On December 6, 2006 KDKA News out of Pittsburg
reported a story about a fast lube operator in the
area facing a $1 million lawsuit from Shell Oil. The
man locals dubbed “David” in this story is Keith
Smith, the
owner of Lube Pro. He purchased the business in 2004
and when he did, it came with a Pennzoil sign - So he
thought.
According to Smith, the sign came with an agreement
the first owner of the shop struck with Pennzoil
back in 1995. Although it took the first owner six
years to satisfy the terms of the five year
agreement due to lower than expected volume, Smith
says the terms of the agreement was satisfied and
the sign was
part of the deal. And that seemed to be the case
after the business was sold to the second owner in
2001, and even to the third owner (Smith) when he
bought the business in 2004. But everything changed
in 2006.
That’s when Smith says a Shell Oil representative
visited and said he wanted him to buy Pennzoil
exclusively from a local distributor. A distributor
Smith says owns competing quick lubes in his area.
And even if the distributor was not his competitor,
Smith told Shell he could buy Pennzoil for
significantly less if he went to Wal-Mart or Costco.
With that, Smith says he refused to make a deal with
Shell.
Then the fireworks started. Shell filed a $1
million lawsuit against Smith in federal court.
Shell’s claim is that the Pennzoil sign is a
“trademark infringement, dilutes their business and
is false advertising among other things.”
Rather than trying to throw a stone into the eye of
this Goliath lawsuit, Smith says he scraped together
a “few thousand dollars and removed the Pennzoil
sign.” But according to Smith, who we interviewed
for this story today, Shell did not back off.
Instead, they continue to press forward with the
lawsuit.
JobbersWorld plans to track development of this
story and keep you posted. Although we certainly
don’t have a dog in this race, it is a story worth
following for several reasons. First, it’s of
interest because it speaks to what appears to be a
grey area in lube contracts and the use of
logos and signs. Let’s face it; this guy is not the
only one in the country flying a brand flag without a
contract. And you can bet he is not the first one to
think the signs on his property came with the
business when he bought it.
But maybe the most interesting part of this story,
Smith says, is about why Shell continues to pursue
the lawsuit after he complied with their demand.
Because now that the sign is down, the only thing
left to come down with a $1million dollar lawsuit is
his business.
From what Jobbers World is hearing from a number of
marketers, there may be more to this story than
meets the eye. Some say the Goliath in this fight
may be trying to set an example with this small town
David to send a message to other fast lube operators
it deals with that are thinking about taking on more
lower priced lubricants (i.e. house brands). That
message being; if
they don't sign with Shell there will be no signs
with Shell's brand on it.
If this is the case, it certainly sets the
stage for some very interesting legal and marketing
battles moving forward.
