Kars4Kids facing $7 million infringement ruling
LAKEWOOD – Most people know the jingle right away.
And the name, Kars4Kids, has become both the object of support from the charities receiving its financial donations, as well as scorn, from those sick of hearing that musical pitch.
What few may know, however, is that the name, Kars4Kids (with a K), has been the subject of a bitter legal battle for nearly a decade involving a Texas-based charity using a similar name, Cars For Kids (with a C).
But a solution may finally be at hand after a recent court hearing offered hope for a conclusion to what observers see as a test case for copyright law and charitable fundraising.
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“We hope they will vindicate, and the truth will prevail,” said Wendy Kerwin, a spokesperson for Kars4Kids, based in Lakewood. “And we will see our rights reaffirmed.”
The dispute dates back to 2014 when Kars4Kids fired the first shot by suing Texas-based American Can Cars for Kids in federal court in New Jersey, claiming trademark infringement, unfair competition and trademark dilution, according to attorneys.
The initial lawsuit contended that Cars for Kids is “confusingly similar” to Kars4Kids, which has made its name with the recognizable radio ad and related promotions.
A year later, American Can Cars for Kids filed its own suit against Kar4Kids in a Texas federal court claiming trademark infringement and unfair competition.
“We spent a lot of time and money developing our Cars for Kids trademark in Texas, and we get donations from many other states,” said Chainey Singleton, general counsel for American Can Cars For Kids. “It has caused a lot of confusion with consumers. That happens a lot.”
Both outlets are 501(c)(3) charitable organizations that accept donated vehicles and other items, auction them off, and give the proceeds to children’s charities.
Federal tax records indicate American Can Cars for Kids received $12.1 million in donations in 2022, while Kars4Kids took in more than $101 million.
American Can Cars for Kids launched in 1992 and provides funding to a variety of charities, including “a unique network of 14 charter schools across Texas in Austin, Dallas, Fort Worth, Houston and San Antonio that serve students who have struggled in a traditional high school setting,” the organization said in a statement.
Kars4Kids, in existence since 1994, focuses primarily on Jewish-related charities and has come under attack with claims that it is not open about how it uses its donations and potentially misleads donors.
In 2017, the Minnesota attorney general issued a report that Kars4Kids had raised $3 million from Minnesota donors but only spent $11,600 between 2012 and 2014 for local charities there.
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That same year, the non-profit site Charity Watch criticized Kars4Kids, stating the organization deceives potential donors “by failing to inform them that donated cars will benefit a Jewish organization and kids of Jewish faith.”
Kerwin dismisses such complaints, noting the attorney general brought no formal charges or other specific criminal claims. She also said Kars4Kids does not promise to donate equal amounts to states based on the donations provided from them.
“It was an intensive investigation, and they came up with very little to complain about,” Kerwin said. “It found that we raised more money in Minnesota than we give to charity there, which is true. But we have charities we give to throughout the country.”
Both lawsuits were eventually consolidated in 2016 into one case in federal court in New Jersey, with a trial held in 2019.
The federal court jury ruled in May 2019 in favor of American Can Cars for Kids. A year later, a federal judge awarded $11 million in damages to American Can Cars for Kids.
That award was later reduced to $10.6 million, attorneys said.
Kars4Kids appealed the verdict to the Third Circuit Court of Appeals in Philadelphia in 2021, which remanded it back to federal court in New Jersey with a directive to review the damage amount.
“They wanted to take a look at a certain period of advertising and determine if that had to be included in the damages award,” said Valerie Yanaros, an attorney for American Can Cars for Kids.
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The New Jersey Federal Court reduced the damages to $7.8 million, which Kars4Kids appealed again to the Third District in May 2023.
A hearing was held before the appeals court on Dec. 12, and both sides are awaiting the next ruling.
“It could be a year, but I think the last appeal was decided in a month and a half,” said Yanaros. “It has been going on for 10 years, the jury decided that our client was using it first, we have litigated this in-depth. There has been a lot of expert work on this on the damages.”
Kerwin said her organization has raised the name to a prominent level and needs to protect its brand like any other.
“We have been pouring our marketing brains and blood, sweat and tears into this brand and building it up,” she said. “We are the brand. This other organization is trying to capitalize on our success.”
Joe Strupp is an award-winning journalist with 30 years’ experience who covers education and several local communities for APP.com and the Asbury Park Press. He is also the author of three books, including Killing Journalism on the state of the news media, and an adjunct media professor at Rutgers University and Fairleigh Dickinson University. Reach him at jstrupp@gannettnj.com and at 732-413-3840. Follow him on Twitter at @joestrupp
This article originally appeared on Asbury Park Press: Kars4Kids accused of infringing on name used in Texas
