Locked Out of Lexus : Trademark Fiasco Means New Toyota May Remain Nameless
It was bizarre. One moment last Friday afternoon, staffers at Lexus--Toyota’s new luxury car division--were cheerfully getting ready to leave Toyota’s American headquarters in Torrance for the long New Year’s holiday.
Suddenly, they found themselves scrambling to hide or erase all public mention anywhere in the United States of the name Lexus.
The switch came at 5 o’clock that afternoon Eastern time--2 p.m. in Los Angeles. A federal judge in New York stunned Toyota by ruling against the giant Japanese auto maker in a trademark infringement lawsuit brought by Mead Corp., which markets Lexis, a computerized information service that provides legal data, mostly for attorneys.
Month to Appeal
The judge threw a legal thunderbolt at Toyota by ruling that it had infringed on Mead’s Lexis trademark and immediately ordered that it not use the name Lexus in any manner.
On Monday, however, Toyota won a decision temporarily allowing it to resume using the Lexus name in some circumstances. On Thursday, an appeals court extended the decision for a month. Without the extension, Toyota would have been forced to drop all public references to Lexus starting today.
Until Thursday’s ruling, Toyota had found itself on a weeklong roller-coaster ride, desperately trying to stitch together some alternate way to keep its new luxury car operation in business without publicly uttering its name.
Yet Toyota had already spent $12 million to make Lexus a household word by the time its high-priced models appear next fall.
Last Friday afternoon, all of that had to be undone. “We had an emergency plan that we had to go to,” said Jim Perkins, Lexus senior vice president, on Thursday.
Receptionists were quickly told to stop using the name Lexus, and instead to answer the phone with, “Hello, Toyota’s luxury car division.”
Lexus ads were pulled around the country. Only a few, including some in Los Angeles, couldn’t be canceled in time.
But that was just the start; two major press conferences introducing the Lexus line to the world were scheduled for this week at auto show previews in Detroit and Los Angeles. So Toyota officials had to count the number of times the Lexus name was mentioned in its auto show displays--26 in all--just in case a court delay was not won and they all had to be covered up.
Toyota public relations officials even had to figure out how to slice off the Lexus name from press kits to be handed out to reporters at the auto shows.
In fact, if the three-day delay had not been extended, Toyota would have introduced its luxury cars at the auto shows without a nameplate.
The worst time for Lexus came last weekend. Toyota’s attorneys couldn’t get in touch with a federal appeals judge until Monday to issue a delay. “From Friday until Monday, we went through a period where we would have been in violation of the order if we had publicly used the Lexus name,” Perkins told reporters at the press preview for Lexus at the Detroit auto show.
So, right after last Friday’s order, Toyota suppliers were immediately called and told not to use the Lexus name publicly. Even the contractor making signs for Lexus dealerships was put on notice; he was told he could continue work only if he left a space where the Lexus name was supposed to go.
Now, even with the monthlong stay in the order, Toyota is still banned from any national advertising. It can only promote the Lexus line in local ads run in conjunction with regional auto shows. The company has thus had to drop any further plans to advertise in USA Today and the Wall Street Journal.
No Alternative Names
Yet despite this week’s identity crisis, Toyota executives say they still don’t have any alternative names lined up if they lose in court. Changing the name is still out of the question, according to Perkins.
“If you had an alternative name in mind, you wouldn’t go ahead with an appeal,” Perkins said.
He added that the company did not develop alternate names earlier during the Mead case--the lawsuit was first filed last April--because Toyota was already committed to the name, and had spent too much money to back off.
And, while Toyota first heard complaints from Mead in October, 1987, Toyota did nothing to develop alternate names before the suit was filed, he said. Instead, Toyota negotiated with Mead, and thought it was close to reaching a deal with Mead early in 1988.
“We did the prudent things,” Perkins insisted. After Mead first complained to Toyota, Toyota rechecked its legal research on the name, Perkins said, and the company felt confident that it was not in violation of any trademark laws. “We did everything right with this name. It just shows you, anybody can sue you for anything.”
Yet if Toyota ultimately loses in court, Perkins apparently will become the first man to run a car company with no name.
“We have an alternate plan now that wouldn’t involve a name,” for the franchise, Perkins said Thursday. Apparently, the two cars to be sold by Lexus this fall would temporarily be known only by their model names--the LS 400 and ES 250--without any brand identity. A new name would have to be developed at that time, Perkins acknowledged--and as quickly as possible.