Does Splash Blending of Ethanol Comprise a Trademark Infringement?

Litigation, North America

Legislation requiring refiner-marketers of blended ethanol-gasoline to make available unblended gasoline suitable for splash blending by third parties led to a lawsuit of trademark infringement over lack of product quality control. This article describes the essence of our work to present a detailed description of the ethanol blending processes and the accuracy of quality control for in-line blending versus splash blending. The investigation and findings were entered into evidence and a Baker & O'Brien consultant provided testimony in deposition and at trial.

Most ethanol blended into the U.S. domestic gasoline pool is conducted using a process called "in-line" blending. In-line blending involves the simultaneous computer-controlled metering of gasoline, ethanol, and additives into a piping manifold before loading onto a tanker truck at a refinery or terminal. In-line blending has proven to be an accurate and reliable way to ensure that each gallon of gasoline receives the correct amount of ethanol prior to delivery to the consumer.

However, in some low-volume rural areas of the country, a process called "splash" blending is still occasionally used. In splash blending, unblended gasoline is loaded onto the tanker truck first. The gasoline purchaser or distributor then drives the truck to another location where the driver loads the required quantity of ethanol before delivery to the consumer. Splash blending was frequently used when the industry was transitioning to ethanol-blended fuel, and many terminals were not yet equipped for in-line blending. Because splash blending is a manual, two-step process which depends largely on the driver to ensure that the correct amount of ethanol has been added, the quality and consistency of splash-blended product has sometimes been called into question.

Several states have passed laws requiring that gasoline marketers-in addition to offering in-line ethanol-blended gasoline-make available for sale an unblended gasoline suitable for splash blending by third parties. In some cases, an industry association representing various refiner-marketers has filed suit, alleging that such a requirement infringes on the marketers' trademark rights by requiring them to transfer an element of product quality control into the hands of an outside party, potentially impacting the product delivered to the consumer, and damaging the trademarked brand.

One such case went to trial, and Baker & O'Brien was engaged to prepare a report providing: (1) a detailed description of both in-line and splash blending, and how key differences might ultimately affect the quality of the finished product; (2) any generally-available data on the accuracy of in-line vs. splash blending; and (3) any available evidence of the accuracy of splash blending for the specific market in question. An expert report was issued covering our investigation and findings. Our report was entered into evidence on the case, and one of our consultants provided testimony in deposition and at trial.

Aaron J. Imrie

Vice President, Dallas Office Manager

Petroleum Refining / Transportation and Storage / Renewable Fuels
Renewables and Regulatory / Commercial Contracts / Litigation / Expert Witness Testimony
North America