Double Jeopardy? Shelby loses lawsuit against Factory Five Racing

The conflicts between Carroll Shelby and various kit car makers are well known and sometimes seem never-ending. Massachusetts-based Factory Five Racing has been at the forefront of the lawsuits with Shelby, and the two have been in battling it out in the courtroom for a decade. The initial lawsuit, filed in the year 2000, resulted in a settlement that barred Factory Five from using the terms "Cobra, 427 S/C, Shelby, Shelby Cobra, Daytona Coupe and Daytona Coupe Cobra" on any of their products.

The two parties were at peace for eight years until Shelby filed another lawsuit in December of 2008 alleging that Factory Five's Type 65 Coupe (pictured above) bore "designs confusingly similar to the Daytona Coupe Trade Dress" and that FFR used the term "Cobra" in the metatags of its website to promote its product.

This past week, a U.S. District Court ruled in Factory Five's favor, allowing the company to continue to produce the Type 65 Coupe. The reason for the decision, according to the 25-page court document, is based on the settlement from the prior lawsuit. The original case stated that "Shelby dismisses with prejudice all claims that have been asserted or could have been asserted relative to the trade dress or designs of FFR's kits, including but not limited to the kits known as the 427 Roadster and the Type 65 Coupe." Essentially, the courts ruled that Shelby couldn't sue Factory Five for something it had already agreed upon. In addition, if Shelby believed that FFR was in violation of the terms and conditions of the agreement, it was to first give written notice to FFR of the alleged violation prior to any judicial enforcement, which it did not.

In response to the decision, Factory Five president David Smith wrote a scathing statement regarding Shelby, claiming that "Shelby's legal bullying has caused Factory Five to endure years of hardship and expend over $1 million in legal fees to defend against what many in the general public believed to be frivolous in nature." He went on to say that Carroll Shelby is "a man whose lasting legacy is rapidly changing from racing legend to prolific litigant." You can read Factory Five's full press release regarding the lawsuit after the jump.

[Source: Factory Five Racing]

PRESS RELEASE:

Carroll Shelby has failed in his second attempt this decade to halt Factory Five Racing from manufacturing and selling kit cars which resemble vintage 1960's Shelby automobiles. In a ruling issued yesterday by the United States District Court for the District of Massachusetts, the Court dismissed Carroll Shelby's 2009 suit against Factory Five wherein Shelby alleged that Factory Five's Type 65 Coupe infringed on the trade dress (design trademark) of Shelby's Daytona Coupe® automobile. Shelby filed a similar suit against Factory Five in 2000 alleging trade dress violations of "designs that relate to the vintage 1960's automobiles created, designed and made by Carroll Shelby" including but not limited to the COBRA 427 S/C®. After almost two years of litigation, Factory Five and Shelby settled the earlier suit pursuant to which the Court dismissed Shelby's trade dress claims relative to Factory Five's kit Roadster and Type 65 Coupe which are similar to Shelby's COBRA 427 S/C® and Daytona Coupe®, respectively.

Despite Shelby's dismissal of the trade dress claims in the 2000 law suit, in December, 2009, Shelby attempted a second bite of the apple by filing suit against Factory Five, this time on his home turf in the federal court in Los Angeles. However, the change in venue was short-lived. Over Shelby's arduous objection, Factory Five was successful in having the suit transferred to the District of Massachusetts, the site of the earlier litigation. Shortly thereafter, Factory Five filed its Motion to Dismiss based, in part, on the Court's judgment in the prior law suit.

In a twenty-five page decision, U.S. District Judge Patti B. Saris held that Shelby was legally barred from seeking legal redress as to Factory Five's manufacturing and sale of the Coupe design where these claims have already been raised and adjudicated in the earlier suit. The Court's ruling dismisses all existing and future claims by Shelby against Factory Five related to the design of the Daytona Coupe®. The Court also dismissed several other federal and state claims by Shelby against Factory Five unrelated to the Daytona Coupe®. It is unknown at this time whether Shelby plans to appeal.

Factory Five's President, David Smith, was understandably pleased with the Court's decision. Smith stated that it has always been Factory Five's position that Shelby never had exclusive legal ownership to the shape of the Daytona Coupe® or the COBRA 427 S/C® for that matter. "In the 2000 lawsuit, Factory Five had ample evidence to prove that Shelby had no legal rights to the shape of the Daytona Coupe® and COBRA 427 S/C®" said Smith. Smith believes that Shelby and his lawyers were well aware of these facts, back in 2000, and opted to dismiss these trade dress claims with prejudice rather than try the issues on the merits. Smith notes that Pete Brock, not Shelby, designed the Daytona Coupe® and only six were constructed in the 1960's. These cars were used solely for racing and were never sold in commerce. Factory Five began manufacturing its Type 65 Coupe in 1999. Smith believes that Factory Five has manufactured and sold more kit cars based on the Daytona Coupe® then anyone else in the world, including Shelby.

Smith is cautiously optimistic that the Court's ruling will once and for all put an end to Shelby's legal wranglings against Factory Five as well as other kit car companies. Shelby's legal bullying has caused Factory Five to endure years of hardship and expend over $1 million in legal fees to defend against what many in the general public believed to be frivolous in nature. At this juncture, Factory Five is contemplating several options including seeking sanctions against Shelby, a man whose lasting legacy is rapidly changing from racing legend to prolific litigant.