that only 2 to 3 percent of the oil he used in oil changes was Pennzoil brand.

(“Shell wants Mr. Smith to stop using Pennzoil signs and wants to be reimbursed for his actions as the court deems appropriate. Shell must protect authorized installers against unfair competition by operators who…display Pennzoil signage to draw in customers but substitute a less expensive, less effective brand of oil.” -Kim Muller, Shell)

A Mr. Howard operated the oil change facility as an authorized Pennzoil installer from about 1995 until 2002, when he sold the business to another person. When Shell’s efforts to convince this person to become an authorized Pennzoil installer were unsuccessful, Shell wrote to him asking that he remove and return the Pennzoil signage. This person then sold the business to Mr. Smith in mid-2004,” Muller said.

For his part, Smith said the issue is about what happens when a contract is fulfilled.

“There’s a Pennzoil distributor about a mile from me, and when I bought the business (in May 2004), they sent their salesman and tried to get me to sign a contract to exclusively sell Pennzoil. The reason Shell placed the lawsuit is because they own Pennzoil,” Smith said.

According to Smith, the sign in question was part of the faculty dating to the time its first owner signed a contract agreement with Pennzoil in 1995. After that owner fulfilled his contract, the sign became part of the operation, he said.

When Smith declined to sign a new contract with Pennzoil, he was asked to return the signage.

“They said, ‘Well we would like our sign back,’ and I said, ‘What are you talking about?’ Here they thought the sign that was out front was still theirs, and I said, Tm the third owner. This sign has been up since the beginning of this quick lube,’ and they said, ‘We loaned it to the first owner when he signed a contract with us.’ I said, ‘I believe there is a little different slant on that; I believe you gave him the sign to sell your product and when he fulfilled his contract, you abandoned the sign,”‘ Smith said.

“When (the first owner) sold the business to the second owner, it came with all the equipment and the sign. That man also never signed a contract with Pennzoil. They asked him to, but he had no interest in signing a contract, either. The same sign has (been here) all along. The distributor got so frustrated that they went to Shell and asked them what they were going to do about it, and that’s when they preceded to try to (sue me).”

Smith, who said he was in disbelief that Shell would file this type of lawsuit against a small-time operator, said the case was also about competitive fairness.

“The other important thing about this is that this (Pennzoil) distributor (who approached me about signing the contract) also owns their own quick lubes, which are very close to me. So, basically they are my competition. I didn’t want to sign a contract to buy oil from a competitor,” Smith said.

Shell’s Muller said the company gave Smith numerous opportunities to comply with their requests.

“Shell repeatedly wrote letters to Mr. Smith requesting his cooperation in removing and returning the Pennzoil signage in October and December 2004 and March 2005. Shell representatives also paid a personal visit to Mr. Smith in January 2005- Despite Shell’s repeated attempts to convince Mr. Smith to remove and return the Pennzoil signage, he refused to cooperate, and Shell was forced to file suit to protect its trademark rights and the rights of customers who wish to purchase Pennzoil-branded products,” Muller said.

“Before it was forced to file suit, Shell was simply seeking the removal and return of its Pennzoil signage. Shell has been willing to settle the matter since filing suit but has been unable to determine a complete financial picture for Mr. Smiths business, and he has been unwilling to remove all the Pennzoil signs.”

Muller also explained that Pennzoil-Quaker State’s agreement with the facility’s first owner offered the signage on a loan basis only. The sign would remain the property of Pennzoil and would be returned when the agreement with the initial owner was terminated.

However, according to Smith, the signage has been removed. To try to settle the dispute, Smith said he used his own finances to remove it from public view.

“The bottom line is that after I got the suit, even though I didn’t have the money, I went and bought another sign. All that sign says is, ‘Lube Pro Drive-Thru Oil Change,'” Smith said.

(“The important thing about this is that the Pennzoil distributor (who wanted me to sign) also owns their own quick lubes, which are very close to me. They are my competition. I didn’t want to sign a contract to buy oil from a competitor.” 
Keith Smith, Lube Pro)

“I didn’t give the sign in question back to them because, as far as I’m concerned, it’s still my sign. I just put it in a storage shed. My attorney talked to their attorney and said, ‘Now, he has taken down the sign; you should drop the lawsuit and call it a day,’ but they don’t want to drop the lawsuit. They want to continue with it.”

Muller said the situation isn’t that simple.

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“Mr. Smith did not remove the Feature Pennzoil Products’ road sign in December 2005. He has still not removed the remaining Pennzoil signs at his facility.

Mr. Smith testified in his deposition that Pennzoil signs are the most prominent signs at his facility,” Muller said. ”

He wants Mr. Smith to stop using Pennzoil signs and wants to be reimbursed for actions as the court deems appropriate Muller said, adding, “(Fast lube) operators will see that Shell is willing to action to protect itself against confusion of its customers and infringement of its trademarks. Shell must also protect authorized installers against unfair competition by operators who prominently display Pennzoil signage to draw in customers but substitute a less expensive less effective brand of oil… Shell will take affirmative action to avoid a reduction in the value of its trademarks. This action ensures parties outside the control of Shell’s licensed network do not put Shell’s product reputation at risk.”

“With no resolution in sight, the lawsuit continues. Smith said he is uncertain where it might end, but until it does he plans maintaining a defense attorney for representation — despite the mounting costs. “I don’t own property, and I don’t have a million dollars in the bank. Quite obviously they want to put me of business. The sign cost me a $3,500, and attorneys, fees, so far have cost me a $15,000,” Smith said.  “I continue pay a defense attorney to handle case and give monthly checks to continue to defend me because if don’t defend yourself you’re automatically going to lose.”

APRIL 2007
WWW.NOLN.NET

Note: from the point where the asterisks were inserted we had to guess at several words because the end of lines were cut off. However, the overall accuracy of the text in the article should still be almost 100% correct.

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