This post was written by Joshua Newman.

Car-Freshener Corporation and Julius Samann Ltd. (“JSL”), the companies behind the iconic LITTLE TREE air fresheners, recently filed a trademark infringement lawsuit against WPP’s Grey Global Group Inc. (“Grey”). The action stems from a 2011 ad campaign in which Grey worked with Another Dancing Bear Productions (“ADBP”) and Scent USA to develop car air fresheners for BMW’s line of certified pre-owned vehicles. In particular, Car-Freshener Corp. and JSL allege that the BMW air fresheners, which contain an evergreen logo, are confusingly similar to their own trademarked tree logo.

Grey has denied liability, and argues that the failure of Car-Freshener Corp. and JSL to demonstrate any harm resulting from Grey’s use of the air fresheners precludes an award of damages. In addition, Grey asserts that because ADBP and Scent USA claimed to have rights to the trademark at issue, and agreed to indemnify Grey from any legal claims that might arise from use of the marketing materials, there is no basis to hold Grey liable.

It remains to be seen whether Car-Freshener Corp. and JSL will prevail in their claim for trademark infringement, or whether the contract with ADBP and Scent USA will adequately shield Grey from liability. However, regardless of the outcome, this case is a cautionary tale and good reminder to advertisers and agencies of the importance of carefully drafting contracts and properly clearing third-party intellectual property rights, including on props.