American Petroleum Institute v. Cooper

The Lanham Act preempted North Carolina's gasoline blending statute, allowing producers to require in-line blending of gasoline to protect the quality of their marked products.

Opinion (Agee): In 2008, the North Carolina general assembly passed a statute requiring that suppliers of gasoline offer to retailers unblended gasoline which the retailers could later splash blend with fuel alcohol (ethanol) to arrive at the required 1:9 ratio of gasoline to ethanol. The American Petroleum Institute ("API") filed suit to enjoin the enforcement of the statute on the grounds of preemption by the Lanham Act as a violation of their federal trademark protections. The key element of this case is the difference between splash blending and in-line blending of gasoline. In-line blending happens before gasoline is distributed to retailers in computer controlled tanks of the supplier. Then the blended gasoline is distributed to retailers for sale to the public. Under splash blending unblended gasoline is pumped into the retailers trucks then ethanol is pumped into the trucks tanks and the motion of the trucks blends the two together. The district court granted the State's motion for summary judgement on the grounds that the blending statute did not impair the suppliers ability to control the quality of their trademarked products and therefore was not preempted by the Lanham Act. On appeal, the court held that the district court erred in granting the motion for summary judgement because the question of whether in-line blending and splash blending produced substantially similar quality blended gasoline was a question of material fact. The Lanham Act allows producers to control the quality of goods produced under their trademark, therefore it is a material fact whether splash blending denigrated the quality of gasoline sold under API's trademark. If it did, then the Lanham Act would preempt the blending statutes requirement that producers sell unblended gasoline. Accordingly, the district court's holding was VACATED in relevant part and the case was REMANDED for further proceedings.