CarMax awarded $50 million from AutoNation Unfair competition involves similar names

October 28, 1998|By BLOOMBERG NEWS

FORT LAUDERDALE, Fla. -- Republic Industries Inc.'s Auto- Nation USA used-car superstore unit must pay $50 million to rival CarMax Group for using similar brand names to confuse car buyers, a CarMax lawyer said yesterday.

A federal court jury in Fort Lauderdale deliberated more than seven hours yesterday before awarding the punitive damages to CarMax, a unit of Circuit City Group, for its unfair competition claims against AutoNation, said Richard Knoth, a lawyer for CarMax.

CarMax had sought $477 million from AutoNation, accusing it of trademark infringement and unfair competition in copying the name for CarMax's "AutoMation" computerized inventory-browsing system.

"The jury made a finding that AutoNation acted with malice toward CarMax in selecting that name and some of its sales slogans," Knoth said. "They found AutoNation trampled CarMax's rights in choosing those names."

Republic officials said they were pleased that jurors rejected CarMax's trademark claim.

"We have reason to believe the judge will throw out the punitive damage award" when he considers post-trial motions, said Jim Donahue, a Republic vice president and its spokesman.

While Republic lost on the unfair competition claim, Donahue said, the jury found that CarMax had "no protectable property interest" in the AutoMation name, giving other companies unrestricted use of similar names.

Richmond, Va.-based CarMax, which sells used cars through a chain of superstores in the mid-Atlantic and Southeast, filed suit against AutoNation in 1996. CarMax argued that AutoNation was so similar to its AutoMation name that consumers would be confused by it and that Republic had come up with a thinly veiled variation on its slogan, "The New Way to Buy Used Cars."

The two-week trial included testimony by Republic Chairman H. Wayne Huizenga about how the AutoNation unit was created.

Huizenga, a Fort Lauderdale resident, also owns the National Football League's Miami Dolphins, Major League Baseball's Florida Marlins and the National Hockey League's Florida Panthers.

"They put up a long fight, but we got the best of them," Knoth said. "It's not too easy to get a jury in Wayne Huizenga's backyard to hand down $50 million in damages against one of his companies."

Shares of Fort Lauderdale-based Republic rose 50 cents to $16.125 yesterday and CarMax's shares slipped 12.5 cents to $6.4375. Circuit City's shares fell 31.25 cents to $36.3125.

Pub Date: 10/28/98

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